Friday, April 19, 2019 5:42:23 PM
Source: Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2018
Commission File No. 333-177532
KAYA HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
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Delaware 90-0898007(State of other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
888 S. Andrews Avenue
Suite 302
Ft. Lauderdale, Florida 33316
(Address of principal executive offices)
(954)-892-6911
(Registrant’s telephone number, including area code)
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act: None
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] Yes [ ] No
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] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [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,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
[ ] Large accelerated filer [ ] Accelerated filer
[X] Non-accelerated filer [X] Smaller reporting company
[X] emerging growth company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [ ] Yes [X] No
The aggregate market value of the voting stock held by non-affiliates of the Registrant was approximately $20,983,182 as of June 30, 2018, based on the closing price on such date of $0.1433 of the Company’s common stock on the OTCQB tier of the over-the-counter market operated by OTC Markets Group, Inc.
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. There were 173,598,080 shares of common stock outstanding as of April 15, 2019.
DOCUMENTS INCORPORATED BY REFERENCE: No documents are incorporated by reference into this Annual Report on Form 10-K except those Exhibits so incorporated as set forth in the list of Exhibits set forth in Item 15 of this Annual Report on Form 10-K.
KAYA HOLDINGS, INC.
ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2017
TABLE OF CONTENTS
PagePart I Item 1.Business.1 Item 1A.Risk Factors.34Item 1 B.Unresolved Staff Comments.39Item 2.Properties. 39Item 3.Legal Proceedings. 39Item 4.Mine Safety Disclosures. 40 Part II Item 5.Market for Registrant’s Common Equity and Related Stockholder Matters.41Item 6.Selected Financial Data.43Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operation.43Item 7A.Quantitative and Qualitative Disclosures about Market Risk.47Item 8.Financial Statements and Supplementary Data. 47Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. 47Item 9A.Controls and Procedures.47Item 9B.Other Information. 49 Part III Item 10.Directors, Executive Officers and Corporate Governance.49Item 11.Executive Compensation.50Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. 52Item 13.Certain Relationships and Related Transactions, and Director Independence. 53Item 14.Principal Accountant Fees and Services.54 Part IV Item 15.Exhibits, Financial Statement Schedules.55 Signatures 57
As used in this Annual Report on Form 10-K (the “Annual Report ”), the terms “ KAYS ,” “ the Company ,” “ we ,” “ us ” and “ our ” refer to Kaya Holdings, Inc. and its owned and controlled subsidiaries, unless the context indicates otherwise.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Information contained in this Annual Report 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 contained principally in the sections titled “Item 1. Business,” “Item 1A. Risk Factors,” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ” and 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.
PART I
Item 1. Business.
Overview
Kaya Holdings, Inc., a Delaware corporation, is a vertically integrated legal marijuana enterprise, which cultivates, produces and retails legal medical and recreational cannabis in Oregon using its proprietary Kaya Shack™ brand. The Company currently operates a its chain of four retail Kaya Shack™ retail outlets (including three Kaya Shack™ Marijuana Superstores) in Oregon, has developed its own proprietary Kaya Farms™ strains of cannabis, which it grows and produces (together with edibles and other cannabis derivatives) at its Eugene, Oregon Sunstone Farms legal recreational and medical marijuana production and processing manufacturing facility, which it acquired in October 2018. The Company also owns a 26-acre parcel in Lebanon, Linn County, Oregon, which it purchased in August 2017 on which it intends to construct a cultivation and production facility. We filed for zoning and land use approval in early 2018, and after numerous regulatory challenges and delays, we finally received zoning and land use approval in January, 2019 to build an 85,000-square foot Kaya Farms™ greenhouse grow and production facility. The Company maintains a genetics library of over 30 strains of cannabis it has developed and has also formulated various edibles, cannabis derivatives and marijuana cigarettes under the “Kaya” brand name.
All of the Company’s operations are licensed by the Oregon Liquor Control Commission (the “ OLCC ’), which has jurisdiction over legal medical and recreational cannabis grow, production and retail operations. The Company originally commenced operations in Oregon in July 2014, operating medical marijuana dispensaries (“ MMDs ”) when only medical marijuana sales had been legalized. However, this afforded the Company to be in position to rapidly move into the grow, production and retailing of recreational marijuana when legalization of recreational cannabis sales followed shortly thereafter in October 2015.
As Oregon has recently placed a moratorium on licensing additional legal marijuana retail outlets, the Company is exploring opportunities to expand its operations beyond Oregon by replicating its Kaya Shack™ brand retail outlets through franchising in other states where recreational cannabis use is legal or expected to become legal in the near term, as well as in Canada, where it is legal nationwide.
Corporate Information
Our corporate office is located at 888 South Andrews Avenue, Suite 302, Fort Lauderdale, Florida, 33316. Our telephone number is website is www.kayaholdings.com. Information contained on our website does not constitute part of this Annual Report.
Market Overview
According to research firm Cowen & Co., legal cannabis sales in the U.S. are expected to reach $75 billion by 2030. The industry research firm Arcview, estimates a $22.6 billion legal cannabis market in North America by 2021, with 87% of all sales occurring in the United States. The Arcview forecast assumes a 27% compound annual growth rate, an assumption supported by current rates of growth, while reliant on additional states passing both recreational and medical cannabis laws.
Thirty-three states and the District of Columbia have legalized medical marijuana in some capacity. Additionally, ten states (Alaska, California, Colorado, Maine, Massachusetts, Michigan, Nevada, Oregon, Vermont and Washington State) and the District of Colombia have approved the implementation of legal recreational marijuana use. The Marijuana Business Factbook 2017, published by industry news source Marijuana Business Daily, estimates that the legal marijuana sector will grow more than 300% from sales of $1.8 billion to $17.1 billion in 2021. The firm estimates that the economic impact of the legal cannabis industry will exceed $70 billion, placing it almost on par with nutraceuticals and ahead of movie tickets and retail ice cream. According to the Factbook, “to get another idea of just how big the marijuana industry has become, look to employment numbers. The cannabis sector now employs between 165,000-230,000 full and part-time workers….to put this in perspective, there are now more marijuana industry workers than there are bakers or massage therapists in the United States”.
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The Kaya Shack™ Brand
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Kaya Holdings operates the Kaya Shack™ brand of legal medical and recreational retail marijuana retail stores.
Kaya Holdings operates four recreational marijuana retail outlets and medical marijuana dispensaries in Oregon under the Kaya Shack™ brand.
Dubbed by the mainstream press as the “Starbucks of Marijuana” after our first outlet opened in July 2014, our operating concept is simple: to deliver a consistent customer experience (quality products, fair prices and superior customer service) to a broad and diverse base of customers. Kaya Shack™ meets the quality needs of the “marijuana enthusiast”, the comfort and atmosphere of all including “soccer moms” and the price sensitivities of casual smokers.
The Kaya Shack™ brand communicates positive thinking and joy, with signs adorning the walls that read “It’s a Good Day to have a Good Day,” “Some of our Happiest Days Haven’t Even Happened Yet,” and our signature “Be Kind.”
Kaya Shack™ retail outlets are open 7 days a week- Monday through Saturday from 8:00 am to 10:00 pm, and Sunday 8:00 AM to 9:00 PM. Operations follow an operational manual that details procedures for 18 areas of operation including safety, compliance, store opening, store closing, merchandising, handling of cash, inventory control, product intake, store appearance and employee conduct.
In compliance with regulations, all marijuana and marijuana infused products sold through our stores are quality tested by independent labs to assure adherence to strict quality and OLCC regulations.
The Company is exploring opportunities to expand its operations beyond Oregon by replicating its Kaya Shack™ brand retail outlets through franchising in other states where recreational cannabis use is legal or expected to become legal in the near term, as well as in Canada, where it is legal nationwide. KAYS also is targeting opening corporate owned marijuana production and processing facilities to support the envisioned franchised outlets, and to both maintain quality control and offer customers a consistent customer experience while reducing costs of goods to franchisees.
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- Form 10-Q - Quarterly report [Sections 13 or 15(d)] • Edgar (US Regulatory) • 08/21/2023 08:15:57 PM
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