Kaya Holdings, Inc. (KAYS): A First Look at Its 2024 Form 10-K

Kaya Holdings, Inc. ("KAYA" or "the Company") is a microcap holding company with a history in legal marijuana retail and cultivation in Oregon and new ventures in psychedelic therapy and international cannabis markets. With a fiscal year end of December 31, 2024, KAYA’s latest 10-K tells the story of a pivot from its U.S. dispensary business toward Oregon-licensed psilocybin treatment centers and overseas cannabis production. We’ve distilled the key points you need to know as an investor.

Warren.AI 💰 2.0 / 10

---

Table of Contents

1. Business Overview (Item 1)
2. Financial Performance (Items 7 & 8)
3. Cash Flow Analysis (Item 8)
4. Risks & Contingencies (Item 1A)
5. Going Concern & Liquidity (Note 2)
6. Non-GAAP & One-Time Items
7. Capital Structure & Dilution
8. International Operations
9. Assets Held for Sale & Discontinued Operations (MJAI)
10. Segment Reporting (Note 16)
11. Critical Accounting Policies
12. Outlook & Investment Score

---

1. Business Overview (Item 1)

Core Activities

• Psychedelic Treatment Clinics: KAYA formed Fifth Dimension Therapeutics, Inc. ("FDT") in late 2022 to operate psilocybin treatment centers in Oregon. In April 2024 it received a license for its flagship facility, The Sacred Mushroom™ in Portland (approx. 11,000 sq. ft.).
• U.S. Cannabis: From 2014 to mid-2024, KAYA and its subsidiary, Marijuana Holdings Americas, Inc. ("MJAI"), ran 4 Kaya Shack™ dispensaries in Oregon and operated grow facilities. These operations were shuttered and classified as discontinued in June 2024.
• International Cannabis: Through majority-owned subsidiary Kaya Brands International (KBI), KAYA holds interests (up to 50–65%) in cannabis production licenses in Greece and Israel, aiming to serve the EU market.

Recent Strategic Moves

1. Shift to Psilocybin: Reduced U.S. retail footprint, focusing on the growing legal psilocybin therapy market in Oregon.
2. License & Pre-Opening Costs: The Company incurred significant costs in facility build-out, licensing, staffing and training for The Sacred Mushroom™, opening in September 2024.
3. Discontinued MJAI: Closed all MJAI dispensaries by H2 2024, producing net proceeds from property sales that reduced debt but left the Company with a discontinued retail segment.
4. Pursuit of Capital: Raised about $615K in 2024 via private debt/equity offerings (vs. $370K in 2023) to fund new ventures.

---

2. Financial Performance (Items 7 & 8)

2024 Highlights

• Net Sales (Continuing): $7.1K (psilocybin center pre-launch/early sales)
• Net Sales (Discontinued): $28K (cannabis retail during early 2024)
• Total Operating Expenses: $2.02M (continuing) vs. $1.02M in 2023
• Professional fees soared to $1.38M (vs. $753K) due to stock-based compensation and licensing costs
• G&A: $605K vs. $270K
• Operating Loss: $2.02M (vs. $1.02M loss)
• Other Expenses: Interest $738K (vs. $665K), Debt discount amortization $119K
• Derivative Liability Gain: $814K (vs. $3.3M in 2023)
• Net Loss (Continuing): $(2.06M)
• Net Loss (Discontinued): $(162K)
• Net Loss Attributable: $(2.08M)

2023 Comparison

• Net Income: $1.61M driven by non-cash gains on derivatives (+$3.3M), sale of land/license (+$178K), and other non-operating items.
• Revenue (Discontinued): $196K (cannabis retail)

Takeaway: 2024’s heavy spending on psychedelic center build-out and lost retail revenues led to a $2.08M net loss, more than in 2023 when non-cash gains skewed profits.

---

3. Cash Flow Analysis (Item 8)

Operating Activities

• Continuing: $(830K) in cash used (vs. $(1.18M) in 2023)
• Discontinued: $(162K) used (vs. $137K provided in 2023)

Investing Activities

• 2024: $4K provided (vs. $813K in 2023)
• Property and equipment expenditures: $(27K)
• Land & license sales: minimal ($31K)

Financing Activities

• 2024: $1M provided (vs. $245K in 2023)
• $1.56M new debt, $(553K) debt repayments

Ending Cash: $39.7K (vs. $29.1K)

Working Capital Deficit: $(8.04M)

Liquidity: Continues to rely on debt/equity infusions. In April 2025, payroll was suspended due to capital constraints.

---

4. Risks & Contingencies (Item 1A)

Key risk factors:

1. Going Concern: Significant losses, negative working capital ($8M), need for financing
2. Regulatory: Marijuana & psilocybin remain illegal at the federal level
3. Capital Intensive: Psilocybin center build-out and grow facilities need cash
4. Competition: In cannabis and emerging psychedelic therapy markets
5. Litigation: Settled vendor suit ($12K) and counsel suit ($16K)
6. Federal Law: Cannabis/psilocybin still Schedule I under U.S. DEA
7. Stock Overhang: Massive derivative liabilities and convertible debt could issue tens of millions of shares.

---

5. Going Concern & Liquidity (Note 2)

Substantial Doubt: The Company recognized net losses from continuing operations of $(2.06M) in 2024. With cash of $39.7K and a $8M working capital deficit, management will need to raise capital or form strategic alliances to continue.

Management Plans: Selling equity/debt, exploring partnerships, and redeploying licenses.

Investor Alert: The 10-K is explicit about the likelihood that KAYA must raise additional funds in 2025 or curtail operations.

---

6. Non-GAAP & One-Time Items

• Derivative Liability Gains: +$814K in 2024 (vs. +$3.3M in 2023)
• Debt Discount Amortization: $119K (non-cash expense)
• Sale of Assets: $1.7K gain on license sales; minimal land sales in 2024
• Accrued Compensation: $727K restructured to 2026 obligations

Removing these items still leaves a significant cash burn in 2024.

---

7. Capital Structure & Dilution

Convertible Debt: $8.56M principal (net of discounts), interest at 8–15%, convertible at $0.02–0.08 per share if triggered, with variable conversion ratchets. Non-Convertible Debt: $70.9K Related Party Payables: $750K due to CEO and affiliates (0% interest until Jan 1, 2025; then 9% imputed) Convertible Preferred: 40 Series D shares (2 seats on board, 1% voting ownership each, convertible into 27.7M common shares)

Dilution Risk: Up to 200M+ new shares could be issued if all debentures & preferred are converted, which would further depress share price.

---

8. International Operations

Kaya Brands International, Inc. (65% owned)

• Greece: 50% stakes in two medical cannabis production and processing licenses (Epidaurus and Thebes); no plant builds yet due to financing
• Israel: 65% stake in Shalvah, licensed for medical cannabis cultivation/processing; early development stage.

Segment Impact: No revenues from international JV’s as of December 31, 2024. These assets carry small goodwill balances and significant build-out risk.

---

9. Assets Held for Sale & Discontinued Operations (MJAI)

Discontinued: MJAI’s dispensaries were closed mid-2024. Net operating loss from discontinued operations: $(162K) in 2024 vs. $137K income in 2023. Assets Held: Remaining MJAI inventory ($90), fixed assets of $100K in property and equipment under MJAI Sale of Lebanon Property: $769.5K sale in Feb 2023; net proceeds funding convertible note repayments.

---

10.

Segment Reporting (Note 16)

The Company reports a single operational segment: licensing, building and operating cannabis and psychedelic health centers. MJAI’s business is shown as discontinued.

---

11.

Critical Accounting Policies

1. Fair Value of Derivatives (ASC 815)
2. Convertible Debt & Tainting (down-round ratchet)
3. Revenue Recognition (Cash & Carry; ASC 606)
4. Impairment Testing (ASC 360)
5. Stock-Based Compensation (ASC 718)
6. Section 280E Tax Treatment (ASC 740)

---

12.

Outlook & Investment Score

Strengths

• Early entry into legal psilocybin therapy in Oregon
• Licensed, built and opened The Sacred Mushroom treatment center
• Ten years of legal cannabis infrastructure and overseas JV’s planned

Weaknesses

• No proven profitable operation since 2014; net loss of $2.08M in 2024
• Negative working capital ($8M) and cash total $39K
• $8.56M of convertible debt with severe dilution risk
• Federal illegality for cannabis and psilocybin

Investment Score: 2.0
A score of 2 reflects KAYAs pioneering psilocybin therapy foray but lacks a track record of profitability, heavy debt load, going concern risk and massive dilution potential. Only investors willing to bet on a high-risk, speculative turnaround in psychedelic medicine with minimal current value would find compelling upside.

---

Net Loss (2024): $2.08M

Disclosure: This is not financial advice. Always consult your financial advisor before investing.