UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For the
Quarter Ended
OR
For the Transition Period from _________ to _________
Commission
File No.
(Exact name of registrant as specified in its charter)
|
|
|
|||
| (State of other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||
(Address of principal executive offices)
(
(Registrant’s telephone number, including area code)
Securities registered under Section 12(b) of the Exchange Act: None
| Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||
| None |
Securities registered under Section 12(g) of the Exchange Act:
None
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. [ ] Yes [X] No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. [ ] Yes [X] No
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2)
has been subject to such filing requirements for the past 90 days. [X]
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D.1(b). [ ]
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
[X]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
[ ] Large accelerated filer [ ] Accelerated filer
[X]
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [ ] Yes
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
As of November 17, 2025, the Issuer had shares of its common stock outstanding.
In this Quarterly Report on Form 10-Q, the terms “KAYS,” “ Kaya Holdings,” “the Company,” “we,” “us” and “our” refer to Kaya Holdings, Inc. and its owned and controlled subsidiaries, unless the context indicates otherwise.
TABLE OF CONTENTS
Cautionary Note Regarding Forward Looking Statements
Information contained in this Quarterly Report on Form 10-Q, as amended contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the ‘Exchange Act”). These forward-looking statements are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend” or “project” or the negative of these words or other variations on these words or comparable terminology.
The forward-looking statements herein represent our expectations, beliefs, plans, intentions or strategies concerning future events. Our forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that any projections or other expectations included in any forward-looking statements will come to pass. Moreover, our forward-looking statements are subject to various known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements.
Except as required by applicable laws, we undertake no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.
Available Information
We file annual, quarterly and special reports and other information with the Securities and Exchange Commission (“SEC”) that can be obtained from the SEC by telephoning 1-800-SEC-0330. The Company’s filings are also available through the SEC’s Electronic Data Gathering Analysis and Retrieval System, known as EDGAR, through the SEC’s website (www.sec.gov).
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
Kaya Holdings, Inc. and Subsidiaries
Consolidated Balance Sheets
As of September 30, 2025 and December 31, 2024
| ASSETS | ||||||||
| (Unaudited) | (Audited) | |||||||
| September 30, 2025 | December 31, 2024 | |||||||
| CURRENT ASSETS: | ||||||||
| Cash and equivalents | $ |
|
$ |
|
||||
| Inventory |
|
|
||||||
| Prepaid expenses |
|
|
||||||
| Total current assets |
|
|
||||||
| NON-CURRENT ASSETS: | ||||||||
| Right-of-use asset - operating lease |
|
|||||||
|
Property and equipment, net of accumulated depreciation of $
|
|
|
||||||
| Goodwill |
|
|
||||||
| Other Assets |
|
|
||||||
| Total non-current assets |
|
|
||||||
| Total assets | $ |
|
$ |
|
||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable and accrued expense | $ |
|
$ |
|
||||
| Accounts payable and accrued expense-related parties |
|
|||||||
| Accrued interest, current |
|
|
||||||
| Right-of-use liability - operating lease |
|
|||||||
| Taxable Payable |
|
|
||||||
|
Convertible notes payable, net of discount of $
|
|
|
||||||
| Notes payable, current |
|
|
||||||
| Derivative liabilities |
|
|
||||||
| Total current liabilities |
|
|
||||||
| NON-CURRENT LIABILITIES: | ||||||||
| Accrued expense-related parties |
|
|||||||
| Notes payable, non current |
|
|||||||
| Notes payable-related party |
|
|||||||
|
Convertible notes payable, net of discount of $
|
|
|
||||||
| Total non-current liabilities |
|
|
||||||
| Total liabilities |
|
|
||||||
| STOCKHOLDERS' DEFICIT: | ||||||||
| Convertible preferred stock, Series D, par value $ ; shares authorized; and issued and outstanding as of September 30, 2025 and December 31, 2024, respectively | ||||||||
| Common stock , par value $ ; shares authorized; shares issued, outstanding as of September 30, 202 and shares issued, outstanding as of December 31, 2024 |
|
|
||||||
| Subscriptions payable |
|
|
||||||
| Treasury stock, at cost, shares as of September 30, 2025 and December 31, 2024, respectively |
(
|
) |
(
|
) | ||||
| Additional paid in capital |
|
|
||||||
| Accumulated deficit |
(
|
) |
(
|
) | ||||
| Accumulated other comprehensive income |
(
|
) |
(
|
) | ||||
| Total stockholders' deficit attributable to parent company |
(
|
) |
(
|
) | ||||
| Non-controlling interest |
(
|
) |
(
|
) | ||||
| Total stockholders' deficit |
(
|
) |
(
|
) | ||||
| Total liabilities and stockholders' deficit | $ |
|
$ |
|
||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
F- 1
Kaya Holdings, Inc. and Subsidiaries
Consolidated Statements of Operations
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| For The | For The | For The | For The | |||||||||||||
| Nine Months Ended | Nine Months Ended | Three Months Ended | Three Months Ended | |||||||||||||
| September 30, 2025 | September 30, 2024 | September 30, 2025 | September 30, 2024 | |||||||||||||
| Net sales | $ |
|
$ |
|
$ |
|
$ |
|
||||||||
| Cost of sales |
|
|
|
|
||||||||||||
| Gross profit |
|
|
|
|
||||||||||||
| Operating expenses: | ||||||||||||||||
| Professional fees |
|
|
|
|
||||||||||||
| Salaries and wages |
|
|
||||||||||||||
| General and administrative |
|
|
|
|
||||||||||||
| Total operating expenses |
|
|
|
|
||||||||||||
| Operating loss |
(
|
) |
(
|
) |
(
|
) |
(
|
) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense |
(
|
) |
(
|
) |
(
|
) |
(
|
) | ||||||||
| Amortization of debt discount |
(
|
) |
(
|
) |
(
|
) |
(
|
) | ||||||||
| Gain/loss on disposal |
(
|
) |
|
(
|
) |
|
||||||||||
| Gain on license sale |
|
|
||||||||||||||
| Loss on debt extinguishment |
(
|
) |
(
|
) | ||||||||||||
| Change in derivative liabilities expense |
(
|
) |
(
|
) |
(
|
) |
(
|
) | ||||||||
| Other income (expense) |
|
|||||||||||||||
| Total other income (expense) |
(
|
) |
(
|
) |
(
|
) |
(
|
) | ||||||||
| Net loss from continuing operations before income taxes |
(
|
) |
(
|
) |
(
|
) |
(
|
) | ||||||||
| Provision for Income Taxes | ||||||||||||||||
| Net loss - from continued operations |
(
|
) |
(
|
) |
(
|
) |
(
|
) | ||||||||
| Net loss from discontinued operations before tax |
(
|
) |
(
|
) |
(
|
) | ||||||||||
| Provision for income taxes on discontinued operations |
(
|
) | ||||||||||||||
| Net loss - from discontinued operations |
(
|
) |
(
|
) |
(
|
) | ||||||||||
| Net loss |
(
|
) |
(
|
) |
(
|
) |
(
|
) | ||||||||
| Net loss attributed to non-controlling interest |
(
|
) |
(
|
) |
(
|
) |
(
|
) | ||||||||
| Net loss attributed to Kaya Holdings, Inc. |
(
|
) |
(
|
) |
(
|
) |
(
|
) | ||||||||
| Basic net loss from continuing operations per common share | $ |
(
|
) | $ |
(
|
) | $ |
(
|
) | $ |
(
|
) | ||||
| Basic net loss from discontinued operations per common share | $ |
(
|
) | $ |
(
|
) | $ | $ |
(
|
) | ||||||
| Basic net loss per common share | $ |
(
|
) | $ |
(
|
) | $ |
(
|
) | $ |
(
|
) | ||||
| Weighted average number of common shares outstanding - Basic |
|
|
|
|
||||||||||||
| Diluted net loss from continuing operations per common share | $ |
(
|
) | $ |
(
|
) | $ |
(
|
) | $ |
(
|
) | ||||
| Diluted net loss from discontinued operations per common share | $ |
(
|
) | $ |
(
|
) | $ | $ | ||||||||
| Diluted net loss per common share | $ |
(
|
) | $ |
(
|
) | $ |
(
|
) | $ |
(
|
) | ||||
| Weighted average number of common shares outstanding - Diluted |
|
|
|
|
||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements. .
F- 2
Kaya Holdings, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income (Loss)
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| For The | For The | For The | For The | |||||||||||||
| Nine Months Ended | Nine Months Ended | Three Months Ended | Three Months Ended | |||||||||||||
| September 30, 2025 | September 30, 2024 | September 30, 2025 | September 30, 2024 | |||||||||||||
| Net loss | $ |
(
|
) | $ |
(
|
) | $ |
(
|
) | $ |
(
|
) | ||||
| Other comprehensive loss: | ||||||||||||||||
| Foreign currency adjustments |
|
|
|
|
||||||||||||
| Comprehensive loss |
(
|
) |
(
|
) |
(
|
) |
(
|
) | ||||||||
| Comprehensive loss attributable to non-controlling interest |
(
|
) |
(
|
) |
(
|
) |
(
|
) | ||||||||
| Comprehensive loss attributable to Kaya Holdings |
(
|
) |
(
|
) |
(
|
) |
(
|
) | ||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
F- 3
Kaya Holdings, Inc. and Subsidiaries
Consolidated Statements of Stockholders' Deficit
| Additional Paid-in Capital | Accumulated Deficit | Accumulated Comprehensive Loss | Noncontrolling Interest | Total Stockholders' Deficit | ||||||||||||||||||||||||
| Preferred Stock - Series C | Preferred Stock - Series D | Common Stock | Treasury Stock | Subscription Payable | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Shares | Amount | Amount | |||||||||||||||||||
| Balance, December 31, 2023 (Audited) |
|
|
$
|
|
$ (
|
$
|
$
|
$ (
|
$ (
|
$ (
|
$ (
|
|||||||||||||||||
| Imputed interest | - | - | - | - |
|
|
||||||||||||||||||||||
| Equity transaction (Sale of subsidiary's stock) | - | - | - | - |
|
|
||||||||||||||||||||||
| Translation Adjustment | - | - | - | - |
(
|
(
|
(
|
|||||||||||||||||||||
| Net Loss | - | - | - | - |
(
|
(
|
(
|
|||||||||||||||||||||
| Balance, March 31, 2024 |
|
|
|
- |
|
(
|
|
|
(
|
(
|
(
|
(
|
||||||||||||||||
| Imputed interest | - | - | - | - |
|
|
||||||||||||||||||||||
| Equity transaction (sale of subsidiary's stock) | - | - | - | - |
|
|
||||||||||||||||||||||
| Translation adjustment | - | - | - | - |
(
|
(
|
(
|
|||||||||||||||||||||
| Net income | - | - | - | - |
|
(
|
|
|||||||||||||||||||||
| Balance, June 30, 2024 |
|
|
|
- |
|
(
|
|
|
(
|
(
|
(
|
(
|
||||||||||||||||
| Imputed interest | - | - | - | - | - |
|
|
|||||||||||||||||||||
| Equity transactions (Sale of subsidiary's stock) | - | - | - | - |
|
|
||||||||||||||||||||||
| Common stock issued for services | - | - |
|
|
- | - |
|
|
||||||||||||||||||||
| Common stock issued for services - related parties | - | - |
|
|
- | - |
|
|
||||||||||||||||||||
| Common stock issued for acquiring the subsidiary | - | - |
|
|
- |
|
|
|||||||||||||||||||||
| Translation Adjustment | - | - | - | - |
|
|
|
|||||||||||||||||||||
| Net Loss | - | - | - | - |
(
|
(
|
(
|
|||||||||||||||||||||
F- 4
| Balance, September 30, 2024 |
|
|
|
- |
|
(
|
|
|
(
|
(
|
(
|
(
|
||||||||||||||||
| Balance, December 31, 2024 (Audited) |
|
|
|
- |
|
(
|
|
|
- |
(
|
(
|
(
|
(
|
|||||||||||||||
| Imputed interest | - | - | - | - |
|
|
||||||||||||||||||||||
| Translation Adjustment | - | - | - | - |
|
|
|
|||||||||||||||||||||
| Net Loss | - | - | - | - |
(
|
(
|
(
|
|||||||||||||||||||||
| Balance, March 31, 2025 |
|
|
|
- |
|
(
|
|
|
- |
(
|
(
|
(
|
(
|
|||||||||||||||
| Imputed interest | - | - | - | - |
|
|
||||||||||||||||||||||
| Equity transaction (Sale of subsidiary's stock) | - | - | - | - |
|
|
||||||||||||||||||||||
| Translation Adjustment | - | - | - | - |
|
|
|
|||||||||||||||||||||
| Net Loss | - | - | - | - |
(
|
(
|
(
|
|||||||||||||||||||||
| Balance, June 30, 2025 |
|
|
|
- |
|
(
|
|
|
(
|
(
|
(
|
(
|
||||||||||||||||
| Imputed interest | - | - | - | - |
|
|
||||||||||||||||||||||
| Share issued for notes settlement | - | - |
|
|
- |
|
|
|||||||||||||||||||||
| Share issued for compensation settlement | - | - |
|
|
- | - |
|
|
||||||||||||||||||||
| Shared issued for consulting services | - | - |
|
|
- |
|
|
|||||||||||||||||||||
| Warrants issued for services | - | - | - | - |
|
|
||||||||||||||||||||||
| Related party debt extinguishment | - | - | - | - |
|
|
||||||||||||||||||||||
| Translation Adjustment | - | - | - | - |
(
|
|
(
|
|||||||||||||||||||||
| Net Loss | - | - | - | - |
(
|
(
|
(
|
|||||||||||||||||||||
| Balance, September 30, 2025 |
|
|
|
- |
|
(
|
|
|
(
|
(
|
(
|
(
|
The accompanying notes are an integral part of these unaudited consolidated financial statements.
F- 5
Kaya Holdings, Inc. and Subsidiaries
Consolidated Statement of Cashflows
| (Unaudited) | (Unaudited) | |||||||
| For The | For The | |||||||
| Nine Months Ended | Nine Months Ended | |||||||
| September 30, 2025 | September 30, 2024 | |||||||
| OPERATING ACTIVITIES: | ||||||||
| Net loss | $ |
(
|
) | $ |
(
|
) | ||
| Adjustment to non-controlling interest |
(
|
) |
(
|
) | ||||
| Adjustments to reconcile net income / loss to net cash used in operating activities: | ||||||||
| Depreciation |
|
|
||||||
| Imputed interest |
|
|
||||||
| Warrants issued for services |
|
|||||||
| Shares issued for services |
|
|
||||||
| Shares issued for services-related parties |
|
|||||||
| Shares issued for acquisition-related parties |
|
|||||||
| Loss on extinguishment of debt |
|
|||||||
| Loss on land disposal |
|
|||||||
| Gain on license sales |
(
|
) | ||||||
| Change in derivative liabilities |
|
|
||||||
| Amortization of debt discount |
|
|
||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expense |
(
|
) |
|
|||||
| Inventory |
(
|
) |
|
|||||
| Right-of-use asset |
|
|
||||||
| Other assets |
(
|
) |
|
|||||
| Accrued interest |
|
|
||||||
| Accounts payable and accrued expenses |
|
|
||||||
| Accounts payable and accrued expenses - Related Parties |
|
|
||||||
| Right-of-use liabilities |
(
|
) |
(
|
) | ||||
| Deferred tax liabilities |
|
|||||||
| Net cash used in operating activities |
(
|
) |
(
|
) | ||||
| Net cash used in Discontinued Operations |
(
|
) |
(
|
) | ||||
| INVESTING ACTIVITIES: | ||||||||
| Cash Received for Sale of License |
|
|||||||
| Purchase of property and equipment |
(
|
) | ||||||
| Proceeds from sales of subsidiary's stock |
|
|||||||
| Net cash used in investing activities |
|
|
||||||
| FINANCING ACTIVITIES: | ||||||||
| Payments on debt |
(
|
) | ||||||
| Proceeds from convertible notes |
|
|
||||||
| Net cash provided by financing activities |
|
|
||||||
| Effects of currency translation on cash and cash equivalents |
|
(
|
) | |||||
| NET INCREASE (DECREASE) IN CASH |
(
|
) |
|
|||||
| CASH BEGINNING BALANCE |
|
|
||||||
| CASH ENDING BALANCE | $ |
|
$ |
|
||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
| Interest paid |
|
|
||||||
| NON-CASH TRANSACTIONS AFFECTING OPERATING, INVESTING AND FINANCING ACTIVITIES: | ||||||||
| Initial derivative liability on convertible note payable |
|
|
||||||
| Initial lease |
|
|||||||
| Reinvested interest |
|
|||||||
| Subsidiary shares placement issued from note payable |
|
|||||||
| Related party debt extinguishment |
|
|||||||
| Debt conversion to additional paid in capital |
|
|||||||
| Shares issued for debt of notes settlement |
|
|||||||
| Non-cash common share issued |
|
|||||||
| Derivative liabilities derecognition from debt settlement |
|
|||||||
| Accrued compensation settlement |
|
|||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
F- 6
NOTE 1 – ORGANIZATION AND NATURE OF THE BUSINESS
Organization
Kaya Holdings, Inc. FKA (Alternative Fuels Americas, Inc.) (“KAYS”) is a holding company. The Company was incorporated in 1993 and engaged in a number of businesses until October, 2010, the Company changed its name to Alternative Fuels Americas, Inc, in connection with the acquisition of a company by that name. The Company assumed its present name in March 2015, in connection with its commencement of operations in the legal cannabis market in Oregon.
The Company has five subsidiaries:
| a. | Marijuana Holdings Americas, Inc., a majority-owned Florida corporation (“MJAI”), which was formed on March 27, 2014 to operate the Company’s cannabis retail business in Oregon. MJAI's operations were discontinued during the nine months ended September 30, 2024, and the subsidiary is now classified as a discontinued operation (see Note 4). The Company retains full ownership of MJAI and is evaluating potential sale opportunities for its remaining assets in 2025; and |
| b. | 34225 Kowitz Road, LLC, a wholly owned Oregon limited liability company which held ownership of the Company’s 26-acre property in Lebanon, Oregon (inactive since February 28, 2023 when the subject property was sold); and |
| c. | Kaya Brand International, Inc., a majority-owned Florida Corporation (“KBI”) which was formed on October 14, 2019 to expand the business overseas (active); and |
| d. | Fifth Dimension Therapeutics, Inc., a majority-owned Florida corporation (“FDT”) which was formed on December 13, 2022 to develop and maintain ownership of the Company’s planned Psychedelic Treatment Projects (active); and |
| e. | Kaya Crypto Operations, Inc., a wholly-owned Florida Corporation (“Kaya Crypto”) which was formed on October 20, 2025 to develop, launch and implement a Digital Assets Treasury Company (DATCO) strategy and related cryptocurrency operations (active). |
Additionally, the Company’s subsidiaries hold/have held interests in various limited liability companies to hold licenses for its subsidiaries including MJAI Oregon 1 LLC (the entity that held the licenses for the Company’s retail store operations) , MJAI Oregon 5 LLC (the entity that held the license application for the Company’s 26 acre farm property in Lebanon Oregon, sold on February 28, 2023, inactive since that date) and FDT Oregon 1, LLC (the entity that holds Psilocybin Service Center license).
Nature of the Business
In January 2014, KAYS incorporated MJAI, a wholly owned subsidiary, to focus on opportunities in the legal recreational and medical marijuana industry in the United States. Between April of 2014 and December 31, 2023, KAYS owned and operated four (4) Kaya Shack™ retail cannabis medical and recreational dispensaries, three (3) Medical Marijuana Grow sites licensed by the OHA and two (2) Recreational Marijuana grow sites licensed by the OLCC (all in Oregon). The statuses of these operations are as follows:
The first Kaya Shack™ (Kaya Shack™ Store 1) opened in 2014 in Portland, Oregon and operated until March of 2024, and no further cannabis retail revenue has been generated since that time as it was the Company’s last remaining retail cannabis operation.
F- 7
Kaya Shack™ Store 2 was closed in December, 2022 as part of a sale and surrender agreement that the Company entered into with the OLCC to resolve an Administrative Action filed by the OLCC .Per the terms of the agreement the Company agreed to either enter into a purchase and sale agreement for its retail license in South Salem by February 1, 2023 (the renewal date) or surrender the license. On April 21, 2023 the Company concluded the sale of Store 2 for $210,000, less a 6% closing commission and minor closing expenses. After these expenses and paying $75,000 to resolve three non-performing store leases in South Oregon, the Company netted $118,900.
Kaya Shack™ Store 3 and Kaya Shack™ Store 4 were both closed due to consolidation moves by the Company in 2020 and 2021, respectively, and the Company let the licenses lapse.
In August of 2017, the Company purchased a 26-acre parcel in Lebanon, Linn County, Oregon for $510,000 on which we intended to construct a Greenhouse Grow and Production Facility (the “Property”) and filed for OLCC licensure. In August of 2022, the Company entered into an agreement (the “CVC Agreement”) with CVC International, Inc. (“CVC”), an institutional investor who holds certain of the Company’s Convertible Promissory Notes (the “Notes”), one of which was secured by a $500,000 mortgage on the Property. CVC released its lien on the Property to enable the Company to sell the Property and utilize the proceeds therefrom for the benefit of the Company and its shareholders, without having to repay CVC the $500,000 Note held by CVC. Additionally, CVC agreed to advance certain sums against the sale of the Property (“Advances”), which amounted to $270,000 pending the sale of the Property. On February 28, 2023 we sold the Property for a price of $769,500, less commissions and customary closing costs. The net proceeds of the sale were used to repay the advances plus interest (including an additional $100,000 borrowed from another lender interest) and the Company realized net proceeds of approximately $302,000,000. The land is reflected on the balance sheet as assets held for sale for the year ended December 31, 2022 at a value of $516,076. The land was sold in 2023.
In the fourth quarter of 2018, KAYS concluded the purchase of the Eugene, Oregon based Sunstone Farms grow and manufacturing facility, which is licensed by the Oregon Liquor Control Commission (the “OLCC ”) for both the production (growing) of medical and recreational marijuana flower and the processing of cannabis concentrates/extracts/edibles. The Seller of the facility was Bruce Burwick, who had obtained it in settlement from a previous investment with an unrelated entity. KAYS entered into a management agreement with the holder of existing OLCC licenses (“Sunstone ”) to oversee operations at the facility pending transfer of the license to KAYS, which were aware would be an extended and cumbersome process, and Bruce Burwick joined KAYS Board of Directors. The Company paid 12,000,000 shares valued at $1,417,200 for the purchase of the property and the seller also purchased 2.5 million restricted shares of the Company’s stock for $250,000 in cash in a private transaction with the Company.
In November 2018, we were notified that that the OLCC was doing a Compliance Review, pending the requested transfer of the licenses (which is normal practice) and that they may have issues with how certain aspects of the transaction were structured. We asked the OLCC for guidance with respect to interim operation of the facility and were advised to continue operating as usual.
In February and March of 2019, the OLCC issued Conditional Letters of authority so that the facility could continue operations pending the resolution of the Sunstone License renewals and processing of the requested license transfers to KAYS.
Notwithstanding the foregoing, in mid-April 2019, we were advised by Sunstone that it had been notified that the OLCC was proposing that Sunstone’s licenses be cancelled, claiming that that Sunstone had not filed paperwork correctly with respect to the transaction or its historical ownership.
At the OLCC’s Administrative Hearing Session held on October 15, 2020, the OLCC approved a settlement between the Oregon Liquor Control Commission (OLCC) and Sunstone Marketing Partners that required theirs license to either be sold to a third party (other than KAYS) or surrendered.
As the settlement between the OLCC and Sunstone/Burwick deemed that the licenses that were part and parcel of the purchase were ultimately non-transferrable to KAYS by the OLCC, the Company recently negotiated a settlement with the seller (Sunstone and Bruce Burwick) that allows for the return of all 1,006,671 shares issued to the seller as part of the transaction (the 773,336 shares for the facility purchase, the 166,667 shares issued for $250,000.00, and subsequent shares issued as annual compensation for Board Member Compensation) in exchange for allowing the seller to retain the proceeds of the sale of the grow license to an unrelated third party that is in process of obtaining approvals from the OLCC to relocate it to another location, as well as provides for the seller to resign from the Board of Kaya Holdings and work as a non-exclusive consultant to the Company for the next 48 months for a total four year fee of $140,000.00.
F- 8
Pursuant to the terms of the settlement, Bruce Burwick surrendered to KAYS 1,006,671 shares of our common stock issued to him in connection with the transaction (800,003 shares which were issued for the facility purchase, 166,667 shares which were issued for $250,000 in cash and 40,001 shares which were issued as annual compensation for Burwick serving as a director of KAYS). The shares have been cancelled. In addition, the Company received clear title to the warehouse facility. As part of the settlement, Burwick received $160,000 from the net proceeds of the sale of the facility’s grow license to an unrelated third party, resigned from the Company’s board of directors and agreed to work as a non-exclusive consultant to the Company for the next four years for a yearly fee of $35,000.00
On July 28, 2021, the Company announced that all terms had been satisfied. Pursuant to the terms of the settlement, Bruce Burwick surrendered to KAYS 1,006,671 shares of our common stock issued to him in connection with the transaction (800,003 shares which were issued for the facility purchase, 166,667 shares which were issued for $250,000 in cash and 40,001 shares which were issued as annual compensation for Burwick serving as a director of KAYS). The shares have been submitted to KAYS' transfer agent for cancellation. In addition, the Company received clear title to the warehouse facility, which enables the Company to sell it without restriction. As part of the settlement, Burwick received $160,000 from the net proceeds of the sale of the facility's grow license to an unrelated third party, resigned from the Company's board of directors and agreed to work as a non-exclusive consultant to the Company for the next four years for a yearly fee of $35,000.00. As of September 30, 2025, the Company had $138,227 due to Bruce.
On September 26, 2019, the Company formed the majority owned subsidiary Kaya Brands International, Inc. (“KBI”) to serve as the Company’s vehicle for expansion into worldwide cannabis markets. Between September of 2019 and March 31, 2024 KBI has formed majority-owned subsidiaries in both Greece and Israel and its local operating subsidiaries have acquired interests in various licenses and entities.
On December 13, 2022, the Company formed Fifth Dimension Therapeutics ™ (“FDT”, a Florida Corporation) to seek to provide psychedelic services to sufferers of treatment resistant mental health diseases such as depression, PTSD and other mental health disorders. FDT initially held a 49% stake in FDT Oregon 1, LLC (“FDT1”, an Oregon limited liability company) and in January 1, 2025 the Company issued 1,000,000 shares of common stock to FDT Oregon 1 LLC owners who are also the Company’s related parties, to acquire the remaining 51% equity interest of FDT Oregon 1 LLC.
On November 14, 2023, the Company filed a license application with the Oregon Department of Health (the “OHA”) for the licensure of The Sacred Mushroom™, an approximately 11,000 square foot psilocybin treatment center located in Portland, Oregon And on May 7, 2024, the Company was awarded its license by the Oregon Health Authority to operate and on July 5, 2024 the Company began administering psilocybin treatments to eligible guests.
During the first half of 2024, the Company ceased operations of its retail marijuana business, MJAI, which was previously its primary revenue-generating subsidiary. MJAI's operations were discontinued during the nine months ended September 30, 2024, and no revenue or operating activity has occurred since that date. The retail store was fully closed following the cessation of operations, and the Company no longer maintains involvement in or influence over MJAI’s business activities.
The Company concluded a sale of its last remaining OLCC Cannabis Retailer License on September 2, 2025 for $75,000 less customary commissions and expenses, and as of September 30, 2024, the Company had ceased all retail cannabis operations under the MJAI subsidiary in accordance with ASC 205-20. The Company retains ownership of MJAI, and its assets and liabilities remain consolidated. Only revenues and direct expenses related to MJAI’s retail operations are included in discontinued operations. Accordingly, the Company has classified MJAI’s operations as discontinued as of year-end. See Note 4 for additional details on discontinued operations.
F- 9
NOTE 2 – LIQUIDITY AND GOING CONCERN
The
Company’s consolidated financial statements as of September 30, 2025 have been prepared on a going concern basis, which contemplates
the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company incurred net
loss of $
| • | the sale of additional equity and debt securities, |
| • | alliances and/or partnerships with entities interested in and having the resources to support the further development of the Company’s business plan, |
| • | business transactions to assure continuation of the Company’s development and operations, |
| • | development of a unified brand and the pursuit of licenses to operate recreational and medical marijuana facilities under the branded name. |
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION
Basis of Presentation
The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) under the accrual basis of accounting.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.
Such estimates and assumptions impact both assets and liabilities, including but not limited to: net realizable value of accounts receivable and inventory, estimated useful lives and potential impairment of property and equipment, the valuation of intangible assets, estimate of fair value of share based payments and derivative liabilities, estimates of fair value of warrants issued and recorded as debt discount, estimates of tax liabilities and estimates of the probability and potential magnitude of contingent liabilities.
F- 10
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to one or more future non-conforming events. Accordingly, actual results could differ significantly from estimates.
Risks and Uncertainties
The Company’s operations are subject to risk and uncertainties including financial, operational, regulatory and other risks including the potential risk of business failure.
The Company has experienced, and in the future expects to continue to experience, variability in its sales and earnings. The factors expected to contribute to this variability include, among others, (i) the uncertainty associated with the commercialization and ultimate success of the product, (ii) competition inherent at other locations where product is expected to be sold (iii) general economic conditions and (iv) the related volatility of prices pertaining to the cost of sales.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Kaya Holdings, Inc. and all wholly and majority-owned subsidiaries. All significant intercompany balances have been eliminated.
Majority-owned subsidiaries:
Fifth Dimension Therapeutics, Inc. (a Florida Corporation)
FDT Oregon 1, LLC (an Oregon limited liability company that holds the Company’s OHA Psilocybin Service Center License)
Kaya Brands International, Inc. (a Florida Corporation)
Kaya Shalvah (“Kaya Farms Israel”, an Israeli corporation) majority owned subsidiary of KBI)
Kaya Farms Greece, S.A. (a Greek Corporation) majority owned subsidiary of KBI)
Marijuana Holding Americas, Inc. (a Florida Corporation)
MJAI Oregon 1 LLC
Non-Controlling Interest
The company owned
The company owned
On September 5, 2024, the Company issued 1,000,000 shares of common stock to FDT Oregon 1 LLC owners who are also the Company’s related parties to acquire the remaining 51% equity interest of FDT Oregon 1 LLC after January 1, 2025 per the agreement.
F- 11
Cash and Cash Equivalents
Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less. The Company had no cash equivalents.
Inventory
Inventory
consists of finished goods purchased, which are valued at the lower of cost or market value, with cost being determined on the first-in,
first-out method. The Company periodically reviews historical sales activity to determine potentially obsolete items and also
evaluates the impact of any anticipated changes in future demand. Total value of Finished Goods inventory as of September
30, 2025 and December 31, 2024 is $
Property and Equipment
Property and equipment are stated at cost, less accumulated depreciation and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Depreciation
of property and equipment is provided utilizing the straight-line method over the estimated useful lives, ranging from
Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the statements of operations.
Long-lived assets
The Company reviews long-lived assets and certain identifiable intangibles held and used for possible impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In evaluating the fair value and future benefits of its intangible assets, management performs an analysis of the anticipated undiscounted future net cash flow of the individual assets over the remaining amortization period. The Company recognizes an impairment loss if the carrying value of the asset exceeds the expected future cash flow.
Accounting for the Impairment of Long-Lived Assets
We evaluate long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Upon such an occurrence, the recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to forecasted undiscounted net cash flows expected to be generated by the asset. If the carrying amount of the asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. For long-lived assets held for sale, assets are written down to fair value, less cost to sell. Fair value is determined based on discounted cash flows, appraised values or management's estimates, depending upon the nature of the assets.
Operating Leases
We lease our retail stores under non-cancellable operating leases. Most store leases include tenant allowances from landlords, rent escalation clauses and/or contingent rent provisions. We recognize rent expense on a straight-line basis over the lease term, excluding contingent rent, and record the difference between the amount charged to expense and the rent paid as a deferred rent liability.
Deferred Rent and Tenant Allowances
Deferred rent is recognized when a lease contains fixed rent escalations. We recognize the related rent expense on a straight-line basis starting from the date of possession and record the difference between the recognized rental expense and cash rent payable as deferred rent. Deferred rent also includes tenant allowances received from landlords in accordance with negotiated lease terms. The tenant allowances are amortized as a reduction to rent expense on a straight-line basis over the term of the lease starting at the date of possession.
F- 12
In accordance with ASC 260, Earnings per Share, the Company calculates basic earnings per share by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings per share are computed if the Company has net income; otherwise it would be anti-dilutive and would result from the conversion of a convertible note.
Income Taxes
The Company accounts for income taxes in accordance with ASC 740, Accounting for Income Taxes, as clarified by ASC 740-10, Accounting for Uncertainty in Income Taxes. Under this method, deferred income taxes are determined based on the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities given the provisions of enacted tax laws. Deferred income tax provisions and benefits are based on changes to the assets or liabilities from year to year. In providing for deferred taxes, the Company considers tax regulations of the jurisdictions in which the Company operates, estimates of future taxable income, and available tax planning strategies. If tax regulations, operating results or the ability to implement tax-planning strategies vary, adjustments to the carrying value of deferred tax assets and liabilities may be required. Valuation allowances are recorded related to deferred tax assets based on the “more likely than not” criteria of ASC 740.
ASC 740-10 requires that the Company recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the “more-likely-than-not” threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority.
We are subject to certain tax risks and treatments that could negatively impact our results of operations
Section 280E of the Internal Revenue Code, as amended, prohibits businesses from deducting certain expenses associated with trafficking-controlled substances (within the meaning of Schedule I and II of the Controlled Substances Act). The IRS has invoked Section 280E in tax audits against various cannabis businesses in the U.S. that are permitted under applicable state laws. Although the IRS issued a clarification allowing the deduction of certain expenses, the scope of such items is interpreted very narrowly, and the bulk of operating costs and general administrative costs are not permitted to be deducted. While there are currently several pending cases before various administrative and federal courts challenging these restrictions, there is no guarantee that these courts will issue an interpretation of Section 280E favorable to cannabis businesses.
During the year ended December 31, 2024, the Company fully transitioned out of its cannabis-related business activities. As such, the Company no longer expects to be subject to the limitations of Section 280E on a going forward basis. Nonetheless, prior tax periods remain subject to audit, and there can be no assurance that the IRS will not challenge historical deductions associated with the Company’s former cannabis operations.
Provision for Income Taxes
We recorded no provision for income taxes for the nine months ended September 30, 2025, compared to a provision of $2,819 for the nine months ended September 30, 2024. The 2024 provision was solely related to the operations of MJAI, our former retail cannabis subsidiary, which was discontinued during 2024 and is now reported as a discontinued operation (see Note 4).
Although the Company believes it has sufficient net operating loss carryforwards to offset this liability, the tax provision was recorded as a conservative measure due to the limitations imposed by Section 280E of the Internal Revenue Code, which disallows the deduction of most operating expenses for cannabis-related businesses. As the Company has fully exited cannabis operations, we do not expect Section 280E to impact our tax position in future periods.
F- 13
Fair Value of Financial Instruments
The Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level.
The following are the hierarchical levels of inputs to measure fair value:
| • | Level 1 – Observable inputs that reflect quoted market prices in active markets for identical assets or liabilities. |
| • | Level 2 - Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means. |
| • | Level 3 – Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available. |
| Fair Value Measurements at September 30, 2025 | ||||||||||||
| Assets | Level 1 | Level 2 | Level 3 | |||||||||
| Cash | $ |
|
$ | — | $ | — | ||||||
| Total Assets |
|
— | — | |||||||||
| Liabilities | ||||||||||||
| Convertible debentures, net | — | — |
|
|||||||||
| Derivative liabilities | — | — |
|
|||||||||
| Total liabilities | — | — |
|
|||||||||
| Total | $ |
|
$ | — | $ |
(
|
) | |||||
| Fair Value Measurements at December 31, 2024 | ||||||||||||
| Assets | Level 1 | Level 2 | Level 3 | |||||||||
| Cash | $ |
|
$ | — | $ | — | ||||||
| Total Assets |
|
— | — | |||||||||
| Liabilities | ||||||||||||
|
Convertible debentures, net of discounts of $
|
— | — |
|
|||||||||
| Derivative liabilities | — | — |
|
|||||||||
| Total liabilities | — | — |
|
|||||||||
| Total | $ |
|
$ | — | $ |
(
|
) | |||||
F- 14
The carrying amounts of the Company’s financial assets and liabilities, such as cash, prepaid expenses, other current assets, accounts payable & accrued expenses, certain notes payable and notes payable – related party, approximate their fair values because of the short maturity of these instruments.
The Company accounts for its derivative liabilities, at fair value, on a recurring basis under level 3. See Note 12.
Embedded Conversion Features
The Company evaluates embedded conversion features within convertible debt under ASC 815 “Derivatives and Hedging” to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings.
Derivative Financial Instruments
The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives.
For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income. For option-based simple derivative financial instruments, the Company uses the Binomial option-pricing model to value the derivative instruments at inception and subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period.
In July 2017, the FASB issued ASU 2017-11 Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivative and Hedging (Topic 815). The amendments in Part I of this Update change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendment also clarifies existing disclosure requirements for equity-classified instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity classified financial instruments, the amendments require entities that present earnings per share (“EPS”) in accordance with Topic 260 to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down round features are now subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, Debt-Debt with Conversion and Other Options), including related EPS guidance (in Topic 260). The amendments in Part II of this Update recharacterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a scope exception. Those amendments do not have an accounting effect.
Prior to this Update, an equity-linked financial instrument with a down round feature that otherwise is not required to be classified as a liability under the guidance in Topic 480 is evaluated under the guidance in Topic 815, Derivatives and Hedging, to determine whether it meets the definition of a derivative. If it meets that definition, the instrument (or embedded feature) is evaluated to determine whether it is indexed to an entity’s own stock as part of the analysis of whether it qualifies for a scope exception from derivative accounting. Generally, for warrants and conversion options embedded in financial instruments that are deemed to have a debt host (assuming the underlying shares are readily convertible to cash or the contract provides for net settlement such that the embedded conversion option meets the definition of a derivative), the existence of a down round feature results in an instrument not being considered indexed to an entity’s own stock. This results in a reporting entity being required to classify the freestanding financial instrument or the bifurcated conversion option as a liability, which the entity must measure at fair value initially and at each subsequent reporting date.
F- 15
In August 2020, the FASB issued ASU 2020-06, Debt- Debt with Conversion and Other Options (Subtopic 47020) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 81540): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity , which is intended to simplify the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity's own equity. In this Update revise the guidance for instruments with down round features in Subtopic 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity, which is considered in determining whether an equity-linked financial instrument qualifies for a scope exception from derivative accounting. An entity still is required to determine whether instruments would be classified in equity under the guidance in Subtopic 815-40 in determining whether they qualify for that scope exception. If they do qualify, freestanding instruments with down round features are no longer classified as liabilities and embedded conversion options with down round features are no longer bifurcated. The guidance allows for either full retrospective adoption or modified retrospective adoption. The guidance is effective for the Company in the first quarter of fiscal year 2025 and early adoption is permitted. The Company is evaluating the impact the adoption of this guidance will have on its condensed consolidated financial statements and related disclosures.
The amendments in Part 1 of this Update are a cost savings relative to former accounting. This is because, assuming the required criteria for equity classification in Subtopic 815-40 are met, an entity that issued such an instrument no longer measures the instrument at fair value at each reporting period (in the case of warrants) or separately accounts for a bifurcated derivative (in the case of convertible instruments) on the basis of the existence of a down round feature. For convertible instruments with embedded conversion options that have down round features, applying specialized guidance such as the model for contingent beneficial conversion features rather than bifurcating an embedded derivative also reduces cost and complexity. Under that specialized guidance, the issuer recognizes the intrinsic value of the feature only when the feature becomes beneficial instead of bifurcating the conversion option and measuring it at fair value each reporting period.
The amendments in Part II of this Update replace the indefinite deferral of certain guidance in Topic 480 with a scope exception. This has the benefit of improving the readability of the Codification and reducing the complexity associated with navigating the guidance in Topic 480.
The Company adopted this new standard on January 1, 2019; however, the Company needs to continue the derivative liabilities due to variable conversion price on some of the convertible instruments. As such, it did not have a material impact on the Company’s consolidated financial statements.
Debt Issue Costs and Debt Discount
The Company may record debt issue costs and/or debt discounts in connection with raising funds through the issuance of debt. These costs may be paid in the form of cash, or equity (such as warrants). These costs are amortized to interest expense over the life of the debt. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed.
Original Issue Discount
For certain convertible debt issued, the Company may provide the debt holder with an original issue discount. The original issue discount would be recorded as a debt discount, reducing the face amount of the note and is amortized to interest expense over the life of the debt.
Extinguishments of Liabilities
The Company accounts for extinguishments of liabilities in accordance with ASC 405-20 “Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities”. When the conditions are met for extinguishment accounting, the liabilities are derecognized and the gain or loss on the sale is recognized.
F- 16
Stock-Based Compensation - Employees
The Company accounts for its stock-based compensation in which the Company obtains employee services in share-based payment transactions under the recognition and measurement principles of the fair value recognition provisions of section 718-10-30 of the FASB Accounting Standards Codification. Pursuant to paragraph 718-10-30-6 of the FASB Accounting Standards Codification, all transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.
The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the performance is complete or the date on which it is probable that performance will occur.
If the Company is a newly formed corporation or shares of the Company are thinly traded, the use of share prices established in the Company’s most recent private placement memorandum (based on sales to third parties) (“PPM”), or weekly or monthly price observations would generally be more appropriate than the use of daily price observations as such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.
The fair value of share options and similar instruments is estimated on the date of grant using a Binomial Option Model option-pricing valuation model. The ranges of assumptions for inputs are as follows:
| • |
Expected term of share options and similar instruments: The expected life of options and similar instruments represents the period of time the option and/or warrant are expected to be outstanding. Pursuant to Paragraph 718-10-50-2(f)(2)(i) of the FASB Accounting Standards Codification the expected term of share options and similar instruments represents the period of time the options and similar instruments are expected to be outstanding taking into consideration of the contractual term of the instruments and employees’ expected exercise and post-vesting employment termination behavior into the fair value (or calculated value) of the instruments. Pursuant to paragraph 718-10-S99-1, it may be appropriate to use the simplified method, i.e., expected term = ((vesting term + original contractual term) / 2), if (i) A company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term due to the limited period of time its equity shares have been publicly traded; (ii) A company significantly changes the terms of its share option grants or the types of employees that receive share option grants such that its historical exercise data may no longer provide a reasonable basis upon which to estimate expected term; or (iii) A company has or expects to have significant structural changes in its business such that its historical exercise data may no longer provide a reasonable basis upon which to estimate expected term. The Company uses the simplified method to calculate expected term of share options and similar instruments as the company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term.
|
|
| • |
Expected volatility of the entity’s shares and the method used to estimate it. Pursuant to ASC Paragraph 718-10-50-2(f)(2)(ii) a thinly-traded or nonpublic entity that uses the calculated value method shall disclose the reasons why it is not practicable for the Company to estimate the expected volatility of its share price, the appropriate industry sector index that it has selected, the reasons for selecting that particular index, and how it has calculated historical volatility using that index. The Company uses the average historical volatility of the comparable companies over the expected contractual life of the share options or similar instruments as its expected volatility. If shares of a company are thinly traded the use of weekly or monthly price observations would generally be more appropriate than the use of daily price observations as the volatility calculation using daily observations for such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.
|
|
| • |
Expected annual rate of quarterly dividends. An entity that uses a method that employs different dividend rates during the contractual term shall disclose the range of expected dividends used and the weighted-average expected dividends. The expected dividend yield is based on the Company’s current dividend yield as the best estimate of projected dividend yield for periods within the expected term of the share options and similar instruments.
|
| • |
Risk-free rate(s). An entity that uses a method that employs different risk-free rates shall disclose the range of risk-free rates used. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods within the expected term of the share options and similar instruments.
|
Generally, all forms of share-based payments, including stock option grants, warrants and restricted stock grants and stock appreciation rights are measured at their fair value on the awards’ grant date, based on estimated number of awards that are ultimately expected to vest.
The expense resulting from share-based payments is recorded in general and administrative expense in the statements of operations.
F- 17
Equity Instruments Issued to Parties Other Than Employees for Acquiring Goods or Services
In June 2018, the FASB issued ASU No. 2018-07, Compensation – Stock Compensation: Improvement to Nonemployee Share-Based Payment Accounting (Topic 718). The ASU supersedes ASC 505-50, Equity-Based Payment to Non-Employment and expends the scope of the Topic 718 to include stock-based payments granted to non-employees. Under the new guidance, the measurement date and performance and vesting conditions for stock-based payments to non-employees are aligned with those of employees, most notably aligning the award measurement date with the grant date of an award. The new guidance is required to be adopted using the modified retrospective transition approach. The Company adopted the new guidance effective January 1, 2019, with an immaterial impact on its financial statements and related disclosures.
The fair value of share options and similar instruments is estimated on the date of grant using a Binomial option-pricing valuation model. The ranges of assumptions for inputs are as follows:
| • |
Expected term of share options and similar instruments: Pursuant to Paragraph 718-10-50-2(f)(2)(i) of the FASB Accounting Standards Codification the expected term of share options and similar instruments represents the period of time the options and similar instruments are expected to be outstanding taking into consideration of the contractual term of the instruments and holder’s expected exercise behavior into the fair value (or calculated value) of the instruments. The Company uses historical data to estimate holder’s expected exercise behavior. If the Company is a newly formed corporation or shares of the Company are thinly traded the contractual term of the share options and similar instruments is used as the expected term of share options and similar instruments as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term.
|
|
| • |
Expected volatility of the entity’s shares and the method used to estimate it. Pursuant to ASC Paragraph 718-10-50-2(f)(2)(ii) a thinly-traded or nonpublic entity that uses the calculated value method shall disclose the reasons why it is not practicable for the Company to estimate the expected volatility of its share price, the appropriate industry sector index that it has selected, the reasons for selecting that particular index, and how it has calculated historical volatility using that index. The Company uses the average historical volatility of the comparable companies over the expected contractual life of the share options or similar instruments as its expected volatility. If shares of a company are thinly traded the use of weekly or monthly price observations would generally be more appropriate than the use of daily price observations as the volatility calculation using daily observations for such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.
|
|
| • |
Expected annual rate of quarterly dividends. An entity that uses a method that employs different dividend rates during the contractual term shall disclose the range of expected dividends used and the weighted-average expected dividends. The expected dividend yield is based on the Company’s current dividend yield as the best estimate of projected dividend yield for periods within the expected term of the share options and similar instruments.
|
| • |
Risk-free rate(s). An entity that uses a method that employs different risk-free rates shall disclose the range of risk-free rates used. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods within the expected term of the share options and similar instruments.
|
F- 18
Revenue Recognition
Effective January 1, 2018, the Company adopted ASC 606 – Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following steps: (1) identifying the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.
To confirm, all of our OLCC licensed cannabis retail sales operations are conducted and operated on a “cash and carry” basis- product(s) from our inventory accounts are sold to the customer(s) and the customer settles the account at time of receipt of product via cash payment at our retail store; the transaction is recorded at the time of sale in our point-of-sale software system. Revenue is only reported after the product has been delivered to the customer and the customer has paid for the product with cash.
To date the only other revenue we have received is for ATM transactions and revenue from this activity is only reported after we receive payment via check from the ATM service provider company.
Cost of Sales
Cost of sales represents costs directly related to the purchase of goods and third party testing of the Company’s products.
Related Parties
The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.
Pursuant to Section 850-10-20 the related parties include a. affiliates of the Company; b. Entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; c. trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d. principal owners of the Company; e. management of the Company; f. other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g. Other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
The consolidated financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements.
The disclosures shall include: a. the nature of the relationship(s) involved; b. a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c. the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d. amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
F- 19
Contingencies
The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, consolidated financial position, and consolidated results of operations or consolidated cash flows.
Uncertain Tax Positions
The Company did not take any uncertain tax positions and had no adjustments to its income tax liabilities or benefits pursuant to the provisions of Section 740-10-25 for the reporting period ended September 30, 2025.
Subsequent Events
The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements are issued.
Segment reporting
The Company operates as a single reportable segment focused on the development and operation of psychedelic treatment facilities. The Company does not operate separate lines of business or discrete business units. Accordingly, the Company has determined it has one reportable segment. The Company’s chief operating decision maker (“CODM”), Craig Frank, the Company’s Chief Executive Officer, reviews consolidated financial information to assess performance and allocate resources. As of September 30, 2025, all of the Company’s operations, revenues, and long-lived assets are located in the United States. The Company’s former cannabis operations have been discontinued and are presented separately as discontinued operations in accordance with ASC 205-20.
Discontinued Operation
As of September 30, 2025, the Company ceased operations of its retail marijuana business, MJAI, which was previously its primary revenue-generating subsidiary. MJAI's operations were discontinued during the nine months ended September 30, 2024, and no revenue or operating activity has occurred since that date. The retail store was fully closed following the cessation of operations, and the Company no longer maintains involvement in or influence over MJAI’s business activities. As a result, MJAI was reported as a discontinued operation. See Note 4.
New Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the effect of recently issued standards that are not yet effective will not have a material effect on its consolidated financial position or results of operations upon adoption.
F- 20
Recently issued accounting pronouncements not yet adopted
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, Improvements to Income Tax Disclosures (Topic 740). The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024. Early adoption is also permitted for annual financial statements that have not yet been issued or made available for issuance. This ASU will likely result in the required additional disclosures being included in our consolidated financial statements, once adopted.
In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40). The ASU requires the disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization, within relevant income statement captions. This ASU also requires disclosure of the total amount of selling expenses along with the definition of selling expenses. The ASU is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Adoption of this ASU can either be applied prospectively to consolidated financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the consolidated financial statements. Early adoption is also permitted. This ASU will likely result in the required additional disclosures being included in our consolidated financial statements once adopted. We are currently evaluating the provisions of this ASU.
In November 2024, the FASB issued ASU No. 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments, which clarifies the requirements related to accounting for the settlement of a debt instrument as an induced conversion. The amendments in this update are effective for annual reporting periods beginning after December 15, 2025, including interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements.
Recently adopted accounting pronouncements
In November 2023, the FASB issued ASU No. 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment’s profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. We adopted this ASU retrospectively on December 31, 2023. Refer to Note 17, Segment Reporting and Information about Geographic Areas for the inclusion of the new required disclosures.
F- 21
NOTE 4 – DISCONTINUED OPERATIONS
During the six months ended June 30, 2024, the Company ceased operations of its wholly owned subsidiary, MJAI, a retail marijuana dispensary based in Oregon. While the Company did not formally sell the MJAI business during the nine months ended September 30, 2025, operations were effectively discontinued during the second quarter of 2024, and the dispensary has remained closed since that time. Kaya has had no further operating activity or income from MJAI following the closure.
The Company entered
into a definitive agreement in the second quarter of 2025 to sell its remaining OLCC marijuana retail license under the MJAI business
for $
The following table presents the summary of operating results from discontinued operations for the nine months ended September 30, 2025, and 2024:
Marijuana Holdings Americas, Inc.
Consolidated Statements of Operations
| For The | For The | |||||||
| Nine Months Ended | Nine Months Ended | |||||||
| September 30, 2025 | September 30, 2024 | |||||||
| Net sales | $ | $ |
|
|||||
| Cost of sales |
|
|||||||
| Gross profit |
|
|||||||
| Operating expenses: | ||||||||
| Salaries and wages |
|
|
||||||
| Professional fees |
|
|||||||
| General and administrative |
|
|
||||||
| Total operating expenses |
|
|
||||||
| Operating loss |
(
|
) |
(
|
) | ||||
| Other income (expense): | ||||||||
| Other income (expense) | ||||||||
| Total other income | ||||||||
| Net loss from discontinued operations before income taxes |
(
|
) |
(
|
) | ||||
| Provision for Income Taxes |
(
|
) | ||||||
| Net loss from discontinued operations |
(
|
) |
(
|
) |
F- 22
Although MJAI’s operations ceased during the year 2024, the Company retained control of the subsidiary as of September 30, 2025. Accordingly, MJAI was not deconsolidated, and its assets and liabilities remain included in the Company’s consolidated balance sheet as of September 30, 2025 and December 31, 2024.
Cash Fow Disclosures from Discontinued Operations
For the nine months
ended September 30, 2025 and 2024, the MJAI discontinued operation had net cash used in operating activities of $
NOTE 5 – PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following as of September 30, 2025 and December 31, 2024:
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Vehicle | $ |
|
$ |
|
||||
| Computers |
|
|
||||||
| Machinery and equipment |
|
|
||||||
| Furniture and fixtures |
|
|
||||||
| Land |
|
|||||||
| Leasehold improvements |
|
|
||||||
| Less: Accumulated depreciation |
(
|
) |
(
|
) | ||||
| Property and equipment, net | $ |
|
$ |
|
||||
Depreciation expense
totaled $
NOTE 6 – NON-CURRENT ASSETS
Other assets consisted of the following as of September 30, 2025 and December 31, 2024:
| September 30, 2025 | December 31, 2024 | |||||||
| Other receivable | $ |
|
$ |
|
||||
| Rent deposits |
|
|
||||||
| Security deposits |
|
|
||||||
| Due from BMN Consultant |
|
|||||||
| Total non-current assets | $ |
|
$ |
|
||||
During the nine
months ended September 30, 2025, our other receivables increased in the second quarter primarily due to the recognition of a $
F- 23
NOTE 7 – ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
The accounts payable and accrued expenses consisted of the following at September 30, 2025 and December 31, 2024:
| September 30, 2025 | December 31, 2024 | |||||||
| Accounts payable | $ |
|
$ |
|
||||
| Accrued expenses |
|
|
||||||
| Total | $ |
|
$ |
|
||||
Other current liabilities
as of June 30, 2025 included a deferred gain of $
NOTE 8 – CONVERTIBLE DEBT
These debts have
a price adjustment provision. Therefore, the Company accounted for these Notes under ASC Topic 815-15 “Embedded Derivative.”
The derivative component of the obligation is initially valued and classified as a derivative liability with an offset to discounts
on convertible debt. Discounts have been amortized to interest expense over the respective term of the related note. In determining the
indicated value of the convertible note issued, the Company used the Binomial Options Pricing Model with a risk-free interest rate of
ranging from
As of September 30, 2025, the Company completed the conversion of substantially all outstanding convertible notes issued to Caymen Ventures Capital, LLC (44 notes), Lindsey Perry Jr. (4 notes), Gray Lady Capital, LLC (1 note), and Joseph Gayer (1 note). The conversions were executed at $0.02 per share, resulting in the issuance of an aggregate 607,534,390 shares of common stock. The total derivative liabilities associated with these notes were $13,081,163 at September 30, 2025. The increase during the three months ended September 30, 2025, primarily reflects the remeasurement of the derivative liabilities upon amendment and settlement of the convertible notes at a fixed conversion price of $0.02 per share, resulting in a non-cash derivative change of $7,617,339 recognized during the period. Upon conversion, the corresponding principal, accrued interest, and derivative liabilities related to these notes were reclassified to equity, and all remaining unamortized debt discounts were expensed in full during the quarter.
The total derivative liabilities balance associated with the remaining outstanding notes were $503,789 at September 30, 2025 and $2,497,275 at December 31, 2024. The Company issued three new convertible note during nine months ended September 30, 2025 in the amount of $325,000, which was subsequently converted into common stock prior to September 30, 2025.
See Below Summary Table
| Convertible Debt Summary | |||||||||
| Debt Type | Debt Classification | Interest Rate | Due Date | Ending | |||||
| CT | LT | 9/30/2025 | 12/31/2024 | ||||||
| A | Convertible | X |
|
|
$ |
|
$ |
|
|
| B | Convertible | X |
|
|
|
|
|||
| C | Convertible | X |
|
|
|
|
|||
| D | Convertible | X |
|
|
|
|
|||
| O | Convertible | X |
|
|
|
||||
| P | Convertible | X |
|
|
|
||||
| Q | Convertible | X |
|
|
|
||||
| S | Convertible | X |
|
|
|
||||
| T | Convertible | X |
|
|
|
||||
| CC | Convertible | X |
|
|
|
|
|||
| KK | Convertible | X |
|
|
|
||||
| LL | Convertible | X |
|
|
|
||||
| MM | Convertible | X |
|
|
|
||||
| NN | Convertible | X |
|
|
|
||||
| OO | Convertible | X |
|
|
|
||||
| PP | Convertible | X |
|
|
|
||||
| Convertible | X |
|
|
|
|||||
| RR | Convertible | X |
|
|
|
||||
| SS | Convertible | X |
|
|
|
||||
| TT | Convertible | X |
|
|
|
||||
| UU | Convertible | X |
|
|
|
||||
| VV | Convertible | X |
|
|
|
||||
| XX | Convertible | X |
|
|
|
||||
| YY | Convertible | X |
|
|
|
||||
| ZZ | Convertible | X |
|
|
|
||||
| AAA | Convertible | X |
|
|
|
||||
| BBB | Convertible | X |
|
|
|
||||
| DDD | Convertible | X |
|
|
|
||||
| EEE | Convertible | X |
|
|
|
||||
| GGG | Convertible | X |
|
|
|
||||
| JJJ | Convertible | X |
|
|
|
||||
| LLL | Convertible | X |
|
|
|
||||
| MMM | Convertible | X |
|
|
|
||||
| PPP | Convertible | X |
|
|
|
||||
| SSS | Convertible | X |
|
|
|
||||
| TTT | Convertible | X |
|
|
|
||||
| VVV | Convertible | X |
|
|
|
||||
| WWW | Convertible | X |
|
|
|
||||
| XXX | Convertible | X |
|
|
|
||||
| YYY | Convertible | X |
|
|
|
||||
| ZZZ | Convertible | X |
|
|
|
||||
| AAAA | Convertible | X |
|
|
|
||||
| EEEE | Convertible | X |
|
|
|
||||
| FFFF | Convertible | X |
|
|
|
||||
| GGGG | Convertible | X |
|
|
|
||||
| HHHH | Convertible | X |
|
|
|
||||
| IIII | Convertible | X |
|
|
|
||||
| JJJJ | Convertible | X |
|
|
|
||||
| kkkk | Convertible | X |
|
|
|
||||
| LLLL | Convertible | X |
|
|
|
||||
| MMMM | Convertible | X |
|
|
|
||||
| NNNN | Convertible | X |
|
|
|
||||
| Total Convertible Debt |
|
|
|||||||
| Less: Discount |
(
|
||||||||
| Convertible Debt, Net of Discounts | $ |
|
$ |
|
|||||
| Convertible Debt, Net of Discounts, Current | $ |
|
$ |
|
|||||
| Convertible Debt, Net of Discounts, Long-term | $ |
|
$ |
|
|||||
F- 24
On February 28, 2023, the Company sold the Property for a price of $769,500, less commissions and customary closing costs. The net proceeds of the sale were used to repay the convertible notes described above, of which total principal was $370,000. On December 31, 2022, the Company and various noteholders agree to modify the maturity date to December 31,2026 of all notes that were due to mature on December 31, 2024. No other terms of the convertible notes were changed.
On January 23, 2024, the Company received $61,200 from selling 2.4 units to CVC International LTD, including $60,000 convertible debt and 120,000 FDT shares at $0.01 per share and total value was $1,200. Interest is stated at 10%. The Note and Interest is convertible into common shares at $0.08 per share. The Note is Due on December 31, 2026. This note has a price adjustment provision: if the stock price 20 days before the conversion notice proceeding is less than $0.16 per share, the conversion price should be adjusted to the less of: 50% of the average closing price or the historical price for the 20 trading days before proceeding the conversion notice, but in any event the conversion price should be not less than $0.02 per share or more than $0.08 per share Therefore, the Company accounted for these Notes under ASC Topic 815-15 “Embedded Derivative.” The derivative component of the obligation is initially valued and classified as a derivative liability with an offset to discounts on convertible debt. Discounts are amortized to interest expense over the respective term of the related note.
On January 31, 2024, the Company signed an agreement with a third-party individual to transfer one non-convertible promissory note, including $15,000 principal and $300 accrual interest to purchase 0.6 unit, which included $15,000 convertible note and 30,000 FDT shares which is $0.01 per share and total value was $300. The convertible notes interest is stated at 10%. The Note and Interest is convertible into common shares at $0.08 per share. The Note is Due on December 31, 2026. This note has a price adjustment provision: if the stock price 20 days before the conversion notice proceeding is less than $0.16 per share, the conversion price should be adjusted to the less of: 50% of the average closing price or the historical price for the 20 trading days before proceeding the conversion notice, but in any event the conversion price should be not less than $0.02 per share or more than $0.08 per share Therefore, the Company accounted for these Notes under ASC Topic 815-15 “Embedded Derivative.” The derivative component of the obligation is initially valued and classified as a derivative liability with an offset to discounts on convertible debt. Discounts are amortized to interest expense over the respective term of the related note.
On March 12, 2024, the Company received $150,000 from selling 6 units to CVC International LTD, including $150,000 convertible debt and 300,000 FDT shares which is $0.01 per share and total value is $3,000. Interest is stated at 10%. The Note and Interest is convertible into common shares at $0.08 per share. The Note is Due on December 31, 2026. This note has a price adjustment provision: if the stock price 20 days before the conversion notice proceeding is less than $0.16 per share, the conversion price should be adjusted to the less of: 50% of the average closing price or the historical price for the 20 trading days before proceeding the conversion notice, but in any event the conversion price should be not less than $0.02 per share or more than $0.08 per share Therefore, the Company accounted for these Notes under ASC Topic 815-15 “Embedded Derivative.” The derivative component of the obligation is initially valued and classified as a derivative liability with an offset to discounts on convertible debt. Discounts are amortized to interest expense over the respective term of the related note.
On March 15, 2024, one of a promissory non-convertible notes was expired. The Company signed a purchase agreement with this third-party individual to purchase 4.3 units using the matured note, including $100,000 principal and $96,500 accrual interest. The 4.3 units included $107,500 convertible note and 215,000 FDT shares which is $0.01 per share and total value was $2,150. The convertible notes interest is stated at 10%. The Note and Interest is convertible into common shares at $0.08 per share. The Note is Due on December 31, 2026. This note has a price adjustment provision: if the stock price 20 days before the conversion notice proceeding is less than $0.16 per share, the conversion price should be adjusted to the less of: 50% of the average closing price or the historical price for the 20 trading days before proceeding the conversion notice, but in any event the conversion price should be not less than $0.02 per share or more than $0.08 per share. Therefore, the Company accounted for these Notes under ASC Topic 815-15 “Embedded Derivative.” The derivative component of the obligation is initially valued and classified as a derivative liability with an offset to discounts on convertible debt. Discounts are amortized to interest expense over the respective term of the related note.
F- 25
On May 1, 2024, the Company received $130,000 deposit plus $23,000 accrued interest reinvest from selling 6 units to CVC International LTD. The 6 units included $150,000 convertible debt and 300,000 FDT shares which is $0.01 per share and total value is $3,000. Interest is stated at 10%. The Note and Interest is convertible into common shares at $0.08 per share. The Note is Due on December 31, 2026. This note has a price adjustment provision: if the stock price 20 days before the conversion notice proceeding is less than $0.16 per share, the conversion price should be adjusted to the less of: 50% of the average closing price or the historical price for the 20 trading days before proceeding the conversion notice, but in any event the conversion price should be not less than $0.02 per share or more than $0.08 per share Therefore, the Company accounted for these Notes under ASC Topic 815-15 “Embedded Derivative.” The derivative component of the obligation is initially valued and classified as a derivative liability with an offset to discounts on convertible debt. Discounts are amortized to interest expense over the respective term of the related note.
On June 4, 2024, the Company received $150,000 deposit plus $3,000 accrual interest reinvest from selling 6 units to CVC International LTD. The 6 Units included $150,000 convertible debt and 300,000 FDT shares which is $0.01 per share and total value is $3,000. Interest is stated at 10%. The Note and Interest is convertible into common shares at $0.08 per share. The Note is Due on December 31, 2026. This note has a price adjustment provision: if the stock price 20 days before the conversion notice proceeding is less than $0.16 per share, the conversion price should be adjusted to the less of: 50% of the average closing price or the historical price for the 20 trading days before proceeding the conversion notice, but in any event the conversion price should be not less than $0.02 per share or more than $0.08 per share Therefore, the Company accounted for these Notes under ASC Topic 815-15 “Embedded Derivative.” The derivative component of the obligation is initially valued and classified as a derivative liability with an offset to discounts on convertible debt. Discounts are amortized to interest expense over the respective term of the related note.
On July 22, 2024, the Company received $125,000 deposit plus $53,000 accrual interest and principal reinvest from selling 7 units to CVC International LTD. The 7 Units included $175,000 convertible debt and 350,000 FDT shares which is $0.01 per share and total value is $3,000. Interest is stated at 10%. The Note and Interest is convertible into common shares at $0.08 per share. The Note is Due on December 31, 2026. This note has a price adjustment provision: if the stock price 20 days before the conversion notice proceeding is less than $0.16 per share, the conversion price should be adjusted to the less of: 50% of the average closing price or the historical price for the 20 trading days before proceeding the conversion notice, but in any event the conversion price should be not less than $0.02 per share or more than $0.08 per share. Therefore, the Company accounted for these Notes under ASC Topic 815-15 “Embedded Derivative.” The derivative component of the obligation is initially valued and classified as a derivative liability with an offset to discounts on convertible debt. Discounts are amortized to interest expense over the respective term of the related note.
On September 13, 2024, the Company received $125,000 deposit plus $130,000 accrual interest and principal reinvest from selling 10 units to CVC International LTD. The 10 Units included $250,000 convertible debt and 500,000 FDT shares which is $0.01 per share and total value is $5,000. Interest is stated at 10%. The Note and Interest is convertible into common shares at $0.08 per share. The Note is Due on December 31, 2026. This note has a price adjustment provision: if the stock price 20 days before the conversion notice proceeding is less than $0.16 per share, the conversion price should be adjusted to the less of: 50% of the average closing price or the historical price for the 20 trading days before proceeding the conversion notice, but in any event the conversion price should be not less than $0.02 per share or more than $0.08 per share. Therefore, the Company accounted for these Notes under ASC Topic 815-15 “Embedded Derivative.” The derivative component of the obligation is initially valued and classified as a derivative liability with an offset to discounts on convertible debt. Discounts are amortized to interest expense over the respective term of the related note.
On October 29, 2024, the Company received $125,000 deposit plus $130,000 accrual interest and principal reinvest from selling 10 units to CVC International Ltd. The 10 Units included $250,000 convertible debt and 500,000 FDT shares which is $0.01 per share and total value is $5,000. Interest is stated at 10%. The Note and Interest is convertible into common shares at $0.0 8 per share. The Note is Due on December 31, 2026. This note has a price adjustment provision: if the stock price 20 days before the conversion notice proceeding is less than $0.16 per share, the conversion price should be adjusted to the less of: 50% of the average closing price or the historical price for the 20 trading days before proceeding the conversion notice, but in any event the conversion price should be not less than $0.02 per share or more than $0.08 per share. Additionally, this note has a one-time conversion price adjustment of $0.02 per share for the first $1,000,000 principal and/or accumulated interest converted by CVC or their assigns. Therefore, the Company accounted for these Notes under ASC Topic 815-15 “Embedded Derivative.” The derivative component of the obligation is initially valued and classified as a derivative liability with an offset to discounts on convertible debt. Discounts are amortized to interest expense over the respective term of the related note.
F- 26
On July 22, 2024, the Company received $125,000 deposit plus $53,000 accrual interest and principal reinvest from selling 7 units to CVC International LTD. The 7 Units included $175,000 convertible debt and 350,000 FDT shares which is $0.01 per share and total value is $3,000. Interest is stated at 10%. The Note and Interest is convertible into common shares at $0.08 per share. The Note is Due on December 31, 2026. This note has a price adjustment provision: if the stock price 20 days before the conversion notice proceeding is less than $0.16 per share, the conversion price should be adjusted to the less of: 50% of the average closing price or the historical price for the 20 trading days before proceeding the conversion notice, but in any event the conversion price should be not less than $0.02 per share or more than $0.08 per share. Therefore, the Company accounted for these Notes under ASC Topic 815-15 “Embedded Derivative.” The derivative component of the obligation is initially valued and classified as a derivative liability with an offset to discounts on convertible debt. Discounts are amortized to interest expense over the respective term of the related note.
On September 13, 2024, the Company received $125,000 deposit plus $130,000 accrual interest and principal reinvest from selling 10 units to CVC International LTD. The 10 Units included $250,000 convertible debt and 500,000 FDT shares which is $0.01 per share and total value is $5,000. Interest is stated at 10%. The Note and Interest is convertible into common shares at $0.08 per share. The Note is Due on December 31, 2026. This note has a price adjustment provision: if the stock price 20 days before the conversion notice proceeding is less than $0.16 per share, the conversion price should be adjusted to the less of: 50% of the average closing price or the historical price for the 20 trading days before proceeding the conversion notice, but in any event the conversion price should be not less than $0.02 per share or more than $0.08 per share. Therefore, the Company accounted for these Notes under ASC Topic 815-15 “Embedded Derivative.” The derivative component of the obligation is initially valued and classified as a derivative liability with an offset to discounts on convertible debt. Discounts are amortized to interest expense over the respective term of the related note.
On October 29, 2024, the Company received $125,000 deposit plus $130,000 accrual interest and principal reinvest from selling 10 units to CVC International Ltd. The 10 Units included $250,000 convertible debt and 500,000 FDT shares which is $0.01 per share and total value is $5,000. Interest is stated at 10%. The Note and Interest is convertible into common shares at $0.0 8 per share. The Note is Due on December 31, 2026. This note has a price adjustment provision: if the stock price 20 days before the conversion notice proceeding is less than $0.16 per share, the conversion price should be adjusted to the less of: 50% of the average closing price or the historical price for the 20 trading days before proceeding the conversion notice, but in any event the conversion price should be not less than $0.02 per share or more than $0.08 per share. Additionally, this note has a one-time conversion price adjustment of $0.02 per share for the first $1,000,000 principal and/or accumulated interest converted by CVC or their assigns. Therefore, the Company accounted for these Notes under ASC Topic 815-15 “Embedded Derivative.” The derivative component of the obligation is initially valued and classified as a derivative liability with an offset to discounts on convertible debt. Discounts are amortized to interest expense over the respective term of the related note.
On July 31, 2024, the Company entered into a convertible notes modification agreement with CVC to extend the due date to December 31, 2026.
On January 23, 2025, the Company issued a secured convertible promissory note to CVC International LTD in the principal amount of $195,000, bearing interest at 10% per annum and maturing on December 31, 2026. The note principal reinvest from selling 10 units to CVC International Ltd. The 10 Units included up to $250,000 convertible debt and 500,000 FDT shares which is $0.01 per share and total value is $5,000. The note is convertible into shares of the Company’s common stock at a fixed conversion price of $0.08 per share, subject to certain adjustment provisions. The note includes a price protection mechanism: if the average closing price of the Company’s common stock for the 20 trading days preceding the conversion notice is less than $0.16 per share, the conversion price is adjusted to the lesser of (i) 50% of that 20-day average or (ii) $0.08 per share, but in no event lower than $0.02 per share. The Company has also granted the holder a one-time conversion price adjustment of $0.02 per share for the first $1,000,000 in principal and/or accrued interest converted. Additionally, the note includes an acceleration clause if certain key individuals are no longer with the Company, and it ranks senior to all other existing and future indebtedness not designated as senior. The Company may prepay the note in whole or in part, subject to a minimum of six months’ interest and a 10-day advance notice, during which the holder may still elect to convert. As the conversion terms include variable pricing features and contingent adjustments, the Company accounted for the embedded derivative under ASC 815-15, "Embedded Derivatives." Accordingly, a derivative liability was initially recognized, with a corresponding discount on the convertible note. The discount is being amortized to interest expense over the term of the note. As of September 30, 2025, the full $250,000 principal and $17,123 accrued interest were converted into common stock in accordance with the note’s terms. All related derivative liabilities and unamortized discounts were reclassified to equity upon conversion, and no balance remains outstanding as of the reporting date.
On June 20, 2025, the Company issued a secured convertible promissory note to CVC International Ltd. in the principal amount of $50,000, bearing interest at 10% per annum and maturing on December 31, 2026. The note is convertible into shares of the Company’s common stock at a fixed conversion price of $0.08 per share, subject to certain adjustment provisions. The note includes a price protection mechanism: if the average closing price of the Company’s common stock for the 20 trading days preceding the conversion notice is less than $0.16 per share, the conversion price is adjusted to the lesser of (i) 50% of that 20-day average or (ii) $0.08 per share, but in no event lower than $0.02 per share. The Company has also granted the holder a one-time conversion price adjustment of $0.02 per share for the first $1,000,000 in principal and/or accrued interest converted. Additionally, the note includes an acceleration clause if certain key individuals are no longer with the Company, and it ranks senior to all other existing and future indebtedness not designated as senior. The Company may prepay the note in whole or in part, subject to a minimum of six months’ interest and a 10-day advance notice, during which the holder may still elect to convert.
As the conversion terms include variable pricing features and contingent adjustments, the Company accounted for the embedded derivative under ASC 815-15, Embedded Derivatives. Accordingly, a derivative liability was initially recognized, with a corresponding discount on the convertible note. The discount is being amortized to interest expense over the term of the note. As of September 30, 2025, the full $50,000 principal and $1,397 accrued interest were converted into common stock in accordance with the note’s terms. All related derivative liabilities and unamortized discounts were reclassified to equity upon conversion, and no balance remains outstanding as of the reporting date.
F- 27
On September 8, 2025, the Company issued a secured convertible promissory note to CVC International Ltd. in the principal amount of $25,000, bearing interest at 10% per annum and maturing on December 31, 2026. The note is convertible into shares of the Company’s common stock at a fixed conversion price of $0.08 per share, subject to certain adjustment provisions. The note includes a price protection mechanism: if the average closing price of the Company’s common stock for the 20 trading days preceding the conversion notice is less than $0.16 per share, the conversion price is adjusted to the lesser of (i) 50% of that 20-day average or (ii) $0.08 per share, but in no event lower than $0.02 per share. The Company has also granted the holder a one-time conversion price adjustment to $0.02 per share for the first $1,000,000 in principal and/or accrued interest converted. Additionally, the note includes an acceleration clause if certain key individuals are no longer with the Company, and it ranks senior to all other existing and future indebtedness not designated as senior. The Company may prepay the note in whole or in part, subject to a minimum of six months’ interest and a 10-day advance notice, during which the holder may still elect to convert.
As the conversion terms include variable pricing features and contingent adjustments, the Company accounted for the embedded derivative under ASC 815-15, Embedded Derivatives. Accordingly, a derivative liability was initially recognized, with a corresponding discount on the convertible note. The discount is being amortized to interest expense over the term of the note. As of September 30, 2025, the full $25,000 principal and $151 accrued interest were converted into common stock in accordance with the note’s terms. All related derivative liabilities and unamortized discounts were reclassified to equity upon conversion, and no balance remains outstanding as of the reporting date.
As of September 30, 2025, substantially all previously issued convertible notes to CVC International, Ltd. (f/k/a Cayman Ventures Capital), Lindsey Perry Jr., Gray Lady Capital LLC, and Joseph Gayer had been converted into common stock. A limited number of other convertible notes remain outstanding and under negotiation, with aggregate principal of $520,742, accrued interest of $249,145, and related derivative liabilities of $503,789.
NOTE 9 – NON-CONVERTIBLE DEBT
| September 30, 2025 | December 31, 2024 | |||||||
| Current non-convertible notes | $ |
|
$ |
|
||||
| Non-current non-convertible notes | ||||||||
| Total non-convertible notes | $ |
|
$ |
|
||||
| Breakdown | ||||||||
| CBD Growth Partners (a) | $ |
|
$ |
|
||||
| CV 46 (b) |
|
|||||||
| Robert L. Pope and Lorinda J. Pope (c) |
|
|||||||
| Total non-convertible notes | $ |
|
$ |
|
||||
(a) On September 16, 2016, the Company received a total of $31,661 to be used for equipment in exchange for a two year note in the aggregate amount of $31,661 with interest accruing at 18% per year and a 10% loan fee. The note is in default as of December 31, 2024 with an outstanding balance of $9,312.
F- 28
(b) On June 12, 2023, the Company issued a 10% promissory note in the amount of $350,000 with 10% interest rate, payable to CVC International Ltd, secured by 10% of monthly total revenues from all sources of Kaya Holdings, Inc. and any of its subsidiaries. and the noteholder also received 10 Series A preferred shares in FDT, which are convertible into a total of 10% of the common shares. The due date of the note is June 12, 2025. At the end of September 2023, the company paid $5,000, which is 10% of the total revenues from all sources of Kaya Holdings, Inc to the Holder and the Holder agreed to reinvest it as the additional of the note. On October 6, 2023, the Company received another $145,000 from the same investor to increase the promissory note to $500,000 total. As of September 30, 2024, Cayman Venture Capital Fund reinvested $29,000 of accrued interest from promissory notes into convertible notes and FDT stock purchases. In connection with this reinvestment, the Fund executed three convertible promissory notes, each with a principal amount of $150,000, and received a total of 900,000 FDT shares. On July 22, 2024, $16,975 of accrued interest and $36,025 of principal were reinvested into an additional 10 units, which included $175,000 of convertible debt and 350,000 FDT shares. On September 13, 2024, $6,730 of accrued interest and $123,270 of principal were reinvested into an additional 10 units, which included $250,000 of convertible debt and 500,000 FDT shares. On October 29, 2024, $4,288 of accrued interest and $125,712 of principal were reinvested into an additional 10 units, which included $250,000 of convertible debt and 500,000 FDT shares. On December 4, 2024, $2,116 of accrued interest and $152,884 principal were reinvested into an additional 10 units, which included $250,000 convertible debt and 500,000 FDT shares. As of September 30, 2025, the remaining $51,608 principal and $5,081 accrued interest were converted into common stock in accordance with the note’s terms.
(c) On June 9, 2025, the Company received $50,000 from Robert L. Pope and Lorinda J. Pope under a one-year non-convertible loan agreement bearing interest at 10% per year. In addition to interest, the lenders are entitled to receive 10% of the Company’s gross operating revenue each quarter, beginning with the first full fiscal quarter after the loan disbursement. The loan is repayable in full within one year regardless of revenue. As part of the agreement, the lenders were granted a 3% ownership interest in FDT, representing a 3% membership interest. As of September 30, 2025, the outstanding principal balance was $50,000, with $$1,548 accrued interest.
(d) On June 23, 2025, the Company received $50,000 for working capital in exchange for a short-term note bearing interest at 10% per year, with a minimum of six months’ interest due. The note is secured by the proceeds from the pending sale of the Company’s OLCC marijuana retail license and matures on the earlier of the license sale closing or October 1, 2025. As of September 30, 2025, the outstanding $50,000 principal and $2,500 accrued interest balance were paid in full.
| Related Party | ||||||||
| September 30, 2025 | December 31, 2024 | |||||||
| Loan payable - Stockholder, 0%, Due December 31, 2027 (1) | $ | $ |
|
|||||
| $ | $ |
|
||||||
| (1) |
|
NOTE 11 – STOCKHOLDERS’ EQUITY
Preferred Stock
The Company has shares of preferred stock authorized with a par value of $ , of which shares have been designated as Series C convertible preferred stock (“Series C” or “Series C preferred stock”). The Board has the authority to issue the shares in one or more series and to fix the designations, preferences, powers and other rights, as it deems appropriate.
Each share of Series
C has
F- 29
Pursuant
to the terms and conditions of this Agreement, the Holders each agreed to
Each Share of 40 Series D Preferred Stock is convertible, at the option of the holder thereof, at any time and from time to time, into one percent (1%) of the Company’s Fully Diluted Capitalization as of the Conversion Date.
Common Stock
On August 20, 2024, the Company filed an amendment to its Certificate of Incorporation with the Delaware Secretary of State increasing the number of shares of common stock that the Company is authorized to shares and the par value changed to $ . Each share of common stock has one vote per share for the election of directors and all other items submitted to a vote of stockholders. The common stock does not have cumulative voting rights, preemptive, redemption or conversion rights.
On September 5, 2024,
the Board of Directors approved the issuance of
shares of common stock to various individuals for services rendered to the
Company. The shares were issued in accordance with Rule 144. The shares were valued at the market price of $
On September 5, 2024,
the Board of Directors approved the issuance of
shares of common stock to the officers, directors and consultants. And another
shares of common stock issued to FDT Oregon 1 LLC owners who are also the Company’s related parties to acquire
During the quarter
ended September 30, 2025, the Company also issued an aggregate of
shares of common stock to settle certain non-convertible
notes payable, including those held by Caymen Ventures Capital, LLC (Note CV46) and Ilan Sarid. The shares were issued at an agreed conversion
price of $
On September 3, 2025,
the Company issued
shares of common stock to Greentree Financial Group, Inc. in connection with a consulting and advisory agreement.
The shares were issued in accordance with Rule 144 and valued at the market price of approximately $
per share, for a total fair
value of $
On September 30,
2025, the Company issued a total of
shares
of common stock to the Company CEO Craig Frank, and consultant William David Jones, in settlement of accrued compensation balances.
Each party converted $200,000 of accrued compensation into
shares at a fixed conversion price of $
On September 30,
2025, the Board of Directors approved the issuance total of
shares for debt conversion between the Company and CVC International,
Ltd, Lindsey Perry Jr., Gray Lady Capital LLC, and Joseph Gayer. The shares were issued in accordance with Rule 144 and valued at the
market price of approximately $
per share, for a total fair value of approximately $
F- 30
As of September 30, 2025, there were shares of common stock outstanding and shares subscription payable.
Warrants
On September 3, 2025, the Company entered
into a one-year consulting agreement with Greentree Financial Group, Inc. to provide advisory and uplisting support services related
to the Company’s planned public offering. The agreement covers the period from September 3, 2025 through September 30, 2026. The
Company issued a warrant to purchase
shares of common stock to Greentree Financial Group, Inc. as part of the consulting and
advisory agreement described above. The warrant was issued in accordance with Rule 144, has an exercise price of $
Black-Scholes Model is using with the following variables:
| · | Stock Price - $ |
| · | Exercise Price - $ |
| · | Term - years |
| · | Volatility - % |
| · | Risk Free Rate of Return - % |
As consideration for the services, the Company agreed to compensate Greentree as follows:
(i) Cash fees of $
(ii)
shares of the
Company’s common stock, valued at the quoted market price of $
per share on the agreement date, for a total fair value of
$
(iii) a warrant to purchase
shares of common stock at an exercise price of $
The aggregate fair value of consideration
provided to Greentree totaled $
For the nine months ended September 30,
2025, the Company recognized $
Treasury Stock
As of September 30, 2025, the Company held shares of its own common stock as treasury stock, which are recorded at cost using the cost method in accordance with ASC 505-30, Treasury Stock . These shares were originally issued in 2015 as part of a consulting agreement and were returned to the Company in 2016 pursuant to a settlement agreement with the service provider.
Although the shares
were returned in 2016, they were not previously recorded as treasury stock. Upon review during the preparation of the 2024 financial
statements, the Company determined that these shares should be properly reflected as issued but not outstanding. Accordingly, as of September
30, 2025 and December 31, 2024,
shares are reported as treasury stock, with a total recorded cost of $
F- 31
NOTE 12 – DERIVATIVE LIABILITIES
Effective January 1, 2019, an equity-linked financial instrument with a down round feature that otherwise is not required to be classified as a liability under the guidance in Topic 480 is evaluated under the guidance in Topic 815, Derivatives and Hedging, to determine whether it meets the definition of a derivative. If it meets that definition, the instrument (or embedded feature) is evaluated to determine whether it is indexed to an entity’s own stock as part of the analysis of whether it qualifies for a scope exception from derivative accounting. Generally, for warrants and conversion options embedded in financial instruments that are deemed to have a debt host (assuming the underlying shares are readily convertible to cash or the contract provides for net settlement such that the embedded conversion option meets the definition of a derivative), the existence of a down round feature results in an instrument not being considered indexed to an entity’s own stock. This results in a reporting entity being required to classify the freestanding financial instrument or the bifurcated conversion option as a liability, which the entity must measure at fair value initially and at each subsequent reporting date.
However,
due to a recognition of tainting, due to variable conversion price on some of the convertible notes, all convertible notes are considered
to have a derivative liability, therefore the Company accounted for these Notes under ASC Topic 815-15 “Embedded Derivative.”
The derivative component of the obligation is initially valued and classified as a derivative liability with an offset to discounts
on convertible debt. Discounts are amortized to interest expense over the respective term of the related note. In determining the indicated
value of the convertible note issued, the Company used the Binomial Options Pricing Model with a risk-free interest rate of ranging
As a result of the application of ASC No. 815, the fair value of the ratchet feature related to convertible debt is summarized as follows:
| Balance as of December 31, 2024 | $ |
|
||
| Change in Derivative values |
|
|||
| Debt conversion derivative derecognition |
(
|
) | ||
| Initial derivative |
|
|||
| Balance as of September 30, 2025 | $ |
|
The Company recorded the debt discount to the extent of the gross proceeds raised and expanded immediately the remaining fair value of the derivative liability, as it exceeded the gross proceeds of the note.
The Company recorded
initial derivative liabilities of $
The Company recorded
a change in the value of embedded derivative liabilities loss of $
During the nine months
ended September 30, 2025, derivative liabilities of $
NOTE 13 – DEBT DISCOUNT
The Company recorded the debt discount to the extent of the gross proceeds raised and expensed immediately the remaining fair value of the derivative liability, as it exceeded the gross proceeds of the note.
In connection with
the debt conversions during the nine months ended September 30, 2025, the remaining unamortized debt discount of $
The Company recorded the amortization
of debt discount of $
F- 32
NOTE 14 – RELATED PARTY TRANSACTIONS
At December 31, 2014,
the Company was indebted to an affiliated shareholder of the Company for $
, which consisted of $
principal and $
accrued interest, with interest accruing at
%. On January 2, 2014, the Company entered into a Debt Modification Agreement whereby the
total amount of the debt was reduced to $
In 2019, the Company entered into amended consulting agreements for a term of 3 years with two parties: Tudog International Consulting, Inc., which provides CEO services through Craig Frank, an officer and related party of the Company, and BMN Consultants, Inc., which provides business development and financial consulting services through William David Jones, a non-officer and non-related party consultant. In 2023, The Tudog Group, BMN Consultants, Inc, Inc and 495 Oxford Consulting, Inc which all provide services to the Company through Craig Frank and William David Jones, forgave a total of $38,329 of payable expense. The payable forgiveness was recorded as Additional paid in capital. Each consulting entity is entitled to monthly compensation of $25,000 under its respective agreement. Due to the Company’s liquidity constraints, compensation had been paid only in part during the periods presented. As of March 31, 2024, the Company had recorded total accrued compensation of approximately $500,000, with $250,000 attributable to Tudog International Consulting, Inc. and $250,000 to BMN Consultants, Inc. By agreement of the parties, the unpaid balances were deferred and not payable until December 1, 2026, and have been classified as long-term liabilities. Effective January 1, 2025, the Company and both consulting entities agreed to cease accruing additional monthly compensation.
During the three
months ended September 30, 2025, the Company and the consultants agreed to settle the outstanding accrued compensation balance of $
In the fourth quarter of 2018, KAYS concluded the purchase of the Eugene, Oregon based Sunstone Farms grow and manufacturing facility, which is licensed by the Oregon Liquor Control Commission (the “ OLCC ”) for both the production (growing) of medical and recreational marijuana flower and the processing of cannabis concentrates/extracts/edibles. The Seller of the facility was Bruce Burwick, who had obtained it in settlement from a previous investment with an unrelated entity. KAYS entered into a management agreement with the holder of existing OLCC licenses (“ Sunstone ”) to oversee operations at the facility pending transfer of the license to KAYS, which were aware would be an extended and cumbersome process, and Bruce Burwick joined KAYS Board of Directors.
In November 2018, we were notified that that the OLCC was doing a Compliance Review, pending the requested transfer of the licenses (which is normal practice) and that they may have issues with how certain aspects of the transaction were structured. We asked the OLCC for guidance with respect to interim operation of the facility and were advised to continue operating as usual.
F- 33
In February and March of 2019, the OLCC issued Conditional Letters of authority so that the facility could continue operations pending the resolution of the Sunstone License renewals and processing of the requested license transfers to KAYS.
Notwithstanding the foregoing, in mid-April 2019, we were advised by Sunstone that it had been notified that the OLCC was proposing that Sunstone’s licenses be cancelled, claiming that that Sunstone had not filed paperwork correctly with respect to the transaction or its historical ownership.
At the OLCC’s Administrative Hearing Session held on October 15, 2020, the OLCC approved a settlement between the Oregon Liquor Control Commission (OLCC) and Sunstone Marketing Partners that required theirs license to either be sold to a third party (other than KAYS) or surrendered.
As the settlement between the OLCC and Sunstone/Burwick deemed that the licenses that were part and parcel of the purchase were ultimately non-transferrable to KAYS by the OLCC, the Company recently negotiated a settlement with the seller (Sunstone and Bruce Burwick) that allows for the return of all 1,006,671 shares issued to the seller as part of the transaction (the 773,336 shares for the facility purchase, the 166,667 shares issued for $250,000.00, and subsequent shares issued as annual compensation for Board Member Compensation) in exchange for allowing the seller to retain the proceeds of the sale of the grow license to an unrelated third party that is in process of obtaining approvals from the OLCC to relocate it to another location, as well as provides for the seller to resign from the Board of Kaya Holdings and work as a non-exclusive consultant to the Company for the next 48 months for a total four year fee of $140,000.00.
Pursuant to
the terms of the settlement, Bruce Burwick surrendered to KAYS
shares of our common stock issued to him in connection with
the transaction (
On July 28,
2021, the Company announced that all terms had been satisfied. Pursuant to the terms of the settlement, Bruce Burwick surrendered to
KAYS
shares of our common stock issued to him in connection with the transaction (
On September 5, 2024, the Board of Directors approved the issuance of shares of common stock to FDT Oregon 1 LLC owners who are also the Company’s related party to acquire equity interest of FDT Oregon 1 LLC.
On September 15, 2022, the Company approved the 2022 Equity Incentive Plan, which provides for equity incentives to be granted to the Company’s employees, executive officers or directors or to key advisers or consultants. Equity incentives may be in the form of stock options with an exercise price not less than the fair market value of the underlying shares as determined pursuant to the 2022 Incentive Stock Plan, restricted stock awards, other stock based awards, or any combination of the foregoing. The 2022 Incentive Stock Plan is administered by the board of directors. The remaining balance of the shares available in the plan is shares.
F- 34
NOTE 16 – COMMITMENTS AND CONTINGENCIES
Operating Leases
The Company has three operating leases for an office in Fort Lauderdale, Florida, the Sacred Mushroom Psilocybin Service Center in Portland, Oregon, an apartment used by Officers and Consultants for the Company in Portland, Oregon when they are working in Portland, all under arrangements classified as leases under ASC 842.
Effective June
1, 2019,
Effective May 15,
2014,
On September 21,
2023,
The Company has escrowed
$
On June 13, 2025,
the Company entered into a month-to-month apartment lease for premises located in Portland, Oregon, with a current monthly rent of $
Legal Proceedings
From time to time, we may become involved in litigation or other legal proceedings. We are not currently a party to any material litigation or legal proceedings. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
On October 17, 2024, the Company reached a settlement agreement with P3 Distributing L.L.C. in connection with a lawsuit filed in the Marion County Circuit Court, Case No.24CV08588. Under the terms of the settlement, the Company is required to make monthly payments of $300 for a period of 18 months beginning September 30, 2024. In addition, a balloon payment of $11,779 is due at the conclusion of the payment schedule. The Plaintiff has agreed to dismiss the lawsuit without prejudice and not to file the Stipulated General Judgment with the court as long as the Company makes timely payments. In the event of a default, the Plaintiff retains the right to reinstate the lawsuit and file the Stipulated General Judgment. The total amount of the settlement is $17,179. As of September 30, 2025, the Company complies with the settlement agreement terms.
F- 35
Note 17 - SEGMENT REPORT
The Company operates as a single reportable business segment, focused on the development and operation of psychedelic treatment facilities. The Company does not maintain separate lines of business or discrete operating units. Accordingly, management has concluded that the Company operates in one segment.
The Company’s chief operating decision maker (“CODM”), Craig Frank, the Chief Executive Officer, reviews consolidated results to assess performance and allocate resources. Financial performance is evaluated based on segment net profit, which is defined as consolidated net income (loss) including all revenues, operating expenses, interest income and expense, other income and expense attributable to the segment. Management believes segment net profit is a more comprehensive measure of performance than operating income because it incorporates the effects of financing activities, non-operating items, and income taxes, which are relevant to evaluating overall segment profitability and cash generation potential. This measure is the primary metric used in internal decision-making and resource allocation.
The Company’s segment disclosures are presented in accordance with the guidance outlined in ASC 280, Segment Reporting, including ASC 280-10-50-22 through 50-30, which require entities to disclose financial information about their operating segments to provide users of financial statements with an understanding of the business activities and their performance.
As of September 30, 2025, all of the Company’s operations, revenues, and long-lived assets are located in the United States, primarily in Florida and Oregon, where the Company’s treatment facilities are based.
As disclosed in Note 4 to the consolidated financial statements, during the nine months ended September 30, 2024, the Company ceased operations of its MJAI retail marijuana business, which had historically represented its primary operating segment. Following this operational shutdown, MJAI ceased to generate revenue and is no longer considered part of continuing operations. Although the Company retains ownership of MJAI as of September 30, 2025, it intends to pursue the sale of MJAI and its related assets during the third quarter of 2025. Accordingly, the MJAI segment is presented as a discontinued operation in the consolidated financial statements in accordance with ASC 205-20.
The Company has no other operating segments that meet the quantitative thresholds for separate disclosure, and a reconciliation of segment totals is not required given the single-segment structure.
The following table presents segment revenue, segment profit or loss, and significant segment expenses.
F- 36
| For Nine Months ended September 30, 2025 | For Nine Months ended September 30, 2024 | |||||||
| Gross profit |
|
|
||||||
| Less: | ||||||||
| Professional fees |
|
|
||||||
| Salaries and wages |
|
|||||||
| General and administrative |
|
|
||||||
| Interest expense |
|
|
||||||
| Amortization of debt discount |
|
|
||||||
| Change in derivative liabilities expense |
|
|
||||||
| Gain on license sale |
(
|
) | ||||||
| Loss on debt extinguishment |
|
|||||||
| Other Segment Items (a) |
|
(
|
) | |||||
| Segment net loss |
(
|
) |
(
|
) | ||||
| Reconciliation of profit or loss | ||||||||
| Adjustments and reconciling items | ||||||||
| Provision for Income Taxes | ||||||||
| Net loss from discontinued operations |
(
|
) |
(
|
) | ||||
| Net loss attributed to non-controlling interest |
(
|
) |
(
|
) | ||||
| Consolidated net loss | $ |
(
|
) | $ |
(
|
) | ||
| (a) |
|
NOTE 18 - INCOME TAXES
We record tax positions as liabilities in accordance with ASC 740 and adjust these liabilities when our judgement changes as a result
of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate
resolution may result in a payment that is materially different from our current estimate of the recognized tax benefit liabilities.
These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available.
As of September 30, 2025 and December 31, 2024, we have not recorded any uncertain tax positions in our financial statements.
The effective US Federal Income Corporate
Tax Rates for 2025 and 2024 are
The Company has net
operating loss carry forwards of approximately $
The Company has a deferred tax asset as shown in the following:
| September 30, 2025 | December 31, 2024 | |||||||
| Deferred Tax Asset |
|
|
||||||
| Valuation Allowance |
(
|
) |
(
|
) | ||||
| Net Deferred Tax Asset | $ | $ | ||||||
We are subject to certain tax risks and treatments that could negatively impact our results of operations
Section 280E of the Internal Revenue Code, as amended, prohibits businesses from deducting certain expenses associated with trafficking-controlled substances (within the meaning of Schedule I and II of the Controlled Substances Act). The IRS has invoked Section 280E in tax audits against various cannabis businesses in the U.S. that are permitted under applicable state laws. Although the IRS issued a clarification allowing the deduction of certain expenses, the scope of such items is interpreted very narrowly and the bulk of operating costs and general administrative costs are not permitted to be deducted. While there are currently several pending cases before various administrative and federal courts challenging these restrictions, there is no guarantee that these courts will issue an interpretation of Section 280E favorable to cannabis businesses.
Provision for Income Taxes
We recorded a provision for income taxes
in the amount of $
Note 19 - SUBSEQUENT EVENTS
Events that occur after the balance sheet date but before the financial statements were available to be issued must be evaluated for recognition or disclosure. The effects of subsequent events that provide evidence about conditions that existed at the balance sheet date are recognized in the accompanying financial statements. Subsequent events, which provide evidence about conditions that existed after the balance sheet date, require disclosure in the accompanying notes.
On September 15, 2025, the Company entered into a Preferred Stock Conversion Agreement with Craig Frank, KAYS CEO and Acting CFO, and
RLH Financial Partners, Inc., teach which hold
shares of the Company’s Series D Preferred Stock (
shares of Series D Preferred
Stock in total). Under the agreement, the preferred shares may be converted into common shares upon the Company’s written notice,
in connection with the Company’s planned business restructuring and uplisting preparation. As of September 30, 2025, no conversion
or issuance of common shares had occurred.
F- 37
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Overview
Kaya Holdings currently has three operating subsidiaries-
| a. | Kaya Brands International, Inc., a majority-owned Florida Corporation (“KBI”) which was formed on October 14, 2019 to expand the company’s Medical Cannabis business oversea; and |
| b. | Fifth Dimension Therapeutics, Inc., a majority-owned Florida corporation (“FDT ”) which was formed on December 13, 2022 to condut of the Company’s planned Psychedelic Treatment projects; and |
| c. | Kaya Crypto Operations, Inc., a wholly-owned Florida Corporation (“Kaya Crypto”) which was formed on October 20, 2025 to develop, launch and implement a Digital Assets Treasury Company (“DATCO”) strategy and related cryptocurrency operations. |
Kaya Brands International, Inc. and Kaya Farms Greece
In 2019 KAYS formed Kaya Brands International, Inc. (“Kaya International” or “KBI”), to leverage its experience and expand into worldwide cannabis markets. KBI’s current initiative includes Greece.
Our Project in Epidaurus, Greece (“The Epidaurus Project”) consists of 2 connected industrial buildings (already constructed, approximately 50,000 square feet in total under-air space) situated on 2.8 acres of land, with its own independent industrial electrical power center and ample water supply to service the needs of the facility. The Epidaurus Project is designed to include 25,000 square feet of indoor cannabis cultivation, a 15,000 square foot EU-GMP extraction and processing facility, and a 10,000 square foot EU-GMP packing area. There is ample room for expansion with room to construct an additional 15,000 square feet on site. We have an existing installation license which allows us to complete the project, and due to interruptions from COVID 19 and the Russian/Ukraine War we are awaiting project financing to complete the project.
The land for the potential project in Epidaurus is owned by one of our Greek partner’s families, and the Company believes it could acquire the property once funding and market conditions allow. Alternatively, the license is in good order, and can be transferred to a new location pending Greek Government approval.
38
Fifth Dimension Therapeutics, Inc.
On December 13, 2022, the Company formed Fifth Dimension Therapeutics, Inc. (“ FDT ”) to seek to provide psychedelic treatments to veterans suffering from PTSD, addicts seeking to break addiction, individuals with eating disorders, and others with a wide array of treatment resistant mental health disorders.
In November 2023, the Company filed a license application with the OHA for the licensure of The Sacred Mushroom an approximately 11,000 square foot psychedelic treatment center located in Portland, Oregon and after receiving our license in April 2024 and began providing treatments in September 2024. Between September 2024 through October 31, 2025 we provided psilocybin treatments to individuals and groups in our Portland, Oregon facility and even hosted the filming of a documentary of a veteran obtaining psilocybin treatment and his journey of recovery.
The Company terminated the lease for the Portland effective October 31, 2025 and is currently placing clients at local Psilocybin Service Centers in Portland that rent out rooms for sessions to licensed facilitators. Additionally, we are pursuing seeking to utilize our OHA Psilocybin Service Center License to enter into cooperation agreements with select pharmaceutical companies seeking access to data and a facility to host their trials,.
Kaya Crypto Operations, Inc.
On October 20, 2025, the Company formed Kaya Crypto Operations, Inc.(“Kaya Crypto”) to develop, launch and implement a Digital Assets Treasury Company (“DATCO”) strategy and related cryptocurrency operations.
KAYS is conducting ongoing discussions with cryptocurrency foundations and other entities/individuals through its representatives Thomas Gaffney of Conduit Advisors, a seasoned corporate attorney and capital markets strategist with extensive experience in the digital asset sector and the team at Greentree Financial Group ("Greentree"), which has been involved with a number of recent high profile crypto treasury deals both as an investor and as a financial advisor, to develop a strategy for becoming a DATCO.
The Company is seeking to develop a joint venture with one or more of the top 200+/- crypto currencies as ranked by market cap. The preferred candidate(s) would most likely be built on the Solana Network (Solana, with its high throughput offers low transaction costs, is ideal for smart contracts, offers optimal strategies for liquidity, lending and leveraged trading, and is user friendly with an emphasis on security), or the Ethereum or Polygon Networks, which both have significant advantages as well. Interested cryptocurrency foundations and other entities and individuals While the Company has not yet entered into a definitive agreement with any third party, Thomas and the Company's representatives are exploring opportunities with two different groups introduced by Thomas. The Company also plans to engage in dialogue with other cryptocurrency foundations.
Additionally, the Company has begun to reach out to different entities in Grand Cayman, a leading global offshore financial center, to help build out its planned cryptocurrency operations. In recent years, Grand Cayman and the Cayman Islands have emerged as a Cryptocurrency and Digital Assets Financial Center, and the Company is working to leverage its contacts there for both potential investment in the cryptocurrency subsidiary and access to cryptocurrency trading and service platforms.
39
Results of Operations
Three months ended September 30, 2025 compared to three months ended September 30, 2024
Revenues
We incurred a loss from continuing operations of $8,591,465 for the three months ended September 30, 2025, compared to $2,397,693 for the three months ended September 30, 2024. The increase in loss was primarily attributable to non-cash expenses associated with the conversion of outstanding convertible debts and the related changes in the fair value of derivative liabilities recognized under ASC 815.
Losses from discontinued operations, which reflect our former cannabis retail business under Marijuana Holdings Americas, Inc., a Florida corporation (“MJAI”) , totaled $0 for the three months ended September 30, 2025, compared to $97,634 for the three months ended September 30, 2024. The significant decrease in discontinued operation loss was due to the closure of our last remaining retail dispensary in Oregon during the year of 2024, in line with our strategic shift away from the U.S. cannabis retail market. As a result, MJAI was classified as a discontinued operation for the nine months ended September 30, 2025.
Cost of Sales
Cost of sales from continuing operations was $38 for the three months ended September 30, 2025, compared to $272 for the three months ended September 30, 2024, reflecting the cost of our Psychedelic Medicine business in the early-stage.
Cost of sales from discontinued operations, related to our former retail cannabis business under MJAI, was $0 for the three months ended September 30, 2025, compared to $0 for the three months ended September 30, 2024. The result corresponds with the closure of MJAI’s dispensary operations during the first half of 2024 and the resulting wind-down of cannabis-related retail activity.
Operating Expenses
General and administrative expenses from continuing operations were $72,968 for the three months ended September 30, 2025, compared to $248,840 for the three months ended September 30, 2024. Salaries and wages from continuing operations totaled $1,565 for the three months ended September 30, 2025, compared to $0 for the three months ended September 30, 2024. General and administrative expenses from discontinued operations were $0 for the three months ended September 30, 2025, compared to $42,604 for the three months ended September 30, 2024. Salaries and wages from discontinued operations totaled $0 for the three months ended September 30, 2025, compared to $37,851 for the three months ended September 30, 2024. The changes primarily reflect the wind-down of MJAI’s cannabis retail operations and the early-stage expenses associated with the launch of The Sacred Mushroom™ facility.
Professional fees from continuing operations were $199,847, for the three months ended September 30, 2025, compared to $796,650 for the three months ended September 30, 2024. Professional fees from discontinued operations totaled $0 and $17,179 for the three months ended September 30, 2025 and 2024, respectively. The overall decrease in professional fees was primarily driven by stock-based compensation issued during 2024.
After giving effect to all of the foregoing, operating expenses from continuing operations were $274,380 for the three months ended September 30, 2025, compared to $1,045,490 for the three months ended September 30, 2024.
40
Operating expenses from discontinued operations totaled $0 and $97,634 for the three months ended September 30, 2025 and 2024, respectively. Correspondingly, the Company recorded an operating loss from continuing operations of $269,010 and 1,042,762 for the three months ended September 30, 2025 and 2024, respectively. Operating loss from discontinued operations was $0 and $97,634 for the three months ended September 30, 2025, and 2024, respectively.
Interest expense
Interest expense from continuing operations was $209,587 for the three months ended September 30, 2025, as compared to $189,726 for the three months ended September 30, 2024, reflecting a slight increase of additional debt incurred in 2025. Interest expense from discontinued operations was $0 and $0 for the three months ended September 30, 2025 and 2024, respectively.
Net Income (Loss)
After giving effect to an operating loss of $269,010, interest expense of $209,587, amortization of debt discount of $365,527, a non-cash expense of $7,750,521 related to the change in fair value of derivative liabilities, loss on land disposal of $17,703, and a loss on debt extinguishment of $54,117, the Company recorded offsetting non-cash and non-operating gains consisting of a $75,000 gain on the sale of license during the three months ended September 30, 2025. These results were primarily driven by the Company’s debt conversions and compensation settlements completed during the period, as well as the stabilization of the Company’s stock price, which reduced the volatility factors utilized in the derivative liability valuation model. Net loss from discontinued operations was $0, reflecting the discontinue of MJAI’s cannabis retail business prior to its closure in the second quarter of 2024. The Company also recorded a net loss attributable to non-controlling interest of $7,179 for the three months ended September 30, 2025. In addition, the Company accrued a tax liability of $902,166 related to potential taxes payable under IRS Code Section 280E.
For comparison, during the three months ended September 30, 2024, the Company recorded an operating loss of $ 1,354,931, interest expense of $189,726, amortization of debt discount of $82,040, and a non-cash expense of $1,084,865 related to the change in fair value of derivative liabilities, partially offset by gain on disposal of store furniture and fixtures in the amount of $1,700. The Company also reported a net loss from discontinued operations of $97,634, reflecting the remaining activities of the cannabis retail operations prior to closure. Net loss attributable to non-controlling interest totaled $38,236 for the period. As a result, the net loss attributable to the Company was $7,444,810 for the three months ended September 30, 2025, compared to net loss of $2,457,091 for the three months ended September 30, 2024.
Nine months ended September 30, 2025 compared to Nine months ended September 30, 2024
Revenues
We incurred a loss from continuing operations of $12,773,109 for the nine months ended September 30, 2025, compared to $3,024,925 for the nine months ended September 30, 2024. The increase in loss was primarily attributable to non-cash expenses associated with the conversion of outstanding convertible debts and the related changes in the fair value of derivative liabilities recognized under ASC 815.
41
Losses from discontinued operations, which reflect our former cannabis retail business under Marijuana Holdings Americas, Inc., a Florida corporation (“MJAI”) , totaled $1,123 for the nine months ended September 30, 2025, compared to $218,872 for the nine months ended September 30, 2024. The significant decrease in discontinued operation loss was due to the closure of our last remaining retail dispensary in Oregon during the year of 2024, in line with our strategic shift away from the U.S. cannabis retail market. As a result, MJAI was classified as a discontinued operation for the nine months ended September 30, 2025.
Cost of Sales
Cost of sales from continuing operations was $11,743 for the nine months ended September 30, 2025, compared to $272 for the nine months ended September 30, 2024, reflecting the cost of our Psychedelic Medicine business in the early stage.
Cost of sales from discontinued operations, related to our former retail cannabis business under MJAI, was $0 for the nine months ended September 30, 2025, compared to $13,406 for the nine months ended September 30, 2024. The decrease corresponds with the closure of MJAI’s dispensary operations during the first half of 2024 and the resulting wind-down of cannabis-related retail activity.
Operating Expenses
General and administrative expenses from continuing operations were $240,885 for the nine months ended September 30, 2025, compared to $468,471 for the nine months ended September 30, 2024. Salaries and wages from continuing operations totaled $62,189 for the nine months ended September 30, 2025, compared to $0 for the nine months ended September 30, 2024. General and administrative expenses from discontinued operations were $892 for the nine months ended September 30, 2025, compared to $86,543 for the nine months ended September 30, 2024. Salaries and wages from discontinued operations totaled $231 for the nine months ended September 30, 2025, compared to $126,934 for the nine months ended September 30, 2024. The changes primarily reflect the wind-down of MJAI’s cannabis retail operations and the early-stage expenses associated with the launch of The Sacred Mushroom™ facility.
Professional fees from continuing operations were $344,872, for the nine months ended September 30, 2025, compared to $1,156,422 for the nine months ended September 30, 2024. Professional fees from discontinued operations totaled $0 and $17,179 for the nine months ended September 30, 2025 and 2024, respectively. The overall decrease in professional fees was primarily driven by stock-based compensation issued during 2024.
After giving effect to all of the foregoing, operating expenses from continuing operations were $647,946 for the nine months ended September 30, 2025, compared to $1,624,893 for the nine months ended September 30, 2024. Operating expenses from discontinued operations totaled $1,123 and $230,656 for the nine months ended September 30, 2025 and 2024, respectively. Correspondingly, the Company recorded an operating loss from continuing operations of $637,132 and 1,622,165 for the nine months ended September 30, 2025 and 2024, respectively. Operating loss from discontinued operations was $1,123 and $218,872 for the nine months ended September 30, 2025, and 2024, respectively.
Interest expense
Interest expense from continuing operations was $610,887 for the nine months ended September 30, 2025, as compared to $539,619 for the nine months ended September 30, 2024, reflecting a slight increase of additional debt incurred in 2025. Interest expense from discontinued operations was $0 and $0 for the nine months ended September 30, 2025 and 2024, respectively.
42
Net Income (Loss)
After giving effect to an operating loss of $637,132, interest expense of $610,887, amortization of debt discount of $542,835, a non-cash expense of $10,985,435 related to the change in fair value of derivative liabilities, loss from land disposal of $17,703, and a loss on debt extinguishment of $54,117, the Company recorded offsetting non-cash and non-operating gains consisting of a $75,000 gain on the sale of license during the nine months ended September 30, 2025. These results were primarily driven by the Company’s debt conversions and compensation settlements completed during the period, as well as the stabilization of the Company’s stock price, which reduced the volatility factors utilized in the derivative liability valuation model. Net loss from discontinued operations was $1,123, reflecting the remaining activity of MJAI’s cannabis retail business prior to its closure in the second quarter of 2024. The Company also recorded a net loss attributable to non-controlling interest of $76,858 for the nine months ended September 30, 2025. In addition, the Company accrued a tax liability of $902,166 related to potential taxes payable under IRS Code Section 280E.
For comparison, during the nine months ended September 30, 2024, the Company recorded an operating loss of $1,622,165, interest expense of $539,619, amortization of debt discount of $108,835, and a non-cash expense of $759,620 related to the change in fair value of derivative liabilities, partially offset by gain on disposal of store furniture and fixtures in the amount of $1,700 and other income of $3,614. The Company also reported a net loss from discontinued operations of $218,872, reflecting the remaining activities of the cannabis retail operations prior to closure. Net loss attributable to non-controlling interest totaled $104,106 for the period. As a result, the net loss attributable to the Company was $11,557,898 for the nine months ended September 30, 2025, compared to net loss of $3,139,691 for the nine months ended September 30, 2024.
Liquidity and Capital Resources
During the first nine months of 2025 our cash position decreased by $13,581 to $26,087, and our negative working capital deficit was $2,422,383.
As of September 30, 2025, our working capital consisted of cash of $26,087, inventories of $348 and prepaid expenses of $85,255 as compared to cash of $39,668, inventories of $90 and prepaid expenses of $28,180 as of December 31, 2024.
Our current liabilities include accounts payable and accrued expenses of $683,427, accounts payable and accrued expenses from related parties of $0, current portion of accrued interest of $250,376, current portion of lease liability of $0, tax liability of $902,166, net convertible notes payable balance of $135,000, notes payable of $59,312, and derivative liabilities of $503,792 as of September 30, 2025.
As compared to current liabilities include accounts payable and accrued expenses of $631,963, accounts payable and accrued expenses-related parties of $869,864, current portion of accrued interest of $3,005,107, current portion of lease liability of $52,574, tax liability of $902,166, net convertible notes payable balance of $135,000, notes payable of $9,312 and derivative liabilities of $2,497,275 as of December 31, 2024.
43
The following table sets forth the major sources and uses of cash for the nine months ended September 30, 2025 and 2024:
| Nine Months Ending September 30, 2025 | Nine Months Ending September 30, 2024 | |||||||
| Net cash used in operating activities | $ | (434,666 | ) | $ | (504,346 | ) | ||
| Net cash provided by investing activities | — | 1,884 | ||||||
| Net cash provided by financing activities | 420,000 | 757,500 | ||||||
| Effects of currency translation on cash and cash equivalents | 2,208 | (480 | ) | |||||
| Net cash used in operating activities from discontinued operations | (1,123 | ) | (218,872 | ) | ||||
| Net increase in cash | $ | (13,581 | ) | $ | 35,686 | |||
Cash Used in Operating Activities
During the nine months ended September 30, 2025, from continuing operations, we had cash of $434,666 used in operating activities, as compared to cash used in operations of $504,346 in 2024. From discontinued operations, we had cash of $1,123 and $218,872 used in operating activities during the nine months ended September 30, 2025 and 2024, respectively. The slight decrease in cash used primarily reflected increases in accrued interest of $613,387 and accounts payable, including $72,799 in regular payables and $121,278 in related-party payables, which collectively improved operating cash flow. These positive effects were partially offset by higher prepaid expenses of $57,075 and a $9,902 increase in other assets. The right of use asset and liability decreased compared to the prior period as the Company’s lease expired in the second quarter of 2025, reducing lease-related operating adjustments. From discontinued operations, the Company used $1,123 in operating cash during the nine months ended September 30, 2025, compared to $218,872 used during the same period in 2024, following the complete wind-down of MJAI’s cannabis retail operations.
Cash Provided by Investing Activities
During the nine months ended September 30, 2025, we had no cash activities under investing activities, as compared to $1,884 cash provided by investing activities in 2024. Cashflow in 2025 decreased due to retail business closed in Oregon.
Cash Provided by Financing Activities
During the nine months ended September 30, 2025, $420,000 of notes payable was issued, as compared to $757,500 of net notes payable was proceed in 2024.
Additional Capital
As of September 30, 2025, we had cash of $26,087 and a working capital deficiency of $2,422,383 as compared to cash of $39,668 and a working capital deficiency of $8,035,323 at December 31, 2024.
Management believes that it will require additional capital, in addition to anticipated revenues from operations to fund expansion of the Company’s operations and ultimately achieve profitability. The Company intends to seek such additional capital from further private offerings of equity and/or debt securities. However, we may not be successful in raising additional capital on commercially reasonable terms, if and when needed, in which case our business, financial condition, cash flows and results of operations may be materially and adversely affected.
44
Critical Accounting Estimates
The following are deemed to be the most significant accounting estimates affecting us and our results of operations:
Revenue Recognition
Effective January 1, 2018, the Company adopted ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. For the comparative periods, revenue has not been adjusted and continues to be reported under ASC 605 — Revenue Recognition. Under ASC 605, revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured.
To confirm, all of our OLCC licensed cannabis retail sales operations are conducted and operated on a “cash and carry” basis- product(s) from our inventory accounts are sold to the customer(s) and the customer settles the account at time of receipt of product via cash payment at our retail store; the transaction is recorded at the time of sale in our point-of-sale software system. Revenue is only reported after product has been delivered to the customer and the customer has paid for the product with cash.
To date the only other revenue we have received is for ATM transactions and revenue from this activity is only reported after we receive payment via check from the ATM service provider company.
Fair value of financial instruments
The Company follows the provisions of ASC 820. This Topic defines fair value, establishes a measurement framework and expands disclosures about fair value measurements. We apply these provisions to estimate the fair value of our financial instruments including cash, accounts payable and accrued expenses, and notes payable.
Income Taxes
The Company accounts for income taxes in accordance with ASC 740, Accounting for Income Taxes, as clarified by ASC 740-10, Accounting for Uncertainty in Income Taxes. Our deferred income taxes are determined based on the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities given the provisions of enacted tax laws. Deferred income tax provisions and benefits are based on changes to the assets or liabilities from year to year. In providing for deferred taxes, the Company considers tax regulations of the jurisdictions in which the Company operates, estimates of future taxable income, and available tax planning strategies. If tax regulations, operating results or the ability to implement tax planning strategies vary, adjustments to the carrying value of deferred tax assets and liabilities may be required. Valuation allowances are recorded related to deferred tax assets based on the “more likely than not” criteria of ASC 740.
45
ASC 740-10 requires that the Company recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the “more-likely-than-not” threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority.
Section 280E of the Internal Revenue Code, as amended, prohibits businesses from deducting certain expenses associated with trafficking controlled substances (within the meaning of Schedule I and II of the Controlled Substances Act). The IRS has invoked Section 280E in tax audits against various cannabis businesses in the U.S. that are permitted under applicable state laws. Although the IRS issued a clarification allowing the deduction of certain expenses, the scope of such items is interpreted very narrowly and the bulk of operating costs and general administrative costs are not permitted to be deducted. While there are currently several pending cases before various administrative and federal courts challenging these restrictions, there is no guarantee that these courts will issue an interpretation of Section 280E favorable to cannabis businesses.
Provision for Income Taxes
We recorded a provision for income taxes of $0 for the nine months ended September 30, 2025, compared to $2,819 for the nine months ended September 30, 2024. Although we have net operating losses that we believe are available to offset this tax liability, it arises under Section 280E of the Internal Revenue Code due to our cannabis-related operations. As a conservative measure, we have accrued this liability in connection with our discontinued business.
Recently Issued Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the effect of recently issued standards that are not yet effective will not have a material effect on its consolidated financial position or results of operations upon adoption.
Recently issued accounting pronouncements not yet adopted
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, Improvements to Income Tax Disclosures (Topic 740). The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024. Early adoption is also permitted for annual financial statements that have not yet been issued or made available for issuance. This ASU will likely result in the required additional disclosures being included in our consolidated financial statements, once adopted.
46
In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40). The ASU requires the disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization, within relevant income statement captions. This ASU also requires disclosure of the total amount of selling expenses along with the definition of selling expenses. The ASU is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Adoption of this ASU can either be applied prospectively to consolidated financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the consolidated financial statements. Early adoption is also permitted. This ASU will likely result in the required additional disclosures being included in our consolidated financial statements once adopted. We are currently evaluating the provisions of this ASU.
In November 2024, the FASB issued ASU No. 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments, which clarifies the requirements related to accounting for the settlement of a debt instrument as an induced conversion. The amendments in this update are effective for annual reporting periods beginning after December 15, 2025, including interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements.
Recently adopted accounting pronouncements
In November 2023, the FASB issued ASU No. 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment’s profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. We adopted this ASU retrospectively on December 31, 2024. Refer to Note 16 in the consolidated financial statements, Segment Reporting and Information about Geographic Areas for the inclusion of the new required disclosures.
Off-Balance Sheet Arrangements
There are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Financing Transactions
On September 8, 2025 the Company received $25,000 from CVC International Ltd. from the issuance of convertible debt. Interest is stated at 10%. The Note and Interest is convertible into common shares of the Company’s stock. The Note is Due on December 31, 2026. This note has a price adjustment provision: if the stock price 20 days before the conversion notice proceeding is less than $0.16 per share, the conversion price should be adjusted to the less of: 50% of the average closing price or the historical price for the 20 trading days before proceeding the conversion notice, but in any event the conversion price should be not less than $0.02 per share or more than $0.08 per share.. Therefore, the Company accounted for these Notes under ASC Topic 815-15 “Embedded Derivative.” The derivative component of the obligation is initially valued and classified as a derivative liability with an offset to discounts on convertible debt. Discounts are amortized to interest expense over the respective term of the related note. The funds are to be used exclusively for public company maintenance expenses.
47
Use of Proceeds
The proceeds from financing transactions that the Company has and may enter into will be used for general working capital to fund our growth plan.
Plan of Operations
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. However, there can be no assurance that further funding from the contemplated financings will be achieved, or if achieved that they will be successful to the level required to meet the Company’s cash needs, or that management’s belief will be correct and that the Company will not sooner require additional financing to meet its working capital needs prior to achieving profitability or positive cash flow. Moreover, we may not be successful in raising additional capital on commercially reasonable terms, if and when needed, in which case our business, financial condition, cash flows and results of operations may be materially and adversely affected.
Note, Debt and Preferred Stock Conversions
As of September 30, 2025, the Company completed the conversion of substantially all outstanding convertible notes issued to Caymen Ventures Capital, LLC (44 notes), Lindsey Perry Jr. (4 notes), Gray Lady Capital, LLC (1 note), and Joseph Gayer (1 note). The conversions were executed at $0.02 per share, resulting in the issuance of an aggregate 607,534,390 restricted shares of common stock.
Additionally, the Company settled a total of $1,771,772 in debt and accounts payable as follows: $760,886 of accrued fees owed to Tudog International for the services of Craig Frank as the Company’s CEO was reduced to $200,000 and settled for 10,000,000 restricted shares of common stock, $760,886 of accrued fees owed to BMN Consultants, Inc. for the services of William David Jones acting as the Company’s Senior Consultant and Advisor for Business Development and Financial Operations was reduced to $200,000 and settled for 10,000,000 restricted shares of common stock, and a non-convertible $250,000 note owed to Ilan Sarid was settled for 12,500,000 restricted shares of common stock.
On September 15, 2025, the Company entered into a Preferred Stock Conversion Agreement with Craig Frank, KAYS CEO and Acting CFO, and RLH Financial Partners, Inc., teach which hold 20 shares of the Company’s Series D Preferred Stock (40 shares of Series D Preferred Stock in total). Under the agreement, the preferred shares may be converted into common shares upon the Company’s written notice, in connection with the Company’s planned business restructuring and uplisting preparation. As of September 30, 2025, no conversion or issuance of common shares had occurred.
Note Repayments
On September 2, 2025 the Company repaid the $50,000.00 short-term working capital loan it had received from CVC International Ltd. in Q-2, 2025. Pursuant to the terms of the loan the Company repaid CVC a total of $52,500.00 which included a minimum interest payment of six months interest at the rate of 10%.
Employee Stock Plan Issuances and Director and Officer Restricted Stock issuances
No Employee Stock Plan Issuances or Director and Officer Restricted Stock issuances were issued during the period.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
48
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the direction of our Chairman and President, who is our principal, executive, financial and accounting officer, we evaluated our disclosure controls and procedures as of March 31, 2025. Our Chairman and President, who is our principal, executive, financial and accounting officer, concluded that our disclosure controls and procedures were not effective as of March 31, 30, 2025.
We maintain disclosure controls and procedures that are designed to ensure that the information required to be disclosed in the reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chairman and President, who is our principal, executive, financial and accounting officer, as appropriate, to allow timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objectives, and in reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the c
As required by SEC Rule 13a-15(b), we carried out an evaluation, under the supervision and with the participation of our management, including our Chairman and President, who is our principal, executive, financial and accounting officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2025. . Based on the foregoing, our Chairman and President concluded that our disclosure controls and procedures were not effective as of September 30, 2025, in that.
| ▪ | We do not have an audit committee. While we are not currently obligated to have an audit committee, including a member who is an “audit committee financial expert,” as defined in Item 407 of Regulation S-K, under applicable regulations or listing standards; however, it is management’s view that such a committee is an important internal control over financial reporting, the lack of which may result in ineffective oversight in the establishment and monitoring of internal controls and procedures. | |
| ▪ | We did not maintain proper segregation of duties for the preparation of our financial statements. We currently have only one officer overseeing all transactions. This has resulted in several deficiencies, including the lack of control over preparation of financial statements and proper application of accounting policies | |
| ▪ |
As of September 31, 2025, the Company did not establish a formal written policy for the approval, identification and authorization of related party transactions. |
Changes in Internal Control over Financial Reporting
There was no change in our internal controls or in other factors that could affect these controls during the third quarter of the year ended September 30, 2025 that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.
.
49
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
From time-to-time KAYS be party to various legal proceedings in the ordinary course of business.
Item 1A. Risk Factors.
See “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Please see Note 8 to the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Report with respect to unregistered sales of securities during the three months ended September 30, 2025.
The securities described therein were issued in private transactions pursuant to the exemption from registration afforded by Section 4(a)(20 of the Securities Act of 1933, as amended.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Item 6. Exhibits
| Exhibit No. | Description of Exhibit | ||
| 31.1 | Section 302 Certification | ||
| 32.1 | Section 906 Certification |
50
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: November 21, 2025
KAYA HOLDINGS, INC.
By: /s/ Craig Frank
Craig Frank, Chairman, President, Chief Executive Officer and Acting Chief Financial Officer (Principal Executive, Financial and Accounting Officer)
51