10-Q: Kaya Holdings Reports Q1 2025 Results, Navigating Transition to Psychedelic Medicine

Kaya Holdings, Inc. reports a net loss for Q1 2025 as it transitions from cannabis retail to psychedelic treatment facilities, with a focus on The Sacred Mushroom facility.

Summary

• Kaya Holdings, Inc. (KAYS) reported its financial results for the quarter ended March 31, 2025.
• The company incurred a net loss of $1,636,770 for the quarter, compared to a net loss of $1,084,992 for the same period in 2024.
• Revenue from continuing operations was $7,052, primarily from the early-stage development of the Psychedelic Medicine business.
• The company ceased operations of its retail marijuana business, MJAI, during the first half of 2024, classifying it as a discontinued operation.
• Operating expenses from continuing operations were $311,620, compared to $238,830 in the prior year.
• The company's cash position increased slightly to $50,718, but it faces a working capital deficiency of $9,580,900.
• KAYS is dependent on its ability to raise capital to fund its operations and expansion.
• The company is focusing on the development of its Psychedelic Medicine business, including The Sacred Mushroom facility in Portland, Oregon.
• The company is seeking additional capital through private offerings of equity and/or debt securities.
• The company is working with a Portland, Oregon training program that is approved by the Colorado Psilocybin Licensing Program, and is utilizing The Sacred Mushrooms Psilocybin Service Center as a practicum site for the completion of facilitator training prior to licensing.
• In April 2025, payroll was suspended to employees at The Sacred Mushroom due to capital constraints and the company is evaluating the operational structure of the facility with a view to restructuring operations in order to generate greater revenues.

Sentiment

Score: 3

Explanation: The document presents a challenging financial situation with a significant net loss and working capital deficiency. While the company is transitioning to a new market, the immediate financial outlook is concerning.

Positives

• The company is focusing on a new market segment with the development of The Sacred Mushroom psychedelic treatment facility.
• The company is working with a Portland, Oregon training program that is approved by the Colorado Psilocybin Licensing Program, and is utilizing The Sacred Mushrooms Psilocybin Service Center as a practicum site for the completion of facilitator training prior to licensing.
• The company is actively seeking additional capital to fund its operations and expansion.

Negatives

• The company incurred a significant net loss of $1,636,770 for Q1 2025.
• The company has a substantial working capital deficiency of $9,580,900.
• The company's cash position is low at $50,718.
• The company is dependent on raising additional capital to continue operations.
• The company ceased operations of its retail marijuana business, MJAI, during the first half of 2024, classifying it as a discontinued operation.
• In April 2025, payroll was suspended to employees at The Sacred Mushroom due to capital constraints and the company is evaluating the operational structure of the facility with a view to restructuring operations in order to generate greater revenues.

Risks

• The company's ability to continue as a going concern is uncertain due to its financial condition.
• The company may not be successful in raising additional capital on commercially reasonable terms.
• The company faces significant competition in the legal marijuana and psychedelic medicine sectors.
• The use and possession of Psilocybin is currently illegal under Federal Law.
• The company's internal control over financial reporting is not effective.
• The company is dependent on raising additional capital to continue operations.
• In April 2025, payroll was suspended to employees at The Sacred Mushroom due to capital constraints and the company is evaluating the operational structure of the facility with a view to restructuring operations in order to generate greater revenues.

Future Outlook

Management believes that further proceeds expected to be received from financing transactions that it is seeking to enter into, combined with existing and anticipated revenues, will alleviate the Company's financial difficulties to a significant extent and will allow the Company to meet its anticipated working capital needs for a period of between twelve and eighteen months from the date of this report.

Management Comments

• The net loss due to the close of a retail shop in Oregon as the company focused on moving our cannabis business overseas and concentrated on the development of our Psychedelic Medicine business and the launch of The Sacred Mushroom facility in Portland, Oregon.

Industry Context

The company is transitioning from the cannabis industry to the psychedelic medicine industry, which is an emerging market with potential for growth. Oregon and Colorado are currently the only two states that have legalized Psilocybin for use within a regulatory framework. Oregon is the most mature market but Colorado is moving closely behind it and is in process of licensing facilitators and As of the date of this filing Colorado has completed their licensing framework for Psilocybin Access and is in process of processing applications and licensing Colorado Psilocybin Facilitators in a framework similar to the Oregon Model.

Comparison to Industry Standards

• Companies such as Compass Pathways, ATAI Life Sciences, and Cybin are engaged in developing synthetic versions of psilocybin and psilocin (the active ingredient in magic mushrooms) to offer as breakthrough therapies for treatment resistant mental health disorders.
• As a Delivery of Treatment provider, it is expected that The Sacred Mushroom and similar facilities will be the safe environment needed for these emerging pharma-based psychedelic treatments.
• As these companies endure the costly, time consuming, and unpredictable path to FDA approval, we believe that The Scared Mushroom will establish its position as a leader in the delivery of psychedelic care, offering more immediate relief for people with pressing mental health conditions.
• KAYS believes that its facility offers a superior setting, broader activity and treatment options with pricing at or near the lower range, thereby enabling us to deliver a superior treatment experience at a much lower price than the competition, while still achieving profitability.

Related Party Transactions

• On September 5, 2024, the Board of Directors approved the issuance of 1,000,000 shares of common stock to FDT Oregon 1 LLC owners who are also the Companys related party to acquire equity interest of FDT Oregon 1 LLC.

Stakeholder Impact

• Shareholders face the risk of further dilution if the company issues additional equity.
• Employees at The Sacred Mushroom may face job insecurity due to the suspension of payroll and potential restructuring.
• Creditors face the risk of non-payment if the company is unable to raise additional capital.

Next Steps

• The company intends to seek additional capital from further private offerings of equity and/or debt securities.
• The company plans to pursue a potential sale of the MJAI business and remaining assets during the second quarter of 2025.
• The company is evaluating the operational structure of The Sacred Mushroom facility with a view to restructuring operations in order to generate greater revenues.

Key Dates

Keywords

psychedelic medicine, cannabis, Kaya Holdings, financial results, The Sacred Mushroom, MJAI, net loss, working capital, capital raise, psilocybin