10-Q/A: WEED Inc. Faces Going Concern Doubt Amidst Mounting Losses

WEED Inc. reported a significant increase in net losses and a critical decline in cash, raising substantial doubt about its ability to continue as a going concern.

Summary

• Reported a net loss of $(622,018) for the nine months ended September 30, 2025, an increase from $(377,492) in the prior year period.
• Cash balance plummeted to $400 as of September 30, 2025, from $159,355 at December 31, 2024.
• Total current assets decreased to $10,933 from $189,891, while total current liabilities increased to $1,051,346 from $959,372.
• Accumulated deficit grew to $(85,525,296) as of September 30, 2025.
• The company has no revenues since its inception and operates with a monthly cash burn rate of approximately $53,000.
• Management acknowledges substantial doubt about the company's ability to continue as a going concern without additional financing.
• 10,500,000 shares of common stock, valued at $315,000, were issued for services during the nine months ended September 30, 2025.
• Disclosure controls and procedures were deemed ineffective, with a new deficiency identified regarding formal processes for related party transactions.

Sentiment

Score: 1

Explanation: The company is in a critical financial state with no revenue, rapidly depleting cash, increasing losses, and explicit 'going concern' doubt. Operational projects are stalled due to lack of funding, and internal controls are ineffective. The overall outlook is extremely negative.

Positives

• Net cash used in operating activities decreased to $(75,471) for the nine months ended September 30, 2025, from $(288,079) in the prior year, indicating a reduction in operational cash outflow.
• The company continues to pursue various business opportunities in the cannabis and hemp field, including cultivation, product development, and research.
• Acquisition of Hempirical Genetics, LLC brought over 200 High THC strains, 15 PURE Landrace strains, and 30+ CBD & CBG strains into inventory.

Negatives

• No revenues generated since inception.
• Significant increase in net loss and comprehensive loss for the nine months ended September 30, 2025, compared to the prior year.
• Cash balance is critically low at $400, down from $159,355 at the end of 2024.
• Total current assets have drastically decreased, while total current liabilities have increased, leading to a negative working capital position of $(1,040,413).
• Accumulated deficit continues to grow, reaching over $85.5 million.
• Substantial doubt exists about the company's ability to continue as a going concern.
• Disclosure controls and procedures are ineffective, with a lack of formal processes for related party transactions.
• Accrued officer compensation significantly increased to $324,750 from $202,750.

Risks

• Going Concern Risk: The company has no revenues, incurred significant net losses, and has a substantial accumulated deficit, raising substantial doubt about its ability to continue as a going concern.
• Funding Risk: The company is dependent on securing additional equity and/or debt financing, with no assurances of success, to fund short-term operations and continue its strategic initiatives.
• Operational Risk: The company's strategic projects, such as the Cannabis Genomic Study and the acquisition of Professor Touitou's patents, are stalled or terminated due to lack of funding.
• Regulatory Risk: The cannabis industry is highly regulated, and changes in government regulations or failure to comply could adversely affect the business.
• Internal Control Deficiencies: Disclosure controls and procedures are ineffective, and there is a lack of formal processes for identifying and approving related party transactions, increasing financial reporting risk.
• Market Risk: Fluctuations and difficulty in forecasting operating results, competition, and the loss of significant customers or suppliers are noted as risks.

Future Outlook

The company plans to research and potentially enter the hemp and infused beverage industry, continue its Cannabis Genomic Study (contingent on funding), and ultimately become a global 'Seed-to-Sale' company providing infrastructure, financial solutions, product development, and real estate options in the legal cannabis and medical marijuana sector. Long-term goals include developing cures for diseases using the Cannabaceae plant and expanding internationally through subsidiaries like WEED Australia and WEED Israel, with a potential luxury condos & resort development in New York.

Management Comments

• Management is actively pursuing new products and services to begin generating revenues.
• The Company is currently seeking additional sources of capital to fund short term operations.
• We will need additional financing to attempt to accomplish these goals.
• We currently do not believe we will be able to satisfy our cash needs from our revenues for many years to come.
• We will need to continue borrowing from our shareholders and other related parties, and/or raise money from the sales of our securities, to fund operations.
• Management believes it is more likely than not that the net deferred tax assets will not be fully realizable.
• As funds become available to us, we expect to implement additional measures to improve disclosure controls and procedures.

Industry Context

WEED, Inc. operates within the rapidly evolving global cannabis and hemp industry, aiming to capitalize on the increasing legalization of medical and recreational marijuana. The company's 'Seed-to-Sale' vision and focus on genomic research align with industry trends towards product differentiation and scientific validation. However, its current lack of revenue and significant financial distress highlight the intense capital requirements and competitive pressures within this emerging market, where many smaller players struggle to secure funding and achieve profitability despite market growth.

Comparison to Industry Standards

• The company's complete lack of revenue stands in stark contrast to established cannabis companies that have achieved significant sales, such as Canopy Growth, Tilray, or Curaleaf, which report hundreds of millions to billions in annual revenue.
• The accumulated deficit of over $85 million and critically low cash balance of $400 are far below the financial health metrics of industry leaders, indicating severe undercapitalization and operational inefficiency.
• While the company's focus on genomic research (e.g., Cannabis Genomic Study) is a strategic move, similar to efforts by larger players like GW Pharmaceuticals (now part of Jazz Pharmaceuticals) in cannabinoid-based drug development, WEED Inc.'s inability to fund its research puts it at a significant disadvantage.
• The proposed 'Cannabis Friendly' luxury resort concept is novel, but without funding or developed plans, it remains purely speculative, unlike tangible real estate investments made by some larger cannabis REITs or vertically integrated companies.
• The ineffective disclosure controls and procedures, particularly the lack of an audit committee and combined CEO/CFO roles, fall short of corporate governance standards expected of publicly traded companies, especially those with significant related-party transactions, unlike more mature industry participants.

Management Changes

Corporate Governance

Legal Proceedings

• Management is not aware of any pending or threatened litigation where the ultimate disposition or resolution could have a material adverse effect on the company's financial position, results of operations, or liquidity.

Related Party Transactions

• Notes payable to related parties totaled $348,018 as of September 30, 2025, down from $423,328 at December 31, 2024.
• Advances from Glenn Martin (officer) totaled $305,000 in 2024 and $45,000 in 2025, with payments of $130,000 made in January 2025.
• A note payable to executive officer Jeffrey Miller for $120,000 as of September 30, 2025, with no interest, stemming from the Hempirical Genetics acquisition.
• Nicole M. Breen (officer) receives $8,000 a month in cash compensation.
• Glenn E. Martin (officer) receives $7,000 a month in cash compensation.
• Accrued officer compensation increased to $324,750 as of September 30, 2025, from $202,750 at December 31, 2024.
• Due to officer increased to $10,353 as of September 30, 2025, from $9,653 at December 31, 2024.
• The company's disclosure controls are ineffective, specifically lacking formal processes for identifying and approving related party transactions.

Stakeholder Impact

• Shareholders: Face significant dilution risk from potential future equity raises, substantial risk of loss due to the company's going concern doubt, and potential value erosion from increasing accumulated deficit and ineffective internal controls.
• Creditors: Face high risk of non-payment given the company's critically low cash balance, negative working capital, and dependence on future financing. Related party creditors may have different terms and priorities.
• Employees/Management: Compensation is partially accrued and unpaid, indicating potential cash flow issues affecting their remuneration. The combined CEO/CFO role and lack of audit committee concentrate power and responsibility.
• Consultants: Issued common stock for services, indicating a reliance on non-cash compensation due to liquidity constraints.
• Customers/Partners: Potential future customers or partners for cultivation centers or research projects face uncertainty regarding the company's long-term viability and ability to deliver on its strategic plans.

Next Steps

• Actively pursue new products and services to generate revenues.
• Seek additional sources of capital (equity and/or debt financing) to fund short-term operations.
• Continue efforts to fund and resume the Cannabis Genomic Study.
• Potentially resume the acquisition of Professor Touitou's patents and begin clinical trials upon proper funding.
• Implement additional measures to improve disclosure controls and procedures as funds become available.
• Potentially develop the Sugar Hill Golf course property into a luxury condos & resort development, contingent on funding and plans.

Key Dates

Recommendation

The company exhibits severe financial distress, marked by zero revenue, a critically low cash balance of $400, a rapidly expanding accumulated deficit of over $85 million, and negative working capital. Management explicitly states 'substantial doubt about the Company's ability to continue as a going concern' and its dependence on uncertain future financing. Key strategic projects are stalled due to lack of funds. Furthermore, ineffective disclosure controls and a lack of formal processes for related party transactions highlight significant governance and operational risks. These factors collectively indicate an extremely high risk of financial failure and significant capital loss for investors.

Keywords

Cannabis, Hemp, Genetics, Cultivation, Seed-to-Sale, Marijuana, Biotechnology, SEC Filing, 10-Q/A, Going Concern, BUDZ, Financial Reporting, OTC Pink Sheets