FARMHOUSE, INC. /NV - Quarter Report: 2021 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 10-Q

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☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 2021
or

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from: _____________ to _____________

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FARMHOUSE, INC.

(Exact name of registrant as specified in its charter)

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NEVADA NV	333-238326	46-3321759
(State or Other Jurisdiction	(Commission	(I.R.S. Employer
of Incorporation)	File Number)	Identification No.)

1355 Market Street, Suite 488, San Francisco, CA 94103

(Address of Principal Executive Office) (Zip Code)

(888) 420-6856

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [X] Yes [ ] No

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. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

	Large accelerated filer [ ]		Accelerated filer [ ]
	Non-accelerated filer [ ]		Smaller reporting 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 number of shares of the issuer’s Common Stock outstanding as of November 12, 2021 is 15,639,550.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements and information included in this Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2021 (this “Report”) contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995. These statements are based upon beliefs of, and information currently available to management as well as estimates and assumptions made by management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used herein, the words “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “future,” “intend,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue” or the negative of these terms and similar expressions as they relate to the Company or the Company’s management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors, including the risks relating to our business, industry, and our operations and results of operations and the effects that the COVID-19 outbreak, or similar pandemics, could have on our business. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.

The full extent to which the COVID-19 pandemic may directly or indirectly impact our business, results of operations and financial condition will depend on future developments that are uncertain, including as a result of new information that may emerge concerning COVID-19 and the actions taken to contain it or treat COVID-19, as well as the economic impact on local, regional, national and international customers and markets. We have made estimates of the impact of COVID-19 within our financial statements, and although there is currently no major impact, there may be changes to those estimates in future periods. Actual results may differ from these estimates.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

CERTAIN TERMS USED IN THIS REPORT

“We,” “us,” “our,” the “Registrant,” the “Company,” and “Farmhouse” are synonymous with Farmhouse, Inc., unless otherwise indicated. WeedClub®, Friends in High Places®, WeedClub Select® and @420® are registered Trademarks of the Company where used throughout this Report.

FARMHOUSE, INC. AND SUBSIDIARIES

QUARTERLY REPORT ON FORM 10-Q

September 30, 2021

I NDEX

PART I – FINANCIAL INFORMATION3

Item 1.Financial Statements3

Item 2.Management’s Discussion and Analysis of Financial Condition

and Results of Operations19

Item 3.Quantitative and Qualitative Disclosures about Market Risk29

Item 4.Controls and Procedures29

PART II – OTHER INFORMATION30

Item 1.Legal Proceedings30

Item 1A.Risk Factors31

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds31

Item 3.Defaults Upon Senior Securities33

Item 4.Mine Safety Disclosures33

Item 5.Other Information33

Item 6.Exhibits34

SIGNATURE35

CERTIFICATIONS36

PART I – FINANCIAL INFORMATION

FARMHOUSE, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30,		December 31,
	2021		2020
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	44,994	$	3,906
Prepaid expenses		583		-
Total current assets		45,577		3,906

Property and equipment, net		389		1,272
Total assets	$	45,966	$	5,178

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	15,952	$	10,971
Accrued legal fees		298,488		267,127
Accrued payroll and payroll taxes		715,427		577,321
Accrued liabilities		74,100		59,011
Deferred revenue		-		3,000
Accrued interest payable		35,091		28,095
Convertible note payable		45,000		45,000
Notes Payable		60,000		-
Due to related parties		157,985		150,365
Total current liabilities		1,402,043		1,140,890

Stockholders’ deficit:
Preferred stock - Undesignated: $0.0001 par value, 5,000,000 shares authorized, no shares issued and outstanding				-
Common stock, $0.0001 par value; 295,000,000 shares authorized, 15,618,050 and 14,855,792 shares issued and outstanding, respectively		1,562		1,486
Additional paid-in capital		3,586,912		3,189,140
Accumulated deficit		(4,944,551)		(4,326,338)
Total stockholders’ deficit		(1,356,077)		(1,135,712)
Total liabilities and stockholders’ deficit	$	45,966	$	5,178

The accompanying notes are an integral part of these condensed consolidated financial statements

FARMHOUSE, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

	For the three months ended Sept. 30,				For the nine months ended Sept. 30,
	2021		2020		2021		2020

REVENUES
Net revenues	$	149	$	5,000	$	12,045	$	7,940
Total revenues		149		5,000		12,045		7,940

OPERATING EXPENSES
General and administrative		116,234		107,831		286,204		273,928
Professional fees		132,107		48,470		347,544		161,756
Depreciation and amortization		295		397		883		1,621
Total operating expenses		248,636		156,698		634,631		437,305

LOSS FROM OPERATIONS		(248,487)		(151,698)		(622,586)		(429,365)

OTHER INCOME (EXPENSE):
Recovery of expense in litigation		22,382		-		22,382		-
Gain on extinguishment of debt		14,220		-		14,220		-
Interest expense		(12,836)		(2,309)		(32,229)		(38,653)
Total other income (expense)		23,766		(2,309)		4,373		(38,653)

NET LOSS	$	(224,721)	$	(154,007)	$	(618,213)	$	(468,018)

BASIC AND DILUTED NET LOSS PER SHARE	$	(0.01)	$	(0.01)	$	(0.04)	$	(0.03)

BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING		15,337,287		14,722,264		15,032,325		14,659,590

The accompanying notes are an integral part of these condensed consolidated financial statements

FARMHOUSE, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
For the three and nine months ended September 30, 2021
(unaudited)

	Common Stock					Accumulated
	Shares	Par Value		Paid-in Capital		Deficit		Total

Balance at December 31, 2020	14,855,792	$	1,486	$	3,189,140	$	(4,326,338)	$	(1,135,712)

Common stock sold	8,000		1		5,999		-		6,000
Common stock issued for services	58,287		6		29,862		-		29,868
Net loss	-		-		-		(137,325)		(137,325)
Balance at March 31, 2021	14,922,079		1,493		3,225,001		(4,463,663)		(1,237,169)

Common stock sold	49,020		4		24,996		-		25,000
Common stock issued for "anti-dilution" protection	39,844		4		(4)		-		-
Common stock issued for services	120,713		12		120,701		-		120,713
Net loss	-		-		-		(256,167)		(256,167)
Balance at June 30, 2021	15,131,656		1,513		3,370,694		(4,719,830)		(1,347,623)

Common stock sold	189,216		19		96,481		-		96,500
Common stock issued for Restricted Stock Award	200,000		20		(20)		-		-
Stock-based compensation on RSA's vested	-		-		25,500		-		25,500
Common stock issued for settlement of liabilities	30,000		3		15,777		-		15,780
Common stock issued for services	67,178		7		78,480		-		78,487
Net loss	-		-		-		(224,721)		(224,721)
Balance at September 30, 2021	15,618,050	$	1,562	$	3,586,912	$	(4,944,551)	$	(1,356,077)

The accompanying notes are an integral part of these condensed consolidated financial statements

FARMHOUSE, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
For the three and nine months ended September 30, 2020
(unaudited)

	Common Stock					Subscription		Accumulated
	Shares	Par Value		Paid-in Capital		Receivable		Deficit		Total

Balance at December 31, 2019	14,497,843	$	1,450	$	2,841,608	$	(2,001)	$	(3,280,859)	$	(439,802)

Subscription received	-		-		-		2,001		-		2,001
Common stock issued for services	46,564		5		38,550		-		-		38,555
Common stock issued for intangible assets	125,000		13		124,987		-		-		125,000
Net loss	-		-		-		-		(186,452)		(186,452)
Balance at March 31, 2020	14,669,407		1,468		3,005,145		-		(3,467,311)		(460,698)

Common stock sold	50,000		5		37,495		-		-		37,500
Common stock issued for services	2,857		-		2,857		-		-		2,857
Net loss	-		-		-		-		(127,559)		(127,559)
Balance at June 30, 2020	14,722,264		1,473		3,045,497		-		(3,594,870)		(547,900)

Common stock issued for services	56,574		6		56,568		-		-		56,574
Net loss	-		-		-		-		(154,007)		(154,007)
Balance at September 30, 2020	14,778,838	$	1,479	$	3,102,065	$	-	$	(3,748,877)	$	(645,333)

The accompanying notes are an integral part of these condensed consolidated financial statements

FARMHOUSE, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended September 30,
(unaudited)

	2021		2020

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(618,213)	$	(468,018)
Adjustments to reconcile net income (loss) to net cash used by operating activities:
Depreciation and amortization		883		1,621
Common stock issued for services		229,068		97,986
Common stock issued for settlement of liabilities		15,780		-
Stock-based compensation on RSA's vested		25,500		-
Changes in operating assets and liabilities:
Accounts receivable		-		7,594
Prepaid expenses		(583)		-
Accounts payable		4,981		935
Accrued legal fees		31,361		86,156
Accrued payroll and payroll taxes		138,106		157,602
Accrued liabilities		15,089		33,236
Deferred revenue		(3,000)		-
Accrued interest payable		6,996		8,019
Net cash used in operating activities		(154,032)		(74,869)

CASH FLOWS FROM INVESTING ACTIVITIES:		-		-

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock		127,500		39,501
Proceeds from borrowings on Note Payable		60,000		-
Borrowings of related party debt and short-term advances		31,546		50,132
Repayment of related party debt and short-term advances		(23,926)		(21,214)
Net cash provided by financing activities		195,120		68,419

NET CHANGE IN CASH		41,088		(6,450)
CASH AT BEGINNING OF PERIOD		3,906		7,313
CASH AT END OF PERIOD	$	44,994	$	863

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest	$	1,937	$	-
Income taxes	$	-	$	-

NON-CASH INVESTING AND FINANCING ACTIVITIES:
Common stock issued for intangible asset	$	-	$	125,000

The accompanying notes are an integral part of these condensed consolidated financial statements

FARMHOUSE, INC. AND SUBSIDIARIES

NOTES TO QUARTERLY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021

(Unaudited)

NOTE 1 – ORGANIZATION AND OPERATIONS

Organization and Current Operations

The Company was incorporated in June 2013 as Somerset Transition Corporation under the Oklahoma General Corporation Act. The Company was formed to complete a reorganization under Section 1088(g) of the Oklahoma Act, whereby the Company became successor to Transnational Financial Network, Inc., which was originally incorporated in California in 1985. In September 2013, the Company was redomesticated in Maryland and changed its name to Somerset Property, Inc. In July 2017, the Company was redomesticated in Nevada and changed its name to Revival, Inc. In June 2019, the Company changed its name to Farmhouse, Inc. to reflect its new business endeavors.

In August 2019, the Company acquired Farmhouse, Inc., a Washington corporation (“Farmhouse Washington”) as its wholly owned subsidiary (the “Acquisition”). Farmhouse Washington was formed in January 2014 and has developed a social network platform, “The WeedClub Platform. At the closing of the Acquisition, all of the issued and outstanding shares of common stock of Farmhouse Washington were exchanged for shares of common stock of the Company on a one-for-one basis. The financial statements of the Company are the continuation of Farmhouse Washington with the adjustment to reflect the capital structure of the Company.

Prior to the Acquisition, on August 1, 2017, Farmhouse Washington formed Farmhouse DTLA, Inc. (“DTLA”) in California as a wholly owned subsidiary. DTLA has an agreement with a medical marijuana growing and retail company based in Los Angeles which is subject to litigation. See Note 9.

The Company is a technology company with multiple cannabis related divisions and IP, including the WeedClub® Platform, a professional social network platform to the regulated cannabis industry, that enables cannabis and hemp professionals to connect, discover products and services and scale their businesses. Within the WeedClub® Platform, members utilize an increasing set of technology-based tools for discovering professional connections and information. The Company believes it has established itself as the trusted brand to connect the industry through the WeedClub® Platform and its @420 Twitter handle. Through its wholly owned subsidiary, DTLA, the Company owns a 49% equity interest in a Los Angeles-based multi-licensed cannabis retail dispensary, grow, manufacturer and distributor. The Company offers its WeedClub members group opportunities while advertising and consulting revenues are generated via the curated opportunities.

Going Concern and Management’s Plans

The accompanying unaudited interim condensed consolidated financial statements have been presented on the basis that the Company is a going concern which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. For the nine months ended September 30, 2021, the Company had a net loss from operations of $622,586, consisting primarily of general and administrative and legal and professional expenses. In addition, as of September 30, 2021, the Company had stockholders’ deficit of $1,356,077 and available cash on hand of $44,994. In view of these matters, recoverability of any asset amounts shown in the accompanying unaudited interim condensed consolidated financial statements is dependent upon the Company’s ability to expand operations and achieve profitability from its business. These factors raise substantial doubt about the Company’s ability to continue as a going concern. These unaudited interim condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company has financed its activities principally from the sale of its common stock and loans from Company officers. The Company intends on financing its future working capital needs from these sources until such time that funds provided by operations are sufficient to fund working capital requirements. Management believes that loans from Company officers and funds raised from the sale of its common stock will allow sufficient capital for operations and to continue as a going concern.

FARMHOUSE, INC. AND SUBSIDIARIES

NOTES TO QUARTERLY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021

(Unaudited)

In April 2021, the board of directors (“Board”) authorized an offering of up to 1,000,000 shares of restricted common stock at $.51 per share, to be offered and sold only to investors that qualify as “accredited investors” as that term is defined in Regulation D. For the nine months ended September 30, 2021, the Company sold 238,236 shares of common stock under this offering for proceeds of $121,500. This offering was terminated on August 31, 2021. See Note 7.

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies is presented to assist the reader in understanding and evaluating the Company’s unaudited interim condensed consolidated financial statements. These accounting policies conform to Generally Accepted Accounting Principles (“GAAP”) and have been consistently applied in the preparation of these unaudited interim condensed consolidated financial statements.

Principals of Consolidation

The unaudited interim condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries Farmhouse Washington and DTLA (together the “Company”). All material intercompany accounts, transactions, and earnings have been eliminated in the accompanying unaudited interim condensed consolidated financial statements.

Financial Statement Reclassification

Certain amounts from the prior year’s financial statements have been reclassified in these unaudited interim condensed consolidated financial statements to conform to the current year’s classifications.

Cash and Cash Equivalents

Cash and cash equivalents as of September 30, 2021 included cash in banks. The Company considers all highly liquid instruments with maturity dates within 90 days at the time of issuance to be cash equivalents.

Basis of presentation

The accompanying unaudited interim condensed consolidated financial statements contained in this Report have been prepared in accordance with U.S. GAAP and the rules of the Securities and Exchange Commission (“SEC”) for interim financial information and do not include all of the information or disclosures required by U.S. GAAP for annual financial statements. Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2020, filed with the Securities and Exchange Commission on April 30, 2021. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein.

Use of Estimates

Operating results for interim periods are not necessarily indicative of the results to be expected for the full year. The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and the related disclosures at the date of the financial statements and during the reporting period. Significant estimates include the carrying value of property and equipment and intangible assets, grant date fair value of options, deferred tax assets and any related valuation allowance and related disclosure of contingent assets and liabilities. The Company evaluates its estimates, based

FARMHOUSE, INC. AND SUBSIDIARIES

NOTES TO QUARTERLY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021

(Unaudited)

on historical experience and on various other assumptions that it believes to be reasonable under the circumstances. Actual results could materially differ from these estimates.

Revenue Recognition

In accordance with ASC No. 606, Revenue Recognition, the Company recognizes revenue from product sales or services rendered when the following five revenue recognition criteria are met: identify the contract with the client, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to performance obligations in the contract and recognize revenues when or as the Company satisfies a performance obligation. The Company generates five types of revenue, including:

Subscription fees. Subscription fees related to the WeedClub portal are received at the time of purchase. The Company’s performance obligation is to provide services over a fixed subscription period, accordingly, the Company recognizes revenue ratably over the subscription period and deferred revenue is recorded for the portion of the subscription period subsequent to each reporting date.

(1)Affiliate advertising. Affiliate advertising revenues result from advertising campaigns and are generally multi-month arrangements. The Company’s performance obligation is met when the Company runs the agreed upon advertisements on its platform, accordingly, the Company recognizes revenue ratably over the campaign period and deferred revenue is recorded for the portion of the campaign period subsequent to each reporting date.

(2)Event Sales. The Company collects payment up front for event ticket sales and sponsorships and records these payments as unearned revenue. The Company’s performance obligation is met at the time the event takes place, accordingly, the Company recognizes revenue at the time the event takes place.

(3)Referral fees. The Company generates referral fees when a business transaction is consummated between the Company, as referee, and a potential target company. The Company performance obligation is met at the time such business transaction is consummated, accordingly, the Company recognize revenue at that point.

(4)Consulting and Other. The Company generates fees to assist presenting companies with request consulting services in connection with their investment deck and presentation scripts. Such consulting fees are recognized as services are performed.

Revenues generated for the three and nine months ended September 30, 2021 and 2020 were as follows:

	For the three months ended September 30,				For the nine months ended September 30,
	2021		2020		2021		2020
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)

Subscription fees	$	149	$	-	$	695	$	-
Affiliate advertising		-		-		8,850		-
Event Sales		-		-		-		2,940
Referral fees		-		5,000		2,500		5,000
Consulting and other		-		-		-		-
Total revenues	$	149	$	5,000	$	12,045	$	7,940

No costs of revenues were incurred for the three and nine months ended September 30, 2021 and 2020.

Earnings (Loss) per Common Share

Net income (loss) per common share is computed pursuant to ASC 260-10-45, Earnings per Share – Overall – Other Presentation Matters. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net

FARMHOUSE, INC. AND SUBSIDIARIES

NOTES TO QUARTERLY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021

(Unaudited)

income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period. The weighted average number of common shares outstanding and potentially outstanding common shares assumes that we incorporated as of the beginning of the first period presented.

All dilutive common stock equivalents are reflected in our net income (loss) per share calculations. Anti-dilutive common stock equivalents are not included in our loss per share calculations. The Company had one convertible note with a principal value of $45,000 as of September 30, 2021 and December 31, 2020. This note is convertible at a conversion price the note holder and the Company agree and therefore the number of shares it is convertible into is not determinable.

Recently Issued Accounting Pronouncements

There are no recently issued accounting pronouncements that the Company has not yet adopted that they believe are applicable or would have a material impact on the financial statements of the Company.

NOTE 3 – PROPERTY AND EQUIPMENT

Property and equipment is comprised of the following:

	September 30,		December 31,
	2021		2020
	(Unaudited)

Computer equipment	$	7,312	$	9,604
Less: Accumulated depreciation		(6,923)		(8,332)
	$	389	$	1,272

Depreciation is computed using the straight-line method based upon the estimated useful lives of the underlying assets, generally three years. Depreciation expense was $883 and $1,621 for the nine months ended September 30, 2021 and 2020, respectfully.

FARMHOUSE, INC. AND SUBSIDIARIES

NOTES TO QUARTERLY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021

(Unaudited)

NOTE 4 – CONVERTIBLE NOTE PAYABLE

Convertible note payable is comprised of a sole promissory note in the amount of $45,000 as of September 30, 2021 and December 31, 2020, respectively. Principal and interest was originally due on July 4, 2018 and is currently in default. The loan bears interest at 18% per annum, accrued monthly and is unsecured. Interest expense related to the convertible note payable was $6,057 and $6,081 for the nine months ended September 30, 2021 and 2020, respectively. Accrued interest on the convertible note payable was $34,153 and $28,095 as of September 30, 2021 and December 31, 2020, respectively.

The conversion feature was not accounted for under derivative accounting guidance because the settlement amount is not determinable by an underlying conversion price. Therefore, no derivative was recorded in these interim condensed consolidated financial statements as of September 30, 2021 and December 31, 2020.

NOTE 5 – NOTES PAYABLE

Notes payable is comprised of the following:

	September 30,		December 31,
	2021		2020
	(Unaudited)

Borrowing under loan agreement, 6% per annum, personally guaranteed.	$	50,000	$	-
Note payable, 6% per annum, unsecured.		10,000		-
	$	60,000	$	-

On June 16, 2021, the Company entered into a loan agreement, not to exceed $75,000. with an unaffiliate individual (“Lender”) and borrowed $50,000 as a first advance. This loan bears interest at 6% per annum, and is due nine months after the first advance, or such earlier date that the Lender may demand payment, which may not be earlier than 60 days after the first advance (“Maturity Date”). At Lender’s sole discretion, the Maturity Date may be extended. Borrowings under this loan agreement shall remain senior with respect to priority lien and right of payment to any indebtedness acquired by the Company. As a condition of the loan agreement, the Company’s Chief Executive Officer personally and unconditionally guaranteed the timely repayment of the loan and is liable for any amounts remaining due and owed following the Maturity Date. Interest expense related to this borrowing was $880 for the nine months ended September 30, 2021. Accrued interest on this borrowing was $880 as of September 30, 2021.

On August 27, 2021, the Company borrowed $10,000 from an unrelated individual. This loan bears interest at 6% per annum and is due on April 30, 2022. Interest expense related to this borrowing was $58 for the nine months ended September 30, 2021. Accrued interest on this borrowing was $58 as of September 30, 2021.

FARMHOUSE, INC. AND SUBSIDIARIES

NOTES TO QUARTERLY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021

(Unaudited)

NOTE 6 – DUE TO RELATED PARTIES

Due to Related Parties totals $157,985 and $150,365 as of September 30, 2021 and December 31, 2020, respectively. These amounts are comprised of cash advances provided to the Company for operating expenses and direct payment of Company expenses by Company officers. For the nine months ended September 30, 2021, Company officers made cash advances of $13,000, personally paid Company expenses of $18,546 and were repaid $23,926. For the nine months ended September 30, 2020, Company officers made cash advances of $50,132 and were repaid $21,214. The cash advances are non-interest bearing and are unsecured. Company officers own approximately 47.4% of the Company as of September 30, 2021. The Company has agreed to indemnify Company officers for certain events or occurrences arising as a result of the officer or director serving in such capacity. See Note 10.

NOTE 7 – STOCKHOLDERS’ DEFICIT

Authorized Capital

The Company’s authorized capital consists of 295,000,000 shares of common stock, $0.0001 par value per share, and 5,000,000 shares of undesignated preferred stock, $0.0001 par value per share. The Board, in its sole discretion, may establish par value, divide the shares of preferred stock into series, and fix and determine the dividend rate, designations, preferences, privileges, and ratify the powers, if any, and determine the restrictions and qualifications of any series of preferred stock as established.

Common Stock Offering

In April 2021, the Board authorized an offering of up to 1,000,000 shares of common stock at $0.51 per share (the “Offering Price”), providing proceeds of up to $510,000 (the “Offering”). The Offering terminated on August 21, 2020. In connection with the Offering, the Board also approved a one-time, limited anti-dilution protection to certain investors who, in the last 12 months, invested at a per share price higher than the Offering Price.

Common stock transactions

A summary of the Company’s common stock transactions for the nine months ended September 30, 2021 is as follows:

·The Company sold 8,000 shares of common stock for cash proceeds of $6,000.

·The Company issued 246,178 shares of common stock for services rendered. The Company recorded an expense of $229,068 for the nine months ended September 30, 2021 based on the closing price of the Company’s common stock on the OTC Pink market.

·The Company sold 238,236 shares of common stock under the Offering for proceeds of $121,500. See “Common Stock Offering” above.

·The Company issued 39,844 shares of common stock for anti-dilution protection to five investors who invested at a per share price higher than the Offering Price in the last 12 months. See “Common Stock Offering” above.

·The Company issued 30,000 shares of common stock in settlement of $30,000 of liabilities and

FARMHOUSE, INC. AND SUBSIDIARIES

NOTES TO QUARTERLY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021

(Unaudited)

recognized a gain on extinguishment of debt in connection with this settlement. which is recorded as other income for the three and nine-month periods ended September 30, 2021.

·The Company granted a Restricted Stock Award of 200,000 shares of common stock under the Company’s 2021 Omnibus Incentive Plan to a Company office. See Note 8.

As a result of these transactions, the Company has 15,618,050 shares of common stock outstanding as of September 30, 2021.

A summary of the Company’s common stock transactions for the nine months ended September 30, 2020 is as follows:

·The Company sold 50,000 shares of common stock for cash proceeds of $37,500.

·The Company issued 105,995 shares of common stock for services rendered. The shares of common stock were valued at various prices, based on the closing price of the Company’s common stock on the OTC Pink market, and resulted in an expense of $97,986 for the nine months ended September 30, 2020.

·The Company issued 125,000 shares of common stock for the acquisition of the domain blunt.com. The shares of common stock were valued at $125,000, based on the closing price of the Company’s common stock on the OTC Pink market.

As a result of these transactions, the Company has 14,778,838 shares of common stock outstanding as of September 30, 2020.

Subsequent to September 30, 2021, there were additional common stock transactions. See Note 11.

Shares Reserved

The Company is required to reserve and keep available of its authorized but unissued shares of common stock an amount sufficient to effect shares that could be issued in connection the conversion of the convertible note payable. See Note 4. This note is convertible at a conversion price that the noteholder and the Company agree upon, therefore the number of shares it is convertible into is not determinable. Accordingly, no shares of common stock are reserved for future issuance as of September 30, 2021 and December 31, 2020.

FARMHOUSE, INC. AND SUBSIDIARIES

NOTES TO QUARTERLY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021

(Unaudited)

NOTE 8 – STOCK-BASED COMPENSATION

2021 Omnibus Incentive Plan

On May 12, 2021, the Board and majority shareholders approved the Farmhouse, Inc. Omnibus Incentive Plan (the “2021 OIP”). The 2021 OIP permits the granting of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, Other Stock-Based Awards and Cash-Based Awards. The maximum number of shares of common stock that may be issued pursuant to Awards under the 2021 OIP is 3,000,000. Stockholders holding a majority of the Company’s common stock outstanding signed a consent authorizing the 2021 OIP.

Any options to be granted under the 2021 OIP may be either “incentive stock options,” as defined in Section 422A of the Internal Revenue Code, or “non-statutory stock options,” subject to Section 83 of the Internal Revenue Code, at the discretion of the Board and as reflected in the terms of the written option agreement. The option price shall not be less than 100% of the fair market value of the optioned common stock on the date the option is granted. The option price shall not be less than 110% of the fair market value of the optioned common stock for an optionee holding at the time of grant, more than 10% of the total combined voting power of all classes of stock of the Company. Options become exercisable based on the discretion of the Board of the Company and must be exercised within ten years from the date of grant (five years from date of grant for Company employees and directors).

Any restricted stock awards to be granted under the 2021 OIP are issued and measured at fair market value on the date of grant and become vested in various monthly or quarterly installments from the date of grant, subject to the recipient remaining in the Company’s service on specified vesting dates. Vesting of restricted stock awards is based solely on time vesting. Stock-based compensation expense is recognized as the shares vest with a corresponding offset credited to additional paid-in-capital.

Restricted Stock Awards

On August 16, 2021, the Board granted a Restricted Stock Award (“RSA”) of 200,000 shares of common stock under the 2021 OIP to a Company officer. The RSA shares vest 25,000 shares over each of the following eight fiscal quarters starting September 30, 2021. RSA shares are measured at fair market value on the date of grant and stock-based compensation expense is recognized as the shares vest with a corresponding offset credited to additional paid-in-capital.

NOTE 9 – LITIGATION

In August 2017, the Company’s subsidiary, DTLA. entered into a Strategic Consulting Agreement (the “SCA”) with Absolute Herbal Pain Solutions, Inc., a medical marijuana growing and retail company based in Los Angeles that now goes by the name Los Angeles Farmers, Inc. (“LAFI”). The SCA provided for DTLA to invest substantial sums of money into LAFI and also to provide management services for LAFI going forward. In exchange, LAFI agreed to provide DTLA with a share in any future profits and a 49% equity stake in LAFI. Following the SCA, in excess of $700,000 was spent by DTLA to stabilize LAFI’s finances and pay critical bills. In addition, DTLA brought in an outside management company with expertise in running grow and retail operations. Subsequent to DTLA providing funding and management resources to LAFI, DTLA and its management team were locked out of the LAFI facility in late October 2017.

On October 25, 2017, DTLA commenced litigation in Los Angeles County Superior Court (Case #BC681251) against LAFI and David and Irina Vayntrub, who were the sole officers, directors, and members of LAFI, seeking to enforce its contract rights under the SCA. On March 27, 2018, the litigation was stayed so that the parties could pursue the claims by way of arbitration at Judicate West. In January 2020, following more than a

FARMHOUSE, INC. AND SUBSIDIARIES

NOTES TO QUARTERLY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021

(Unaudited)

year of discovery, DTLA entered into a confidential settlement with the Vayntrubs, however, the case continued against LAFI.

In February 2021, a four-day arbitration hearing was held at Judicate West. On April 8, 2021, the Judge overseeing the arbitration hearing issued a judgment in favor of DTLA and against LAFI (the “DLTA Judgment”). The DLTA Judgment awarded 49% of LAFI to DTLA as of the change of control in November 2017, along with a share of any profits from November 2017 to the present and going forward, accrued interest on those profits, and costs of bringing the litigation. The DLTA Judgment also appointed a monitor, to be supervised by the Judge, to determine how much in past profits and interest DTLA is entitled to be awarded and that DTLA is treated fairly by LAFI on a going forward basis. The impact of the DLTA Judgment has not been reflected in the accompanying unaudited interim condensed consolidated financial statements since the amount of the DLTA Judgment has not been determined. The Company is also reviewing the accounting treatment going forward.

Following the issuance of DTLA Judgment, DTLA filed a motion for reimbursement of costs in the amount of $22,382. No objection was filed by LAFI and on June 1, 2021, the amount was confirmed by the Los Angeles County Superior Court as a Judgment. In July 2021, DTLA received reimbursement costs in the amount of $22,382, which is recorded as other income for the three and nine-month periods ended September 30, 2021. A court-appointed Monitor is undertaking the process of determining the value of the 49% of profits and proceeds from 2017 forward that DTLA is entitled to, in addition to the 10% prejudgment interest. The Monitor’s report is expected to be completed by the end of Q4 2021.

NOTE 10 – COMMITMENTS AND CONTINGENCIES

In the normal course of its business, the Company may be subject to certain contractual obligations and litigation. In management’s opinion, upon consultation with legal counsel, there are no contractual obligations or current litigation that will materially affect the Company’s unaudited interim condensed consolidated financial position or results of operations.

Lease Commitment

The Company leases desk space in an incubator in San Francisco, CA at the rate of $700 per desk. This lease is month-to-month with one calendar month written notice to terminate.

Indemnification Agreements

The Company has agreed to indemnify its officers and directors for certain events or occurrences arising as a result of the officer or director serving in such capacity. The term of the indemnification period is for the officer’s or director’s lifetime. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited. The Company believes the estimated fair value of these indemnification agreements is minimal and no liability has been recorded as of September 30, 2021 and December 31, 2020.

NOTE 11 – SUBSEQUENT EVENTS

As of the date of these unaudited interim condensed consolidated financial statements, there are no subsequent events that are required to be recorded or disclosed in the accompanying unaudited interim condensed consolidated financial statements other than those listed below and elsewhere in these unaudited interim condensed consolidated financial statements.

FARMHOUSE, INC. AND SUBSIDIARIES

NOTES TO QUARTERLY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021

(Unaudited)

Common stock transactions

A summary of the Company’s common stock transactions subsequent to September 30, 2021 is as follows:

·The Company issued 21,500 shares of common stock for services rendered.

As a result of these transactions, the Company has 15,639,550 shares of common stock outstanding as of the date of this Report.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

The following discussion should be read in conjunction with the financial statements and related notes contained elsewhere in this Report, as well as our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 as filed with the Securities and Exchange Commission (the “SEC”) on April 30, 2021. Certain statements made in this discussion are “forward-looking statements” within the meaning of 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are based upon beliefs of, and information currently available to management as well as estimates and assumptions made by management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used herein, the words “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “future,” “intend,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue” or the negative of these terms and similar expressions as they relate to the Company or the Company’s management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors, including the risks relating to our business, industry, and our operations and results of operations and the effects that the COVID-19 outbreak, or similar pandemics, could have on our business. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and

assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates and actual results. The following discussion should be read in conjunction with our financial statements and notes thereto appearing elsewhere in this Report.

Unless otherwise indicated or the context requires otherwise, the words “we,” “us,” “our,” the “Company,” “our Company” or “Farmhouse” refer to Farmhouse Inc., a Nevada corporation, and our wholly owned subsidiaries, Farmhouse, Inc., a Washington corporation (“Farmhouse Washington”) and Farmhouse DTLA, Inc. (“DTLA”), a California corporation.

Corporate Overview

On August 13, 2019, the Company consummated an Agreement and Plan of Merger with Farmhouse Washington which became a wholly owned subsidiary. On this date, all of the issued and outstanding shares of common stock of Farmhouse Washington were exchanged for shares of common stock of the Company on a one share for one share basis (the “Acquisition”). Upon consummation of the Acquisition, the financial statements are the continuation of Farmhouse Washington with the adjustment to reflect the capital structure of the Company.

We are a holding company dedicated to connecting the cannabis industry through multiple divisions including WeedClub, the @420 Twitter handle and a 49% equity interest in a Los Angeles-based multi-licensed cannabis retail dispensary, grow, manufacturer and distributor.

WeedClub® Platform: Our WeedClub® Platform is a professional social networking platform for the regulated cannabis and hemp industries. It was founded in 2014 and has established a trusted brand by providing a private and secure way for members to network with fellow industry stakeholders through our WeedClub® Platform and in-person and virtual events.

@420: Our signature brand encompasses our @420 Twitter handle and our @420 pitch events. Our Twitter handle enables the Company to raise awareness, engage with and advertise to cannabis enthusiasts, businesses and consumers. With over 93,000 followers, our organic tweets consistently generate engagement rates of at least 2% and upwards of 10% while the industry average is 0.07% on Twitter according to Social Insider. In addition, our Twitter handle provides an approved paid advertising channel that many companies lack access to. This exclusive ability enables our members to drive traffic to their websites and deliver increased sales through approved paid advertising campaigns. The @420 pitch connects cannabis startups with investors in both in-person and virtual events. Our events have hosted over 100 startup pitches, led to more than $50M in funding raised and generated over 10 fully funded and exited startups.

LA Dispensary: In April 2021, the Judge overseeing an arbitration hearing in our ongoing lawsuit against a downtown Los Angeles retail dispensary issued a judgment in favor of DTLA. The judgment awarded 49% of this dispensary to DTLA. In addition to equity ownership, the judgment awarded DTLA a share of any profits of this dispensary from November 2017 to the present and going forward along with accrued interest on those profits and the costs of bringing

litigation. The Court appointed a monitor, supervised by the Judge, to determine how much in past profits and interest we are entitled to be awarded and to ensure we are treated fairly by the counterparty going forward. Currently, no impact of the Judgment is reflected in our accompanying unaudited interim condensed consolidated financial statements as the amount of the Judgment has not been determined. See further discussion under Part II, Item 1. Legal Proceedings in this report.

Our WeedClub® Platform, @420 Twitter handle and @420 pitch events provide essential services that position the Company as a trusted brand and connector within the cannabis industry. Our recent award of 49% equity ownership in the Los Angeles retail dispensary provides an additional asset for our holding company. With our strong brand and far-reaching cannabis network, we believe we are uniquely positioned to scale in the current political climate and in the event of federal legalization.

Our principal executive office is located at 1355 Market Street, Suite 488, San Francisco, CA 94103 and our phone number is (888) 420-6856.

Current and Future Plan of Operations

Farmhouse is built on connection, brand and trust. These three pillars establish the foundation that drives value for our community across all our divisions. Through technology, we leverage these pillars to connect members to value-add products, services, capital, and consumers. Our commitment to developing cannabis-specific technology solutions firmly established us as a trusted connector in the cannabis industry.

As our industry continues to grow, it faces the same problems due to the lack of federal legalization. For many cannabis brands, the lack of federal legalization leads to increased cost of expansion, lack of access to many proven digital marketing channels and lack of access to capital and banking. We addressed these problems by being early movers by creating the WeedClub® Platform, a professional social networking platform, and establishing the @420 brand including our @420 Twitter handle with over 93,000 followers.

Over the past year, new technology centered around a decentralized future (web3) has emerged as a potentially more effective solution for all the core problems our industry faces. Decentralization and web3 eliminate the walled gardens created by the platform economy that cannabis companies lack access to due to the lack of federal legalization. Through web3, cannabis brands can connect directly with their consumers, build community and raise capital through new channels to better position themselves for potential federal legalization.

The key feature of this future is non-fungible tokens (NFTs). What started out as simple digital JPEGs has rapidly evolved in the past year into curated collectable art and the digital proof of ownership that unlocks holder-specific value such as community, product and services discounts and more.

Just as we were early movers when we created the WeedClub® Platform as a professional social network for the cannabis industry, we launched Super Strains in October 2021, a NFT project

that connects cannabis brands directly to a community of cannabis and cryptocurrency enthusiasts. Super Strains is a joint venture with a member of the Bored Ape Yacht Club (BAYC) and a cybersecurity and smart contract auditor. This joint venture allows us to leverage our connections in the cannabis industry and NFT communities to create a unique community ideal for cannabis brands to interact with.

Super Strains is the first step that allows us to leverage our existing foundation to solve the problems of our industry through web3 solutions. As we build this new crypto native, cannabis enthusiast community, we will drive brand awareness and access an entirely new demographic of members to our ecosystem. Not only will this provide new opportunities for cannabis brands to engage with us, it will also expand our reach to younger demographics that care about engaging in a more instantaneous and genuine way.

We believe our entrance into web3 and NFTs adds a new layer into our current foundation and allows us to leverage what we have built to strengthen our ability to provide technological solutions that address the core problems our industry continues to face.

Liquidity and Capital Resources

Until such time we can raise additional capital or generate positive cash flow from operations, we will continue to be funded through short-term advances from the Company Officers. We estimate we will need $2,500,000 in capital, after satisfying our debt obligations, to cover our ongoing expenses and to successfully market and expand our product offerings. This is only an estimate and may change as we receive feedback from customers and have a better feel of the demand and revenues from our new products. Both of these factors may change and we may not be able to raise the necessary capital and if we are able to, that it may not be at favorable rates. We intend to meet our cash requirements for the next 12 months equity financing, debt financing, or other sources, which may result in further dilution in the equity ownership of our shares.

For the nine months ended September 30, 2021 and 2020, we generated revenues of $12,045 and $7,940, respectively, and we reported net losses of $618,213 and $468,018, respectively. We had negative cash flow from operating activities of $154,032 and $74,869, respectively. As of September 30, 2021, we had an accumulated deficit of $4,944,551 and a stockholders’ deficit of $1,356,077.

Our auditors have raised substantial doubt regarding our ability to continue as a going concern as a result of our historical recurring losses and negative cash flows from operations as well as our dependence on private equity and financings. We anticipate that we will continue to report losses and negative cash flow. To date, we have financed our activities principally from the sale of common stock and loans from Company officers. We intend on financing our future working capital needs from these sources until such time that funds provided by our operations are sufficient to fund our working capital requirements. We believe that the loans from Company officers and funds raised from the sale of our common stock will allow us sufficient capital for operations and to continue as a going concern.

In April 2021, we authorized an offering of up to 1,000,000 shares of common stock at $.51 per share, providing proceeds of up to $510,000, to be offered and sold only to investors that qualify as “accredited investors” as that term is defined in Regulation D. For the nine months ended September 30, 2021, we sold 238,236 shares of common stock under this offering for proceeds of $121,500. This offering was terminated on August 31, 2021.

Results of Operations

Nine months Ended September 30, 2021, compared to the nine months Ended September 30, 2020

For the nine months ended September 30, 2021 and 2020, we generated revenues of $12,045 and $7,940. We generate five types of revenue, which generally consist of fees from subscriptions, affiliate advertising, event sales, referrals and consulting. Our revenues for the nine months ended September 30, 2021 and 2020 were as follows:

	Nine months Ended September 30,
	2021		2020

Subscription fees	$	695	$	-
Affiliate advertising		8,850		-
Event Sales		-		2,940
Referral fees		2,500		5,000
Consulting and other		-		-
	$	12,045	$	7,940

In June, we launched a new Membership Benefits Program under the WeedClub® Platform, where subscribers can connect to ‘exclusive deals’ on essential products and services necessary to scale their business. Our special pricing of $149 for an annual subscription makes access to our WeedClub® Platform available to all. Affiliate advertising, through our advertising deal with Twitter, generated $8,850 of revenues for the nine months ended September 30, 2021. In 2020, we entered into an advertising deal with Twitter which provides us a revenue stream and growth opportunity due to our ability to post approved hemp social media ads. We generate referral fees when a business transaction is consummated between us and the potential target company.

For the nine months ended September 30, 2021 and 2020, general and administrative expenses were $286,204 and $273,928, respectively, an overall increase of approximately $12,400. Contributing factors to this increase were:

·public company related costs, including OTC filing fees, press releases and transfer agent costs increased by approximately $13,400,

·overall general and administrative expenses increased by approximately $27,300, and

·labor-related expenses decreased by approximately $28,300. Labor-related expenses included recognizing approximately $61,100 in stock-based fees in the current nine-month period.

For the nine months ended September 30, 2021 and 2020, professional fees were $347,544 and $161,756, respectively, an increase of approximately $185,800. Our professional fees for the nine months ended September 30, 2021 and 2020 were comprised of the following:

	Nine months Ended September 30,
	2021		2020

Legal	$	88,976	$	55,475
Accounting and audit		127,430		78,122
Professional fees		93,034		28,159
Consulting fees		38,104		-
	$	347,544	$	161,756

Legal expenses increased overall by approximately $33,500 for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020. Contributing factors to this increase were:

·our current securities counsel fees increased by approximately $15,300,

·fees incurred by Judicate West and Planet Depot related to our litigation against LAFI increased by approximately $70,400. Reference is made to Note 9, Litigation, to the Condensed Consolidated Financial Statements included under Item 1 in this Report,

·fees to our patent and trademark counsel increased by approximately $1,100, and

·fees to litigation counsel in connection with our litigation against LAFI decreased by approximately $53,300.

Accounting and audit expenses increased by approximately $49,300 for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020. Contributing factors to this increase were:

·fees to our independent public accounting firm increased by approximately $4,800 for our annual fiscal year audit and quarterly reviews,

·fees for our contracted CFO services increased by approximately $54,300, which included $60,800 of stock-based fees recognized in the current nine-month period, and

·fees to our outside bookkeeping services decreased by approximately $9,800 for the costs of filing our corporate federal income tax returns in the prior year comparable period.

Professional fees increased by approximately $64,900 for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 due to an increase in fees to our contracted software engineers and developers of our software technology platforms. Professional fees included recognizing approximately $92,000 in stock-based fees in the current nine-month period.

Consulting fees increased by approximately $38,100 for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 due to an increase in fees to an outside strategic business consultant. Consulting fees included recognizing approximately $38,100 in stock-based fees in the current nine-month period.

For the nine months ended September 30, 2021 and 2020 interest expense was $32,229 and $38,653, respectively, a decrease of approximately $6,400. Interest charged by our former litigation counsel on their unpaid balance decreased by approximately $7,300 while interest expense on our other debt obligations increased by approximately $900 in the current nine-month period.

Overall, for the nine months ended September 30, 2021, we reported a net loss of $618,213 compared to a net loss of $468,018 for the nine months ended September 30, 2020, an overall increase of approximately $150,200 from the prior year comparable period. Not including stock-based fees recorded for services rendered by consultants and professionals, which totaled approximately $254,600 and $98,000 for the nine months ended September 30, 2021 and 2020, respectively (as discussed above), our net loss actually decreased by approximately $6,400 from the prior year comparable period, as shown in the following table:

	Nine Months ended September 30,
	2021		2020

Net loss	$	618,213	$	468,018
Less: Stock-based fees		254,568		97,986
	$	363,645	$	370,032

Three Months Ended September 30, 2021, compared to the three Months Ended September 30, 2020

For the three months ended September 30, 2021 and 2020, we generated revenues of $149 and $5,000, respectively. We generate five types of revenue, which generally consist of fees from subscriptions, affiliate advertising, event sales, referrals and consulting. Our revenues for the three months ended September 30, 2021 and 2020 were as follows:

	Three Months ended September 30,
	2021		2020

Subscription fees	$	149	$	-
Affiliate advertising		-		-
Event Sales		-		-
Referral fees		-		5,000
Consulting and other		-		-
	$	149	$	5,000

For the three months ended September 30, 2021 and 2020, general and administrative expenses were $116,234 and $107,831, respectively, an overall increase of approximately $8,400. Contributing factors to this increase were:

·public company related costs, including OTC filing fees, press releases and transfer agent costs increased by approximately $10,800,

·overall general and administrative expenses increased by approximately $20,800, and

·labor-related expenses decreased by approximately $23,200. Labor-related expenses included recognizing approximately $26,400 in stock-based fees in the current three-month period.

For the three months ended September 30, 2021 and 2020, professional fees were $132,107 and $48,470, respectively, an increase of approximately $83,600. Our professional fees for the three months ended September 30, 2021 and 2020 were comprised of the following:

	Three Months ended September 30,
	2021		2020

Legal	$	28,770	$	15,736
Accounting and audit		53,972		19,018
Professional fees		35,261		13,716
Consulting fees		14,104		-
	$	132,107	$	48,470

Legal expenses increased overall by approximately $13,000 for the three months ended September 30, 2021 compared to the three months ended September 30, 2020. Contributing factors to this increase were:

·our current securities counsel fees increased by approximately $10,400,

·fees incurred by Judicate West and Planet Depot related to our litigation against LAFI increased by approximately $16,700. Reference is made to Note 9, Litigation, to the Condensed Consolidated Financial Statements included under Item 1 in this Report,

·fees to our patent and trademark counsel increased by approximately $1,600, and

·fees to litigation counsel in connection with our litigation against LAFI decreased by approximately $15,700.

Accounting and audit expenses increased by approximately $35,000 for the three months ended September 30, 2021 compared to the three months ended September 30, 2020. Contributing factors to this increase were:

·fees to our independent public accounting firm decreased by approximately $2,000 for our annual fiscal year audit and quarterly reviews,

·fees for our contracted CFO services increased by approximately $37,500, which included $25,500 of stock-based fees recognized in the current nine-month period, and

·fees to our outside bookkeeping services decreased by approximately $500.

Professional fees increased by approximately $21,500 for the three months ended September 30, 2021 compared to the three months ended September 30, 2020 due to an increase in fees to our

contracted software engineers and developers of our software technology platforms. Professional fees included recognizing approximately $35,300 in stock-based fees in the current three-month period.

Consulting fees increased $14,100 for the three months ended September 30, 2021 compared to the three months ended September 30, 2020 due to an increase in fees to an outside strategic business consultant. Consulting fees included recognizing approximately $14,100 in stock-based fees in the current three-month period.

For the three months ended September 30, 2021 and 2020 interest expense was $12,836 and $2,309, respectively, a decrease of approximately $10,500. Interest charged by our former litigation counsel on their unpaid balance increased by approximately $10,000 while interest expense on our other debt obligations increased by approximately $500 in the current three-month period.

Overall, for the three months ended September 30, 2021, we reported a net loss of $224,721 compared to a net loss of $154,007 for the three months ended September 30, 2020, an overall increase of approximately $70,700 from the prior year comparable period. Not including stock-based fees recorded for services rendered by consultants and professionals, which totaled approximately $104,000 and $56,574 for the three months ended September 30, 2021 and 2020, respectively (as discussed above), our net loss increased by approximately $23,300 from the prior year comparable period, as shown in the following table:

	Three Months ended September 30,
	2021		2020

Net loss	$	224,721	$	154,007
Less: Stock-based fees		103,987		56,574
	$	120,734	$	97,433

Cash Flows

The following table summarizes the sources and uses of cash for the nine months ended September 30, 2021 and 2020, respectively:

	Nine months Ended September 30,
	2021		2020

Net cash used in operating activities	$	(154,032)	$	(74,869)
Net cash used in investing activities		-		-
Net cash provided by financing activities		195,120		68,419
Net increase (decrease) in cash and cash equivalents	$	41,088	$	(6,450)

Nine months Ended September 30, 2021

Operating activities used $154,032 of cash, primarily resulting from our net loss for the nine months ended September 30, 2021 of $618,213, offset by non-cash stock issued for services of $229,068 and to settle liabilities of $15,780 (net of gain on settlement of debt of $14,220) and increases in liabilities across all categories: accounts payable, accrued legal fees, accrued payroll and other accrued liabilities. There was no use of cash for investing activities for the nine months ended September 30, 2021. Financing activities provided $195,120 of cash for the nine months ended September 30, 2021, consisting of $127,500 in proceeds from the sale of common stock and $60,000 of borrowings on two loan obligations, one for $50,000 (senior) and one for $10,000, from unrelated lenders. Borrowings under the $50,000 loan obligation shall remain senior with respect to priority lien and right of payment to any indebtedness later acquired. As a condition of this loan agreement, our Company’s Chief Executive Officer personally and unconditionally guaranteed the timely repayment of the loan. In addition to these cash increases, short-term advances from Company officers, net of repayments provided of $7,620 of cash for the nine months ended September 30, 2021.

Nine months Ended September 30, 2020

Operating activities used $74,869 of cash, primarily resulting from our net loss for the nine months ended September 30, 2020 of $468,018, offset by non-cash stock issued for services of $97,986 and increases in liabilities across all categories: accounts payable, accrued legal fees, accrued payroll and other accrued liabilities. There was no use of cash for investing activities for the nine months ended September 30, 2020. Financing activities provided $68,419 of cash for the nine months ended September 30, 2020, consisting of $39,501 in proceeds from the sale of common stock and $28,918 of short-term advances from Company officers, net of repayments, for the nine months ended September 30, 2020.

Contractual Obligations

We qualify as a smaller reporting company, as defined by Item 10 of Regulation S-K and, thus, are not required to provide the information required by this Item.

Off Balance Sheet Arrangements

We are not currently a party to, or otherwise involved with, any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Cash and Cash Equivalents

We consider all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents were $44,994 and $3,906 as of September 30, 2021 and December 31, 2020, respectively.

Critical Accounting Policies and Estimates

The preparation of our condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Our accounting policies that are critical or most important to understanding our financial condition and results of operations and that require management to make the most difficult judgments are described in our Annual Report on Form 10-K for the year ended December 31, 2020, as filed on April 30, 2021. There have been no material changes in these critical accounting policies.

Recently Adopted Accounting Pronouncements

Reference is made to Note 2, Summary of Significant Accounting Policies, to the Condensed Consolidated Financial Statements included under Item 1 in this Report.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management carried out an evaluation under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”). Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures were not effective as of September 30, 2021.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting subsequent to September 30, 2021, which were identified in connection with our management’s evaluation

required by paragraph (d) of rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations of the Effectiveness of Disclosure Controls and Internal Controls

Our management, including our Principal Executive Officer and Principal Financial Officer, does not expect that our disclosure controls and internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control.

The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving our stated goals under all potential future conditions; over time, a control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

PART II – OTHER INFORMATION

None.

ITEM 1. LEGAL PROCEEDINGS

From time to time, the Company may become subject to various legal proceedings that are incidental to the ordinary conduct of its business. Although the Company cannot accurately predict the amount of any liability that may ultimately arise with respect to any of these matters, it makes provision for potential liabilities when it deems them probable and reasonably estimable. These provisions are based on current information and legal advice and may be adjusted from time to time according to developments.

The Company is a party to legal proceedings by the Company’s subsidiary, Farmhouse DTLA.

DTLA with a share in any future profits and a 49% equity stake in LAFI. Following the SCA, in excess of $700,000 was spent by DTLA to stabilize LAFI’s finances and pay critical bills. In addition, DTLA brought in an outside management company with expertise in running grow and retail operations. Subsequent to DTLA providing funding and management resources to LAFI, DTLA and its management team were locked out of the LAFI facility in late October 2017.

ITEM 1A. RISK FACTORS

The Company qualifies as a smaller reporting company, as defined by Item 10 of Regulation S-K and, thus, are not required to provide the information required by this Item.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Common Stock Offering

approved a one-time, limited anti-dilution protection to certain investors who, in the last 12 months, invested at a per share price higher than the Offering Price.

Unless otherwise indicated, all of the following sales or issuances of Company securities were conducted under the exemption from registration as provided under Section 4(2) of the Securities Act of 1933 (and also qualified for exemption under 4(5), formerly 4(6) of the Securities Act of 1933, except as noted below). All of the shares issued were issued in transactions not involving a public offering, are considered to be restricted stock as defined in Rule 144 promulgated under the Securities Act of 1933 and stock certificates issued with respect thereto bear legends to that effect.

Common Stock Issuances

A summary of the Company’s common stock transactions for the nine months ended September 30, 2021 is as follows:

·The Company sold 8,000 shares of common stock for cash proceeds of $6,000.

·The Company sold 238,236 shares of common stock under the Offering for proceeds of $121,500. See “Common Stock Offering” above.

·The Company issued 30,000 shares of common stock in settlement of $30,000 of liabilities and recognized a gain on extinguishment of debt in connection with this settlement. which is recorded as other income for the three and nine-month periods ended September 30, 2021.