Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Feb. 15, 2021 | Jun. 30, 2020 | |
Document And Entity Information | |||
Entity Registrant Name | AGRITEK HOLDINGS, INC. | ||
Entity Central Index Key | 0001040850 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2019 | ||
Entity Incorporation, State or Country Code | DE | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity File Number | 001-15673 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | No | ||
Entity Interactive Data Current | No | ||
Is Entity Emerging Growth Company? | false | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Public Float | $ 1,057,945 | ||
Entity Common Stock, Shares Outstanding | 73,864,989 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2019 | ||
Entity Shell Company | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
CURRENT ASSETS: | ||
Cash | $ 131,864 | $ 77,016 |
Accounts receivable | 1,990 | |
Marketable Securities | 8,703 | |
Other receivable - related party | 94,750 | |
Prepaid expenses and other assets | 4,000 | 28,000 |
Total Current Assets | 230,614 | 115,709 |
OTHER ASSETS: | ||
Notes receivable | 170,000 | |
Land | 129,554 | 129,554 |
Property and equipment, net | 141,258 | 153,079 |
Right-of-use asset, net | 239,302 | |
Other assets | 825 | 825 |
Total Assets | 741,553 | 569,167 |
CURRENT LIABILITIES: | ||
Accounts payable | 262,732 | 260,852 |
Accrued expenses and other liabilities | 1,927,306 | 932,216 |
Due to related party | 5,596 | 1,283 |
Deferred rent | 24,916 | 24,916 |
Lease liability | 162,506 | |
Convertible notes payable, net | 1,613,385 | 717,715 |
Convertible notes payable - related party | 147,864 | |
Derivative liabilities | 1,420,681 | 1,561,232 |
Non-convertible notes payable | 21,500 | 21,500 |
Total Current Liabilities | 5,586,486 | 3,519,714 |
LONG-TERM LIABILITIES: | ||
Lease payable - long-term | 76,796 | |
Total Liabilities | 5,663,282 | 3,519,714 |
Commitments and contingencies | ||
STOCKHOLDERS' DEFICIT: | ||
Series B Preferred stock: $0.01 par value; 1,000,000 shares authorized; 1,000 issued and outstanding at December 31, 2019 and 2018 | 10 | 10 |
Common stock: $0.0001 par value; 1,499,000,000 shares authorized; 21,889,418 and 5,628,475 issued and outstanding at December 31, 2019 and 2018, respectively | 2,189 | 563 |
Common stock issuable: 10,423,084 and 302,251 commons stock issuable at December 31, 2019 and 2018, respectively | 1,042 | 30 |
Additional paid-in capital | 30,111,273 | 24,047,027 |
Accumulated comprehensive gain (loss) | (7,822) | |
Accumulated deficit | (35,036,243) | (26,990,355) |
Total Stockholders' Deficit | (4,921,729) | (2,950,547) |
Total Liabilities and Stockholders' Deficit | $ 741,553 | $ 569,167 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Preferred stock Series B par value | $ 0.01 | $ 0.01 |
Preferred stock Series B authorized | 1,000,000 | 1,000,000 |
Preferred stock Series B issued | 1,000 | 1,000 |
Preferred stock Series B outstanding | 1,000 | 1,000 |
Common stock par value | $ 0.0001 | $ 0.0001 |
Common stock shares authorized | 1,499,000,000 | 1,499,000,000 |
Common stock shares issued | 21,889,418 | 5,628,475 |
Common stock shares outstanding | 21,889,418 | 5,628,475 |
Common stock issuable | 10,423,084 | 302,251 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Statement [Abstract] | ||
REVENUES, NET | $ 3,339 | |
COST OF REVENUE | 61,168 | |
Gross loss | (57,829) | |
OPERATING EXPENSES: | ||
Professional fees | 415,206 | 383,664 |
Compensation expense | 5,123,623 | 208,365 |
General and administrative expenses | 288,918 | 705,025 |
Total Operating Expenses | 5,827,747 | 1,297,054 |
LOSS FROM OPERATIONS | (5,827,747) | (1,354,883) |
OTHER INCOME (EXPENSE): | ||
Interest expense | (2,824,298) | (2,724,307) |
Derivative income | 1,187,653 | 2,880,913 |
Loss on debt settlement | (72,871) | (58,759) |
Realized loss on marketable securities | (7,822) | |
Impairment loss | (535,803) | (131,000) |
Other income (expense) | 35,000 | (24,242) |
Total Other Expense | (2,218,141) | (57,395) |
NET LOSS | (8,045,888) | (1,412,278) |
Other comprehensive gain (loss): | ||
Unrealized gain (loss) on marketable securities | (33,159) | |
Comprehensive loss | $ (8,045,888) | $ (1,445,437) |
NET LOSS PER COMMON SHARE: | ||
Continuing operations - basic | $ (0.57) | $ (0.34) |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||
Basic | 14,187,890 | 4,124,863 |
CONSOLIDATED STATEMENT OF STOCK
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT - USD ($) | Series B Preferred stock | Common stock | Common Stock Issuable | Additional Paid-in Capital | Accumulated Deficit | Accumulated other comprehensive gain | Total |
Beginning balance, shares at Dec. 31, 2017 | 1,000 | 3,618,402 | 262,872 | ||||
Beginning balance, amount at Dec. 31, 2017 | $ 10 | $ 362 | $ 26 | $ 19,389,888 | $ (25,578,077) | $ 25,337 | $ (6,162,454) |
Common stock issued upon conversion of convertible debt and accrued interest, shares | 1,676,665 | 1,676,665 | |||||
Common stock issued upon conversion of convertible debt and accrued interest, amount | $ 168 | 1,006,092 | $ 1,006,260 | ||||
Reclassification of derivative liability upon note conversions | 3,105,639 | $ 3,105,639 | |||||
Common stock issued for services, shares | 33,500 | 33,500 | |||||
Common stock issued for services, amount | $ 3 | 120,447 | $ 120,450 | ||||
Common stock to be issued pursuant to Stock Purchase Agreements, shares | 55,028 | ||||||
Common stock to be issued pursuant to Stock Purchase Agreements, amount | $ 6 | 424,995 | 425,001 | ||||
Common stock issued upon cashless warrant exercises, shares | 284,259 | ||||||
Common stock issued upon cashless warrant exercises, amount | $ 28 | (28) | |||||
Unrealized loss on marketable securities | (33,159) | (33,159) | |||||
Realized loss on marketable securities upon impairment | |||||||
Common stock issued for stock payable, shares | 15,649 | (15,649) | |||||
Common stock issued for stock payable, amount | $ 2 | $ (2) | |||||
Net loss | (1,412,278) | (1,412,278) | |||||
Ending balance, shares at Dec. 31, 2018 | 1,000 | 5,628,475 | 302,251 | ||||
Ending balance, amount at Dec. 31, 2018 | $ 10 | $ 563 | $ 30 | 24,047,027 | (26,990,355) | (7,822) | $ (2,950,547) |
Common stock issued upon conversion of convertible debt and accrued interest, shares | 3,260,943 | 3,270,943 | |||||
Common stock issued upon conversion of convertible debt and accrued interest, amount | $ 326 | 398,393 | $ 398,719 | ||||
Reclassification of derivative liability upon note conversions | 499,128 | ||||||
Loss on debt settlement | 72,871 | $ 72,871 | |||||
Common stock issued for services, shares | 13,000,000 | 10,100,000 | 13,000,000 | ||||
Common stock issued for services, amount | $ 1,300 | $ 1,010 | 5,078,856 | $ 5,081,166 | |||
Common stock to be issued pursuant to Stock Purchase Agreements, shares | 20,833 | ||||||
Common stock to be issued pursuant to Stock Purchase Agreements, amount | $ 2 | 14,998 | 15,000 | ||||
Unrealized loss on marketable securities | |||||||
Realized loss on marketable securities upon impairment | 7,822 | 7,822 | |||||
Net loss | (8,045,888) | (8,045,888) | |||||
Ending balance, shares at Dec. 31, 2019 | 1,000 | 21,889,418 | 10,423,084 | ||||
Ending balance, amount at Dec. 31, 2019 | $ 10 | $ 2,189 | $ 1,042 | $ 30,111,273 | $ (35,036,243) | $ (4,921,729) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
CASH FLOWS USED IN OPERATING ACTIVITIES | ||
Net loss | $ (8,045,888) | $ (1,412,278) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||
Depreciation | 46,336 | 38,104 |
Stock-based compensation | 5,081,166 | 120,450 |
Amortization of debt issuance cost | 111,998 | 109,186 |
Amortization of debt discount | 1,334,121 | 2,407,751 |
Derivative liability (income) expense | (1,187,653) | (2,880,811) |
Non-cash default interest on convertible notes | 1,163,135 | |
Realized loss on marketable securities | 7,822 | |
Loss on debt extinguishment | 72,871 | 58,759 |
Loss (gain) on legal settlement | (35,000) | 24,242 |
Impairment loss | 535,803 | 115,000 |
Change in operating assets and liabilities: | ||
Prepaid expenses and other assets | (311,110) | 41,510 |
Accounts payable and other liabilities | (125,569) | 124,023 |
Other receivable | (96,033) | (6,432) |
NET CASH USED IN OPERATING ACTIVITIES | (1,448,001) | (1,260,492) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of property, equipment and furniture | (34,515) | (34,323) |
Purchase of notes receivable | (20,000) | (75,000) |
NET CASH USED IN INVESTING ACTIVITIES | (54,515) | (109,323) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceed from convertible debt, net of fees and OID | 1,394,500 | 925,000 |
Repayment of convertible debt | (178,058) | |
Repayment of non-convertible note payable | (30,000) | |
Proceeds from sale of common stock | 15,000 | 425,000 |
Proceeds from convertible debt - related party | 175,000 | |
Repayment of convertible debt - related party | (27,136) | |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 1,557,364 | 1,141,942 |
NET INCREASE (DECREASE) IN CASH | 54,848 | (227,873) |
CASH, beginning of the period | 77,016 | 304,889 |
CASH, end of the period | 131,864 | 77,016 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Cash paid during the period for interest | 6,811 | |
Cash paid during the period for income taxes | ||
Non-cash investing and financing activities: | ||
Stock issued for stock payable | 2 | |
Common stock issued on conversion of convertible debt and interest | 398,719 | 1,006,260 |
Increase in derivative liabilities | 1,546,230 | 2,130,851 |
Initial right-of-use asset and liability | 310,259 | |
Reduction in right-of-use asset and liability | 70,957 | |
Unrealized (loss) gain on marketable securities | (33,159) | |
Issuance of common stock for cashless warrant exercise | 28 | |
Reclassification of derivative liability to equity upon debt conversion | $ 499,128 | $ 3,105,639 |
ORGANIZATION AND NATURE OF OPER
ORGANIZATION AND NATURE OF OPERATIONS | 12 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND NATURE OF OPERATIONS | NOTE 1 - ORGANIZATION AND NATURE OF OPERATIONS Agritek Holdings Inc. (“the Company” or “Agritek Holdings”) has wholly-owned subsidiaries, Prohibition Products Inc. (“PPI”) and Agritek Venture Holdings, Inc. (“AVHI”) which are inactive. Agritek Holdings provides strategic capital and functional expertise to accelerate the commercialization of its diversified portfolio of holdings. The Company is focused on three high-value segments of the cannabis market, including real estate investment, intellectual property brands; and infrastructure, with operations in three U.S. States, Colorado, Washington State, California as well as Canada and Puerto Rico. Agritek Holdings invests its capital via real estate holdings, licensing agreements, royalties and equity in acquisition operations. We provide key business services to the legal cannabis sector including: • Funding and Financing Solutions for Agricultural Land and Properties zoned for the regulated Cannabis Industry. • Dispensary and Retail Solutions • Commercial Production and Equipment Build Out Solutions • Multichannel Supply Chain Solutions • Branding, Marketing and Sales Solutions of proprietary product lines • Consumer Product Solutions The Company intends to bring its’ array of services to each new state that legalizes the use of cannabis according to appropriate state and federal laws. Our primary objective is acquiring commercial properties to be utilized in the commercial marijuana industry as cultivation facilities in compliance with state laws. This is an essential aspect of our overall growth strategy because once acquired and re-zoned, the value of such real property is substantially higher than under the previous zoning and use. Once properties are identified and acquired to be used for purposes related to the commercial marijuana industry as provided for by state law, and we plan to create vertical channels within that legal jurisdiction including equipment financing, payment processing and marketing of exclusive brands and services to retail dispensaries. The Company’s business focus is primarily to hold, develop and manage real property. The Company shall also provide oversight on every property that is part of its portfolio. This can include complete architectural design and subsequent build-outs, general support, landscaping, general up-keep, and state of the art security systems. At this time, the Company does not grow, process, own, handle, transport, or sell marijuana as the Company is organized and directed to operate strictly in accordance with all applicable state and federal laws. As the legal environment changes in Colorado, California and other states, the Company’s management may explore business opportunities that involve ownership interests in dispensaries and growing operations if and when such business opportunities become legally permissible under applicable state and federal laws. On March 3, 2019, the Company filed an amendment to its Certificate of Incorporation, with the Delaware Secretary of State, to increase its authorized common stock from 1,250,000,000 shares to 1,499,000,000 shares (see Note 13). The Company’s 1,500,000,000 authorized shares consisted of 1,499,000,000 shares of common stock, par value $0.0001 per share, and 1,000,000 shares of preferred stock, par value $0.01 per share. On March 26, 2019, the Company filed an amendment to its Certificate of Incorporation, with the Delaware Secretary of State, for 1-for-200 reverse stock split of our common stock (the “Reverse Stock Split”) effective March 26, 2019. The number of shares of common stock subject to outstanding options, warrants and convertible securities were also reduced by a factor of two-hundred and no fractional shares were issued. All historical share in this report have been adjusted to reflect the Reverse Stock Split (see Note 13). There were no changes to the authorized number of shares and the par value of our common stock. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications had no impact on net earnings, financial position or cash flows. Basis of Presentation and Principles of Consolidation The Company’s consolidated financial statements include the consolidated accounts of Agritek Holdings and its’ inactive wholly owned subsidiaries, AVHI and PPI (a Florida corporation, was originally formed on July 1, 2013 (f/k/a The American Hemp Trading Company). All intercompany accounts and transactions have been eliminated in consolidation. Going Concern These consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying consolidated financial statements, the Company had net loss of $8,045,888 and $1,412,278 for the years ended December 31, 2019 and 2018, respectively. The net cash used in operations were $1,448,001 and $1,260,492 for the years ended December 31, 2019 and 2018, respectively. Additionally, the Company had an accumulated deficit of $35,036,243 and $26,990,355 at December 31, 2019 and December 31, 2018, respectively, had a working capital deficit of $5,355,872 at December 31, 2019, had no revenues from operations in 2019 and 2018 and we defaulted on our debt. Management believes that these matters raise substantial doubt about the Company’s ability to continue as a going concern for twelve months from the issuance date of this report. Management cannot provide assurance that we will ultimately achieve profitable operations or become cash flow positive or raise additional debt and/or equity capital. Management believes that our capital resources are not currently adequate to continue operating and maintaining its business strategy for a period of twelve months from the issuance date of this report. The Company will seek to raise capital through additional debt and/or equity financings to fund its operations in the future. Although the Company has historically raised capital from sales of equity and from the issuance of promissory notes, there is no assurance that it will be able to continue to do so. If the Company is unable to raise additional capital or secure additional lending in the near future, management expects that the Company will need to curtail or cease operations. These consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Significant estimates during the years ended December 31, 2019 and 2018 include the useful life of property and equipment, valuation of right-of-use (“ROU”) assets and operating lease liabilities, impairment of long-term assets, estimates of current and deferred income taxes and deferred tax valuation allowances, the fair value of non-cash equity transactions and the valuation of derivative liabilities. Fair Value of Financial Instruments and Fair Value Measurements FASB ASC 820 - Fair Value Measurements and Disclosures, defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. FASB ASC 820 requires disclosures about the fair value of all financial instruments, whether or not recognized, for financial statement purposes. Disclosures about the fair value of financial instruments are based on pertinent information available to the Company on December 31, 2019. Accordingly, the estimates presented in these financial statements are not necessarily indicative of the amounts that could be realized on disposition of the financial instruments. FASB ASC 820 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows: Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. Level 2—Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data. Level 3—Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information. The carrying amounts reported in the consolidated balance sheets for cash, due from and to related parties, prepaid expenses, accounts payable and accrued liabilities approximate their fair market value based on the short-term maturity of these instruments. At December 31, 2019 At December 31, 2018 Description Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Derivative liabilities — — $ 1,420,681 — — $ 1,561,232 A roll forward of the level 3 valuation financial instruments is as follows: Derivative Liabilities Balance at December 31, 2018 $ 1,561,232 Initial valuation of derivative liabilities included in debt discount 1,546,230 Initial valuation of derivative liabilities included in derivative income (expense) 1,880,621 Reclassification of derivative liabilities to gain (loss) on debt extinguishment (499,128 ) Change in fair value included in derivative income (expense) (3,068,274 ) Balance at December 31, 2019 $ 1,420,681 ASC 825-10 “Financial Instruments”, allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding instruments. Cash and Cash Equivalents For purposes of the consolidated statements of cash flows, the Company considers all highly liquid instruments with a maturity of three months or less at the purchase date and money market accounts to be cash equivalents. At December 31, 2019 and 2018, the Company did not have any cash equivalents. The Company maintains its cash in bank and financial institution deposits that at times may exceed federally insured limits. There were no balances in excess of FDIC insured levels as of December 31, 2019 and 2018. The Company has not experienced any losses in such accounts through December 31, 2019. Property and Equipment Property are stated at cost and are depreciated, except for land, using the straight-line method over their estimated useful lives, which range from three to five years. Leasehold improvements are depreciated over the shorter of the useful life or lease term including scheduled renewal terms. Maintenance and repairs are charged to expense as incurred. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. The Company reviews land, property and equipment for potential impairment whenever events or changes in circumstances indicate that the carrying amounts of assets may not be recoverable (see Note 8). Impairment of Long-Lived Assets In accordance with ASC Topic 360, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. Derivative Liabilities The Company has certain financial instruments that are embedded derivatives associated with capital raises. The Company evaluates all its financial instruments to determine if those contracts or any potential embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with ASC 815-40 (formerly EITF 00-19, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock). This accounting treatment requires that the carrying amount of any embedded derivatives be recorded at fair value at issuance and marked-to-market at each balance sheet date. In the event that the fair value is recorded as a liability, as is the case with the Company, the change in the fair value during the period is recorded as either other income or expense. Upon conversion, exercise or repayment, the respective derivative liability is marked to fair value at the conversion, repayment or exercise date and then the related fair value amount is reclassified to other income or expense as part of gain or loss on debt extinguishment. In July 2017, FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features. These amendments simplify the accounting for certain financial instruments with down-round features. The amendments require companies to disregard the down-round feature when assessing whether the instrument is indexed to its own stock, for purposes of determining liability or equity classification. The guidance was adopted as of January 1, 2019 and the Company elected to record the effect of this adoption retrospectively to outstanding financial instruments with a down round feature by means of a cumulative-effect adjustment to the condensed consolidated balance sheet as of the beginning of 2019, the period which the amendment is effective. The Company adopted ASU No. ASU No. 2017-11 in the first quarter of 2019, and the adoption did not have any impact on its consolidated financial statement and there was no cumulative effect adjustment. Revenue Recognition In May 2014, FASB issued an update Accounting Standards Update, ASU 2014-09, establishing ASC 606 - Revenue from Contracts with Customers. ASU 2014-09, as amended by subsequent ASUs on the topic, establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most of the existing revenue recognition guidance. This standard, which is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2017, requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and also requires certain additional disclosures. The Company adopted this standard on January 1, 2018 using the modified retrospective approach, which requires applying the new standard to all existing contracts not yet completed as of the effective date and recording a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. Based on an evaluation of the impact ASU 2014-09 will have on the Company’s sources of revenue, the Company has concluded that ASU 2014-09 did not have any impact on the process for, timing of, and presentation and disclosure of revenue recognition from customers and there was no cumulative effect adjustment. The Company does not have revenues from continuing operations in 2019 and minimal in 2018. Stock-Based Compensation Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award. Through March 31, 2018, pursuant to ASC 505-50 - Equity-Based Payments to Non-Employees, all share-based payments to non-employees, including grants of stock options, were recognized in the consolidated financial statements as compensation expense over the service period of the consulting arrangement or until performance conditions are expected to be met. Using a Black Scholes valuation model, the Company periodically reassessed the fair value of non-employee options until service conditions are met, which generally aligns with the vesting period of the options, and the Company adjusts the expense recognized in the consolidated financial statements accordingly. In June 2018, the FASB issued ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting, which simplifies several aspects of the accounting for nonemployee share-based payment transactions by expanding the scope of the stock-based compensation guidance in ASC 718 to include share-based payment transactions for acquiring goods and services from non-employees. ASU No. 2018-07 is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods. Early adoption is permitted, but entities may not adopt prior to adopting the new revenue recognition guidance in ASC 606. The Company adopted ASU No. 2018-07 in January 1, 2019, and the adoption did not have any impact on its consolidated financial statements. Basic and Diluted Loss Per Share Pursuant to ASC 260-10-45, basic loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding for the periods presented. Diluted loss per share is computed by dividing net loss by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. Potentially dilutive common shares consist of common stock issuable for stock options and warrants (using the treasury stock method), convertible notes and common stock issuable. These common stock equivalents may be dilutive in the future. The following potentially dilutive equity securities outstanding as of December 31, 2019 and 2018 were not included in the computation of dilutive loss per common share because the effect would have been anti-dilutive: December 31, 2019 2018 Stock warrants 6,998,367 249,479 Convertible debt 122,548,848 5,292,896 Series B preferred stock 10,141,626 — 139,688,841 5,542,375 Accounts Receivable The Company records accounts receivable from amounts due from its customers upon the shipment of products. The allowance for losses is established through a provision for losses charged to expenses. Receivables are charged against the allowance for losses when management believes collectability is unlikely. The allowance is an amount that management believes will be adequate to absorb estimated losses on existing receivables, based on evaluation of the collectability of the accounts and prior loss experience. While management uses the best information available to make its evaluations, this estimate is susceptible to significant change in the near term. As of December 31, 2019 and 2018, based on the above criteria, the Company has an allowance for doubtful accounts of $43,408. Inventory Inventory is valued at the lower of cost or market value. Cost is determined using the first in first out (FIFO) method. Provision for potentially obsolete or slow-moving inventory is made based on management analysis or inventory levels and future sales forecasts. As of December 31, 2019 and 2018, the Company had no inventory in stock. Marketable Securities The Company classifies its marketable securities as available-for-sale securities, which are carried at their fair value based on the quoted market prices of the securities with unrealized gains and losses, net of deferred income taxes, reported as accumulated other comprehensive income (loss), a separate component of stockholders’ equity. Realized gains and losses on available-for-sale securities are included in net earnings in the period earned or incurred (see Note 3). Deferred rent The Company calculates the total cost of the lease for the entire lease period and divides that amount by the number of months of the lease. The result is the average monthly expense and is charged to rent expense with the offset to deferred rent, irrespective of the actual amount paid. The amounts paid are charged to the deferred rent account. As of December 31, 2019, and 2018, the Company has a balance of $24,916 in deferred rent which is included in the consolidated balance sheet. Income Taxes The Company accounts for income taxes in accordance with ASC 740-10, Income Taxes. Deferred tax assets and liabilities are recognized to reflect the estimated future tax effects, calculated at the tax rate expected to be in effect at the time of realization. A valuation allowance related to a deferred tax asset is recorded when it is more likely than not that some portion of the deferred tax asset will not be realized. Deferred tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates of the date of enactment. ASC 740-10 prescribes a recognition threshold that a tax position is required to meet before being recognized in the financial statements and provides guidance on recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues. Interest and penalties are classified as a component of interest and other expenses. To date, the Company has not been assessed, nor paid, any interest or penalties. Uncertain tax positions are measured and recorded by establishing a threshold for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Only tax positions meeting the more-likely-than-not recognition threshold at the effective date may be recognized or continue to be recognized. The Company’s tax years subsequent to 2005 remain subject to examination by federal and state tax jurisdictions. Advertising The Company records advertising costs as incurred. For the years ended December 31, 2019, and 2018, advertising expense was $4,619 and $60,842 (including $46,900 related party expense), respectively. Related parties Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases On January 1, 2019, the Company adopted ASU No. 2016-02, applying the package of practical expedients to leases that commenced before the effective date whereby the Company elected to not reassess the following: (i) whether any expired or existing contracts contain leases and; (ii) initial direct costs for any existing leases. For contracts entered into on or after the effective date, at the inception of a contract the Company assessed whether the contract is, or contains, a lease. The Company’s assessment is based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether we obtain the right to substantially all the economic benefit from the use of the asset throughout the period, and (3) whether it has the right to direct the use of the asset. The Company will allocate the consideration in the contract to each lease component based on its relative stand-alone price to determine the lease payments. The Company has elected not to recognize right-of-use (“ROU”) assets and lease liabilities for short-term leases that have a term of 12 months or less. Leases entered into prior to January 1, 2019, are accounted for under ASC 840 and were not reassessed. We have elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a term of 12 months or less. Operating lease ROU assets represents the right to use the leased asset for the lease term and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most leases do not provide an implicit rate, the Company use an incremental borrowing rate based on the information available at the adoption date in determining the present value of future payments. Lease expense for minimum lease payments is amortized on a straight-line basis over the lease term and is included in general and administrative expenses in the condensed consolidated statements of operations. Recent Accounting Pronouncements In August 2018, the FASB issued ASU 2018-13 —Fair Value Measurement (Topic 820): Disclosure Framework Changes to the Disclosure Requirements for Fair Value Measurement Removals 1. The amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy 2. The policy for timing of transfers between levels 3. The valuation processes for Level 3 fair value measurements 4. For nonpublic entities, the changes in unrealized gains and losses for the period included in earnings for recurring Level 3 fair value measurements held at the end of the reporting period. Modifications 1. In lieu of a roll forward for Level 3 fair value measurements, a nonpublic entity is required to disclose transfers into and out of Level 3 of the fair value hierarchy and purchases and issues of Level 3 assets and liabilities. 2. For investments in certain entities that calculate net asset value, an entity is required to disclose the timing of liquidation of an investee’s assets and the date when restrictions from redemption might lapse only if the investee has communicated the timing to the entity or announced the timing publicly. 3. The amendments clarify that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date. Additions 1. The changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period. 2. The range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. For certain unobservable inputs, an entity may disclose other quantitative information (such as the median or arithmetic average) in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements. In addition, the amendments eliminate at a minimum an entity shall disclose at a minimum Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying unaudited consolidated financial statements. |
GOING CONCERN
GOING CONCERN | 12 Months Ended |
Dec. 31, 2019 | |
Going Concern | |
GOING CONCERN | Going Concern These consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying consolidated financial statements, the Company had net loss of $8,045,888 and $1,412,278 for the years ended December 31, 2019 and 2018, respectively. The net cash used in operations were $1,448,001 and $1,260,492 for the years ended December 31, 2019 and 2018, respectively. Additionally, the Company had an accumulated deficit of $35,036,243 and $26,990,355 at December 31, 2019 and December 31, 2018, respectively, had a working capital deficit of $5,355,872 at December 31, 2019, had no revenues from operations in 2019 and 2018 and we defaulted on our debt. Management believes that these matters raise substantial doubt about the Company’s ability to continue as a going concern for twelve months from the issuance date of this report. Management cannot provide assurance that we will ultimately achieve profitable operations or become cash flow positive, or raise additional debt and/or equity capital. Management believes that our capital resources are not currently adequate to continue operating and maintaining its business strategy for a period of twelve months from the issuance date of this report. The Company will seek to raise capital through additional debt and/or equity financings to fund its operations in the future. Although the Company has historically raised capital from sales of equity and from the issuance of promissory notes, there is no assurance that it will be able to continue to do so. If the Company is unable to raise additional capital or secure additional lending in the near future, management expects that the Company will need to curtail or cease operations. These consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. |
MARKETABLE SECURITIES
MARKETABLE SECURITIES | 12 Months Ended |
Dec. 31, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
MARKETABLE SECURITIES | NOTE 3 – MARKETABLE SECURITIES The Company owns marketable securities (common stock) as of December 31, 2019, and 2018, as outlined below: December 31, 2019 2018 Beginning balance $ 8,703 $ 41,862 Unrealized loss marked to fair value — (33,159 ) Impairment of marketable securities (8,703 ) — Ending balance $ — $ 8,703 Petrogress Inc. (f/k/a 800 Commerce, Inc), was a commonly controlled entity until February 29, 2016, owed the Company $282,947 as of February 29, 2016, as a result of advances received from or payments made by the Company on behalf of Petrogress Inc. These advances were non-interest bearing and were due on demand. Effective February 29, 2016, the Company received 11,025 shares of common stock of Petrogress Inc. as settlement of the $282,947 owed to the Company. The market value on the date the Company received the shares of common stock was $16,525. During the year ended December 31, 2019, management determined that the marketable securities were impaired and recorded $7,822 of realized loss on marketable securities reflected in the accompanying statements of operations. As of December 31, 2019, the were no outstanding marketable securities. |
PREPAID EXPENSES
PREPAID EXPENSES | 12 Months Ended |
Dec. 31, 2019 | |
OTHER INCOME (EXPENSE): | |
PREPAID EXPENSES | NOTE 4 – PREPAID EXPENSES Prepaid expenses consisted of the following at December 31, 2019, and 2018: December 31, 2019 2018 Vendor deposits $ 4,000 $ 28,000 Total prepaid expenses $ 4,000 $ 28,000 During 2019, the Company impaired $25,000 of prepaid expenses, reflected in the statements of operations. |
CULTIVATION
CULTIVATION | 12 Months Ended |
Dec. 31, 2019 | |
Notes to Financial Statements | |
CULTIVATION | NOTE 5 – CULTIVATION On August 7, 2019, The Company entered into a Farm Service Agreement (“Agreement”) with a service provider to for cultivation of land and hemp plants for a fee of $127,500 for 17 acres of land. Pursuant to the Agreement the cultivation shall include; (i) basic farm services; (ii) registration and reporting; (iii) inspection and testing and; (iv) plowing, planting, weed and pest control, irrigation and cultivation. During the year ended December 31, 2019, the Company had paid $112,100 to the service provider which was recorded as an asset under Cultivation in the accompanying condensed consolidated balance sheet. During the year ended December 31, 2019, all the crops were damaged due to unfavorable weather which resulted in the impairment of the Cultivation assets and the Company recorded $112,100 of impairment loss for the same reflected in the accompanying statements of operations. As of December 31, 2019, there were no outstanding Cultivation asset. |
NOTE RECEIVABLE
NOTE RECEIVABLE | 12 Months Ended |
Dec. 31, 2019 | |
Receivables [Abstract] | |
NOTE RECEIVABLE | NOTE 6 – NOTE RECEIVABLE On April 5, 2017, the Company executed a five-year operational and exclusive licensing agreement with a third party who leases a 15,000-sq. ft. approved cultivation facility located in San Juan, Puerto Rico. The Company will be the exclusive funding source, and supervise all infrastructure buildout, equipment lease/finance, security systems and personnel and provide access of seasoned Colorado and California cultivation crews to ensure the facility meets all standard operating procedures as set forth by the Department of Health of Puerto Rico. Under the agreement, the Company is to receive $12,000 a month in consulting fees, licensing fees on all vaporizer and edible sales, equipment and lighting rental and financing fees along with equity interest in the property. As of December 31, 2019, and 2018, the Company had funded $20,000 and $170,000, respectively, for property renovations which was recorded as Note Receivable |
OTHER DEPOSIT
OTHER DEPOSIT | 12 Months Ended |
Dec. 31, 2019 | |
Notes to Financial Statements | |
OTHER DEPOSIT | NOTE 7 – OTHER DEPOSIT On August 28,2019, the Company entered into an Exclusivity Agreement with an entity in which the Company will receive a period of exclusivity in return for payment of an Exclusivity Fee of $50,000 of which $25,000 was paid as deposit during the year ended December 31, 2019. During the year ended December 31, 2019, the Exclusivity Agreement did not materialize and was cancelled by both parties. The Company determined that the deposit uncollectible and was impaired. The Company recorded $25,000 of impairment loss in connection with this deposit during the year ended December 31, 2019. On April 30, 2019, the Company along with 1919 Clinic, LLC (“1919”) signed an option to purchase the building 1919 is currently operating in located in San Juan, Puerto Rico, from the owner for $1,000,000. In May 2019, a non-refundable deposit of $175,000 was paid in consideration for the option to purchase the building (see Note 12). The Company was unable to fund the building purchase within the allotted period under the option that expired during the year ended December 31, 2019, resulting in the impairment of the deposit. During the year ended December 31, 2019, the Company recorded $175,000 of impairment loss for the same and as of December 31, 2019, the deposit for the option to purchase had no outstanding balance. As of December 31, 2019, there were no other deposit outstanding. |
LAND, PROPERTY AND EQUIPMENT
LAND, PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
LAND, PROPERTY AND EQUIPMENT | NOTE 8 – LAND, PROPERTY AND EQUIPMENT Property and equipment are stated at cost, and except for land, depreciation is provided by use of a straight-line method over the estimated useful lives of the assets. The Company reviews property and equipment for potential impairment whenever events or changes in circumstances indicate that the carrying amounts of assets may not be recoverable. In February 2017, the Company entered into a land purchase contract to acquire approximately 80 acres including water and mineral rights. The total cost of the land was $129,554. The Company paid $41,554 at closing and issued a note payable for $88,000. The Company is on the deed of trust of the property with a remaining note balance of $21,500 due the seller for both periods of December 31, 2019 and 2018 (see Note 11). The estimated useful lives of property and equipment are as follows: Furniture and equipment 5 years Manufacturing equipment 7 years The Company's land, property and equipment consisted of the following at December 31, 2019 and 2018: December 31, 2019 2018 Land $ 129,554 $ 129,554 Balance $ 129,554 $ 129,554 Property and equipment $ 249,523 $ 215,006 Less: accumulated depreciation (108,265 ) (61,928 ) Balance $ 141,258 $ 153,078 Depreciation expense of $46,336 and $38,104 was recorded for the years ended December 31, 2019, and 2018, respectively. |
OPERATING LEASE RIGHT-OF-USE AN
OPERATING LEASE RIGHT-OF-USE AND OPERATING LEASE LIABILITIES | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
OPERATING LEASE RIGHT-OF-USE AND OPERATING LEASE LIABILITIES | NOTE 9 – OPERATING LEASE RIGHT-OF-USE (“ROU”) AND OPERATING LEASE LIABILITIES On October 5, 2017, the Company entered in to a lease agreement with Mr. Friedman who served as an officer of the Company and currently a consultant. The Company leased a fifteen-acre “420 Style” resort and estate property near Quebec City, Canada. Pursuant to the lease agreement, the Company will pay a monthly rent of $8,000 per month to Mr. Freidman. The Company is responsible for all costs of the property, including, but not limited to, renovations, repairs and maintenance, insurance and utilities. During the year ended December 31, 2019, the Company incurred $96,000 of rent expense (see Note 12 and Note 15). In adopting ASC Topic 842, Leases (Topic 842), the Company has elected the ‘package of practical expedients’, which permit it not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs (see Note 2). In addition, the Company elected not to apply ASC Topic 842 to arrangements with lease terms of 12 month or less. On January 1, 2019, upon adoption of ASC Topic 842, the Company recorded right-of-use assets and lease liabilities of $310,259. For the year ended December 31, 2019, lease costs amounted to $96,000 which included base lease costs, all of which were expensed during the period and included in general and administrative expenses on the accompanying condensed consolidated statements of operations. The significant assumption used to determine the present value of the lease liability was a discount rate of 9% which was based on the Company’s estimated incremental borrowing rate. Right-of-use asset (“ROU”) is summarized below: December 31, 2019 Operating lease $ 310,259 Less accumulated reduction (70,957 ) Balance of ROU asset as of December 31, 2019 $ 239,302 Operating lease liability related to the ROU asset is summarized below: December 31, 2019 Operating lease $ 310,259 Total lease liabilities 310,259 Reduction of lease liability (70,957 ) Total 239,302 Less: short term portion as of December 31, 2019 (162,506 ) Long term portion as of December 31, 2019 $ 76,796 Future base lease payments under the non-cancelable operating lease at December 31, 2019 are as follows: Amount Year ending - 2020 96,000 Year ending - 2021 96,000 Ten months ended October 31, 2022 80,000 Total minimum non-cancelable operating lease payments 272,000 Less: discount to fair value (32,698 ) Total lease liability at December 31, 2019 $ 239,302 |
CONVERTIBLE NOTES PAYABLE
CONVERTIBLE NOTES PAYABLE | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE NOTES PAYABLE | NOTE 10 – CONVERTIBLE NOTES PAYABLE At December 31, 2019 and 2018, the convertible debt consisted of the following: December 31, 2019 2018 Principal balance $ 2,221,713 $ 935,008 Less: unamortized debt issue cost (31,060 ) — Less: unamortized debt discount (429,404 ) (217,293 ) Ending Principal Balance, net $ 1,761,249 $ 717,715 St George Note On July 5, 2018, as part of the Company’s debt consolidation plan, the Company accepted and agreed to a Note Purchase Agreement (the “NPA”), whereby, St George, the lender, assigned $174,375 of outstanding principal and interest of the St George 2016 Note and $927,324 of outstanding principal and interest of the St George 2017 Note to a third party. The Company issued a 10% Replacement Promissory Note (the “RPN”) to the third party for $1,101,698. The RPN matured on January 1, 2019, is now subject to default interest rate of 18% per annum and is convertible into shares of the Company’s common stock at any time at the discretion of third party at a conversion price equal to the lowest trading price during the twenty-five trading days immediately prior to the conversion date multiplied by 58%, representing a forty 42% discount. In 2018, the third party converted $175,120 of outstanding principal and $12,380 of accrued interest into 166,224 shares of commons stock. As of December 31, 2018, the RPN had $452,012 of outstanding principal and $96,120 of accrued interest. During the year ended December 31, 2019, the lender converted $308,701 of the outstanding principal into 1,499,736 shares of the Company’s common stock. As of December 31, 2019, the RPN had $116,310 of outstanding principal, $131,595 of accrued interest and $492,199 of default penalty. May 2018 Note On May 8, 2018, the Company entered into a securities purchase agreement (the “SPA”) with a lender, pursuant to which the Company issued and sold a promissory note in the aggregate principal amount of up to $565,555 (“May 2018 Note”) to be funded in several tranches, subject to the terms, conditions and limitations set forth in the May 2018 Note. The May 2018 Note accrues interest at a rate of 9% per year (which shall be increased to 18% per year upon the occurrence of an Event of Default (as defined in the May 2018 Note)). The aggregate principal amount of up to $565,555 consists of OID of up to $55,555 and $10,000 legal fees, with net proceeds of up to $500,000 which will be funded in tranches. The maturity date of each tranche funded shall be six months from the effective date of each tranche. The lender has the right at any time to convert all or any part of the funded portion of the May 2018 Note into shares of the Company’s common stock at a conversion price equal to 58% of the lowest VWAP during the twenty-five trading day period ending on either (i) the last complete trading day prior to the conversion date or (ii) the conversion date (subject to adjustment as provided in the May 2018 Note), at the Lender’s sole discretion. In 2018, the Company received $450,000 of net proceeds, net of $49,496 of OID and $15,000 of legal fees. As of December 31, 2018, the May 2018 Note had $514,496 outstanding principal and $14,576 of accrued interest. On January 11, 2019, the Company received the final tranche, with the Company receiving net proceeds of $50,000, net of $5,556 OID. As of December 31, 2019, the May 2018 Note had $570,055 outstanding principal, $117,730 of accrued interest and $455,426 of default penalty. In connection with the funding of the May 2018 Note in 2018, the Company issued 34,843 warrants, with exercise price between $0.72 and $3.63, to the lender to purchase shares of the Company’s common stock pursuant to the terms therein (“May 2018 Warrant”) as a commitment fee and additional 2,852,805 warrants were issued pursuant to anti-dilution provision under the May 2018 Warrant. As of December 31, 2019, there were 2,887,647 outstanding warrants under the May 2018 Warrant (see Note 13). February 2019 Note On February 7, 2019, the Company entered into a securities purchase agreement (the “SPA”) with a lender, pursuant to which the Company issued and sold a promissory note in the aggregate principal amount of up to $565,555 (“February 2019 Note”) to be funded in several tranches, subject to the terms, conditions and limitations set forth in the February 2019 Note. The February 2019 Note accrues interest at a rate of 9% per year (which shall be increased to 18% per year upon the occurrence of an Event of Default (as defined in the February 2019 Note)). The aggregate principal amount of up to $565,555 consists of OID of up to $55,555 and $10,000 legal fees, with net proceeds of up to $500,000 which will be funded in tranches. The maturity date of each tranche funded shall be six months from the effective date of each tranche. The lender has the right at any time to convert all or any part of the funded portion of the February 2019 Note into shares of the Company’s common stock at a conversion price equal to 58% of the lowest VWAP during the twenty-five trading day period ending on either (i) the last complete trading day prior to the conversion date or (ii) the conversion date (subject to adjustment as provided in the February 2019 Note), at the Lender’s sole discretion. The Company received the; (i) first tranche on February 8, 2019 with the Company receiving net proceeds of $50,000, net of $15,556 OID and legal fees; (ii) the second tranche on February 14, 2019 with the Company receiving net proceeds of $50,000, net of $5,555 OID; (iii) the third tranche on March 5, 2019 with the Company receiving net proceeds of $50,000, net of $5,555 OID; (iv) the fourth tranche on March 30, 2019 with the Company receiving net proceeds of $15,000, net of $1,667 OID; (v) the fifth tranche on April 4, 2019 with the Company receiving net proceeds of $75,000, net of $8,333 OID; (vi) the sixth tranche on May 7, 2019 with the Company receiving net proceeds of $150,000, net of $16,667 OID; (vii) the seventh tranche on June 27, 2019 with the Company receiving net proceeds of $50,000, net of $5,556 OID and; (viii) the eighth tranche on September 14, 2019 with the Company receiving net proceeds of $25,000, net of $2,778 OID. As of December 31, 2019, the Company received an aggregate net proceeds of $465,000, net of $61,667 OID and legal fees which total to a principal amount of $526,667. The Company issued 1,219,858 warrants, with exercise price between from $0.22 of $0.99, to the lender to purchase shares of the Company’s common stock pursuant to the terms therein (“February 2019 Warrant”) as a commitment fee and additional 541,811 warrants were pursuant to anti-dilution provision under the February 2019 Warrant. As of December 31, 2019, there were 1,761,669 outstanding warrants under the February 2019 Warrant (see Note 13). April 2019 Note On April 26, 2019, the Company entered a note agreement with a lender, pursuant to which the Company issued and sold a promissory note (“April 2019 Note”) with a principal amount of $128,500. The Company received $125,000 in net proceeds, net of $3,500 legal fees. The April 2019 Note bears an interest rate of 12% per year (interest rate shall be increased to 22% per year upon the occurrence of an Event of Default (as defined in the April 2019 Note)), shall mature on April 26, 2020 and the principal and interest are convertible at any time at a conversion price equal to 63% of the lowest closing price, as reported on the OTCQB or other principal trading market, during the twenty trading days preceding the conversion date. The lender may not convert the April 2019 Note to the extent that such conversion would result in beneficial ownership by a lender and its affiliates of more than 4.99% of the Company’s issued and outstanding common stock. During the first 60 to 180 days following the date of the April 2019 Note, the Company has the right to prepay the principal and accrued but unpaid interest due under the April 2019 Note, together with any other amounts that the Company may owe the lender under the terms of the April 2019 Note, at a premium ranging from 115% to 135% as defined in April 2019 Note. After this initial 180-day period, the Company does not have a right to prepay the April 2019 Note. During the year ended December 31, 2019, the lender converted $57,000 of the principal into 771,758 shares of common stock. As of December 31, 2019, the April 2019 Note had $71,500 of outstanding principal and $10,519 of accrued interest. May 2019 Note On May 31, 2019, the Company entered a note agreement with a lender, pursuant to which the Company issued and sold a promissory note (“May 2019 Note I”) with a principal amount of $128,500. The Company received $125,000 in net proceeds, net of $3,500 legal fees. The May 2019 Note I bears an interest rate of 12% per year (interest rate shall be increased to 22% per year upon the occurrence of an Event of Default (as defined in the May 2019 Note I)), shall mature on May 31, 2020 and the principal and interest are convertible at any time at a conversion price equal to 63% of the lowest closing price, as reported on the OTCQB or other principal trading market, during the twenty trading days preceding the conversion date. The lender may not convert the May 2019 Note I to the extent that such conversion would result in beneficial ownership by a lender and its affiliates of more than 4.99% of the Company’s issued and outstanding common stock. During the first 60 to 180 days following the date of the May 2019 Note I, the Company has the right to prepay the principal and accrued but unpaid interest due under the May 2019 Note I, together with any other amounts that the Company may owe the lender under the terms of the May 2019 Note I, at a premium ranging from 115% to 135% as defined in May 2019 Note I. After this initial 180-day period, the Company does not have a right to prepay the May 2019 Note I. As of December 31, 2019, the May 2019 Note I had $128,500 of outstanding principal and $9,041 of accrued interest. September 2019 Note On September 18, 2019, the Company entered a note agreement with a lender, pursuant to which the Company issued and sold a promissory note (“September 2019 Note”) with a principal amount of $677,000 to be funded in several tranches, subject to the terms, conditions and limitations set forth in the September 2019 Note and five-year warrants (the “September 2019 Warrants”) to purchase shares of the Company’s common stock at an exercise price equal to 110% of the VWAP of the common stock on the trading day immediately prior to the funding date of the respective tranche, (subject to adjustments under certain conditions as defined in the September 2019 Warrants). The September 2019 Note bears an interest rate of 9% per year (interest rate shall be increased to 18% per year upon the occurrence of an Event of Default (as defined in the September 2019 Note)), shall mature on March 17, 2020 and the principal and interest are convertible at any time at a conversion price equal to 58% of the lowest closing price, as reported on the OTCQB or other principal trading market, during the twenty-five trading days preceding the conversion date. The lender may not convert the September 2019 Note to the extent that such conversion would result in beneficial ownership by a lender and its affiliates of more than 4.99% of the Company’s issued and outstanding common stock. The Company received the first tranche $500,000 in net proceeds, net of $65,833 OID ang legal fees and issued 2,123,415 warrants. As of December 31, 2019, the September 2019 Note had $565,833 of outstanding principal and $14,510 of accrued interest. Subsequent to December 31, 2019, the lender funded additional tranches of the September 2019 Note with the Company receiving an aggregate of net proceeds of $85,000, net of $9,672 OID and issued 5,953,297 warrants (see Note 16). December 2019 Note On December 24, 2019, the Company entered a note agreement with a lender, pursuant to which the Company issued and sold a promissory note (“December 2019 Note”) with a principal amount of $128,500. The Company received $125,000 in net proceeds, net of $3,500 legal fees. The December 2019 Note bears an interest rate of 12% per year (interest rate shall be increased to 22% per year upon the occurrence of an Event of Default (as defined in the December 2019 Note)), shall mature on December 24, 2020 and the principal and interest are convertible at any time at a conversion price equal to 63% of the lowest closing price, as reported on the OTCQB or other principal trading market, during the twenty trading days preceding the conversion date. The lender may not convert the December 2019 Note to the extent that such conversion would result in beneficial ownership by a lender and its affiliates of more than 4.99% of the Company’s issued and outstanding common stock. During the first 60 to 180 days following the date of the December 2019 Note, the Company has the right to prepay the principal and accrued but unpaid interest due under the December 2019 Note, together with any other amounts that the Company may owe the lender under the terms of the December 2019 Note, at a premium ranging from 115% to 135% as defined in December 2019 Note. After this initial 180-day period, the Company does not have a right to prepay the December 2019 Note. As of December 31, 2019, the December 2019 Note had $128,500 of outstanding principal and $295 of accrued interest. During the years ended December 31, 2019, the lenders converted an aggregate of $398,719 outstanding principal into 3,270,943 shares of common stock. During the years ended December 31, 2018, the lenders converted an aggregate of aggregate of $1,006,260 outstanding principal and interest into 1,676,665 shares of common stock (see Note 13). During the years ended December 31, 2019 and 2018, the Company recorded a loss on debt extinguishment of $72,871 and $58,759 on the redemption of convertible notes, respectively. Derivative Liabilities Pursuant to Notes and Warrants The Company determined that the conversion feature of the St George, May 2018, February 2019, April 2019 and May 2019 Notes (“Notes”) and related warrants, represent an embedded derivative since the Notes are convertible into a variable number of shares upon conversion. Accordingly, the Notes were not considered to be conventional debt under ASC 815-40 (formerly EITF 00-19, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock) and the embedded conversion feature was bifurcated from the debt host and accounted for as a derivative liability. Accordingly, the fair value of these derivative instruments being recorded as a liability on the consolidated balance sheet with the corresponding amount recorded as a discount to each Note. Such discount is being amortized from the date of issuance to the maturity dates of the Notes. The fair value of the embedded conversion option derivatives was determined using the Binomial valuation model. At the end of each period, on the date that debt was converted into common shares, the Company revalued the embedded conversion option derivative liabilities. In July 2017, FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features. These amendments simplify the accounting for certain financial instruments with down-round features. The amendments require companies to disregard the down-round feature when assessing whether the instrument is indexed to its own stock, for purposes of determining liability or equity classification. The guidance was adopted as of January 1, 2019 and the Company elected to record the effect of this adoption retrospectively to outstanding financial instruments with a down round feature by means of a cumulative-effect adjustment to the condensed consolidated balance sheet as of the beginning of 2019, the period which the amendment is effective. The Company adopted ASU No. 2017-11 in the first quarter of 2019, and the adoption did not have any impact on its consolidated financial statements and there were no cumulative effect adjustments as there were other notes and warrants provisions that caused derivative treatment. In connection with the issuance of the February 2019, April 2019, May 2019, September 2019 and December 2019 Notes and related Warrants, during the year ended December 31, 2019, initial measurement date, the fair values of the embedded conversion option derivative and warrant derivative of $3,426,851 was recorded as derivative liabilities and was allocated as a debt discount of the February 2019, April 2019, May 2019 September 2019 and December 2019 Note of $1,546,230 (see Note 2). In connection with the issuance of the St George and May 2018 Notes and related Warrants, during the year ended December 31, 2018, initial measurement date, the fair values of the embedded conversion option derivative and warrant derivative of $2,880,913. For the year ended December 31, 2019 and 2018, amortization of debt discounts related to the Notes and Warrants amounted to $1,334,121 and $2,407,751, respectively, which has been included in interest expense on the accompanying consolidated statements of operations. During the year ended December 31, 2019, the fair value of the derivative liabilities was estimated using the Binomial valuation model with the following assumptions: Dividend rate — % Term (in years) 0.01 to 5.00 years Volatility 162.9% to 205.5% Risk-free interest rate 1.51% to 2.42% Balance at December 31, 2017 $ 5,416,831 Initial valuation of derivative liabilities included in debt discount 2,636,763 Reclassification of derivative liabilities to gain (loss) on debt extinguishment (3,105,639 ) Change in fair value included in derivative income (expense) (3,386,723 ) Balance at December 31, 2018 $ 1,561,232 Initial valuation of derivative liabilities included in debt discount 1,546,230 Initial valuation of derivative liabilities included in derivative income (expense) 1,880,621 Reclassification of derivative liabilities to gain (loss) on debt extinguishment (499,128 ) Change in fair value included in derivative income (expense) (3,068,274 ) Balance at December 31, 2019 $ 1,420,681 |
NON-CONVERTIBLE NOTE PAYABLE
NON-CONVERTIBLE NOTE PAYABLE | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
NON-CONVERTIBLE NOTE PAYABLE | NOTE 11 – NON-CONVERTIBLE NOTE PAYBLE On March 18, 2014, in conjunction with the land purchase of 80 acres in Pueblo County, Colorado, the Company paid $36,000 cash and entered into a promissory note in the amount of $85,750. In November 2015, the Company was made aware that the land transaction regarding 80 acres in Pueblo County, Colorado, may not have been properly deeded to the Company. The company was a party to the land purchase, however, the second party to the land contract never filed the original quit claim deed on behalf of the Company, even though a copy of the notarized quit claim deed was sent to the Company. In February, 2017, the original owner of the 80 acres foreclosed on the property from the second party and the Company entered into a new land purchase contract (including water and mineral rights) directly with the landowner on February 7, 2017. The Company is on the deed of trust of the property and the note payable had outstanding balance as $21,500 for both periods of December 31, 2019 and 2018 (see Note 8). |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 12 – RELATED PARTY TRANSACTIONS Due (to) from Related Party On October 5, 2017, the Company entered in to a lease agreement with Mr. Friedman who served as an officer of the Company and currently a consultant. The Company leased a fifteen-acre “420 Style” resort and estate property near Quebec City, Canada. Pursuant to the lease agreement, the Company will pay a monthly rent of $8,000 per month to Mr. Freidman. The Company is responsible for all costs of the property, including, but not limited to, renovations, repairs and maintenance, insurance and utilities (see Note 9). During the year ended December 31, 2019, the Company incurred $96,000 of rent expense, related to the property discussed above. The following table summarizes the related party activity the Company for the year ended December 31, 2019: Total Due (to) from related party balance at December 31, 2018 $ (1,283 ) Working capital advances received (30,305 ) Accrued rent expenses – related party (28,000 ) Repayments made 53,992 Due (to) from related party balance at December 31, 2019 $ (5,596 ) Convertible Note Payable – Related Party On May 10, 2019, the Company entered a note agreement with a related party (“Lender”), pursuant to which the Company issued and sold a promissory note (“May 2019 Note II”) with a principal amount of $175,000. The Company received $175,000 in net proceeds. The May 2019 Note II bears an interest rate of 8% per year and matures on November 11, 2019 and the principal and interest are convertible at any time at a conversion price equal to 70% of the lowest closing bid price, as reported on the OTCQB or other principal trading market, during the seven trading days preceding the conversion date. During the year ended December 31, 2019, the Company repaid $27,136 of principal and the May 2019 Note II had an outstanding principal balance of $147,864 and accrued interest $9,014. The May 2019 Note II is reflected as Convertible notes payable – related party Other Receivable- Related Party During the fiscal year ended December 31, 2019, the Company advanced funds totaling $94,750 to Full Spectrum Bioscience, Inc., (“FSB”), a private corporation, and a related party. Subsequently, the Company fully acquired this entity. On March 9, 2020, the Company and Full Spectrum Bioscience, Inc., (“FSB”), a private corporation, and a related party incorporated in Colorado on December 11, 2018 (collectively as “Parties”), entered into a Share Exchange Agreement (the “Exchange Agreement”) to acquire 100% of controlling interest in FSB. On March 31, 2020, pursuant to the Exchange Agreement, the Company issued to 10,000,000 shares of its common stock to FSB in exchange for 1,500 shares of FSB common stock which constitutes all of FSB’s authorized and outstanding common stock held by a sole stockholder. At the time of the Exchange Agreement FSB was owned by the spouse of our Interim Chief Executive Officer. |
STOCKHOLDERS' DEFICIT
STOCKHOLDERS' DEFICIT | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
STOCKHOLDERS' DEFICIT | NOTE 13 – STOCKHOLDERS’ DEFICIT Shares Authorized On March 3, 2019, the Company filed an amendment to its Certificate of Incorporation, with the Delaware Secretary of State, to increase its authorized common stock from 1,250,000,000 shares to 1,499,000,000 shares (see Note 1). The Company’s 1,500,000,000 authorized shares consisted of 1,499,000,000 shares of common stock, par value $0.0001 per share, and 1,000,000 shares of preferred stock, par value $0.01 per share. On March 26, 2019, the Company filed an amendment to its Certificate of Incorporation, with the Delaware Secretary of State, for 1-for-200 reverse stock split of our common stock (the “Reverse Stock Split”) effective March 26, 2019. The number of shares of common stock subject to outstanding options, warrants and convertible securities were also reduced by a factor of two-hundred and no fractional shares were issued. All historical share in this report have been adjusted to reflect the Reverse Stock Split (see Note 1). There were no changes to the authorized number of shares and the par value of our common stock. Preferred Stock The Company has 1,000,000 authorized shares of preferred stock with per share par value of $0.01. Series A Preferred Stock On June 20, 2012, the Company cancelled the designation of 1,000,000 shares of Series A Preferred Stock (“Series A”), par value $0.01. There were no Series A issued and outstanding prior to the cancellation of the Series A designation. Series B Preferred Stock On June 20, 2012, the Company filed a Certificate of Designation, Preferences and Rights, with the Delaware Secretary of State where it designated 1,000,000 of the authorized shares of Preferred Stock as Series B Preferred Stock (“Series B”), par value $0.01. The rights, preferences and restrictions of the Series B Preferred Stock (“Series B”), as amended, state; • each share of the Class B Convertible Preferred Stock shall automatically convert into shares of the Company’s common stock when there are sufficient authorized and unissued shares of common stock to allow for the conversion. The Series B will convert in its entirety, equal one-half the total outstanding shares of common stock of the day immediately prior to the conversion date, on a fully diluted basis. The converted shares will be issued pro rata so that each Series B holder will receive the appropriate number of shares of common stock equal to their percentage ownership of their Series B; • all of the outstanding shares of the Series B, in their entirety, will have voting rights equal to the number of shares of common stock outstanding on a fully diluted basis immediately prior to any vote. The shares eligible to vote will be calculated pro rata so that each Series B holder will have voting power equal to their respective Series B ownership percentage. The Series B holders shall have the rights to vote on all matters presented or submitted to the Company’s stockholders for approval in pari passu with holders of the Company’s common stock, and not as a separate class. On June 26, 2015, the Company filed with the Delaware Secretary of State the Amended and Restated Designation Preferences and Rights (the “Certificate of Designation”) of Series B. Pursuant to the Certificate of Designation, 1,000 shares constitute the Series B. The Series B and any accrued and unpaid dividends thereon shall, with respect to rights on liquidation, winding up and dissolution, rank senior to the Company’s issued and outstanding common stock. The Series B has the right to vote in aggregate, on all shareholder matters equal to 51% of the total vote, no matter how many shares of common stock or other voting stock of the Company are issued or outstanding in the future. The holders of Series B have the right to vote for each share of Series B held of record on all matters submitted to a vote of common stockholders, including the election of directors, except to the extent that voting as a separate class or series is required by law. There is no right to cumulative voting in the election of directors. As of December 31, 2019 and 2018, there were 1,000 shares of Series B issued and outstanding. Common Stock Common Stock Issued and/or Issuable for Services • During the year ended December 31, 2019, the Company issued 13,000,000 shares of its common stock to several consultants and an officer, for services rendered with per share fair value between $0.29 and $0.68. In addition, the Company granted 10,000,000 shares of common stock to and officer with per share grant date fair value of $0.19 which has not yet been issued as of December 31, 2019. These shares of common stock had an aggregate grant fair value of $6,427,000 which shall be expensed over the vesting period. During the year ended December 31, 2019, the Company recorded $5,081,166 of stock-based compensation expense related to these shares. • During the year ended December 31, 2018, the Company issued 33,500 shares of its common stock to a consultant with per share grant date fair value of $3.60 or $120,450. Common Stock Issued and/or Issuable for Cash • During the year ended December 31, 2019, the Company sold 20,833 shares of its common stock to an investor for cash proceed of $15,000 or $0.72 per share. These shares of common stock remain issuable as of December 31, 2019. • During the year ended December 31, 2018, the Company sold 55,028 shares of its common stock to an investor for cash proceeds of $425,001 or $7.7 average price per share. As of December 31, 2019, 39,379 shares of common stock remain issuable. Common Stock Issued for Debt Conversion • During the year ended December 31, 2019, the Company issued an aggregate of 3,270,943 shares of its common stock upon conversion of $398,719 of outstanding principal. The Company recorded $72,871 of loss on debt extinguishment related to the note conversions (see Note 10). • During the year ended December 31, 2018, the Company issued an aggregate of 1,676,665 shares of its common stock upon conversion of $1,006,260 of outstanding principal and accrued interest. The Company recorded $58,759 of loss on debt extinguishment related to the note conversions. Common Stock Issued for Cashless Exercise of Warrants • During the year ended December 31, 2019, the Company there were no warrants exercised. • During the year ended December 31, 2018, the Company issued 284,259 shares of its common stock upon the cashless exercise of 26,044 warrants. Warrants St. George 2016 Warrants On October 31, 2016, the Company granted (Warrant #1) to St. George the right to purchase at any time on or after November 10, 2016 (the “Issue Date”) until the date which is the last calendar day of the month in which the fifth anniversary of the Issue Date occurs (the “Expiration Date”), a number of fully paid and non-assessable shares (the “Warrant Shares”) of Company’s common stock, equal to $57,500 divided by the Market Price (defined below) as of the Issue Date, as such number may be adjusted from time to time pursuant to the terms and conditions of Warrant #1 to Purchase Shares of Common Stock. The Market Price is equal to the lowest intra-day trade price in the twenty (20) Trading Days immediately preceding the applicable date of exercise, multiplied by sixty percent (60%). The exercise price is the lower of $10.00 and is subject to price adjustments pursuant to the agreement and includes a cashless exercise provision. The Company also issued Warrant #’s 2-9, with each warrant only effective upon St. George funding of the secured notes they issued to the Company. Warrant #’s 2-9 give St. George the right to purchase Warrant Shares equal to $27,500 divided by the Market Price on the funded date. On December 14, 2016, the Company received a payment of $50,000, and accordingly, Warrant #2 became effective. During the year ended December 31, 2017, the Company received the funding on the remaining notes and Warrant #’s 3-9 became effective. During the year ended December 31, 2018, the company issued 284,259 shares of common stock to St. George pursuant to Notices of Exercise of 26,044 Warrants received. The shares were issued based upon the cashless exercise provision of the warrant. As of December 31, 2019, there were 214,636 outstanding warrants under the St. George 2016 Warrants. May 2018 Warrants The Company issued to a lender, an aggregate of 34,843 warrants to purchase shares of the Company’s common stock (“May 2018 Warrant”) as a commitment fee. Pursuant to the May 2018 Warrant these warrants are exercisable at a price between $0.72 and $3.63 within five-years from the date of issuance. During year ended December 31, 2019, additional 2,852,804 warrants were issued pursuant to anti-dilution provision as defined in the May 2018 Warrant. As of December 31, 2019, there were 2,887,647 outstanding warrants under the May 2018 Warrant (see Note 10). February 2019 Warrants The Company issued to a lender, an aggregate of 1,219,858 warrants to purchase shares of the Company’s common stock (“February 2019 Warrant”) as a commitment fee. Pursuant to the February 2019 Warrant these warrants are exercisable at a price between $0.22 of $0.99 within five-years from the date of issuance. During year ended December 31, 2019, additional 541,811 warrants were issued pursuant to anti-dilution provision as defined in the February 2019 Warrant. As of December 31, 2019, there were 1,761,669 outstanding warrants under the September 2019 Warrant (see Note 10). September 2019 Warrants The Company issued to a lender, 2,134,415 warrants to purchase shares of the Company’s common stock (“September 2019 Warrant”) as a commitment fee. Pursuant to the September 2019 Warrant these warrants are exercisable at $0.26 within five-years from the date of issuance. As of December 31, 2019, there were 2,134,415 outstanding warrants under the September 2019 Warrant (see Note 10). During the year ended December 31, 2019 and 2018, the Company issued nil and 284,259 shares of common stock in connection with the cashless exercise of nil and 26,044 warrants, respectively. The following table summarizes the activity related to warrants of the Company for the year ended December 31, 2019: Number of Warrants Weighted- Weighted- Outstanding and exercisable December 31, 2018 249,479 $ 1.28 3.3 Issued in connection with financing 3,354,273 $ 0.15 4.1 Issued in connection with anti-dilution adjustment 3,394,616 $ 0.17 3.6 Expired/Forfeited — — — Exercised — — — Outstanding and exercisable December 31, 2019 6,998,368 $ 0.29 4.0 Exercisable at December 31, 2019 6,998,368 $ 0.29 4.0 |
INCOME TAX
INCOME TAX | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAX | NOTE 14 – INCOME TAX The Company accounts for income taxes under standards issued by the FASB. Under those standards, deferred tax assets and liabilities are recognized for future tax benefits or consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided for significant deferred tax assets when it is more likely than not that such assets will not be realized through future operations. The actual income tax provisions differ from the expected amounts calculated by applying the statutory income tax rate to the Company's loss before income taxes. The components of these differences are as follows at December 31, 2019, and 2018: 2019 2018 Net tax loss carry-forwards $ 12,218,349 $ 9,584,964 Statutory rate 21 % 21 % Expected tax recovery 2,565,853 2,012,842 Change in valuation allowance (2,565,853 ) (2,012,842 ) Income tax provision $ — $ — Components of deferred tax asset: Non capital tax loss carryforwards $ 2,565,853 $ 2,012,842 Less: valuation allowance (2,565,853 ) (2,012,842 ) Net deferred tax asset $ — $ — No provision for federal income taxes has been recorded due to the available net operating loss carry forwards of approximately $12,218,349 will expire in various years through 2032. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the future tax loss carry forwards. |
COMMITMENTS AN CONTINGENCIES
COMMITMENTS AN CONTINGENCIES | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AN CONTINGENCIES | NOTE 15 – COMMITMENTS AN CONTINGENCIES Lease On April 28, 2014, AVHI executed and closed a ten-year lease agreement for twenty acres of an agricultural farming facility located in South Florida. Pursuant to the lease agreement, the Company maintains a first right of refusal to purchase the property for three years. The Company is currently in default of the lease agreement, no payment has been made since May 2015. AVHI had accrued expense $114,628 related to this lease included in the accompanying consolidated balance sheet. No party had filed any claims as of the date of this report. In April 2014, AVHI entered into a two-year sublease agreement for the use of up to 7,500 square feet with a Colorado based oncology clinical trial and drug testing company and facility. Pursuant to the lease, as amended, the Company agreed to pay $3,500 per month for the space. The lease expired in April 2016 and AVHI has outstanding balance due of $48,750 included in accrued expenses of the accompanying consolidated balance sheet. No party had filed any claims as of the date of this report. On July 11, 2014, AVHI signed a ten-year lease agreement for forty acres in Pueblo, Colorado. The lease requires monthly rent payments of $10,000 during the first year and is subject to a 2% annual increase over the life of the lease. The lease also provides rights to 50 acres of certain tenant water rights for $50,000 annually plus cost of approximately $2,400 annually. The Company paid the $50,000 in July 2014, and has not used the property and any water and has not paid for any water rights since October 2015. The Company is currently in default of the lease agreement, as no payment has been made since February 2015. AVHI had accrued expense $165,200 related to this lease included in the accompanying consolidated balance sheet. No party had filed any claims as of the date of this report. In January 2017, the Company signed a five-year lease, beginning February 1, 2017, for approximately 6,000 square feet of office space, comprised of two floors, in San Juan, Puerto Rico. Pursuant to the lease, the Company will pay $3,000 per month for the third floor of the building for the first year of the lease. The rent will increase 3% per year on February beginning in 2018 and an additional 3% per year on each successive February 1, during the term of the lease. The landlord agreed that the month of February 2017, the rent was $1,500. The rent for second floor of the building will be $2,000 per month during the term of the lease and the Company does not have any rent payments for the first three months of the lease (February 2017 through April 2017). Through September 30, 2017, the Company calculated the total amount of the rent for the term lease and recorded straight line rent expense of $45,417 and had made payments of $20,516. As of December 31, 2019, the Company has a balance of $24,916 in deferred rent which is included in the consolidated balance sheet. The leases for the second and third floor were cancelled in September 2017 as a result of Hurricane Irma. The Company sub-leased the office space to an affiliated party and as a result, only pays $79 of the $1,500 monthly rent. During the year ended December 31, 2019, the Company incurred $700 of rent expense from this office space. On October 5, 2017, the Company entered in to a lease agreement with Mr. Friedman who serves as an officer of the Company. The Company leased a fifteen-acre “420 Style” resort and estate property near Quebec City, Canada. Pursuant to the lease agreement, the Company will pay a monthly rent of $8,000 per month to Mr. Freidman. The Company is responsible for all costs of the property, including, but not limited to, renovations, repairs and maintenance, insurance and utilities. During the year ended December 31 2019, the Company incurred $96,000 (see Note 9 and Note 12). Agreements On September 19, 2019, the Company entered into an Employment Agreement (“Agreement”) with Mr. Benson to serve as Chief Executive Officer and sole Board Director of the Company. Pursuant to the Agreement Mr. Benson shall receive an annual base salary of $120,000 and was granted 10,000,000 shares of the Company’s common stock of which; (i) 5,000,000 shall vest on March 19, 2020 and; (ii) 5,000,000 shall vest on September 15, 2020. In addition, he is also intitled to commission and bonus plan pursuant to the Agreement. Mr. Benson’s employment is terminable by him or the Company at any time (for any reason or for no reason). In the event that Mr. Benson’s employment is terminated within six months of commencing employment with the Company and such termination is not due to Mr. Benson’s voluntary resignation (other than at the request of the Board or the majority shareholders of the Company), Mr. Benson will be entitled to continued payment of his base salary for the remainder of such six-month period. On January 23, 2020, Scott Benson resigned from his respective positions as Chief Executive Officer and sole Director for the Company. In addition, the 10,000,000 shares of common stock issuable pursuant to his employment agreement were forfeited upon Mr. Benson’s resignation (see Note 16). Legal On March 2, 2015, the Company, the Company’s CEO and the Company’s CFO at the time were named in a civil complaint filed by Erick Rodriguez in the District Court in Clark County, Nevada (the “DCCC”). The complaint alleges that Mr. Rodriguez never received 250,000 shares of Series B preferred stock that were initially approved by the Board of Directors in 2012, subject to the completion of a merger of a company controlled by Mr. Rodriguez. Since the merger was never completed, the shares were never certificated to Mr. Rodriguez. On March 21, 2017, the DCC agreed to Set Aside the Entry of Default against the Defendants. Mr. Rodriguez resigned in June 2013. On April 12, 2018, an Arbitrator issued a final award to Rodriguez in the amount of $399,291. The Company and the Company’s counsel believe the Arbitrator denied a number of detailed objections to the award, which cited clear mistakes as to Nevada law and to the facts. The Company recorded a loss on legal matter, included in other expenses for the year ended December 31, 2017. On May 3, 2018, the Arbitrator issued an amended final award of $631,537, inclusive of interest and legal fees. In December 2018, the plaintiff and defendants entered into a Settlement Agreement and Release whereby both parties agreed on $400,000 settlement of which $35,000 was to be paid by Barry Hollander and $365,000 was to be paid by the Company. As of December 31, 2019, the Company had satisfied all its obligation under the settlement agreement and was released from any further liability with regarding this matter. On May 6, 2016, the Company, B. Michael Freidman and Barry Hollander (former CFO) were named as defendants in a Summons/Complaint filed by Justin Braune (the “Plaintiff”) in Palm Beach County Civil Court, Florida (the “PBCCC”). The complaint alleges that Mr. Braune was entitled to shares of common stock of the Company. On December 5, 2016, the PBCCC set aside a court default that had been previously issued. The defendants have answered the complaint, including the defenses that Mr. Braune advised the Company’s transfer agent and the Company in his letter of resignation dated November 4, 2015, clearly stating that he has relinquished all shares of common stock. The Company has filed a counterclaim suit against the Plaintiff, as well as sanctions against the Plaintiff and their counsel. On or about February 20, 2020, the PBCCC filed a motion to dismiss the case for lack of prosecution. Since this time, and to date the Plaintiff has taken no further action regarding this claim as known by the Company and defendants have received no further correspondence. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 16 – SUBSEQUENT EVENTS Resignation and Appointment of New Chief Executive Officer and Board Member On January 23, 2020, Scott Benson resigned from his respective positions as Chief Executive Officer and sole Director for the Company. In addition, the 10,000,000 shares of common stock issuable to Mr. Benson pursuant to his employment agreement were forfeited upon his resignation (see Note 15). On January 23, 2020, the last action of the sitting Board of Directors (the “Board”) for the Company formally accepted the above resignation and appointed B. Michael Friedman as interim CEO and sole Director for the Company. There were no disputes or disagreements between the Mr. Benson and the Company. On January 23, 2020, the Company entered into an Employment Agreement (“Employment Agreement”) with B. Michael Friedman to serve as Chief Executive Officer and sole Board Director of the Company. Pursuant to the Agreement Mr. Friedman shall receive an annual base salary of $120,000 and was granted 10,000,000 shares of the Company’s common stock of which; (i) 5,000,000 shall vest on July 25, 2020 and; (ii) 5,000,000 shall vest on January 25, 2021. The Employment Agreement is terminable by Mr. Friedman or the Company at any time (for any reason or for no reason). In the event that Mr. Friedman’s employment is terminated within six months of commencing employment with the Company and such termination is not due to Mr. Friedman’s voluntary resignation (other than at the request of the Board or the majority shareholders of the Company), Mr. Friedman will be entitled to continued payment of his base salary for the remainder of such six-month period. Share Exchange Agreement with Full Spectrum Biosciences, Inc. On March 9, 2020, the Company and Full Spectrum Bioscience, Inc., (“FSB”), a private corporation, and a related party incorporated in Colorado on December 11, 2018 (collectively as “Parties”), entered into a Share Exchange Agreement (the “Exchange Agreement”) to acquire 100% of controlling interest in FSB. On March 31, 2020, pursuant to the Exchange Agreement, the Company issued to 10,000,000 shares of its common stock to FSB in exchange for 1,500 shares of FSB common stock which constitutes all of FSB’s authorized and outstanding common stock held by a sole stockholder. At the time of the Exchange Agreement FSB was owned by the spouse of our Interim Chief Executive Officer. The transaction under the Exchange Agreement between the Company and FSB, which are under common control, resulted in a change in the reporting entity in accordance with the Transactions Between Entities Under Common guidance under ASC 805-50-05-5. Accordingly, the Exchange Agreement was be accounted for as a reorganization of entities under common control, in a manner similar to a pooling of interest, using historical costs. As a result of the reorganization, the net assets and liabilities of FSB were transferred to the Company, and the accompanying unaudited condensed consolidated financial statements have been prepared as if the current corporate structure had been in place at the beginning of periods presented in which the common control existed. Consequently, the 10,0000,000 shares of the Company’s common stock issued in exchange for 100% controlling interest in FSB was be recorded at par value. Convertible Note Payable Subsequent to December 31, 2019, the lender funded additional tranches of the September 2019 Note (see Note 10), with the Company receiving an aggregate net proceeds of $85,000, net of $9,672 OID and issued 5,953,297 warrants under the September 2019 Warrants. On May 5, 2020, the Company entered into a securities purchase agreement (the “SPA”) with a lender, pursuant to which the Company issued and sold a promissory note in the aggregate principal amount of up to $565,556 (“May 2020 Note”) to be funded in several tranches, subject to the terms, conditions and limitations set forth in the May 2020 Note and five-year warrants (the “May 2020 Warrants”) to purchase up to 10,282,828 shares of the Company’s common stock at an exercise price equal to 110% of the VWAP of the common stock on the trading day immediately prior to the funding date of the respective tranche, (subject to adjustments under certain conditions as defined in the May 2020 Warrants). The May 2020 Note accrues interest at a rate of 9% per year (which shall be increased to 18% per year upon the occurrence of an Event of Default (as defined in the May 2020 Note)). The aggregate principal amount of up to $565,555 consists of OID of up to $55,556 and $10,000 legal fees, with net proceeds of up to $500,000 which will be funded in tranches. The maturity date of each tranche funded shall be six months from the effective date of each tranche. The lender has the right at any time to convert all or any part of the funded portion of the May 2020 Note into shares of the Company’s common stock at a conversion price equal to 58% of the lowest trading price during the twenty-five trading day period ending on either (i) the last complete trading day prior to the conversion date or (ii) the conversion date (subject to adjustment as provided in the May 2020 Note), at the Lender’s sole discretion. The Company received the; (i) first tranche on May 5, 2020 with the Company receiving net proceeds of $26,667, net of $16,667 OID and legal fees and issued 477,213 warrants; (ii) second tranche on June 1, 2020, with the Company receiving net proceeds of $40,000, net of $4,445 OID and issued 1,171,132 warrants; (iii) third tranche on June 25, 2020, with the Company receiving net proceeds of $5,000, net of $556 OID and issued 114,784 warrants; (iv) fourth tranche on July 6, 2020, with the Company receiving net proceeds of $25,000, net of $2,778 OID and issued 786,683 warrants; (v) fifth tranche on July 24, 2020, with the Company receiving net proceeds of $25,000, net of $2,778 OID and issued 598,401 warrants; and (vi) sixth tranche on August 5, 2020, with the Company receiving net proceeds of $10,000, net of $1,111 OID and issued 286,148 warrants. Power up default interest, legal settlement and note assignment On March 11, 2020, Power Up Lending Group, LTD. commenced an action against the Company and B. Michael Friedman in the Supreme Court of the State of New York, County of Nassau under Index No. 603834/2020. On March 18, 2020, the Company settled the claim from PowerUp Lending Group, Ltd (“Lender”) in the aggregate amount of $599,233.74. The settlement provided that $300,000 of this amount was to be assigned to a third-party lender and the remaining balance of $299,233.74 is to be paid in installments; (i) $100,000 to be paid on or before March 19, 2020 and; (ii) five equal monthly installments of $33,333.33to be paid on or before the 19 th Subsequent to December 31, 2019: · The Company issued 2,000,000 shares of common stock to a consultant in exchange for legal services pursuant to a consulting agreement with fair value of $32,000 or $0.016 per share. · The Company issued and aggregate of 20,000,000 shares of common stock to an executive and a related party as stock-based compensation with fair value of $320,000 or $0.016 per share. · An executive returned 7,000,000 shares of common stock to the Company, at par value and was cancelled upon return. · The lenders converted an aggregate of $295,570 of outstanding principal of convertible notes into 24,091,885 shares of common stock. · The Company issued an aggregate of 2,883,686 shares of common to a lender stock upon cashless exercise of 2,931,819 stock warrants under the May 2018 Warrants. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Reclassifications | Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications had no impact on net earnings, financial position or cash flows. |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The Company’s consolidated financial statements include the consolidated accounts of Agritek Holdings and its’ inactive wholly owned subsidiaries, AVHI and PPI (a Florida corporation, was originally formed on July 1, 2013 (f/k/a The American Hemp Trading Company). All intercompany accounts and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Significant estimates during the years ended December 31, 2019 and 2018 include the useful life of property and equipment, valuation of right-of-use (“ROU”) assets and operating lease liabilities, impairment of long-term assets, estimates of current and deferred income taxes and deferred tax valuation allowances, the fair value of non-cash equity transactions and the valuation of derivative liabilities. |
Fair Value of Financial Instruments and Fair Value Measurements | Fair Value of Financial Instruments and Fair Value Measurements FASB ASC 820 - Fair Value Measurements and Disclosures, defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. FASB ASC 820 requires disclosures about the fair value of all financial instruments, whether or not recognized, for financial statement purposes. Disclosures about the fair value of financial instruments are based on pertinent information available to the Company on December 31, 2019. Accordingly, the estimates presented in these financial statements are not necessarily indicative of the amounts that could be realized on disposition of the financial instruments. FASB ASC 820 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows: Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. Level 2—Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data. Level 3—Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information. The carrying amounts reported in the consolidated balance sheets for cash, due from and to related parties, prepaid expenses, accounts payable and accrued liabilities approximate their fair market value based on the short-term maturity of these instruments. At December 31, 2019 At December 31, 2018 Description Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Derivative liabilities — — $ 1,420,681 — — $ 1,561,232 A roll forward of the level 3 valuation financial instruments is as follows: Derivative Liabilities Balance at December 31, 2018 $ 1,561,232 Initial valuation of derivative liabilities included in debt discount 1,546,230 Initial valuation of derivative liabilities included in derivative income (expense) 1,880,621 Reclassification of derivative liabilities to gain (loss) on debt extinguishment (499,128 ) Change in fair value included in derivative income (expense) (3,068,274 ) Balance at December 31, 2019 $ 1,420,681 ASC 825-10 “Financial Instruments”, allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding instruments. |
Cash and Cash Equivalents | Cash and Cash Equivalents For purposes of the consolidated statements of cash flows, the Company considers all highly liquid instruments with a maturity of three months or less at the purchase date and money market accounts to be cash equivalents. At December 31, 2019 and 2018, the Company did not have any cash equivalents. The Company maintains its cash in bank and financial institution deposits that at times may exceed federally insured limits. There were no balances in excess of FDIC insured levels as of December 31, 2019 and 2018. The Company has not experienced any losses in such accounts through December 31, 2019. |
Property and Equipment | Property and Equipment Property are stated at cost and are depreciated, except for land, using the straight-line method over their estimated useful lives, which range from three to five years. Leasehold improvements are depreciated over the shorter of the useful life or lease term including scheduled renewal terms. Maintenance and repairs are charged to expense as incurred. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. The Company reviews land, property and equipment for potential impairment whenever events or changes in circumstances indicate that the carrying amounts of assets may not be recoverable (see Note 8). |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets In accordance with ASC Topic 360, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. |
Derivative Liabilities | Derivative Liabilities The Company has certain financial instruments that are embedded derivatives associated with capital raises. The Company evaluates all its financial instruments to determine if those contracts or any potential embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with ASC 815-40 (formerly EITF 00-19, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock). This accounting treatment requires that the carrying amount of any embedded derivatives be recorded at fair value at issuance and marked-to-market at each balance sheet date. In the event that the fair value is recorded as a liability, as is the case with the Company, the change in the fair value during the period is recorded as either other income or expense. Upon conversion, exercise or repayment, the respective derivative liability is marked to fair value at the conversion, repayment or exercise date and then the related fair value amount is reclassified to other income or expense as part of gain or loss on debt extinguishment. In July 2017, FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features. These amendments simplify the accounting for certain financial instruments with down-round features. The amendments require companies to disregard the down-round feature when assessing whether the instrument is indexed to its own stock, for purposes of determining liability or equity classification. The guidance was adopted as of January 1, 2019 and the Company elected to record the effect of this adoption retrospectively to outstanding financial instruments with a down round feature by means of a cumulative-effect adjustment to the condensed consolidated balance sheet as of the beginning of 2019, the period which the amendment is effective. The Company adopted ASU No. ASU No. 2017-11 in the first quarter of 2019, and the adoption did not have any impact on its consolidated financial statement and there was no cumulative effect adjustment. |
Revenue Recognition | Revenue Recognition In May 2014, FASB issued an update Accounting Standards Update, ASU 2014-09, establishing ASC 606 - Revenue from Contracts with Customers. ASU 2014-09, as amended by subsequent ASUs on the topic, establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most of the existing revenue recognition guidance. This standard, which is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2017, requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and also requires certain additional disclosures. The Company adopted this standard on January 1, 2018 using the modified retrospective approach, which requires applying the new standard to all existing contracts not yet completed as of the effective date and recording a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. Based on an evaluation of the impact ASU 2014-09 will have on the Company’s sources of revenue, the Company has concluded that ASU 2014-09 did not have any impact on the process for, timing of, and presentation and disclosure of revenue recognition from customers and there was no cumulative effect adjustment. The Company does not have revenues from continuing operations in 2019 and minimal in 2018. |
Stock-Based Compensation | Stock-Based Compensation Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award. Through March 31, 2018, pursuant to ASC 505-50 - Equity-Based Payments to Non-Employees, all share-based payments to non-employees, including grants of stock options, were recognized in the consolidated financial statements as compensation expense over the service period of the consulting arrangement or until performance conditions are expected to be met. Using a Black Scholes valuation model, the Company periodically reassessed the fair value of non-employee options until service conditions are met, which generally aligns with the vesting period of the options, and the Company adjusts the expense recognized in the consolidated financial statements accordingly. In June 2018, the FASB issued ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting, which simplifies several aspects of the accounting for nonemployee share-based payment transactions by expanding the scope of the stock-based compensation guidance in ASC 718 to include share-based payment transactions for acquiring goods and services from non-employees. ASU No. 2018-07 is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods. Early adoption is permitted, but entities may not adopt prior to adopting the new revenue recognition guidance in ASC 606. The Company adopted ASU No. 2018-07 in January 1, 2019, and the adoption did not have any impact on its consolidated financial statements. |
Basic and Diluted Loss Per Share | Basic and Diluted Loss Per Share Pursuant to ASC 260-10-45, basic loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding for the periods presented. Diluted loss per share is computed by dividing net loss by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. Potentially dilutive common shares consist of common stock issuable for stock options and warrants (using the treasury stock method), convertible notes and common stock issuable. These common stock equivalents may be dilutive in the future. The following potentially dilutive equity securities outstanding as of December 31, 2019 and 2018 were not included in the computation of dilutive loss per common share because the effect would have been anti-dilutive: December 31, 2019 2018 Stock warrants 6,998,367 249,479 Convertible debt 122,548,848 5,292,896 Series B preferred stock 10,141,626 — 139,688,841 5,542,375 |
Accounts Receivable | Accounts Receivable The Company records accounts receivable from amounts due from its customers upon the shipment of products. The allowance for losses is established through a provision for losses charged to expenses. Receivables are charged against the allowance for losses when management believes collectability is unlikely. The allowance is an amount that management believes will be adequate to absorb estimated losses on existing receivables, based on evaluation of the collectability of the accounts and prior loss experience. While management uses the best information available to make its evaluations, this estimate is susceptible to significant change in the near term. As of December 31, 2019 and 2018, based on the above criteria, the Company has an allowance for doubtful accounts of $43,408. |
Inventory | Inventory Inventory is valued at the lower of cost or market value. Cost is determined using the first in first out (FIFO) method. Provision for potentially obsolete or slow-moving inventory is made based on management analysis or inventory levels and future sales forecasts. As of December 31, 2019 and 2018, the Company had no inventory in stock. |
Marketable Securities | Marketable Securities The Company classifies its marketable securities as available-for-sale securities, which are carried at their fair value based on the quoted market prices of the securities with unrealized gains and losses, net of deferred income taxes, reported as accumulated other comprehensive income (loss), a separate component of stockholders’ equity. Realized gains and losses on available-for-sale securities are included in net earnings in the period earned or incurred (see Note 3). |
Deferred rent | Deferred rent The Company calculates the total cost of the lease for the entire lease period and divides that amount by the number of months of the lease. The result is the average monthly expense and is charged to rent expense with the offset to deferred rent, irrespective of the actual amount paid. The amounts paid are charged to the deferred rent account. As of December 31, 2019, and 2018, the Company has a balance of $24,916 in deferred rent which is included in the consolidated balance sheet. |
Income Taxes | Income Taxes The Company accounts for income taxes in accordance with ASC 740-10, Income Taxes. Deferred tax assets and liabilities are recognized to reflect the estimated future tax effects, calculated at the tax rate expected to be in effect at the time of realization. A valuation allowance related to a deferred tax asset is recorded when it is more likely than not that some portion of the deferred tax asset will not be realized. Deferred tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates of the date of enactment. ASC 740-10 prescribes a recognition threshold that a tax position is required to meet before being recognized in the financial statements and provides guidance on recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues. Interest and penalties are classified as a component of interest and other expenses. To date, the Company has not been assessed, nor paid, any interest or penalties. Uncertain tax positions are measured and recorded by establishing a threshold for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Only tax positions meeting the more-likely-than-not recognition threshold at the effective date may be recognized or continue to be recognized. The Company’s tax years subsequent to 2005 remain subject to examination by federal and state tax jurisdictions. |
Advertising | Advertising The Company records advertising costs as incurred. For the years ended December 31, 2019, and 2018, advertising expense was $4,619 and $60,842 (including $46,900 related party expense), respectively. |
Related parties | Related parties Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. |
Leases | Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases On January 1, 2019, the Company adopted ASU No. 2016-02, applying the package of practical expedients to leases that commenced before the effective date whereby the Company elected to not reassess the following: (i) whether any expired or existing contracts contain leases and; (ii) initial direct costs for any existing leases. For contracts entered into on or after the effective date, at the inception of a contract the Company assessed whether the contract is, or contains, a lease. The Company’s assessment is based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether we obtain the right to substantially all the economic benefit from the use of the asset throughout the period, and (3) whether it has the right to direct the use of the asset. The Company will allocate the consideration in the contract to each lease component based on its relative stand-alone price to determine the lease payments. The Company has elected not to recognize right-of-use (“ROU”) assets and lease liabilities for short-term leases that have a term of 12 months or less. Leases entered into prior to January 1, 2019, are accounted for under ASC 840 and were not reassessed. We have elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a term of 12 months or less. Operating lease ROU assets represents the right to use the leased asset for the lease term and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most leases do not provide an implicit rate, the Company use an incremental borrowing rate based on the information available at the adoption date in determining the present value of future payments. Lease expense for minimum lease payments is amortized on a straight-line basis over the lease term and is included in general and administrative expenses in the condensed consolidated statements of operations. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2018, the FASB issued ASU 2018-13 —Fair Value Measurement (Topic 820): Disclosure Framework Changes to the Disclosure Requirements for Fair Value Measurement Removals 1. The amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy 2. The policy for timing of transfers between levels 3. The valuation processes for Level 3 fair value measurements 4. For nonpublic entities, the changes in unrealized gains and losses for the period included in earnings for recurring Level 3 fair value measurements held at the end of the reporting period. Modifications 1. In lieu of a roll forward for Level 3 fair value measurements, a nonpublic entity is required to disclose transfers into and out of Level 3 of the fair value hierarchy and purchases and issues of Level 3 assets and liabilities. 2. For investments in certain entities that calculate net asset value, an entity is required to disclose the timing of liquidation of an investee’s assets and the date when restrictions from redemption might lapse only if the investee has communicated the timing to the entity or announced the timing publicly. 3. The amendments clarify that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date. Additions 1. The changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period. 2. The range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. For certain unobservable inputs, an entity may disclose other quantitative information (such as the median or arithmetic average) in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements. In addition, the amendments eliminate at a minimum an entity shall disclose at a minimum Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying unaudited consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Financial instruments measured at fair value on a recurring basis | At December 31, 2019 At December 31, 2018 Description Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Derivative liabilities — — $ 1,420,681 — — $ 1,561,232 |
Roll forward of the level 3 valuation financial instruments | Derivative Liabilities Balance at December 31, 2018 $ 1,561,232 Initial valuation of derivative liabilities included in debt discount 1,546,230 Initial valuation of derivative liabilities included in derivative income (expense) 1,880,621 Reclassification of derivative liabilities to gain (loss) on debt extinguishment (499,128 ) Change in fair value included in derivative income (expense) (3,068,274 ) Balance at December 31, 2019 $ 1,420,681 |
Anti-dilutive equity securities outstanding excluded from computation of earnings per share | December 31, 2019 2018 Stock warrants 6,998,367 249,479 Convertible debt 122,548,848 5,292,896 Series B preferred stock 10,141,626 — 139,688,841 5,542,375 |
MARKETABLE SECURITIES (Tables)
MARKETABLE SECURITIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
Marketable securities owned by Company | December 31, 2019 2018 Beginning balance $ 8,703 $ 41,862 Unrealized loss marked to fair value — (33,159 ) Impairment of marketable securities (8,703 ) — Ending balance $ — $ 8,703 |
PREPAID EXPENSES (Tables)
PREPAID EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
OTHER INCOME (EXPENSE): | |
Prepaid expenses | December 31, 2019 2018 Vendor deposits $ 4,000 $ 28,000 Total prepaid expenses $ 4,000 $ 28,000 |
LAND, PROPERTY AND EQUIPMENT (T
LAND, PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Land, property and equipment | December 31, 2019 2018 Land $ 129,554 $ 129,554 Balance $ 129,554 $ 129,554 Property and equipment $ 249,523 $ 215,006 Less: accumulated depreciation (108,265 ) (61,928 ) Balance $ 141,258 $ 153,078 |
OPERATING LEASE RIGHT-OF-USE _2
OPERATING LEASE RIGHT-OF-USE AND OPERATING LEASE LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Right-of-use asset | December 31, 2019 Operating lease $ 310,259 Less accumulated reduction (70,957 ) Balance of ROU asset as of December 31, 2019 $ 239,302 |
Operating lease liability related to ROU asset | December 31, 2019 Operating lease $ 310,259 Total lease liabilities 310,259 Reduction of lease liability (70,957 ) Total 239,302 Less: short term portion as of December 31, 2019 (162,506 ) Long term portion as of December 31, 2019 $ 76,796 |
Future base lease payments under non-cancelable operating lease | Amount Year ending - 2020 96,000 Year ending - 2021 96,000 Ten months ended October 31, 2022 80,000 Total minimum non-cancelable operating lease payments 272,000 Less: discount to fair value (32,698 ) Total lease liability at December 31, 2019 $ 239,302 |
CONVERTIBLE NOTES PAYABLE (Tabl
CONVERTIBLE NOTES PAYABLE (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Convertible debt | 2018 2017 Beginning Principal Balance $ 979,443 $ 826,480 Convertible notes-newly issued 1,034,186 1,813,210 Conversion of convertible notes (principal) (985,996 ) (1,350,247 ) Accrued interest added to convertible notes 78,574 — Principal payments (171,199 ) (310,000 ) Unamortized discount (217,293 ) (494,193 ) Ending Principal Balance, net $ 717,715 $ 485,250 |
Fair value assumptions for derivative liabilities | Dividend rate — % Term (in years) 0.01 to 5.00 years Volatility 162.9% to 205.5% Risk-free interest rate 1.51% to 2.42% |
Derivative activity | Balance at December 31, 2017 $ 5,416,831 Initial valuation of derivative liabilities included in debt discount 2,636,763 Reclassification of derivative liabilities to gain (loss) on debt extinguishment (3,105,639 ) Change in fair value included in derivative income (expense) (3,386,723 ) Balance at December 31, 2018 $ 1,561,232 Initial valuation of derivative liabilities included in debt discount 1,546,230 Initial valuation of derivative liabilities included in derivative income (expense) 1,880,621 Reclassification of derivative liabilities to gain (loss) on debt extinguishment (499,128 ) Change in fair value included in derivative income (expense) (3,068,274 ) Balance at December 31, 2019 $ 1,420,681 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions | |
Related party activity | Total Due (to) from related party balance at December 31, 2018 $ (1,283 ) Working capital advances received (30,305 ) Accrued rent expenses – related party (28,000 ) Repayments made 53,992 Due (to) from related party balance at December 31, 2019 $ (5,596 ) |
STOCKHOLDERS' DEFICIT (Tables)
STOCKHOLDERS' DEFICIT (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Activity related to warrants | Number of Warrants Weighted- Weighted- Outstanding and exercisable December 31, 2018 249,479 $ 1.28 3.3 Issued in connection with financing 3,354,273 $ 0.15 4.1 Issued in connection with anti-dilution adjustment 3,394,616 $ 0.17 3.6 Expired/Forfeited — — — Exercised — — — Outstanding and exercisable December 31, 2019 6,998,368 $ 0.29 4.0 Exercisable at December 31, 2019 6,998,368 $ 0.29 4.0 |
INCOME TAX (Tables)
INCOME TAX (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income tax reconciliation | 2019 2018 Net tax loss carry-forwards $ 12,218,349 $ 9,584,964 Statutory rate 21 % 21 % Expected tax recovery 2,565,853 2,012,842 Change in valuation allowance (2,565,853 ) (2,012,842 ) Income tax provision $ — $ — |
Components of deferred tax asset | Components of deferred tax asset: Non capital tax loss carryforwards $ 2,565,853 $ 2,012,842 Less: valuation allowance (2,565,853 ) (2,012,842 ) Net deferred tax asset $ — $ — |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Financial instruments measured at fair value on a recurring basis (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Derivative liabilities | $ 1,420,681 | $ 1,561,232 | $ 5,416,831 |
Level I | |||
Derivative liabilities | |||
Level II | |||
Derivative liabilities | |||
Level III | |||
Derivative liabilities | $ 1,420,681 | $ 1,561,232 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Roll forward of the level 3 valuation financial instruments (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Accounting Policies [Abstract] | ||
Derivative liabilities, beginning balance | $ 1,561,232 | $ 5,416,831 |
Initial valuation of derivative liabilities included in debt discount | 1,546,230 | 2,130,851 |
Initial valuation of derivative liabilities included in derivative income (expense) | 1,880,621 | |
Reclassification of derivative liabilities to gain (loss) on debt extinguishment | (499,128) | (3,105,639) |
Change in fair value included in derivative income (expense) | (3,068,274) | (3,386,723) |
Derivative liabilities, ending balance | $ 1,420,681 | $ 1,561,232 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Anti-dilutive equity securities outstanding excluded from computation of earnings per share (Details) - shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Accounting Policies [Abstract] | ||
Stock warrants | 6,998,367 | 249,479 |
Convertible debt | 122,548,848 | 5,292,896 |
Series B preferred stock | 10,141,626 | |
Total | 139,688,841 | 5,542,375 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Accounting Policies [Abstract] | ||
Allowance for doubtful accounts | $ 43,408 | $ 43,408 |
Deferred rent balance | 24,916 | 24,916 |
Advertising expenses | $ 4,619 | $ 60,842 |
GOING CONCERN (Details Narrativ
GOING CONCERN (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Going Concern Details Narrative Abstract | ||
Net loss | $ (8,045,888) | $ (1,412,278) |
Net cash used in operations | (1,448,001) | (1,260,492) |
Accumulated deficit | (35,036,243) | $ (26,990,355) |
Working capital deficit | $ (5,355,872) |
MARKETABLE SECURITIES - Marketa
MARKETABLE SECURITIES - Marketable securities owned by Company (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Investments, Debt and Equity Securities [Abstract] | ||
Beginning balance | $ 8,703 | $ 41,862 |
Unrealized loss marked to fair value | (33,159) | |
Impairment of marketable securities | (8,703) | |
Ending balance | $ 8,703 |
MARKETABLE SECURITIES (Details
MARKETABLE SECURITIES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Investments, Debt and Equity Securities [Abstract] | ||
Realized loss on marketable securities | $ (7,822) |
PREPAID EXPENSES - Prepaid expe
PREPAID EXPENSES - Prepaid expenses (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
OTHER INCOME (EXPENSE): | ||
Vendor deposits | $ 4,000 | $ 28,000 |
Total prepaid expenses | $ 4,000 | $ 28,000 |
PREPAID EXPENSES (Details Narra
PREPAID EXPENSES (Details Narrative) | 12 Months Ended |
Dec. 31, 2019USD ($) | |
OTHER INCOME (EXPENSE): | |
Prepaid expenses impaired | $ 25,000 |
CULTIVATION (Details Narrative)
CULTIVATION (Details Narrative) | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Notes to Financial Statements | |
Amounts paid for Cultivation recorded as an asset | $ (112,100) |
Impairment loss recorded on impairment of Cultivation assets | $ (112,100) |
NOTE RECEIVABLE (Details Narrat
NOTE RECEIVABLE (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Receivables [Abstract] | ||
Note receivable funded | $ 20,000 | $ 170,000 |
Impairment loss related to note receivable | $ (190,000) |
OTHER DEPOSIT (Details Narrativ
OTHER DEPOSIT (Details Narrative) | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Notes to Financial Statements | |
Deposit paid for Exclusivity Agreement | $ (25,000) |
Impairment loss in connection with deposit for Exclusivity Agreement | (25,000) |
Deposit paid in consideration for option to purchase real estate | (175,000) |
Impairment loss on deposit for real estate | $ (175,000) |
LAND, PROPERTY AND EQUIPMENT -
LAND, PROPERTY AND EQUIPMENT - Land, property and equipment (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment [Abstract] | ||
Land | $ 129,554 | $ 129,554 |
Balance | 129,554 | 129,554 |
Property and equipment | 249,523 | 215,006 |
Less: accumulated depreciation | (108,265) | (61,928) |
Balance | $ 141,258 | $ 153,079 |
LAND, PROPERTY AND EQUIPMENT (D
LAND, PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | ||
Remaining note balance on land purchase contract | $ 21,500 | $ 21,500 |
Depreciation expense | $ (46,336) | $ (38,104) |
OPERATING LEASE RIGHT-OF-USE _3
OPERATING LEASE RIGHT-OF-USE AND OPERATING LEASE LIABILITIES - Right-of-use asset (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Debt Disclosure [Abstract] | ||
Operating lease | $ 310,259 | |
Less accumulated reduction | (70,957) | |
Balance of ROU asset | $ 239,302 |
OPERATING LEASE RIGHT-OF-USE _4
OPERATING LEASE RIGHT-OF-USE AND OPERATING LEASE LIABILITIES - Operating lease liability related to ROU asset (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Debt Disclosure [Abstract] | ||
Operating lease | $ 310,259 | |
Total lease liabilities | 310,259 | |
Reduction of lease liability | (70,957) | |
Total | 239,302 | |
Less: short term portion | (162,506) | |
Long term portion | $ 76,796 |
OPERATING LEASE RIGHT-OF-USE _5
OPERATING LEASE RIGHT-OF-USE AND OPERATING LEASE LIABILITIES - Future base lease payments under non-cancelable operating lease (Details) | Dec. 31, 2019USD ($) |
Debt Disclosure [Abstract] | |
Year ending - 2020 | $ 96,000 |
Year ending - 2021 | 96,000 |
Ten months ended October 31, 2022 | 80,000 |
Total minimum non-cancelable operating lease payments | 272,000 |
Less: discount to fair value | (32,698) |
Total lease liability | $ 239,302 |
OPERATING LEASE RIGHT-OF-USE _6
OPERATING LEASE RIGHT-OF-USE AND OPERATING LEASE LIABILITIES (Details Narrative) | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Debt Disclosure [Abstract] | |
Rent expense incurred from lease agreement with officer of the Company | $ 96,000 |
CONVERTIBLE NOTES PAYABLE - Con
CONVERTIBLE NOTES PAYABLE - Convertible debt (Details) - Convertible notes payable balance summary - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Beginning Principal Balance | $ 2,221,713 | $ 935,008 |
Less: unamortized debt issue cost | (31,060) | |
Less: unamortized debt discount | (429,404) | (217,293) |
Ending Principal Balance | $ 1,761,249 | $ 717,715 |
Derivative liabilities - Fair v
Derivative liabilities - Fair value assumptions for derivative liabilities (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Dividend rate | |
Term, minimum | 4 days |
Term, maximum | 5 years |
Volatility, minimum | 162.90% |
Volatility, maximum | 205.50% |
Risk-free interest, minimum | 1.51% |
Risk-free interest, maximum | 2.42% |
CONVERTIBLE NOTES PAYABLE - Der
CONVERTIBLE NOTES PAYABLE - Derivative activity (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Debt Disclosure [Abstract] | ||
Derivative liabilities, beginning balance | $ 1,561,232 | $ 5,416,831 |
Initial valuation of derivative liabilities included in debt discount | 1,546,230 | 2,636,763 |
Initial valuation of derivative liabilities included in derivative income (expense) | 1,880,621 | |
Reclassification of derivative liabilities to gain (loss) on debt extinguishment | (499,128) | (3,105,639) |
Change in fair value included in derivative income (expense) | (3,068,274) | (3,386,723) |
Derivative liabilities, ending balance | $ 1,420,681 | $ 1,561,232 |
CONVERTIBLE NOTES PAYABLE (Deta
CONVERTIBLE NOTES PAYABLE (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Conversion of convertible notes, shares | 3,270,943 | 1,676,665 |
Conversion of convertible notes, outstanding principal amount | $ 398,719 | $ 1,006,260 |
Loss on debt extinguishment recorded | 72,871 | 72,871 |
Loss on redemption of convertible notes recorded | 58,759 | 58,759 |
Amortization of debt discounts related to Notes and Warrants | 1,546,230 | 2,407,751 |
St George Note | ||
Convertible notes, outstanding principal | 116,310 | 452,012 |
Convertible notes, accrued interest | 131,595 | $ 96,120 |
Convertible notes, default penalty | $ 492,199 | |
Conversion of convertible notes, shares | 1,499,736 | 166,224 |
Conversion of convertible notes, outstanding principal amount | $ 308,701 | $ 175,120 |
Conversion of convertible notes, outstanding accrued interest amount | 12,380 | |
May 2018 Note | ||
Convertible notes, outstanding principal | 570,055 | 514,496 |
Convertible notes, accrued interest | 117,730 | 14,576 |
Convertible notes, default penalty | 455,426 | |
Net proceeds received | 50,000 | 450,000 |
OID on proceeds received from note | 5,556 | 49,496 |
Legal fees on proceeds received from note | $ 15,000 | |
Warrants issued and outstanding | 2,887,647 | |
February 2019 Note | ||
Convertible notes, outstanding principal | 493,649 | |
Convertible notes, accrued interest | 31,789 | |
Convertible notes, default penalty | 215,511 | |
Net proceeds received | 465,000 | |
OID on proceeds received from note | $ 61,667 | |
Conversion of convertible notes, shares | 989,448 | |
Conversion of convertible notes, outstanding principal amount | $ 33,018 | |
Warrants issued and outstanding | 1,761,669 | |
April 2019 Note | ||
Convertible notes, outstanding principal | $ 71,500 | |
Convertible notes, accrued interest | 10,519 | |
Net proceeds received | 125,000 | |
Legal fees on proceeds received from note | $ 3,500 | |
Conversion of convertible notes, shares | 771,758 | |
Conversion of convertible notes, outstanding principal amount | $ 57,000 | |
May 2019 Note | ||
Convertible notes, outstanding principal | 128,500 | |
Convertible notes, accrued interest | 9,041 | |
Net proceeds received | 125,000 | |
Legal fees on proceeds received from note | 3,500 | |
September 2019 Note | ||
Convertible notes, outstanding principal | 565,833 | |
Convertible notes, accrued interest | 14,510 | |
Net proceeds received | 500,000 | |
OID on proceeds received from note | $ 65,833 | |
Warrants issued and outstanding | 2,123,415 | |
December 2019 Note | ||
Convertible notes, outstanding principal | $ 128,500 | |
Convertible notes, accrued interest | 295 | |
Net proceeds received | 125,000 | |
Legal fees on proceeds received from note | 3,500 | |
2019 Notes | ||
Fair values of embedded conversion option derivative and warrant derivative | 3,426,851 | |
Debt discount allocated on derivative liabilities | 1,546,230 | |
St George and 2018 Notes | ||
Fair values of embedded conversion option derivative and warrant derivative | $ 2,880,913 |
NON-CONVERTIBLE NOTE PAYABLE (D
NON-CONVERTIBLE NOTE PAYABLE (Details Narrative) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Debt Disclosure [Abstract] | ||
Note payable outstanding balance on land purchase | $ 21,500 | $ 21,500 |
RELATED PARTY TRANSACTIONS - Re
RELATED PARTY TRANSACTIONS - Related party activity (Details) | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Related Party Transactions - Related Party Activity | |
Due (to) from related party balance, beginning | $ (1,283) |
Working capital advances received | (30,305) |
Accrued rent expenses – related party | (28,000) |
Repayments made | 53,992 |
Due (to) from related party balance, ending | $ (5,596) |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Rent expense incurred from lease agreement with officer of the Company | $ 96,000 |
May 2019 Note II | |
Convertible notes, outstanding principal | 147,864 |
Convertible notes, accrued interest | 9,014 |
Net proceeds received | 175,000 |
Principal amounts repaid on notes | $ (27,136) |
Common and Preferred Stock - Ac
Common and Preferred Stock - Activity related to warrants (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Warrants exercised | (26,044) | |
Outstanding and exercisable | ||
Warrants outstanding and exercisable, beginning | 249,479 | |
Warrants outstanding and exercisable, ending | 6,998,368 | 249,479 |
Weighted-average exercise price per share | $ 0.29 | $ 1.28 |
Weighted-average remaining life | 4 years | 3 years 3 months 18 days |
Warrants Issued in connection with financing | ||
Warrants issued | 3,354,273 | |
Weighted-average exercise price per share | $ 0.15 | |
Weighted-average remaining life | 4 years 1 month 6 days | |
Warrants Issued in connection with anti-dilution adjustment | ||
Warrants issued | 3,394,616 | |
Weighted-average exercise price per share | $ 0.17 | |
Weighted-average remaining life | 3 years 7 months 6 days | |
Warrants expired/forfeited | ||
Warrants expired/forfeited | ||
Weighted-average exercise price per share, expired | ||
Warrants exercised | ||
Warrants exercised | ||
Weighted-average exercise price per share |
Common and Preferred Stock - Pr
Common and Preferred Stock - Preferred Stock (Details Narrative) - shares | Dec. 31, 2019 | Dec. 31, 2018 |
Equity [Abstract] | ||
Series B Preferred stock, shares issued and outstanding | 1,000 | 1,000 |
Common and Preferred Stock - Co
Common and Preferred Stock - Common Stock (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Equity [Abstract] | ||
Common stock issued for services, shares | 13,000,000 | 33,500 |
Common stock issued for services, amount | $ 5,081,166 | $ 120,450 |
Common stock granted but unissued for services, shares | 10,000,000 | |
Common stock issued and/or issuable for services, aggregate grant fair value | $ 6,427,000 | |
Stock-based compensation expense related to issuances for services | $ 5,081,166 | $ 120,450 |
Common stock sold for cash, shares issuable | 20,833 | 55,028 |
Common stock sold for cash, proceeds received | $ 15,000 | $ 425,001 |
Common stock issued upon conversion of debt, shares | 3,270,943 | 1,676,665 |
Common stock issued upon conversion of debt, amount | $ 398,719 | $ 1,006,260 |
Loss on deb extinguishment related to note conversions recorded | $ 72,871 | $ 58,759 |
Common stock issued upon cashless exercise of warrants, shares issued | 284,259 | |
Common stock issued upon cashless exercise of warrants, number of warrants | 26,044 |
Common and Preferred Stock - Wa
Common and Preferred Stock - Warrants (Details Narrative) - shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Common stock issued upon cashless exercise of warrants, shares issued | 284,259 | |
Common stock issued upon cashless exercise of warrants, number of warrants | 26,044 | |
St. George 2016 Warrants | ||
Warrants outstanding | 214,636 | |
May 2018 Warrants | ||
Warrants outstanding | 2,887,647 | |
Additional warrants issued pursuant to anti-dilution provisions | 2,852,804 | |
February 2019 Warrants | ||
Warrants outstanding | 1,761,669 | |
Additional warrants issued pursuant to anti-dilution provisions | 541,811 | |
September 2019 Warrants | ||
Warrants outstanding | 2,134,415 |
INCOME TAX - Income tax reconci
INCOME TAX - Income tax reconciliation (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Net tax loss carry-forwards | $ 12,218,349 | $ 9,584,964 |
Statutory rate | 21.00% | 21.00% |
Expected tax recovery | $ 2,565,853 | $ 2,012,842 |
Change in valuation allowance | (2,565,853) | (2,012,842) |
Income tax provision |
INCOME TAX - Components of defe
INCOME TAX - Components of deferred tax asset (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Income Tax Disclosure [Abstract] | ||
Non capital tax loss carry forwards | $ 2,565,853 | $ 2,012,842 |
Less: valuation allowance | (2,565,853) | (2,012,842) |
Net deferred tax asset |
INCOME TAX (Details Narrative)
INCOME TAX (Details Narrative) | Dec. 31, 2019USD ($) |
Income Tax Disclosure [Abstract] | |
Net operating loss carry forwards | $ 12,218,349 |
COMMITMENTS AN CONTINGENCIES (D
COMMITMENTS AN CONTINGENCIES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Lease | ||
Deferred rent balance | $ 24,916 | $ 24,916 |
Rent expense incurred from office space lease | 700 | |
Rent expense incurred from lease agreement with officer of the Company | 96,000 | |
Agreements | ||
Amounts of officer compensation paid | $ 67,000 | |
Shares issued to settle shares due from CEO employment agreement | 2,000,000 | |
Fair value of common shares charged to stock-based compensation | $ 1,359,800 | |
Legal | ||
Amounts paid by Company in settlement agreement | 365,000 | |
South Florida agricultural farming facility lease agreement | ||
Lease | ||
Accrued expense related to lease | 114,628 | |
Colorado testing facility sublease agreement | ||
Lease | ||
Accrued expense related to lease | 48,750 | |
Pueblo, Colorado land lease agreement | ||
Lease | ||
Accrued expense related to lease | $ 165,200 |