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YoY shift: Neutral
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is 0.01pp more bullish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
+0.02pp
Flat
Net-tone change vs last year's 10-K.
MD&A
-0.00pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Risk Factors (Item 1A)
3,975 words
Item 1A. Risk Factors
An investment in our securities involves certain risks relating to our structure and investment objectives. The risks and uncertainties described below are not the only ones facing the Company. You should carefully consider these risks, together with all of the other information included in this 10-K, including our financial statements and the related notes thereto.
Additional risks and uncertainties not presently known to us, or not presently deemed material by us, may also impair our operations and performance.
If any of the following risks actually occur, our business, financial condition or results of operations could be materially adversely affected. If that happens, the trading price of our common stock could decline and you may lose all or part of your investment.
Risks Related to Our Common Stock
Our shares are currently not traded on any exchange or quotation medium . Previously, our shares were traded on the OTC Markets trading platform. Following the filing of this annual report on Form 10-K and other reports as required by the SEC, we intend to re-apply to OTC Markets to resume trading in our shares. We cannot guarantee that OTC Markets will accept our application or that we will otherwise qualify under the listing standards of OTC Markets.
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
impairment+1
Positive rising
gain+1
MD&A (Item 7)
2,035 words
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
CrucialInnovations Corp. (collectively with our subsidiary, “we,” “us,” “our,” “CINV” or the “Company”), a Nevada corporation, was formed on February 28, 2018. We were initially engaged in the business of English language tutoring over the Internet. However, we were not able to execute our original business plan, develop significant operations or commercial sales. During 2023, we determined to change our business to become a supplier and distributor of medical cannabis in Europe.
If our shares are able to resume trading, we could experience higher trading volumes and volatility in the future. This volatility may affect the price at which you could sell our common stock and the sale of substantial amounts of our common stock could adversely affect the price of our common stock . If our stock resumes trading on OTC Markets or other trading platform, it could experience significant price swings. This volatility may affect the price at which you could sell our common stock, and the sale of substantial amounts of our common stock could adversely affect the price of our common stock. Our share price is expected to be volatile and subject to significant price and volume fluctuations in response to market and other factors, including the other factors discussed in “ Risks Related to our Business and Industry ” variations in our quarterly operating results from our expectations or those of securities analysts or investors; downward revisions in securities analysts’ estimates; and announcement by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments.
The pricing and or trading volume of our common stock could decline if there are no independent analysts reports about our business . In the event that our shares are able to resume trading, future sales of our common stock by our existing stockholders could cause our share price to decline. Although our common stock was previously listed for trading on the OTC Markets trading platform, there has not been a sustained history of trading in our common stock on this platform or in “over-the-counter” markets. Moreover, consistent with Regulation M and other federal securities laws applicable to our listing, we have not consulted with our existing stockholders regarding their desire or plans to sell shares in the public market. Further, we have also not discussed with potential investors their intentions to buy our common stock in the open market.
We may not pay dividends in the future . We have not paid dividends in the past and do not anticipate paying dividends in the near future. We expect to retain our earnings to finance further growth and, when appropriate, retire debt. Any decision to pay dividends on our common stock in the future will be at the discretion of our board of directors (the “Board”) and will depend on, among other things, our results of operations, current and anticipated cash requirements and surplus, financial condition, any future contractual restrictions and financing agreement covenants, solvency tests imposed by corporate law and other factors that the Board may deem relevant. As a result, investors may not receive any return on an investment in our common stock unless they are able to sell their shares for a price greater than that which such investors paid for them.
Future sales or issuances of equity securities could decrease the value of our common stock, dilute investors’ voting power and reduce our earnings per share . In the future, we may sell equity securities in one or more offerings (including through the sale of securities convertible into equity securities and may issue equity securities in acquisitions and in exchange for services or for forgiveness of debt). We cannot predict the size of future issuances of equity securities or the size and terms of future issuances of debt instruments or other securities convertible into equity securities or the effect, if any, that future issuances and sales of our securities will have on the market price of our common stock.
Additional issuances of our securities may involve the issuance of a significant number of shares of common stock at prices less than the current market price for our shares. Issuances of substantial numbers of shares of common stock, or the perception that such issuances could occur, may adversely affect prevailing market prices of our common stock. Any transaction involving the issuance of previously authorized but unissued common stock, or securities convertible into common stock, would result in dilution, possibly substantial, to security holders.
Sales of substantial amounts of our securities by us or our existing shareholders, or the availability of such securities for sale, could adversely affect the prevailing market prices for our securities and dilute investors’ earnings per share. A decline in the market prices of our securities could impair our ability to raise additional capital through the sale of securities should we desire to do so.
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Risks Related to Our Business and Industry
We are an early-stage company with limited operating history and may never become profitable . We are an early-stage company that seeks to operate in the medical cannabis market in the United Kingdom and Europe. Nevertheless, we have a limited operating history. We have limited financial resources and minimal operating cash flow. Additionally, there can be no assurance that additional funding will be available to us for the development of our business, which will require the commitment of substantial resources. Accordingly, you should consider our prospects in light of the costs, uncertainties, delays and difficulties frequently encountered by companies in the early stages of development. Potential investors should carefully consider the risks and uncertainties that a company with a limited operating history will face. In particular, potential investors should consider that we may be unable to:
successfully implement or execute our business plan;
adjust to changing conditions or keep pace with increased demand;
attract and retain an experienced management team;
successfully integrate businesses that we acquire; or
raise sufficient funds in the capital markets to execute our business plan, including product development, licensing and approvals.
Certain conditions or events could disrupt the Company's supply chains, disrupt operations, and increase operating expenses . Conditions or events including, but not limited to, the following could disrupt the Company's supply chains and in particular its ability to deliver its products, interrupt operations at its facilities, increase operating expenses, resulting in loss of sales, delayed performance of contractual obligations or require additional expenditures to be incurred: (i) extraordinary weather conditions or natural disasters such as hurricanes, tornadoes, floods, fires, extreme heat, earthquakes, etc.; (ii) a local, regional, national or international outbreak of a contagious disease, including COVID-19, H1N1 influenza virus, avian flu, or any other similar illness could result in a general or acute decline in economic activity; (iii) political instability, social and labor unrest, war or terrorism, including the current conflict between Russia and Ukraine and the conflict in Israel; or (iv) interruptions in the availability of basic commercial and social services and infrastructure including power and water shortages, and shipping and freight forwarding services including via air, sea, rail and road.
Cannabis laws, regulations, and guidelines are dynamic and subject to change . Cannabis laws and regulations are dynamic and subject to evolving interpretations which could require us to incur substantial costs associated with compliance or alter certain aspects of our business plan. It is also possible that regulations may be enacted in the future that will be directly applicable to certain of our products and/or aspects of our businesses. We cannot predict the nature of any future laws, regulations, interpretations or applications, nor can we determine what effect additional governmental regulations or administrative policies and procedures, when and if promulgated, could have on our business. We expect that the legislative and regulatory environment in the cannabis industry internationally will continue to be dynamic and will require innovative solutions to try to comply with this changing legal landscape in this nascent industry for the foreseeable future. Compliance with any such legislation may have a material adverse effect on our business, financial condition and results of operations.
Public opinion can also exert a significant influence over the regulation of the cannabis industry. A negative shift in the public's perception of the cannabis industry could affect future legislation or regulation in different jurisdictions.
Demand for cannabis and derivative products could be adversely affected and significantly influenced by scientific research or findings, regulatory proceedings, litigation, media attention or other research findings . The legal cannabis industry is at a relatively early stage of its development. Consumer perceptions regarding legality, morality, consumption, safety, efficacy and quality of medicinal cannabis are mixed and evolving and can be significantly influenced by scientific research or findings, regulatory investigations, litigation, media attention and other publicity regarding the consumption of medicinal cannabis products. There can be no assurance that future scientific research, findings, regulatory proceedings, litigation, media attention or other research findings or publicity will be favorable to the medicinal cannabis market or any particular product, or consistent with earlier publicity. Future research reports, findings, regulatory proceedings, litigation, media attention or other publicity that are perceived as less favorable than, or that question, earlier research reports, findings or publicity, could have a material adverse effect on the demand for medicinal cannabis and on our business, results of operations, financial condition and cash flows. Further, adverse publicity reports or other media attention regarding cannabis in general or associating the consumption of medicinal cannabis with illness or other negative effects or events, could have such a material adverse effect. Public opinion and support for medicinal cannabis use has traditionally been inconsistent and varies from jurisdiction to jurisdiction. Our ability to gain and increase market acceptance of our business may require substantial expenditures on investor relations, strategic relationships and marketing initiatives. There can be no assurance that such initiatives will be successful and their failure to materialize into significant demand may have an adverse effect on our financial condition.
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Damage to the Company's reputation can be the result of the actual or perceived occurrence of any number of events, and could include any negative publicity, whether or not such publicity is accurate . The increased usage of social media and other web-based tools used to generate, publish and discuss user-generated content and to connect with other users has made it increasingly easier for individuals and groups to communicate and share opinions and views regarding the Company and its activities, whether true or not. Although the Company believes that it operates in a manner that is respectful to all stakeholders and that it takes pride in protecting its image and reputation, it does not ultimately have direct control over how it is perceived by others. Reputational loss may result in decreased ability to enter into new customer, distributor or supplier relationships, retain existing customers, distributors or suppliers, reduced investor confidence and access to capital, increased challenges in developing and maintaining community relations and an impediment to our overall ability to advance our projects, thereby having a material adverse effect on our financial performance, financial condition, cash flows and growth prospects.
We are subject to the inherent risk of exposure to product liability claims, actions and litigation . As we are seeking to become a distributor of products designed to be ingested by humans, we expect to face an inherent risk of exposure to product liability claims, regulatory action and litigation if our products are alleged to have caused bodily harm or injury. In addition, the sale of medical cannabis involves the risk of injury to consumers due to tampering by unauthorized third parties or product contamination. Adverse reactions resulting from human consumption of our products alone or in combination with other medications or substances could occur. We may be subject to various product liability claims, including, among others, that our products caused injury or illness, include inadequate instructions for use or include inadequatewarnings concerning health risks, possible side effects or interactions with other substances. Product liability claims or regulatory actions against us could result in increased costs, could adversely affect our reputation with our clients and consumers generally, and could have a material adverse effect on our results of operations and financial condition. There can be no assurances that we will be able to obtain or maintain product liability insurance on acceptable terms or with adequate coverage against potential liabilities. Such insurance is expensive and may not be available in the future on acceptable terms, or at all. The inability to obtain sufficient insurance coverage on reasonable terms or to otherwise protect against potential product liability claims could prevent or inhibit the commercialization of our potential products.
The Company's future products could have unknown side effects . If the products the Company sells are not perceived to have the effects intended by the end user, its business may suffer and the business may be subject to products liability or other legal actions. Many of the Company's products contain innovative ingredients or combinations of ingredients. There is little long-term data available with respect to efficacy, unknown side effects and/or interaction with individual human biochemistry, or interaction with other drugs. Moreover, there is little long-term data available with respect to efficacy, unknown side effects and/or its interaction with individual animal biochemistry. As a result, the Company's future products could have certain side effects if not taken as directed or if taken by an end user that has certain known or unknown medical conditions.
Negative outcomes of legal proceedings may adversely affect our business and financial condition . Although we are currently not subject to any legal proceedings, we expect that, as we develop our business, we may be involved in legal disputes in the countries in which we operate. dThese proceedings may be complicated, costly, and disruptive to our business operations. We may incur significant expenses in defending these matters and may be required to pay significant fines, awards, or settlements. In addition, litigation or other proceedings could result in restrictions on our current or future manner of doing business. Any of these potential outcomes, such as judgments, awards, settlements, or orders could have a material adverse effect on our business, financial condition, operating results, or ability to do business.
We are subject to anti-corruption, anti-bribery, and similar laws, and non-compliance with such laws can subject us to criminalpenalties or significant fines and harm our business and reputation . We are subject to anti-corruption and anti-bribery and similar laws, such as the U.S. Foreign Corrupt Practices Act of 1977, as amended, or the FCPA, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, U.S. Travel Act, the USA PATRIOT Act, the U.K. Bribery Act 2010, and other anti-corruption, anti-bribery and anti-money laundering laws in countries in which we conduct activities. Anti-corruption and anti-bribery laws have been enforced aggressively in recent years and are interpreted broadly and prohibit companies and their employees and agents from promising, authorizing, making, or offering improper payments or other benefits to government officials and others in the private sector. As we expand our networks in Europe, Africa and internationally, our risks under these laws may increase. Noncompliance with these laws could subject us to investigations, sanctions, settlements, prosecution, other enforcement actions, disgorgement of profits, significant fines, damages, other civil and criminalpenalties or injunctions, adverse media coverage, and other consequences. Any investigations, actions or sanctions could harm our business, results of operations, and financial condition.
Failure to develop our internal controls over financial reporting (ICFR) as we grow could have an adverse effect on our operations . As we mature we will need to develop and improve our current internal control systems and procedures to manage our growth. We are required to establish and maintain appropriate internal controls over financial reporting. Failure to establish appropriate controls, or any failure of those controls once established, could adversely affect our public disclosures regarding our business, financial condition or results of operations. In addition, management's assessment of ICFR may identify weaknesses and conditions that need to be addressed in our ICFR or other matters that may raise concerns for investors.
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Required licenses, permits or approvals may be difficult to obtain in the countries in which we seek to operate, and once obtained may be amended or revoked arbitrarily or may not be renewed. To operate in the medical cannabis industry, we will be required to obtain approvals and licenses from national, regional, and local governmental or regulatory authorities in the countries in which we operate or intend to sell. Even if obtained, licenses are subject to review, interpretation, modification or termination by the relevant authorities. Any unfavorable interpretation or modification or any termination of a required license may significantly harm our operations in the relevant country or may require us to close down parts or all of our operations in the relevant country.
We can offer no assurance that the relevant authorities will not take any action that could materially and adversely affect these licenses, permits or approvals. .We may experience difficulties in obtaining or maintaining some of these licenses, approvals and permits, which may require us to undertake significant efforts and incur additional expenses. If we operate without a license, we could be subject to fines, criminalprosecution or other legal action. Any difficulties in obtaining or maintaining licenses, approvals or permits or the amendment or revocation thereof could have a material adverse effect on our business, financial condition, results of operations and prospects.
There are tax risks the Company may be subject to in carrying on business in multiple jurisdictions . We and our subsidiaries will operate and, accordingly, will be subject to income tax and other forms of taxation in multiple jurisdictions. We may be subject to income taxes and non-income taxes in a variety of jurisdictions and our tax structure may be subject to review by both domestic and foreign taxation authorities. Those tax authorities may disagree with our interpretation and/or application of relevant tax rules. A challenge by a tax authority in these circumstances might require us to incur costs in connection with litigationagainst the relevant tax authority or reaching a settlement with the tax authority and, if the tax authority's challenge is successful, could result in additional taxes (perhaps together with interest and penalties) being assessed on us, and as a result an increase in the amount of tax payable by us.
Taxation laws and rates which determine taxation expenses may vary significantly in different jurisdictions, and legislation governing taxation laws and rates are also subject to change. Therefore, our earnings may be affected by changes in the proportion of earnings taxed in different jurisdictions, changes in taxation rates, changes in estimates of liabilities and changes in the amount of other forms of taxation. The determination of our provision for income taxes and other tax liabilities will require significant judgment (including based on external advice) as to the interpretation and application of these rules. We may have exposure to greater than anticipated tax liabilities or expenses.
Additionally, dividends and other intra-group payments made by our subsidiaries or international branches may expose the recipients of such payments to taxes in their jurisdictions of organization and operation and such dividends and other intra-group payments may also be subject to withholding taxes imposed by the jurisdiction in which the entity making the payment is organized or tax resident. Unless such withholding taxes are fully creditable or refundable, dividends and other intra-group payments may increase the amount of tax paid by us. Although the Company and its subsidiaries arrange themselves and their affairs with a view to minimizing the incurrence of such taxes, there can be no assurance that we will succeed.
We depend on our executive officers and other key employees, and the loss of one or more of these employees or an inability to attract and retain other highly skilled employees could harm our business. Our success depends largely upon the continued services of our executive officers and other key employees, and in particular on Jon Paul (JP) Doran, our founder and CEO, and senior management staff in the United Kingdom and elsewhere. We rely on our leadership team in the areas of research and development, operations, security, marketing, sales, customer experience, general, and administrative functions, and on individual contributors in our research and development and operations. From time to time, there may be changes in our executive management team resulting from the hiring or departure of executives, which could disrupt our business. While we have employment agreements with our executive officers or other key personnel that require them to continue to work for us it is not for any specified period and, therefore, they could terminate their employment with us at any time. The loss of one or more of our executive officers, especially our Chief Executive Officer, or key employees could harm our business. Changes in our executive management team may also cause disruptions in, and harm to, our business. The Board’s process are succession planning for senior executive management is at an early stage and therefore the CEO is a particular ‘key man’ dependency. This is mitigated by the fact that he is a significant shareholder in the company.
Our failure to raise additional capital or generate cash flows necessary to expand our operations and invest in new enterprises in the future could reduce our ability to compete successfully and harm our results of operations . Historically, we have funded our operations and capital expenditures primarily through equity issuances and cash generated from our operations along with negotiating credit terms with suppliers that allows to effectively match revenues from customers with supplier payment terms. Although we currently anticipate that our existing cash and cash equivalents and cash flow from operations will be sufficient to meet our cash needs for the foreseeable future, we may require additional financing, and we may not be able to obtain debt or equity financing on favorable terms, if at all and to manage any currency risk due to a mismatch in the currency of revenues, primarily Naira and those of expenses. If we raise equity financing to fund operations or on an opportunistic basis, our stockholders may experience significant dilution of their ownership interests. If we engage in debt financing, we may be required to accept terms that restrict our ability to incur additional indebtedness, force us to maintain specified liquidity or other ratios or restrict our ability to pay dividends or make acquisitions.
Our business is subject to risks associated with having operations in international markets, including foreign exchange fluctuations . While our financial statements are presented in U.S. dollars, our operations are concentrated in the United Kingdom and South Africa. Our various commercial agreements are denominated in a variety of currencies, including U.S. dollars, Great Britain Pounds Sterling, Euro, and South Africa Rand. We do not employ hedging strategies, and are therefore subject to fluctuations in exchange rates, which can negatively impact the U.S. dollar value of our assets, liabilities, and cash flows.
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achieve
Our principal office is located at 86-90 Paul Street, London EC2A 4NE United Kingdom, and our telephone number is +44 (0) 203 148 1452. Our corporate website is located at www.cinvcorp.com , although it does not constitute a part of this Annual Report. We make available free of charge on our website our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after such material is electronically filed or furnished to the Securities and Exchange Commission (“SEC”). Our shares have previously traded on the OTC Markets expert trading platform under the symbol ‘CINV’. Following the filing of this annual report on Form 10-K and other reports as required by the SEC, we intend to re-apply to OTC Markets to resume trading in our shares.
Acquisition of Ember Pharms
On May 8, 2023, the Company entered into an agreement to acquire all of the share capital of Ember Pharms (Pty) Ltd (previously known as WLR Farming (Pty) Ltd.), a company organized under the laws of South Africa and a licensed grower and exporter of medical cannabis (hereinafter, “Ember Pharms”), in exchange for (i) Six Million South Africa Rand (ZAR 6,000,000) which amount was intended to be paid over twelve months from the date of agreement, and (ii) 500,000 shares of our common stock. On March 5, 2024, we issued the owners of Ember Pharms an aggregate of 500,000 shares of our common stock. On November 8, 2024, this agreement was amended to provide for the payment of Fifty Thousand Pounds in cash, together with the issuance of an aggregate of 1.25 million shares of common stock, inclusive of the 500,000 shares issued in March 2024. The cash payment obligation was satisfied on November 11, 2024.
On May 11, 2023, the Company signed an agreement to to lease, at its option, 1.5782 hectares of land in South Africa for the purpose of growing and cultivating medical cannabis in exchange for a commitment to pay Six Million South Africa Rand (ZAR 6,000,000). The Company has the right to occupy the property commencing June 30, 2023 by paying a monthly lease payment of Five Thousand Great Britain Pounds Sterling (GBP 5,000). The Company commenced occupancy of the property in September 2023 and vacated the property on _____________ pursuant to a settlement agreement with the landowner (see Legal Proceedings in Item 3 above).
Results of Operations
Year Ended December 31, 2024 Compared with the Year Ended December 31, 2023
The Company’s results from operations for the years ended December 31, 2024 and 2023 and the changes between those periods for the respective items are summarized as follows:
Years Ended December 31,
Change ($)
Revenues
Operating expenses
Other income (expenses)
Net loss
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The Company generated no revenues for the years ended December 31, 2024 and 2023. Operating expenses consist primarily of stock-based compensation. During the year ended December 31, 2024, the Company issued 305,082,998 shares under the Company’s 2024 Equity Incentive Plan. 110,345,637 shares of common stock were issued to the Company’s CFO, director and non- executive board members, valued at $30,014,014. 194,737,361 Shares of common stock were issued for professional fees, valued at $52,968,562. The Company also incurred $5,383,859 in marketing costs. On May 24, 2024, the Company entered into an agreement with a musician and entertainer to endorse and promote the Company’s business and the Company recorded marketing expense of $5,285,970. In consideration for services provided by the entertainer, the Company granted a 10-year stock purchase option to acquire 20,000,000 shares of common stock, at an exercise price of $0.01 per share. The option is vested as of the grant date, and may be exercised in whole or in part, at any time. During year ended December 31,2024, the Company recognized acquisition cost of Ember Pharms (Pty) Ltd, of $834,611.
Other income was $21,271 during the year ended December 31, 2024 compared to other expenses of $1,528 during the year ended December 31, 2023. During the year ended December 31, 2024 the Company recognized $28,468 as interest on Related Party payables as well as a gain on insurance claim in the amount of $49,739. During the year ended December 31, 2023 the Company recognized $1,528 in interest on a convertible note.
Our financial statements report a net loss of $91,105,538 for the year ended December 31, 2024 compared to a net loss of $39,618 for the year ended December 31, 2023.
Liquidity and Capital Resources
The following tables provides selected financial data about our company as of December 31, 2024 and 2023, respectively.
Working Capital
December 31,
December 31,
Change ($)
Cash
Current assets
Current liabilities
Working capital (Deficiency)
As of December 31, 2024 and 2023, our current assets were $68,285 and $0, respectively. As of December 31, 2024, our current liabilities were $1,871,473 compared to $114,087 as of December 31, 2023. Our working capital deficiency was $1,343,895 as of December 31, 2024 compared to a working capital deficiency of $114,087 as of December 31, 2023. The increase in working capital deficiency was primarily the result of an increase in accounts payable and accrued liabilities as well as an increase in amounts due to related parties.
Cash Flows
Years Ended December 31,
Change ($)
Cash flows used in operating activities
Cash flows used in investing activities
Cash flows provided by financing activities
Effect of exchange rate changes on cash
Net change in cash during the period
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During the years ended December 31, 2024 and 2023, cash flows used in operating activities were $1,190,501 and $31,359, respectively. For the year ended December 31, 2024, the largest items in net cash flows used in operating activities consisted of a net loss of $91,105,538, stock-based compensation of $88,268,546, impairment of inventory of $648,388, acquisition costs of $834,611, a decrease in inventory of $648,388, and an increase in accounts payable and accrued liabilities of $349,529. For the year ended December 31, 2023, net cash flows used in operating activities consisted of a net loss of $39,618, an increase in imputed interest of $1,528, and an increase in accounts payable and accrued interest of $6,136.
During the years ended December 31, 2024 and 2023, cash flows used in investing activities were $12,981 and $0, respectively. For the year ended December 31, 2024, net cash flows used in investing activities consisted of the acquisition of Ember Pharms (Pty) Ltd of $5,615 and purchases of property and equipment of $18,596.
During the years ended December 31, 2024 and 2023, cash flows provided by financing activities were $1,223,166 and $31,359, respectively. For the year ended December 31, 2024, net cash flows provided by financing activities consisted of proceeds from related parties of $1,233,167, repayment of related party loans of $719,887, proceeds from common stock for stock subscriptions of $719,886 and repayment of convertible note of $10,000.
We expect our cash on hand and proceeds received from our assets and operations will be insufficient to meet our anticipated liquidity needs for business operations for the next twelve months, and that we will need to secure capital from various sources, including loans and sales of our equity. There can be no assurance that we will continue to generate cash flows at or above current levels or that we will be able to raise additional financing to support our operating and compliance expenditures. Absent our success in obtaining operating capital from one or more of these sources, there exists substantial doubt as to the Company’s ability to continue as a going concern.
Our future cash flows could be adversely affected by events outside our control, including, without limitation, changes in overall economic conditions, regulatory requirements, demand for our products and services, availability of labor resources and capital, natural disasters, pandemics and outbreaks of contagious diseases and other adverse public health developments, such as COVID-19, and other conditions. The foregoing events, either individually or collectively, could affect our results.
Off Balance Sheet Arrangements
None.
Subsequent Events
Our Management performed an evaluation of the Company’s activity through the date the financial statements were issued, noting the following subsequent events:
On January 6, 2025, the Company issued an aggregate of 2,021,096 shares of common stock as follows:
1,271,096 shares of common stock were issued in connection with subscriptions received from investors during the fourth quarter of 2024; and
750,000 shares of common stock were issued to the former owners of Ember Pharms.
On January 28, 2025, the Company issued an aggregate of 7,875,000 shares of common stock as follows:
7,500,000 shares were issued two consultants of the Company in connection with the Company’s 2024 Equity Incentive Plan; and
375,000 shares were issued to Vertical Up Manufacturing (Pty) Ltd, the owner of land formerly used by Ember Pharms in South Africa.
On May 22, 2025, the Company’s Board of Directors approved following:
An offering of 2- and 3-year senior secured convertible promissory notes of up to $10,000,000 in the aggregate (the “Note Offering” and the promissory notes issued in connection therewith, the “Notes”);
A Custodian Agreement, wherein the Company issued 20,000,000 shares to the custodian to hold in trust as partial security for the repayment of the Notes;
A consulting agreement for banking, finance, capital formation, mergers, acquisition and general corporate advisory services in exchange for monthly compensation of $100,000;
Consulting agreements with three advisors in connection with business development, valuation, global mergers and acquisitions, financial modelling services in exchange for the issuance of an aggregate of 1,348,000 shares of common stock; and
The award of 5,000,000 shares of common stock to two of the Company’s corporate advisory and operations consultants pursuant to the Company’s 2024 Equity Incentive Plan.
In connection with the Note Offering, the Company issued Notes to various non-U.S. investors in the aggregate principal amount of $475,850.
On June 23, 2025, the Company and Ember Pharms (Pty) Ltd., its wholly-owned subsidiary, entered into a Deed of Settlement with Vertical Up Manufacturing (Pty) Ltd. (“Vertical Up) concerning a lawsuit filed by Vertical Up in the High Court of South Africa, Free State Division, Bloemfontein. The Deed of Settlement required that the Company vacate the premises and make a series of installment payments to Vertical Up totaling ZAR 2,758,500 in the aggregate, which payments may be offset from Vertical Up’s sale of cannabis inventory on the premises. Pursuant to the terms of the Deed of Settlement, the first installment payment of ZAR 500,000 was made on June 27, 2025.
On July 18, 2025, the Company issued an aggregate of 27,477,256 shares of common stock as follows:
129,256 shares of common stock were issued to an investor in connection with a subscription for common stock received by the Company in June 2024;
2,348,000 shares of common stock were issued to four advisors in connection with business development, valuation, global mergers and acquisitions, financial modelling services;
20,000,000 shares were issued to a custodian to be held as partial security in connection with the Company’s offering of senior secured convertible promissory notes which commenced in the second quarter of 2025; and
5,000,000 shares of common stock to two of the Company’s corporate advisory and operations consultants pursuant to the Company’s 2024 Equity Incentive Plan.
