Kaya Holdings, Inc. (f/k/a Alternative Fuels Americas, Inc.), (“KAYS”, “”we”, “us”, “our” or the “Company”) was incorporated in Delaware in 1993 under the name Gourmet Market, Inc. and has engaged in a number of businesses. Its name was changed on May 11, 2007 to Netspace International Holdings, Inc. (“Netspace”). Netspace acquired 100% of the capital stock of Alternative Fuels Americas, Inc., a Florida corporation in January 2010 in a stockforstock transaction and issued 100,000 shares of Series C convertible preferred stock to existing shareholders of the Florida corporation. The Company’s name was changed in October 2010 Netspace International Holdings, Inc. to Alternative Fuels Americas, Inc.
From 20102014 the Company was engaged in seeking to develop a biofuels business. In January 2015 the Company determined that it was in the best interests of its stockholders to discontinue its biofuel development activities, and to instead leverage its agricultural and business development experience and focus all its resources on the development of legal medical and recreational marijuana opportunities in the United States and in select international markets.
In 2014, KAYS incorporated a subsidiary, Marijuana Holdings Americas, Inc. a Florida corporation (“MJAI”). Through MJAI, KAYS has focused on the development of opportunities within the legal recreational and medical marijuana sectors in the United States. In March 2014, MJAI, through an Oregon subsidiary, applied for and was awarded its first license to operate a Medical Marijuana Dispensary (“MMD”). The Company developed the KayaShack™ brand for its retail operations and on July 3, 2014 opened its first Kaya Shack™ Medical Marijuana Dispensary in Portland, Oregon, thereby becoming the first US publicly traded company to own and operate a MMD. Initial customer acceptance and media coverage was very positive, including many references to KAYS as the “Starbucks of Medical Marijuana” by television news stations, news print publications and online news sources. In March 2015, the Company changed its name to Kaya Holdings, Inc. to better reflect its new plan of operations. Table of Contents 1
In April 2015 KAYS commenced its own medical marijuana grow operations for the cultivation and harvesting of legal marijuana, thereby becoming the the first US publicly traded company to own a majority interest in a vertically integrated legal marijuana enterprise in the United States. The Company opened its second MMD (and first Kaya Shack™ Marijuana Superstore) in October 2015 in Salem, Oregon. During 2015, the Company also consolidated its grow operations and manufacturing operations into a single facility in Portland, Oregon.In October 2015, Oregon commenced legal recreational marijuana sales, which are initially being conducted solely through State Licensed MMDs including those operated by the Company. The Company plans to open at least two additional dispensaries in Oregon during 2016, and in April 2016 entered into leases and filed increased applications for the next 2 locations.
Our corporate office is located at 305 South Andrews Avenue, Suite 209, Fort Lauderdale, Florida, 33301. Our website is www.kayaholdings.com. Information contained on our website does not constitute part of this Annual Report.
General
Following the successful introduction of legal recreational marijuana in Colorado and Washington, the Company incorporated MJAI, its majority-owned subsidiary, to operate as a grower, processor, distributor and/or retailer of legal recreational and/or medical marijuana in jurisdictions where it is legal in accordance with State law. After an evaluation of several factors including barriers to entry, costs and potential, the Company targeted Oregon as the first market within which to open a state licensed MMD.
In March 2014, MJAI, through an Oregon subsidiary, applied for and was awarded its first license to operate a MMD. The Company developed the KayaShack™ brand for its retail operations and on July 3, 2014 opened the first Kaya Shack at 1719 SE Hawthorne Boulevard in Portland, Oregon. In April 2015 KAYS commenced its own medical marijuana grow operations for the cultivation and harvesting of legal marijuana. In October 2015, concurrent with Oregon commencing legal sales of recreational marijuana through MMDs KAYS opened its second retail operation in Salem, Oregon, the KayaShack™ Marijuana Superstore. The Company houses its marijuana grow and manufacturing facilities at the KayaShack™ West Coast Base of Operations in Portland. The Company plans to open at least two additional dispensaries in Oregon during 2016.
Market Overview
According to an article published by CBS News Moneywatch, the legal marijuana industry is the fastest growing business in the United States. Steve Berg, a former managing director of Wells Fargo Bank has published a report citing Cannabis as being one of the fastest growing domestic industries, citing that “Domestically, we weren't able to find any market that is growing as quickly."
According to the New York Times, Arcview, (a group active in tracking the legal marijuana industry) has published a report stating that legal marijuana sales have increased from $4.6 billion in 2014 to $5.4 billion. Forecasts for 2016 are up 25% to $7.7 billion with the 2020 mark potentially exceeding $22 billion.
Estimates from various sources for the size of the long term market range from up to an excess of $100 billion if Federal Prohibition is repealed and marijuana sales become legal in all 50 states and Washington D.C. (for perspective beer is approximately a $100 billion market, with wine just under $30 billion and coffee approximately $12 billion).
Twenty-seven states and the District of Columbia have either legalized medical marijuana or decriminalized marijuana possession -- or both. Additionally, four states have voted-in recreational marijuana laws with active legal cannabis economies flourishing in Colorado and Washington. Effective October 1, 2015 Oregon commenced early recreational sales of marijuana (“flower” only, no concentrates or edibles) through existing medical marijuana dispensaries, with full recreational licensing and sales scheduled to begin in 2016.
Potential legislative actions and ballot initiatives are planned over the next two years for several states including Arizona, California, Florida, Hawaii, Maine, Massachusetts, Missouri, Nevada, Pennsylvania and Ohio. Table of Contents 2
Current and Planned Oregon Operations
Kaya Shack™ Medical Marijuana Dispensaries and Recreational Marijuana Retail Stores
Kaya Holdings operates the Kaya Shack™ brand of medical marijuana dispensaries.
Dubbed by the mainstream press as the “Starbucks of Marijuana” after our first store 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” and “Some of our Happiest Days Haven’t Even Happened Yet” , and our signature “Be Kind” .
Kaya Shack™ Stores are open 7 days a week from 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 purity standards.
Our two currently operating locations operate as medical marijuana dispensaries (MMDs), and as of October 1, 2015 they became licensed to offer recreational sales pursuant to a bill passed by both Houses of the Oregon Legislature. When recreational licenses are available in 2016 we will apply for retail sales licenses for bothl locations but still intend to service our medical marijuana patients as the law permits. We intend to open at least two additional retail outlets in Oregon during 2016, and in April 2016 entered into leases and filed increased applications for the next 2 locations.
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