My concern is this puppy got running based on the Kush deal. As we see in the filings, they are continuing negotiations. That is an eye brow raiser here.
Memorandum of Agreement with Kush, Inc.
We previously entered into a Memorandum of Binding Agreement (the “Memorandum”) with Steven Kubby (“Kubby”) and Kush, Inc. (“Kush”), dated as of January 1, 2014, which generally provided that: (i) the Company’s board of directors would appoint Kubby as CEO of the Company for a salary of $5,000 per month for a minimum period of three years and a signing bonus of $60,000 payable no later than February 1, 2014 by the issuance of three post-dated checks; (ii) Kush would grant the Company an exclusive license to a pending patent application for what Kush believes to be a unique strain of cannabis known as the CTA strain (the “CTA Strain”) for a period of 50 years in consideration for the issuance of shares of the Company’s common stock having a value of $1,000,000 (valued at $1.25 per share). In addition the Company would have the option to acquire 100% of Kush in exchange for additional shares of the Company’s common stock having a value of $1,000,000 (based on the value of the stock at the last trade at closing on the date Kush supplied audited financial statements to the Company); (iv) the Company would pay all expenses associated with the prosecution of the patent application and use its best efforts to obtain revenues from the CTA Strain; (v) the net income generated by the Company from the exclusive use of the CTA Strain would be shared among Kush and the Company with 30% allocated to Kush and 70% allocated to the Company, and (vi) at the request of either party, the parties would enter into mutually acceptable sub-agreements with respect to the subject matter of the Memorandum. The foregoing summary of the Memorandum is qualified in its entirety by reference to the Memorandum, a copy of which is included as an exhibit to this report.
We are continuing our negotiations with Kubby and Kush, Inc. However, to date we have not entered into any definitive agreements and Kubby has not been appointed as an officer of the Company. No assurances can be given that the transactions contemplated by the Memorandum will be consummated or that a patent for the CTA Strain will ever be issued.
If we should be successful in acquiring a license for the CTA Strain and/or in acquiring ownership of Kush, it is anticipated that we would encounter a complex web of Federal and state regulations that are evolving at a rapid rate. Marijuana is currently classified as a Schedule I controlled substance under the Controlled Substances Act (U.S.C. Section 811) which generally means that Congress has determined that marijuana is a dangerous drug and that the illegal distribution and sale of marijuana is a serious crime. The Controlled Substances Act does not recognize the differences between medical and recreational uses of marijuana and all uses are prohibited. On the other hand several states have legalized various aspects of marijuana manufacture and distribution, although such activities are subject to stringent licensing and regulation which vary from state to state. In many states there exists a clear conflict between Federal and state law which has yet to be resolved. As a result of the foregoing, we can give no assurances that a patent for the CTA strain will ever be issued, that we will ever become licensed to grow or manufacture the CTA Strain or that we will ever be able to generate income from the sale of products derived from the CTA Strain.
AI
