1606 Corp., incorporated in February 2021 and spun off from Singlepoint Inc., focuses on AI chatbot technology for the CBD industry and public companies. As of September 30, 2024, the company reported total assets of $43.8 million, with current assets of $43.8 million and cash reserves of $26.8 million. However, it faces significant financial challenges, with total liabilities amounting to $2.14 million and stockholders' equity reflecting a deficit of $2.1 million.

For the three months ended September 30, 2024, 1606 Corp. reported no revenue, a decline from $78 in the same period in 2023. For the nine months ended September 30, 2024, revenue increased to $7.2 million from $1.6 million in 2023, primarily due to sales from CBD products, which the company has since decided to discontinue. The gross loss for the nine-month period was $118, an improvement from a gross loss of $3,228 in the previous year.

Operating expenses surged to $3.25 million for the third quarter of 2024, compared to $492,487 in 2023, largely due to stock-based compensation totaling approximately $3 million. Consequently, the net loss for the third quarter was $3.57 million, significantly higher than the $566,308 loss reported in the same quarter of the previous year. For the nine-month period, the net loss reached $4.2 million, up from $1.4 million in 2023.

The company has been actively pursuing financing to sustain operations, reporting net cash used in operating activities of $710,699 for the nine months ended September 30, 2024, compared to $591,749 in 2023. Financing activities provided $688,540 in cash during the same period, an increase from $607,500 in 2023, with notable inflows from the sale of common stock and convertible notes.

Strategically, 1606 Corp. launched the AI chatbot ChatCBDW in October 2023 and completed Chat IR, an AI bot for public companies, in April 2024. The company signed a nonbinding Letter of Intent to acquire a stake in Adnexus, an AI innovations firm, in September 2024. Management has indicated a need for approximately $1 million to continue operations over the next year and is pursuing additional equity financing through private placements.

As of September 30, 2024, the company identified material weaknesses in its internal controls, including a lack of a functioning audit committee and inadequate segregation of duties, which could impact financial reporting.