Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 12, 2020 | |
Document Information Line Items | ||
Entity Registrant Name | Zoned Properties, Inc. | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 12,011,548 | |
Amendment Flag | false | |
Entity Central Index Key | 0001279620 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Document Period End Date | Sep. 30, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity File Number | 000-51640 | |
Entity Incorporation, State or Country Code | NV | |
Entity Interactive Data Current | Yes |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
ASSETS | ||
Cash | $ 577,763 | $ 639,781 |
Accounts receivable | 9,393 | 8,188 |
Deferred rent receivable | 176,004 | |
Rental properties, net | 7,116,736 | 7,374,807 |
Prepaid expenses and other assets | 128,546 | 113,592 |
Convertible note receivable | 100,000 | |
Property and equipment, net | 18,508 | 22,035 |
Security deposits | 1,100 | 1,100 |
Total Assets | 8,128,050 | 8,159,503 |
LIABILITIES: | ||
Convertible note payable | 2,000,000 | 2,000,000 |
Convertible note payable - related party | 20,000 | 20,000 |
Accounts payable | 880 | |
Accrued expenses | 111,424 | 94,641 |
Accrued expenses - related party | 3,900 | 3,000 |
Deferred revenues | 1,000 | 1,750 |
Security deposits payable | 71,800 | 74,468 |
Total Liabilities | 2,209,004 | 2,193,859 |
Commitments and Contingencies | ||
STOCKHOLDERS’ EQUITY: | ||
Preferred stock, $0.001 par value, 5,000,000 shares authorized; 2,000,000 shares issued and outstanding at September 30, 2020 and December 31, 2019 ($1.00 per share liquidation preference) | 2,000 | 2,000 |
Common stock: $0.001 par value, 100,000,000 shares authorized; 12,011,548 and 11,901,548 issued and outstanding at September 30, 2020 and December 31, 2019, respectively | 12,012 | 11,902 |
Additional paid-in capital | 20,850,352 | 20,806,452 |
Accumulated deficit | (14,945,318) | (14,854,710) |
Total Stockholders’ Equity | 5,919,046 | 5,965,644 |
Total Liabilities and Stockholders’ Equity | $ 8,128,050 | $ 8,159,503 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - $ / shares | Sep. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 2,000,000 | 2,000,000 |
Preferred stock, shares outstanding | 2,000,000 | 2,000,000 |
Preferred stock, liquidation preference (in Dollars per share) | $ 1 | $ 1 |
Common stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 12,011,548 | 11,901,548 |
Common stock, shares outstanding | 12,011,548 | 11,901,548 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
REVENUES: | ||||
Rental revenues | $ 284,897 | $ 278,273 | $ 833,607 | $ 834,223 |
Advisory revenues | 17,875 | 60,066 | 72,858 | 106,293 |
Total revenues | 302,772 | 338,339 | 906,465 | 940,516 |
OPERATING EXPENSES: | ||||
Compensation and benefits | 59,418 | 79,455 | 277,683 | 288,422 |
Professional fees | 35,700 | 50,655 | 149,610 | 185,564 |
General and administrative expenses | 42,279 | 60,723 | 147,393 | 137,241 |
Depreciation and amortization | 90,661 | 90,500 | 272,086 | 271,556 |
Real estate taxes | 20,963 | 22,719 | 62,891 | 68,159 |
Total operating expenses | 249,021 | 304,052 | 909,663 | 950,942 |
INCOME (LOSS) FROM OPERATIONS | 53,751 | 34,287 | (3,198) | (10,426) |
OTHER (EXPENSES) INCOME: | ||||
Interest expenses | (30,000) | (30,000) | (90,000) | (90,000) |
Interest expenses - related party | (300) | (300) | (900) | (900) |
Other income | 108,204 | |||
Interest income | 1,638 | 3,490 | ||
Total other (expenses) income, net | (28,662) | (30,300) | (87,410) | 17,304 |
INCOME (LOSS) BEFORE INCOME TAXES | 25,089 | 3,987 | (90,608) | 6,878 |
PROVISION FOR INCOME TAXES | ||||
NET INCOME (LOSS) | $ 25,089 | $ 3,987 | $ (90,608) | $ 6,878 |
NET INCOME (LOSS) PER COMMON SHARE: | ||||
Basic (in Dollars per share) | $ 0 | $ 0 | $ (0.01) | $ 0 |
Diluted (in Dollars per share) | $ 0 | $ 0 | $ (0.01) | $ 0 |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||||
Basic (in Shares) | 12,011,548 | 11,901,548 | 12,009,139 | 11,917,079 |
Diluted (in Shares) | 12,011,548 | 11,901,548 | 12,009,139 | 11,917,079 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) | Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total |
Balance at Dec. 31, 2018 | $ 2,000 | $ 17,442 | $ 20,746,200 | $ (14,842,429) | $ 5,923,213 |
Balance (in Shares) at Dec. 31, 2018 | 2,000,000 | 17,441,552 | |||
Stock redemption and cencellation | $ (5,640) | 5,640 | |||
Stock redemption and cencellation (in Shares) | (5,640,004) | ||||
Common stock issued for services | $ 100 | 31,000 | 31,100 | ||
Common stock issued for services (in Shares) | 100,000 | ||||
Accretion of stock based compensation related to stock options issued | 5,903 | 5,903 | |||
Net income loss | (6,787) | (6,787) | |||
Balance at Mar. 31, 2019 | $ 2,000 | $ 11,902 | 20,788,743 | (14,849,216) | 5,953,429 |
Balance (in Shares) at Mar. 31, 2019 | 2,000,000 | 11,901,548 | |||
Accretion of stock based compensation related to stock options issued | 5,903 | 5,903 | |||
Net income loss | 9,678 | 9,678 | |||
Balance at Jun. 30, 2019 | $ 2,000 | $ 11,902 | 20,794,646 | (14,839,538) | 5,969,010 |
Balance (in Shares) at Jun. 30, 2019 | 2,000,000 | 11,901,548 | |||
Accretion of stock based compensation related to stock options issued | 5,903 | 5,903 | |||
Net income loss | 3,987 | 3,987 | |||
Balance at Sep. 30, 2019 | $ 2,000 | $ 11,902 | 20,800,549 | (14,835,551) | 5,978,900 |
Balance (in Shares) at Sep. 30, 2019 | 2,000,000 | 11,901,548 | |||
Balance at Dec. 31, 2019 | $ 2,000 | $ 11,902 | 20,806,452 | (14,854,710) | 5,965,644 |
Balance (in Shares) at Dec. 31, 2019 | 2,000,000 | 11,901,548 | |||
Common stock issued for services | $ 110 | 24,090 | 24,200 | ||
Common stock issued for services (in Shares) | 110,000 | ||||
Accretion of stock based compensation related to stock options issued | 12,292 | 12,292 | |||
Net income loss | (96,770) | (96,770) | |||
Balance at Mar. 31, 2020 | $ 2,000 | $ 12,012 | 20,842,834 | (14,951,480) | 5,905,366 |
Balance (in Shares) at Mar. 31, 2020 | 2,000,000 | 12,011,548 | |||
Accretion of stock based compensation related to stock options issued | 5,744 | 5,744 | |||
Net income loss | (18,927) | (18,927) | |||
Balance at Jun. 30, 2020 | $ 2,000 | $ 12,012 | 20,848,578 | (14,970,407) | 5,892,183 |
Balance (in Shares) at Jun. 30, 2020 | 2,000,000 | 12,011,548 | |||
Accretion of stock based compensation related to stock options issued | 1,774 | 1,774 | |||
Net income loss | 25,089 | 25,089 | |||
Balance at Sep. 30, 2020 | $ 2,000 | $ 12,012 | $ 20,850,352 | $ (14,945,318) | $ 5,919,046 |
Balance (in Shares) at Sep. 30, 2020 | 2,000,000 | 12,011,548 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net (loss) income | $ (90,608) | $ 6,878 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Depreciation expense | 272,086 | 271,555 |
Stock-based compensation | 24,200 | 31,100 |
Stock option expense | 19,810 | 17,709 |
Change in operating assets and liabilities: | ||
Accounts receivable | (1,205) | (9,037) |
Deferred rent receivable | (176,004) | |
Prepaid expenses and other assets | (14,954) | (15,305) |
Security deposits | (500) | |
Accounts payable | 880 | (111,809) |
Accrued expenses | 16,783 | 28,692 |
Accrued expenses - related parties | 900 | 900 |
Deferred revenues | (750) | (750) |
Security deposits payable | (2,668) | |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 48,470 | 219,433 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of convertible note receivable | (100,000) | |
Purchase of rental property improvements | (9,565) | |
Purchase of property and equipment | (923) | |
NET CASH USED IN INVESTING ACTIVITIES | (110,488) | |
NET (DECREASE) INCREASE IN CASH | (62,018) | 219,433 |
CASH, beginning of period | 639,781 | 354,867 |
CASH, end of period | 577,763 | 574,300 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Interest paid | $ 90,000 | 90,000 |
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Reclassification of convertible note payable - related party to convertible note payable | 2,000,000 | |
Reclassification of security deposits - related party to security deposits | 71,800 | |
Reclassification of accrued expenses - related party to accrued expenses | $ 33,000 |
Organization and Nature of Oper
Organization and Nature of Operations | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
ORGANIZATION AND NATURE OF OPERATIONS | NOTE 1 – ORGANIZATION AND NATURE OF OPERATIONS Organization Zoned Properties, Inc. (“Zoned Properties” or the “Company”), was incorporated in the State of Nevada on August 25, 2003. The Company is a strategic real estate development firm whose primary mission is to provide real estate and sustainability services for clients in the regulated cannabis industry, positioning the company for real estate acquisitions and revenue growth. The Company intends to pioneer sustainable development for emerging industries, including the regulated cannabis industry. The Company is an accredited member of the Better Business Bureau, the U.S. Green Building Council, and the Forbes Real Estate Council. The Company focuses on investing capital to acquire and develop commercial properties to be leased on a triple-net basis, and engaging clients that face zoning, permitting, development, and operational challenges. The Company provides development strategies and advisory services that could potentially have a major impact on cash flow and property value. The Company does not grow, harvest, sell or distribute cannabis or any substances regulated under United States law such as the Controlled Substance Act of 1970, as amended (the “CSA”). The Company has the following wholly owned subsidiaries: ● Gilbert Property Management, LLC (“Gilbert”) was organized in the State of Arizona on February 10, 2014. ● Chino Valley Properties, LLC (“Chino Valley”) was organized in the State of Arizona on April 15, 2014. ● Kingman Property Group, LLC (“Kingman”) was organized in the State of Arizona on April 15, 2014. ● Green Valley Group, LLC (“Green Valley”) organized in the State of Arizona on April 15, 2014. ● Zoned Oregon Properties, LLC was organized in the State of Oregon on June 16, 2015. ● Zoned Colorado Properties, LLC (“Zoned Colorado”) was organized in the State of Colorado on September 17, 2015. ● Zoned Illinois Properties, LLC was organized in the State of Illinois on July 15, 2015. ● Zoned Arizona Properties, LLC (“Zoned Arizona”) was organized in the State of Arizona on June 2, 2017. ● Zoned Advisory Services, LLC (“Zoned Advisory”) was organized in the State of Arizona on July 27, 2018. In March 2020, the World Health Organization declared COVID-19 a global pandemic and recommended containment and mitigation measures worldwide. The Company is monitoring this closely, and although operations have not been materially affected by the COVID-19 outbreak to date, the ultimate duration and severity of the outbreak and its impact on the economic environment and our business is uncertain. Currently, all of the properties in the Company’s portfolio are open to its Significant Tenants and their customers and will remain open pursuant to state and local government requirements. At this time, the Company does not foresee any material changes to its operations from COVID-19. The Company’s tenants are continuing to generate revenue at these properties and they have continued to make rental payments in full and on time and we believe the tenants’ liquidity position is sufficient to cover its expected rental obligations. Accordingly, while the Company does not anticipate an impact on its operations, it cannot estimate the duration of the pandemic and potential impact on its business if the properties must close or if the tenants are otherwise unable or unwilling to make rental payments. In addition, a severe or prolonged economic downturn could result in a variety of risks to the Company’s business, including weakened demand for its properties and a decreased ability to raise additional capital when needed on acceptable terms, if at all. At this time, the Company is unable to estimate the impact of this event on its operations. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation and principles of consolidation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation. The unaudited condensed consolidated financial statements for the nine months ended September 30, 2020 and 2019 have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). In the opinion of management, all adjustments necessary to present fairly the consolidated financial position, results of operations, and cash flows as of September 30, 2020 and 2019, and for the periods then ended, have been made. Those adjustments consist of normal and recurring adjustments. Operating results for interim periods are not necessarily indicative of results that may be expected for the fiscal year as a whole. Accordingly, the condensed consolidated financial statements do not include all the information and notes necessary for a comprehensive presentation of our consolidated financial position and consolidated results of operations and should be read in conjunction with the audited financial statements of the Company for the year ended December 31, 2019 included in our Annual Report on form 10-K filed with the SEC on March 26, 2020. Effective January 1, 2019, the Company and certain beneficial shareholders entered into a Stock Redemption Agreement. Pursuant to SEC rules, each of these beneficial shareholders was deemed to be a “related person” due solely to their status as significant stockholders of the Company. Pursuant to the terms of the Stock Redemption Agreement, these beneficial shareholders would no longer be significant stockholders of the Company and are no longer deemed to be “related persons” under SEC rules. Accordingly, as of January 1, 2019, the Company no longer reflects transactions and balances related to these beneficial shareholders as related party transactions. Use of estimates The preparation of unaudited condensed consolidated financial statements in conformity with 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 revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates for the nine months ended September 30, 2020 and 2019 include the collectability of accounts and note receivable, the useful life of rental properties and property and equipment, assumptions used in assessing impairment of long-term assets, valuation allowances for deferred tax assets, and the fair value of non-cash equity transactions, including options and stock-based compensation. Risks and uncertainties The Company’s operations are subject to risk and uncertainties including financial, operational, regulatory and other risks including the potential risk of business failure. The Company conducts a significant portion of its business in Arizona. Additionally, the Company’s tenants operate in the medical marijuana industry. Consequently, any significant economic downturn in the Arizona market or any changes in the federal government’s enforcement of current federal laws or changes in state laws could potentially have a negative effect on the Company’s business, results of operations and financial condition. Additionally, substantially all of the Company’s real estate properties are leased under triple-net leases to tenants that are controlled by one entity (each, a “Significant Tenant” and collectively, the “Significant Tenants”). For the nine months ended September 30, 2020 and 2019, rental and advisory revenue associated with the Significant Tenants amounted to $878,759 and $855,659, which represents 96.9% and 91.0% of the Company’s total revenues, respectively (see Note 3). Fair value of financial instruments The carrying amounts reported in the unaudited condensed consolidated balance sheets for cash, accounts receivable, prepaid expenses and other assets, accounts payable, accrued expenses, and other payables approximate their fair market value based on the short-term maturity of these instruments. The Company analyzes all financial instruments with features of both liabilities and equity under the Financial Accounting Standard Board’s (the “FASB”) accounting standard for such instruments. Under this standard, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company did not identify any assets or liabilities that are required to be presented on the balance sheet at fair value in accordance with Accounting Standards Codification (“ASC”) Topic 820. Cash Cash is carried at cost and represents cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments. The Company had no cash equivalents at September 30, 2020 and December 31, 2019. The majority of the Company’s cash is held at major commercial banks, which may at times exceed the Federal Deposit Insurance Corporation (“FDIC”) limit. To date, the Company has not experienced any losses on its invested cash. At September 30, 2020 and December 31, 2019, the Company had approximately $328,000 and $390,000, respectively, of cash in excess of FDIC limits of $250,000. Accounts receivable The Company recognizes an allowance for losses on accounts receivable in an amount equal to the estimated probable losses net of recoveries. The allowance is based on an analysis of historical bad debt experience, current receivables aging and expected future write-offs, as well as an assessment of specific identifiable customer accounts considered at risk or uncollectible. The expense associated with the allowance for doubtful accounts is recognized in general and administrative expense. For the nine months ended September 30, 2020 and 2019, the Company did not record any allowances for doubtful accounts. Rental properties Rental properties are carried at cost, less accumulated depreciation and amortization. Betterments, major renovations and certain costs directly related to the improvement of rental properties are capitalized. Maintenance and repair expenses are charged to expense as incurred. Depreciation is recognized on a straight-line basis over estimated useful lives of the assets, which range from 5 to 39 years. Tenant improvements are amortized on a straight-line basis over the lives of the related leases, which approximate the useful lives of the assets. Upon the acquisition of real estate, the Company assesses the fair value of acquired assets (including land, buildings and improvements, identified intangibles, such as acquired above-market leases and acquired in-place leases) and acquired liabilities (such as acquired below-market leases) and allocate the purchase price based on these assessments. The Company assesses fair value based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including historical operating results, known trends, and market/economic conditions. The Company’s rental properties are individually reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment exists when the carrying amount of an asset exceeds the aggregate projected future cash flows over the anticipated holding period on an undiscounted basis. An impairment loss is measured based on the excess of the property’s carrying amount over its estimated fair value. Impairment analyses are based on our current plans, intended holding periods and available market information at the time the analyses are prepared. If the Company’s estimates of the projected future cash flows, anticipated holding periods, or market conditions change, the Company’s evaluation of impairment losses may be different and such differences could be material to its consolidated financial statements. The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results. For the nine months ended September 30, 2020 and 2019, the Company did not record any impairment losses. The Company has capitalized land, which is not subject to depreciation. Property and equipment Property and equipment are stated at cost, less accumulated depreciation. Depreciation of property and equipment is provided utilizing the straight-line method over the estimated useful lives. The Company uses a five-year life for office equipment, seven years for furniture and fixtures, and five to ten years for vehicles. Expenditures for maintenance and repairs are charged to expense as incurred. Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in statements of operations. The Company examines the possibility of decreases in the value of these assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable. Revenue recognition On January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) 2014-09 and ASC Topic 606, Revenue from Contracts with Customers Rental income includes base rents that each tenant pays in accordance with the terms of its respective lease and is reported on a straight-line basis over the non-cancellable term of the lease, which includes the effects of rent abatements under the leases. The Company commences rental revenue recognition when the tenant takes possession of the leased space or controls the physical use of the leased space and the leased space is substantially ready for its intended use. Currently, the Company’s leases provide for payments with fixed monthly base rents over the term of the leases. The leases also require the tenant to remit estimated monthly payments to the Company for property taxes. These payments are recorded as rental income and the related property tax expense reflected separately on the statements of operations. See below for the adoption of ASU 2016-02, “Leases (Topic 842)” and its impact on our consolidated financial statements upon adoption. Revenues from advisory services is recognized when the Company performs services pursuant to its agreements with clients and collectability is reasonably assured. Basic and diluted (loss) income per share Basic (loss) income per share is computed by dividing net (loss) income available to common shareholders by the weighted average number of shares of common stock outstanding during each period. Diluted (loss) income per share is computed by dividing net (loss) income available to common shareholders by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period using the treasury stock method and as-if converted method. Potentially dilutive common shares and participating securities are excluded from the computation of diluted shares outstanding if they would have an anti-dilutive impact on the Company’s net losses. The Company’s preferred stock is considered a participating security since the preferred shares are entitled to dividends equal to common share dividends and accordingly, are included in the computation of earnings per share pursuant to the two-class method. The two-class method of computing (loss) income per share is an earnings allocation formula that determines (loss) income per share for common stock and any participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. The following potentially dilutive shares have been excluded from the calculation of diluted net loss per share as their effect would be anti-dilutive for the nine months ended September 30, 2020 and 2019. September 30, 2020 2019 Convertible debt 404,000 404,000 Stock options 1,325,000 1,290,000 1,729,000 1,694,000 Segment reporting The Company’s business is comprised of one reportable segment. The Company has determined that its properties have similar economic characteristics to be aggregated into one reportable segment (operating, leasing and managing commercial properties). The Company’s determination was based primarily on its method of internal reporting. Income tax Deferred income tax assets and liabilities arise from temporary differences between the financial statements and tax basis of assets and liabilities, as measured by the enacted tax rates, which are expected to be in effect when these differences reverse. Deferred tax assets and liabilities are classified as current or non-current, depending upon the classification of the asset or liabilities to which they relate. Deferred tax assets and liabilities not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company follows the provisions of FASB ASC 740-10, “Uncertainty in Income Taxes”. Certain recognition thresholds must be met before a tax position is recognized in the financial statements. An entity may only recognize or continue to recognize tax positions that meet a “more-likely-than-not” threshold. The Company does not believe it has any uncertain tax positions as of September 30, 2020 and December 31, 2019 that would require either recognition or disclosure in the accompanying unaudited condensed consolidated financial statements. Stock-based compensation Stock-based compensation is accounted for based on the requirements of ASC 718 – “Compensation –Stock Compensation Improvements to Employee Share-Based Payment Recently adopted accounting pronouncements Effective January 1, 2019, the Company adopted ASU 2016-02, “ Leases (Topic 842)” ASU 2016-02, “ Leases (Topic 842)” For contracts entered into on or after the effective date, where we are the lessee, at the inception of a contract the Company assess whether the contract is, or contains, a lease. Our 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 we have the right to direct the use of the asset. We allocate the consideration in the contract to each lease component based on its relative stand-alone price to determine the lease payments. Leases entered into prior to January 1, 2019, are accounted for under ASC 840 and were not reassessed. For leases entered into on or after the effective date, where we are the lessor, at the inception of the contract the Company assess whether the contract is a sales-type, direct financing or operating lease by reviewing the terms of the lease and determining if the lessee obtains control of the underlying asset implicitly or explicitly. If a change to a pre-existing lease occurs, we evaluate if the modification results in a separate new lease or a modified lease. A new lease results when a modification provides additional right of use. The new lease or modified lease is then reassessed to determine its classification based on the modified terms. As disclosed in Note 3, on January 1, 2019, the Chino Valley lease was modified to increase the monthly base rent from $35,000 to $40,000. Additionally, on May 31, 2020, the Chino Valley lease was modified to decrease the monthly base rent from $40,000 to $32,800 and the Tempe lease was modified to increase the monthly base rent from $33,500 to $49,200. At the commencement of the modified terms, the Company reassessed its lease classification and concluded it remained properly classified as an operating lease. The adoption of ASU 2016-02 did not have a material impact on the operating leases where the Company is a lessor. The Company will continue to record revenues from rental properties for its operating leases on a straight-line basis. Any revenue on the straight-line basis exceeding the monthly payment amount required on the operating lease is reflected as a deferred rent receivable. Effective May 31, 2020, the Company amended its leases for which it is the lessor on its Chino Valley, Tempe, Kingman and Green Valley properties. The amendments resulted in an abatement of rent for the months of June and July 2020. This rent abatement resulted in a deferred rent receivable as of September 30, 2020 of $176,004 (see Note 3). For leases where the Company is a lessee, primarily for the Company’s administrative office lease, the Company analyzed if it would be required to record a lease liability and a right of use asset on its condensed consolidated balance sheets at fair value upon adoption of ASU 2016-02. Since the terms of the Company’s operating lease for its office space is 12 months or less, pursuant to ASC 842, the Company determined that the lease meets the definition of a short-term lease and the Company did not recognize a right-of use asset and lease liability arising from this lease. Recently issued accounting pronouncements 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 condensed consolidated financial statements. |
Concentrations and Risks
Concentrations and Risks | 9 Months Ended |
Sep. 30, 2020 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATIONS AND RISKS | NOTE 3 – CONCENTRATIONS AND RISKS Lease Agreements with Significant Tenants Chino Valley On May 1, 2018, Chino Valley and Broken Arrow Herbal Center, Inc. (“Broken Arrow”) agreed to terminate the prior Chino Valley Lease dated April 6, 2015, as amended, in consideration of (i) entry into that certain Licensed Medical Marijuana Facility Triple Net (NNN) Lease Agreement dated May 1, 2018 between Chino Valley and Broken Arrow (the “2018 Chino Valley Lease”), with a term of 22 years, expiring April 30, 2040, and (ii) abatement of rent that would otherwise have been due for the month of April 2018 under the prior Chino Valley Lease. The 2018 Chino Valley Lease provided for payment by Broken Arrow of a fixed monthly base rent of $35,000, as well as real property taxes, personal property taxes, privilege, sales, rental, excise, use and/or other taxes (excluding income or estate taxes) levied upon or assessed against Chino Valley. In addition, pursuant to the terms of the 2018 Chino Valley Lease, Broken Arrow agreed to maintain insurance in full force during the term of the 2018 Chino Valley Lease and any other period of occupancy of the premises by Broken Arrow. On January 1, 2019, Chino Valley and Broken Arrow entered into that the First Amendment to the 2018 Chino Valley Lease (the “2019 Chino Valley Lease Amendment”), pursuant to which the monthly base rent was increased from $35,000 to $40,000. Except for the increase in base rent, the terms of the 2018 Chino Valley Lease remain in full force and effect. On May 29, 2020, Chino Valley and Broken Arrow entered into a second amendment to the 2018 Chino Valley Lease, as amended (the “2020 Chino Valley Amendment”), effective May 31, 2020 (“Effective Date”). Pursuant to the terms of the 2020 Chino Valley Amendment, among other things, the base rent was adjusted to $32,800 per month, and the base rent was abated from June 1, 2020 to July 31, 2020. Any increase in the rentable area of the leased premises will result in an increase in all amounts calculated based on the same, including, without limitation, base rent. Pursuant to the terms of the 2020 Chino Valley Amendment, the parties agreed that if there is any change in laws such that the dispensing, sale or cultivation of marijuana upon the premises is prohibited or materially and adversely affected as mutually and reasonably determined by Chino Valley and Broken Arrow, Broken Arrow may terminate the 2018 Chino Valley Lease, as amended, by delivering written notice to Chino Valley, together with a termination payment which shall be the sum of (i) any unpaid rent and interest, plus (ii) 5% of the base rent which would have been earned after termination for the balance of the term. In addition, the parties agreed that from the period from the Effective Date to June 30, 2022 (the “Improvement Period”), Broken Arrow will and/or Broken Arrow will cause its affiliate, CJK, to invest a combined total of at least $8,000,000 of improvements (“Investment by Tenants”) in and to the property that is the subject of the Chino Valley Lease and the property that is the subject of the Tempe Lease (discussed below, and collectively referred to as the “Facilities”). If Broken Arrow and/or CJK fails to deliver to the Company receipted bills for hard and soft costs of improvements to the Facilities totaling at least $8,000,000 on or before June 30, 2022, Broken Arrow will be in default under the Chino Valley Lease and Tempe Lease, as amended. Green Valley On May 1, 2018, Green Valley and Broken Arrow agreed to terminate the prior Green Valley Lease dated October 1, 2014, in consideration of (i) entry into that certain Licensed Medical Marijuana Facility Triple Net (NNN) Lease Agreement dated May 1, 2018 between Green Valley and Broken Arrow (the “Green Valley Lease”), with a term of 22 years, expiring April 30, 2040, and (ii) abatement of rent that would otherwise have been due for the month of April 2018 under the prior Green Valley Lease. The Green Valley Lease provided for payment by Broken Arrow of a fixed monthly base rent of $3,500, as well as real property taxes, personal property taxes, privilege, sales, rental, excise, use and/or other taxes (excluding income or estate taxes) levied upon or assessed against Chino Valley. In addition, pursuant to the terms of the Green Valley Lease, Broken Arrow agreed to maintain insurance in full force during the term of the Green Valley Lease and any other period of occupancy of the premises by Broken Arrow. On May 29, 2020, Green Valley and Broken Arrow entered into the First Amendment (the “Green Valley Amendment”) to the Green Valley Lease, effective May 31, 2020. Pursuant to the terms of the Green Valley Amendment, among other things, the parties agreed to abate the fixed base rent of $3,500 from June 1, 2020 to July 31, 2020. In addition, the Green Valley Amendment provides that any increase in the rentable area of the leases premises will result in an increase in all amounts calculated based on the same, including, without limitation, base rent. The parties also agreed that if there is any change in laws such that the dispensing, sale or cultivation of marijuana upon the premises is prohibited or materially and adversely affected as mutually and reasonably determined by Green Valley and Broken Arrow, Broken Arrow may terminate the Green Valley Lease by delivering written notice to Green Valley, together with a termination payment which shall be the sum of (i) any unpaid rent and interest, plus (ii) 5% of the base rent which would have been earned after termination for the balance of the term. Tempe On May 1, 2018, Zoned Arizona and CJK, Inc. (“CJK”) agreed to terminate the prior Tempe Leases dated August 15, 2015, as amended, and June 15, 2017, in consideration of (i) entry into that certain Licensed Medical Marijuana Facility Triple Net (NNN) Lease Agreement dated May 1, 2018 between Zoned Arizona and CJK (the “Tempe Lease”), with a term of 22 years, expiring April 30, 2040, and (ii) abatement of rent that would otherwise have been due for the month of April 2018 under the prior Tempe Leases. The Tempe Lease provided for payment by CJK of a fixed monthly base rent of $33,500, as well as real property taxes, personal property taxes, privilege, sales, rental, excise, use and/or other taxes (excluding income or estate taxes) levied upon or assessed against Zoned Arizona. In addition, pursuant to the terms of the Tempe Lease, CJK agreed to maintain insurance in full force during the term of the Tempe Lease and any other period of occupancy of the premises by CJK. On May 29, 2020, Zoned Arizona and CJK entered into the First Amendment (the “Tempe Amendment”) to the Tempe Lease, effective May 31, 2020. Pursuant to the terms of the Tempe Amendment, among other things, the base rent was increased to $49,200 per month, and the base rent was abated from June 1, 2020 to July 31, 2020. Any increase in the rentable area of the leased premises will result in an increase in all amounts calculated based on the same, including, without limitation, base rent. Pursuant to the terms of the Tempe Amendment, the parties agreed that if there is any change in laws such that the dispensing, sale or cultivation of marijuana upon the premises is prohibited or materially and adversely affected as mutually and reasonably determined by Zoned Arizona and CJK, CJK may terminate the Tempe Lease by delivering written notice to Zoned Arizona, together with a termination payment which shall be the sum of (i) any unpaid rent and interest, plus (ii) 5% of the base rent which would have been earned after termination for the balance of the term. In addition, under the Tempe Amendment the parties agreed to an Investment by Tenant (as defined above in the subheading Chino Valley Kingman On May 1, 2018, Kingman and CJK agreed to terminate the prior Kingman Lease dated October 1, 2014, in consideration of (i) entry into that certain Licensed Medical Marijuana Facility Triple Net (NNN) Lease Agreement dated May 1, 2018 between Kingman and CJK (the “Kingman Lease”), with a term of 22 years, expiring April 30, 2040, and (ii) abatement of rent that would otherwise have been due for the month of April 2018 under the Prior Kingman Lease. The Kingman Lease provides for payment by CJK of a fixed monthly base rent of $4,000, as well as real property taxes, personal property taxes, privilege, sales, rental, excise, use and/or other taxes (excluding income or estate taxes) levied upon or assessed against Kingman. In addition, pursuant to the terms of the Kingman Lease, CJK agreed to maintain insurance in full force during the term of the Kingman Lease and any other period of occupancy of the premises by CJK. On May 29, 2020, Kingman and CJK entered into the First Amendment (the “Kingman Amendment”) to the Kingman Lease, effective May 31, 2020. Pursuant to the terms of the Kingman Amendment, among other things, the parties agreed to abate the $4,000 base rent from June 1, 2020 to July 31, 2020. In addition, the Kingman Amendment provides that any increase in the rentable area of the leases premises will result in an increase in all amounts calculated based on the same, including, without limitation, base rent. The parties also agreed that if there is any change in laws such that the dispensing, sale or cultivation of marijuana upon the premises is prohibited or materially and adversely affected as mutually and reasonably determined by Kingman and CJK, CJK may terminate the Kingman Lease by delivering written notice to Kingman, together with a termination payment which shall be the sum of (i) any unpaid rent and interest, plus (ii) 5% of the base rent which would have been earned after termination for the balance of the term. CJK and Broken Arrow, together, operate under the company brand, “Hana Meds”, and are referred to as the Company’s Significant Tenants. The Tempe Lease, Kingman Lease, Chino Valley Lease and Green Valley Lease (together referred to as the “New Leases”) includes a Guarantee of Payment and Performance by Mr. Abrams and the Company’s Significant Tenants. Mr. Abrams guarantee is collateralized by the convertible debt of $2,000,000 owed to him (see Note 6). As of September 30, 2020 and December 31, 2019, security deposits payable to the Significant Tenants amounted to $71,800 in both periods. Future minimum lease payments primarily consist of minimum base rent payments from Significant Tenants. Future minimum lease payments to be received, on all leased properties, for each of the five succeeding calendar years and thereafter as of September 30, 2020 consists of the following: Future annual base rent: 2020 (remainder of year) $ 273,209 2021 1,082,005 2022 1,074,000 2023 1,074,000 2024 1,074,000 Thereafter 16,468,000 Total $ 21,045,214 Rental and advisory revenue and receivable –Significant Tenants For the three months ended September 30, 2020 and 2019, rental and advisory revenue associated with the Significant Tenant leases described above amounted to $297,793 and $299,324, which represents 98.4% and 88.5% of the Company’s total revenues, respectively. For the nine months ended September 30, 2020 and 2019, rental and advisory revenue associated with the Significant Tenant leases described above amounted to $878,759 and $855,659, which represents 96.9% and 91.0% of the Company’s total revenues, respectively. At September 30, 2020 and December 31, 2019, accounts receivable from advisory services provided to the Significant Tenant amounted to $9,393 and $8,188, respectively. Further, as of September 30, 2020 a deferred rent receivable of $176,004 is due from Significant Tenants due to the abatement of rent in the month of June and July 2020 under the amendments executed effective May 31, 2020 discussed above. Asset concentration The majority of the Company’s real estate properties are leased to the Significant Tenant under triple-net leases that terminate in April 2040. The Company monitors the credit of all tenants to stay abreast of any material changes in credit quality. The Company monitors tenant credit by (1) reviewing financial statements and related metrics and information that are publicly available or that are provided to us upon request, and (2) monitoring the timeliness of rent collections. As of September 30, 2020 and December 31, 2019, the Company had an asset concentration related to the Significant Tenants. As of September 30, 2020 and December 31, 2019, the Significant Tenants represented approximately 84.3% and 87.1% of the Company’s total assets, respectively. Through September 30, 2020, all rental payments have been made on a timely basis. As of September 30, 2020, the lease agreements with the Significant Tenants were personally guaranteed by Alan Abrams and are collateralized by convertibles notes of $2,000,000 owed to Mr. Abrams (see Note 6). On March 1, 2018, the Company and Alan Abrams entered into a Reaffirmation Agreement (See Note 6). Confidential advisory services agreements On May 1, 2018, the Company entered into that certain Confidential Advisory Services Agreement by and between the Company and Broken Arrow (the “Broken Arrow CASA”), with a term expiring on April 30, 2040, unless earlier terminated as provided in the Broken Arrow CASA. Additionally, on May 1, 2018, the Company entered into that certain Confidential Advisory Services Agreement by and between the Company and CJK (the “CJK CASA”), with a term expiring on April 30, 2040, unless earlier terminated as provided in the CJK CASA. These Agreements may be terminated prior to the expiration of the Term upon the occurrence of any of the following: (a) by the Company for any reason at any time upon thirty calendar days’ written notice to the other party; (b) by either party immediately upon the mutual agreement of the parties, evidenced by a writing signed by the parties; or (c) immediately by either party in the event of an actual finding, by a court of competent jurisdiction, of fraud, gross negligence or willful misconduct of the other party in connection with these Agreements. Pursuant to the terms of the Broken Arrow CASA and CJK CASA, Broken Arrow and CJK engaged the Company to perform certain advisory services in exchange for a fee equal to 10% of Broken Arrow’s and CJK’s gross revenues (the (“Revenue Fee”), commencing January 2019. On January 1, 2019, as part of a Stock Redemption Agreement, the Company, on behalf of Chino Valley, and Broken Arrow entered into the First Amendment to Confidential Advisory Services Agreement (the “Broken Arrow CASA Amendment”). The Broken Arrow CASA Amendment amended the Broken Arrow CASA to (i) reduce the gross revenue fee payable by Broken Arrow from 10% to 0%, and (ii) add a $250 hourly advisory fee payable by Broken Arrow. Except as set forth herein, the terms of the Broken Arrow CASA remain in full force and effect. On January 1, 2019, as part of the Stock Redemption Agreement, the Company, on behalf of Zoned Arizona, and CJK entered into the First Amendment to Confidential Advisory Services Agreement (the “CJK CASA Amendment”). The CJK CASA Amendment amended the CJK CASA to (i) reduce the gross revenue fee payable by CJK from 10% to 0%, and (ii) add a $250 hourly advisory fee payable by CJK. Except as set forth herein, the terms of the CJK CASA remain in full force and effect. |
Rental Properties
Rental Properties | 9 Months Ended |
Sep. 30, 2020 | |
Rental Properties Disclosure [Abstract] | |
RENTAL PROPERTIES | NOTE 4 – RENTAL PROPERTIES At September 30, 2020 and December 31, 2019, rental properties, net consisted of the following: Description Useful Life September 30, December 31, Building and building improvements 5-39 $ 6,260,524 $ 6,250,959 Land - 2,283,214 2,283,214 Rental properties, at cost 8,543,738 8,534,173 Less: accumulated depreciation (1,427,002 ) (1,159,366 ) Rental properties, net $ 7,116,736 $ 7,374,807 For the three months ended September 30, 2020 and 2019, depreciation and amortization of rental properties amounted to $89,298 and $88,820, respectively. For the nine months ended September 30, 2020 and 2019, depreciation and amortization of rental properties amounted to $267,636 and $266,460, respectively. |
Convertible Note Receivable
Convertible Note Receivable | 9 Months Ended |
Sep. 30, 2020 | |
Convertible Notes Receivable [Abstract] | |
CONVERTIBLE NOTE RECEIVABLE | NOTE 5 – CONVERTIBLE NOTE RECEIVABLE On March 19, 2020, the Company made an initial investment of $100,000 into KCB Jade Holdings, LLC (“KCB”). In exchange for the investment, KCB issued to the Company a convertible debenture (the “KCB Debenture”) dated March 19, 2020 (the “Issuance Date”) in the original principal amount of $100,000. The KCB Debenture bears interest at the rate of 6.5% per annum and matures on March 19, 2025 (the “Maturity Date”). Interest on the outstanding principal sum of the KCB Debenture commences accruing on the Issuance Date and is computed on the basis of a 365-day year and the actual number of days elapsed, and shall be payable annually due by the first day of each calendar anniversary following the Issuance Date. KCB may prepay the KCB Debenture at any point after 18 months following the Issuance Date, in whole or in part. However, if KCB elects to prepay the KCB Debenture prior to the Maturity Date or prior to any conversion as provided in the KCB Debenture in whole or in part, the Company will be entitled to receive a number of KCB units, in addition to such prepayment amount, constituting 10% of the total outstanding units and 10% of the total percentage interest following such issuance and at the time of such issuance. On or after six months from the Issuance Date, the Company may convert all or a portion of the principal balance and all accrued and unpaid interest due into a number of units equal to the proportion of the outstanding amount being converted multiplied by 33% of the total number of units issued and outstanding at the time of conversion, constituting 33% of the total percentage interest (the “Conversion Percentage”). If KCB defaults on payment of the KCB Debenture, the Company may, at its option, extend all conversion rights, through and including the date KCB tenders or attempts to tender payment in full of all amounts due under the KCB Debenture. Conversion rights terminate upon acceptance by the Company of payment in full of principal, accrued interest and any other amounts due under the KCB Debenture. If (i) KCB does not elect to exercise its rights of prepayment prior to the Maturity Date, (ii) the Company does not elect to exercise its rights of conversion, and (iii) KCB pays to the Company all outstanding principal and interest accrued and due under the terms of the KCB Debenture on the Maturity Date, the Company will still be entitled to receive a number of units, in addition to such payment amount, constituting 8% of the total outstanding units and 8% of the total percentage interest following such issuance and at the time of such issuance. Upon the occurrence of an Event of Default, as defined in the KCB Debenture, the entire principal balance and accrued and unpaid interest outstanding under the KCB Debenture, and all other obligations of KCB under the KCB Debenture, will be immediately due and payable and the Company may exercise any and all rights, power and remedies available to it at law or in equity or other appropriate proceeding, whether for the specific performance of any covenant or agreement contained in the KCB Debenture and proceed to enforce the payment thereof or any other legal or equitable right of the Company. Any amount of principal or interest not paid when due will bear interest at the rate of 12% per annum from the due date thereof until paid. At September 30, 2020, convertible note receivable and interest receivable amounted to $100,000 and $3,490, respectively. |
Convertible Note Payable
Convertible Note Payable | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE NOTE PAYABLE | NOTE 6 – CONVERTIBLE NOTE PAYABLE On January 9, 2017, the Company issued a convertible debenture (the “Abrams Debenture”) in the aggregate principal amount of $2,000,000 in favor of Alan Abrams, who was a significant stockholder of the Company through December 31, 2018, in exchange for cash from Mr. Abrams of $2,000,000. The Abrams Debenture accrues interest at the rate of 6% per annum payable quarterly by the 1 st The Company may prepay the Abrams Debenture at any point after nine months, in whole or in part. Pursuant to the terms of the Abrams Debenture, Mr. Abrams is entitled to convert all or a portion of the principal balance and all accrued and unpaid interest due under the Abrams Debenture into shares of the Company’s common stock at a conversion price of $5.00 per share. If the Company defaults on payment, Mr. Abrams may at his option, extend all conversion rights, through and including the date the Company tenders or attempts to tender payment in full of all amounts due under the Abrams Debenture. Any amount of principal or interest, which is not paid when due shall bear interest at the rate of 12% per annum. Upon an Event of Default (as defined in the Abrams Debenture), Mr. Abrams may (i) declare the entire principal amount and all accrued and unpaid interest under the Abrams Debenture immediately due and payable, and (ii) exercise any and all rights, powers and remedies available to Mr. Abrams at law or in equity or other appropriate proceeding, whether for the specific performance of any covenant or agreement contained in the Abrams Debenture and proceed to enforce the payment thereof or any other legal or equitable right of Mr. Abrams. On March 1, 2018, the Company and Alan Abrams entered into a Reaffirmation Agreement whereby Mr. Abrams reaffirmed his personal guarantee of his obligations under certain of the Company’s commercial leases. Additionally, Mr. Abrams affirmed that the principal of the Abrams Debenture in the principal amount of $2,000,000 was acknowledged as collateral within the scope of the guaranty included in the commercial lease agreements. As of September 30, 2020 and December 31, 2019, the principal balance due under the Abrams Debenture is $2,000,000. As of September 30, 2020 and December 31, 2019, accrued interest payable due under the Abrams Debenture was $30,000 which is included in accrued expenses on the accompanying unaudited condensed consolidated balance sheets. For the three months ended September 30, 2020 and 2019, interest expense related to the Abrams Debenture amounted to $30,000. For the nine months ended September 30, 2020 and 2019, interest expense related to the Abrams Debenture amounted to $90,000. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2020 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 7 – RELATED PARTY TRANSACTIONS Convertible notes payable – related party On January 9, 2017, the Company issued a convertible debenture (the “McLaren Debenture”) in the principal amount of $20,000 in favor of Bryan McLaren, the Company’s Chief Executive Officer, President, Chief Financial Officer, and a member of the Company’s Board of Directors, in exchange for cash from Mr. McLaren of $20,000. The McLaren Debenture accrues interest at the rate of 6% per annum payable quarterly by the 1 st If the Company defaults on payment, Mr. McLaren may at his option, extend all conversion rights, through and including the date the Company tenders or attempts to tender payment in full of all amounts due under the McLaren Debenture. Any amount of principal or interest, which is not paid when due shall bear interest at the rate of 12% per annum. Upon an Event of Default (as defined in the McLaren Debenture), Mr. McLaren may (i) declare the entire principal amount and all accrued and unpaid interest under the McLaren Debenture immediately due and payable, and (ii) exercise any and all rights, powers and remedies available to Mr. McLaren at law or in equity or other appropriate proceeding, whether for the specific performance of any covenant or agreement contained in the McLaren Debenture and proceed to enforce the As of September 30, 2020 and December 31, 2019, the principal balance due under the McLaren Debenture is $20,000. As of September 30, 2020 and December 31, 2019, accrued interest payable due under the McLaren Debenture was $3,900 and $3,000, respectively, which is included in accrued expenses – related party on the accompanying unaudited condensed consolidated balance sheets. For the three months ended September 30, 2020 and 2019, interest expense – related party amounted to $300. For the nine months ended September 30, 2020 and 2019, interest expense – related party amounted to $900. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2020 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS’ EQUITY | NOTE 8 – STOCKHOLDERS’ EQUITY (A) Preferred Stock On December 13, 2013, the Board of Directors of the Company authorized and approved the creation of a new class of preferred stock consisting of 5,000,000 shares authorized, $0.001 par value. The preferred stock is not convertible into any other class or series of stock. The holders of the preferred stock are entitled to fifty (50) votes for each share held. Voting rights are not subject to adjustment for splits that increase or decrease the common shares outstanding. Upon liquidation, the holders of the shares will be entitled to receive $1.00 per share plus redemption provision before assets distributed to other shareholders. The holders of the shares of preferred stock are entitled to dividends equal to common share dividends. Once any shares of preferred stock are outstanding, at least 51% of the total number of shares of preferred stock outstanding must approve the following transactions: a. Alter or change the rights, preferences or privileges of the preferred stock. b. Create any new class of stock having preferences over the preferred stock. c. Repurchase any of our common stock. d. Merge or consolidate with any other company, except our wholly owned subsidiaries. e. Sell, convey or otherwise dispose of, or create or incur any mortgage, lien, or charge or encumbrance or security interest in or pledge of, or sell and leaseback, in all or substantially all of our property or business. f. Incur, assume or guarantee any indebtedness maturing more than 18 months after the date on which it is incurred, assumed or guaranteed by us, except for operating leases and obligations assumed as part of the purchase price of property. (B) Common stock issued for services On January 14, 2019, the Company issued an aggregate of 100,000 shares of common stock to the members of the Company’s board of directors for services rendered. The shares were valued at their fair value of $31,100 using the quoted share price on the date of grant of $0.311 per common share. In connection with these grants, in January 2019, the Company recorded stock-based compensation expense of $31,100 which is included in compensation and benefits on the unaudited condensed consolidated statements of operations. On January 6, 2020, the Company issued an aggregate of 110,000 shares of common stock to members of the Company’s board of directors for services rendered. The shares were valued at their aggregate fair value of $24,200 using the quoted per share price on the date of grant of $0.22. In connection with these grants, in January 2020, the Company recorded stock-based compensation expense of $24,200 which is included in compensation and benefits on the unaudited condensed consolidated statements of operations. (C) Equity incentive plans On August 9, 2016, the Company’s Board of Directors authorized the 2016 Equity Incentive Plan (the “2016 Plan”) and reserved 10,000,000 shares of common stock for issuance thereunder. The 2016 Plan was approved by shareholders on November 21, 2016. The 2016 Plan’s purpose is to encourage ownership in the Company by employees, officers, directors and consultants whose long-term service the Company considers essential to its continued progress and, thereby, encourage recipients to act in the stockholders’ interest and share in the Company’s success. The 2016 Plan authorizes the grant of awards in the form of options intended to qualify as incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended, options that do not qualify (non-statutory stock options) and grants of restricted shares of common stock. Restricted shares granted pursuant to the 2016 Plan are amortized to expense over the vesting period. Options vest and expire over a period not to exceed seven years. If any share of common stock underlying a stock option that has been granted ceases to be subject to a stock option, or if any shares of common stock that are subject to any other stock-based award granted are forfeited or terminate, such shares shall again be available for distribution in connection with future grants and awards under the 2016 Plan. As of December 31, 2019, 40,000 stock option awards are outstanding and 40,000 options are exercisable under the 2016 Plan. As of September 30, 2020, 75,000 stock option awards are outstanding and 75,000 options are exercisable under the 2016 Plan. As of September 30, 2020 and December 31, 2019, 9,925,000 and 9,960,000 shares are available for future issuance. The Company also continues to maintain its 2014 Equity Compensation Plan (the “2014 Plan”), pursuant to which 1,250,000 previously awarded stock options are outstanding. The 2014 Plan has been superseded by the 2016 Plan. Accordingly, no additional shares subject to the existing 2014 Plan will be issued and the 1,250,000 shares issuable upon exercise of stock options will be issued pursuant to the 2014 Plan, if exercised. As of September 30, 2020 and December 31, 2019, options to purchase 1,250,000 shares of common stock are outstanding and 1,125,000 options are exercisable pursuant to the 2014 Plan. (D) Stock options On January 6, 2020, the Company granted an employee an option, pursuant to the 2016 Plan, to purchase 125,000 of the Company’s common stock at an exercise price of $1.00 per share. The grant date of the option was January 6, 2020 and the option expires on January 6, 2030. The option vests as to (i) 35,000 of such shares on January 6, 2020; and (ii) as to 10,000 of such shares on January 6, 2021 and each year thereafter through January 6, 2029. The fair value of this option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions: dividend yield of 0%; expected volatility of 110%; risk-free interest rate of 1.81%; and, an estimated holding period of 10 years. In connection with these options, the Company valued these options at a fair value of $23,388 and will record stock-based compensation expense over the vesting period. In July 2020, this employee was terminated and 90,000 unvested options were cancelled. For the nine months ended September 30, 2020 and 2019, in connection with the accretion of stock-based option expense, the Company recorded stock-based compensation expense of $19,810 and $17,709, respectively. As of September 30, 2020, there were 1,325,000 options outstanding and 1,200,000 options vested and exercisable. As of September 30, 2020, there was $34,582 of unvested stock-based compensation expense to be recognized through December 2024. The aggregate intrinsic value at September 30, 2020 was nil and was calculated based on the difference between the quoted share price on September 30, 2020 of $0.34 and the exercise price of the underlying options. Stock option activities for the nine months ended September 30, 2020 are summarized as follows: Number of Weighted Weighted Aggregate Balance Outstanding December 31, 2019 1,290,000 $ 0.99 5.74 $ - Granted 125,000 1.00 - - Forfeited (90,000 ) 1.00 - - Balance Outstanding September 30, 2020 1,325,000 $ 0.99 5.10 $ - Exercisable, September 30, 2020 1,200,000 $ 0.99 4.98 - Balance Non-vested at December 31, 2019 125,000 $ 1.00 $ - Granted 125,000 1.00 - Forfeited (90,000 ) 1.00 Vested during the period (35,000 ) 1.00 - - Balance Non-vested at September 30, 2020 125,000 $ 1.00 6.25 $ - |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 9 – COMMITMENTS AND CONTINGENCIES Rental property acquisition On April 22, 2016, Zoned Colorado, a wholly owned subsidiary of the Company, entered into a Contract to Buy and Sell Real Estate (the “Parachute Agreement”) with Parachute Development Corporation (“Seller”) pursuant to which Zoned Colorado agreed to purchase, and Seller agreed to sell, property in Parachute, Colorado (the “Property”) for a purchase price of $499,857. Of the total purchase price, $274,857, or 55%, will be paid in cash at closing and $225,000, or 45%, will be financed by Seller at an interest rate of 6.5%, amortized over a five-year period, with a balloon payment at the end of the fifth year. Payments will be made monthly and there will be no pre-payment penalty. Pursuant to the terms of the Parachute Agreement, the parties will cooperate in good faith to complete due diligence during a period of 45 days following execution of the Parachute Agreement. The closing is subject to certain contingencies, including that Zoned Colorado must obtain acceptable financing for the purchase and development of the Property, the grant of a special use permit by the Town of Parachute, approval of a protected development deal or equivalent agreement by the Town of Parachute, execution of a lease agreement by a prospective tenant and the prospective tenant’s obtaining a license to cultivate on the Property. Pursuant to the terms of the Parachute Agreement, Zoned Colorado will have a right of first refusal on eleven additional lots owned by Seller in Parachute, Colorado. In April 2016, the Company paid a refundable deposit of $45,000 into escrow in connection with the Parachute Agreement which is included in prepaid expenses and other assets on the unaudited condensed consolidated balance sheets as of September 30, 2020 and December 31, 2019. As of September 30, 2020, the Company and Seller have yet to complete the purchase. Legal matters From time to time, the Company may be involved in litigation related to claims arising out of its operations in the normal course of business. As of September 30, 2020, the Company is not involved in any pending or threatened legal proceedings that it believes could reasonably be expected to have a material adverse effect on its financial condition, results of operations, or cash flows. Confidential Advisory Services Agreements On May 1, 2018, the Company entered into that certain Confidential Advisory Services Agreement by and between the Company and Broken Arrow (the “Broken Arrow CASA”), with a term expiring on April 30, 2040, unless earlier terminated as provided in the Broken Arrow CASA. Additionally, on May 1, 2018, the Company entered into that certain Confidential Advisory Services Agreement by and between the Company and CJK (the “CJK CASA” and together with the Broken Arrow CASA, the “CASAs”), with a term expiring on April 30, 2040, unless earlier terminated as provided in the CJK CASA. The CASAs may be terminated prior to the expiration of their respective term upon the occurrence of any of the following: (a) by the Company for any reason at any time upon thirty calendar days’ written notice to the other party; (b) by either party immediately upon the mutual agreement of the parties, evidenced by a writing signed by the parties; or (c) immediately by either party in the event of an actual finding, by a court of competent jurisdiction, of fraud, gross negligence or willful misconduct of the other party in connection with the CASAs. Pursuant to the terms of the CASAs, Broken Arrow and CJK engaged the Company to perform certain advisory services in exchange for a fee equal to 10% of Broken Arrow’s and CJK’s gross revenues (the “Revenue Fee”). Effective January 1, 2019, the parties agreed to amend the May 1, 2018 leases to reduce the Revenue Fee payable pursuant to each of the CASAs from 10% of gross revenue to 0% of gross revenue. Employment and Related Golden Parachute Agreement On May 23, 2018, the Company and Mr. McLaren, the Company’s President, Chief Executive Officer, Chief Financial Officer and Chairman of the Board, agreed to replace Mr. McLaren’s 2014 employment agreement with a new employment agreement dated May 23, 2018 (the “2018 Employment Agreement”). Pursuant to the terms of the 2018 Employment Agreement, the Company agreed to continue to pay Mr. McLaren his then-current base annual salary of $215,000, and to award Mr. McLaren with an annual and/or quarterly bonus payable in either cash and/or equity of no less than 2% of the Company’s net income for the associated period. The 2018 Employment Agreement has a term of 10 years. The term and Mr. McLaren’s employment will terminate (a “Termination”) in any of the following circumstances: (i) immediately, if Mr. McLaren dies; (ii) immediately, if Mr. McLaren receives benefits under the long-term disability insurance coverage then provided by the Company or, if no such insurance is in effect, upon Mr. McLaren’s disability; (iii) on the expiration date, as the same may be extended by the parties by written amendment to the 2018 Employment Agreement prior to the occasion thereof; (iv) at the option of the Company for Cause (as defined in the 2018 Employment Agreement) upon the Company’s provision of written notice to Mr. McLaren of the basis for such Termination; (v) at the option of the Company, without Cause; (vi) by Mr. McLaren at any time with Good Reason (as defined in the 2018 Employment Agreement), upon 30 days’ prior written notice to the Company delivered not later than within 90 days of the existence of the condition therefor; or (vii) by Mr. McLaren at any time without Good Reason, upon not less than three months’ prior written notice to the Company. In the event of a Termination for any reason or for no reason whatsoever, or upon the expiration date of the 2018 Employment Agreement, whichever comes first, all rights and obligations under the 2018 Employment Agreement shall cease (i) as to the Company, except for the Company’s obligations for the payment of applicable severance benefits thereunder, and for indemnification thereunder, and (ii) as to Mr. McLaren, except for his obligation under the restrictive covenants in the 2018 Employment Agreement. The Company and Mr. McLaren also entered into a Golden Parachute Agreement (the “Golden Parachute Agreement”) on May 23, 2018. No benefits shall be payable under the Golden Parachute Agreement unless there shall have been a change in control of the Company, as set forth below. For purposes of the Golden Parachute Agreement, amongst other terms in the Golden Parachute Agreement, a “change in control of the Company” shall mean a change of control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended. For purposes of the Golden Parachute Agreement, “Cause” means termination upon (a) the willful and continued failure to substantially perform duties with the Company after a written demand for substantial performance is delivered by the Board, which demand specifically identifies the manner in which the Board believes that duties have not substantially been performed, or (b) the willful engaging in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise. For purposes of the Golden Parachute Agreement, “Good Reason” means, without express written consent, the occurrence after a change in control of the Company of any of the following circumstances unless, such circumstances are fully corrected prior to the date of Termination specified in the notice of Termination: (a) a material diminution in Mr. McLaren’s authority, duties or responsibility from those in effect immediately prior to the change in control of the Company; (b) a material diminution in Mr. McLaren’s base compensation; (c) a material change in the geographic location at which Mr. McLaren performs his duties; (d) a material diminution in the authority, duties, or responsibilities of the supervisor to whom Mr. McLaren is required to report, including a requirement that Mr. McLaren report to a corporate officer or employee instead of reporting directly to the Board; (e) a material diminution in the budget over which Mr. McLaren retains authority; (f) a material breach under any agreement with the Company to continue in effect any bonus to which Mr. McLaren was entitled, or any compensation plan in which Mr. McLaren participates immediately prior to the change in control of the Company which is material to Mr. McLaren’s total compensation; (g) a material breach under any agreement with the Company to provide Mr. McLaren benefits substantially similar to those enjoyed by him under any of the Company’s life insurance, medical, health and accident, or disability plans in which he was participating at the time of the change in control of the Company, the failure to continue to provide Mr. McLaren with a Company automobile or allowance in lieu of it, if Mr. McLaren was provided with such an automobile or allowance in lieu of it at the time of the change of control of the Company, the taking of any action by the Company which would directly or indirectly materially reduce any of such benefits or deprive him of any material fringe benefit enjoyed by him at the time of the change in control of the Company, or the failure by the Company to provide him with the number of paid vacation days to which he is entitled on the basis of years of service with the Company in accordance with the Company’s normal vacation policy in effect at the time of the change in control of the Company; Following a change in control of the Company, upon termination of Mr. McLaren’s employment or during a period of disability, Mr. McLaren will be entitled to the following benefits: (i) During any period that he fails to perform his full-time duties with the Company as a result of incapacity due to physical or mental illness, Mr. McLaren will continue to receive his base salary at the rate in effect at the commencement of any such period, together with all amounts payable to him under any compensation plan of the Company during such period, until the Golden Parachute Agreement is terminated. (ii) If Mr. McLaren’s employment is terminated by the Company for Cause or by Mr. McLaren other than for Good Reason, disability, death or retirement, the Company will pay Mr. McLaren his full base salary through the date of Termination at the rate in effect at the time notice of Termination is given, plus all other amounts and benefits to which he is entitled under any compensation plan of the Company at the time such payments are due. (iii) If employment by the Company shall be terminated (a) by the Company other than for Cause, death or disability or (b) by Mr. McLaren for Good Reason, Mr. McLaren will be entitled to benefits provided below: a. The Company will pay Mr. McLaren his full base salary through the date of Termination at the rate in effect at the time notice of Termination is given, plus all other amounts and benefits to which he is entitled under any compensation plan of the Company. b. In lieu of any further salary payments to Mr. McLaren for periods subsequent to the date of Termination, the Company will pay as severance pay to Mr. McLaren a lump sum severance payment (together with the payments provided in clauses (c) and (d) below) equal to five times the sum of his annual base salary in effect immediately prior to the occurrence of the circumstance giving rise to the notice of Termination given in respect of them. c. The Company will pay to Mr. McLaren any deferred compensation allocated or credited to him or his account as of the date of Termination. d. In lieu of shares of common stock of the Company issuable upon exercise of outstanding options, if any, granted to Mr. McLaren under the Company’s stock option plans (which options shall be cancelled upon the making of the payment referred to below), Mr. McLaren will receive an amount in cash equal to the product of (i) the excess of the closing price of the Company’s common stock as reported on or nearest the date of Termination (or, if not so reported, on the basis of the average of the lowest asked and highest bid prices on or nearest the date of Termination), over the per share exercise price of each option held by Mr. McLaren (whether or not then fully exercisable) plus the amount of any applicable cash appreciation rights, times (ii) the number of the Company’s common stock covered by each such option. e. The Company will also pay to Mr. McLaren all legal fees and expenses incurred by him as a result of such Termination. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of presentation and principles of consolidation | Basis of presentation and principles of consolidation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation. The unaudited condensed consolidated financial statements for the nine months ended September 30, 2020 and 2019 have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). In the opinion of management, all adjustments necessary to present fairly the consolidated financial position, results of operations, and cash flows as of September 30, 2020 and 2019, and for the periods then ended, have been made. Those adjustments consist of normal and recurring adjustments. Operating results for interim periods are not necessarily indicative of results that may be expected for the fiscal year as a whole. Accordingly, the condensed consolidated financial statements do not include all the information and notes necessary for a comprehensive presentation of our consolidated financial position and consolidated results of operations and should be read in conjunction with the audited financial statements of the Company for the year ended December 31, 2019 included in our Annual Report on form 10-K filed with the SEC on March 26, 2020. Effective January 1, 2019, the Company and certain beneficial shareholders entered into a Stock Redemption Agreement. Pursuant to SEC rules, each of these beneficial shareholders was deemed to be a “related person” due solely to their status as significant stockholders of the Company. Pursuant to the terms of the Stock Redemption Agreement, these beneficial shareholders would no longer be significant stockholders of the Company and are no longer deemed to be “related persons” under SEC rules. Accordingly, as of January 1, 2019, the Company no longer reflects transactions and balances related to these beneficial shareholders as related party transactions. |
Use of estimates | Use of estimates The preparation of unaudited condensed consolidated financial statements in conformity with 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 revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates for the nine months ended September 30, 2020 and 2019 include the collectability of accounts and note receivable, the useful life of rental properties and property and equipment, assumptions used in assessing impairment of long-term assets, valuation allowances for deferred tax assets, and the fair value of non-cash equity transactions, including options and stock-based compensation. |
Risks and uncertainties | Risks and uncertainties The Company’s operations are subject to risk and uncertainties including financial, operational, regulatory and other risks including the potential risk of business failure. The Company conducts a significant portion of its business in Arizona. Additionally, the Company’s tenants operate in the medical marijuana industry. Consequently, any significant economic downturn in the Arizona market or any changes in the federal government’s enforcement of current federal laws or changes in state laws could potentially have a negative effect on the Company’s business, results of operations and financial condition. Additionally, substantially all of the Company’s real estate properties are leased under triple-net leases to tenants that are controlled by one entity (each, a “Significant Tenant” and collectively, the “Significant Tenants”). For the nine months ended September 30, 2020 and 2019, rental and advisory revenue associated with the Significant Tenants amounted to $878,759 and $855,659, which represents 96.9% and 91.0% of the Company’s total revenues, respectively (see Note 3). |
Fair value of financial instruments | Fair value of financial instruments The carrying amounts reported in the unaudited condensed consolidated balance sheets for cash, accounts receivable, prepaid expenses and other assets, accounts payable, accrued expenses, and other payables approximate their fair market value based on the short-term maturity of these instruments. The Company analyzes all financial instruments with features of both liabilities and equity under the Financial Accounting Standard Board’s (the “FASB”) accounting standard for such instruments. Under this standard, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company did not identify any assets or liabilities that are required to be presented on the balance sheet at fair value in accordance with Accounting Standards Codification (“ASC”) Topic 820. |
Cash | Cash Cash is carried at cost and represents cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments. The Company had no cash equivalents at September 30, 2020 and December 31, 2019. The majority of the Company’s cash is held at major commercial banks, which may at times exceed the Federal Deposit Insurance Corporation (“FDIC”) limit. To date, the Company has not experienced any losses on its invested cash. At September 30, 2020 and December 31, 2019, the Company had approximately $328,000 and $390,000, respectively, of cash in excess of FDIC limits of $250,000. |
Accounts receivable | Accounts receivable The Company recognizes an allowance for losses on accounts receivable in an amount equal to the estimated probable losses net of recoveries. The allowance is based on an analysis of historical bad debt experience, current receivables aging and expected future write-offs, as well as an assessment of specific identifiable customer accounts considered at risk or uncollectible. The expense associated with the allowance for doubtful accounts is recognized in general and administrative expense. For the nine months ended September 30, 2020 and 2019, the Company did not record any allowances for doubtful accounts. |
Rental properties | Rental properties Rental properties are carried at cost, less accumulated depreciation and amortization. Betterments, major renovations and certain costs directly related to the improvement of rental properties are capitalized. Maintenance and repair expenses are charged to expense as incurred. Depreciation is recognized on a straight-line basis over estimated useful lives of the assets, which range from 5 to 39 years. Tenant improvements are amortized on a straight-line basis over the lives of the related leases, which approximate the useful lives of the assets. Upon the acquisition of real estate, the Company assesses the fair value of acquired assets (including land, buildings and improvements, identified intangibles, such as acquired above-market leases and acquired in-place leases) and acquired liabilities (such as acquired below-market leases) and allocate the purchase price based on these assessments. The Company assesses fair value based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including historical operating results, known trends, and market/economic conditions. The Company’s rental properties are individually reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment exists when the carrying amount of an asset exceeds the aggregate projected future cash flows over the anticipated holding period on an undiscounted basis. An impairment loss is measured based on the excess of the property’s carrying amount over its estimated fair value. Impairment analyses are based on our current plans, intended holding periods and available market information at the time the analyses are prepared. If the Company’s estimates of the projected future cash flows, anticipated holding periods, or market conditions change, the Company’s evaluation of impairment losses may be different and such differences could be material to its consolidated financial statements. The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results. For the nine months ended September 30, 2020 and 2019, the Company did not record any impairment losses. The Company has capitalized land, which is not subject to depreciation. |
Property and equipment | Property and equipment Property and equipment are stated at cost, less accumulated depreciation. Depreciation of property and equipment is provided utilizing the straight-line method over the estimated useful lives. The Company uses a five-year life for office equipment, seven years for furniture and fixtures, and five to ten years for vehicles. Expenditures for maintenance and repairs are charged to expense as incurred. Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in statements of operations. The Company examines the possibility of decreases in the value of these assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable. |
Revenue recognition | Revenue recognition On January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) 2014-09 and ASC Topic 606, Revenue from Contracts with Customers Rental income includes base rents that each tenant pays in accordance with the terms of its respective lease and is reported on a straight-line basis over the non-cancellable term of the lease, which includes the effects of rent abatements under the leases. The Company commences rental revenue recognition when the tenant takes possession of the leased space or controls the physical use of the leased space and the leased space is substantially ready for its intended use. Currently, the Company’s leases provide for payments with fixed monthly base rents over the term of the leases. The leases also require the tenant to remit estimated monthly payments to the Company for property taxes. These payments are recorded as rental income and the related property tax expense reflected separately on the statements of operations. See below for the adoption of ASU 2016-02, “Leases (Topic 842)” and its impact on our consolidated financial statements upon adoption. Revenues from advisory services is recognized when the Company performs services pursuant to its agreements with clients and collectability is reasonably assured. |
Basic and diluted (loss) income per share | Basic and diluted (loss) income per share Basic (loss) income per share is computed by dividing net (loss) income available to common shareholders by the weighted average number of shares of common stock outstanding during each period. Diluted (loss) income per share is computed by dividing net (loss) income available to common shareholders by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period using the treasury stock method and as-if converted method. Potentially dilutive common shares and participating securities are excluded from the computation of diluted shares outstanding if they would have an anti-dilutive impact on the Company’s net losses. The Company’s preferred stock is considered a participating security since the preferred shares are entitled to dividends equal to common share dividends and accordingly, are included in the computation of earnings per share pursuant to the two-class method. The two-class method of computing (loss) income per share is an earnings allocation formula that determines (loss) income per share for common stock and any participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. The following potentially dilutive shares have been excluded from the calculation of diluted net loss per share as their effect would be anti-dilutive for the nine months ended September 30, 2020 and 2019. September 30, 2020 2019 Convertible debt 404,000 404,000 Stock options 1,325,000 1,290,000 1,729,000 1,694,000 |
Segment reporting | Segment reporting The Company’s business is comprised of one reportable segment. The Company has determined that its properties have similar economic characteristics to be aggregated into one reportable segment (operating, leasing and managing commercial properties). The Company’s determination was based primarily on its method of internal reporting. |
Income tax | Income tax Deferred income tax assets and liabilities arise from temporary differences between the financial statements and tax basis of assets and liabilities, as measured by the enacted tax rates, which are expected to be in effect when these differences reverse. Deferred tax assets and liabilities are classified as current or non-current, depending upon the classification of the asset or liabilities to which they relate. Deferred tax assets and liabilities not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company follows the provisions of FASB ASC 740-10, “Uncertainty in Income Taxes”. Certain recognition thresholds must be met before a tax position is recognized in the financial statements. An entity may only recognize or continue to recognize tax positions that meet a “more-likely-than-not” threshold. The Company does not believe it has any uncertain tax positions as of September 30, 2020 and December 31, 2019 that would require either recognition or disclosure in the accompanying unaudited condensed consolidated financial statements. |
Stock-based compensation | Stock-based compensation Stock-based compensation is accounted for based on the requirements of ASC 718 – “Compensation –Stock Compensation Improvements to Employee Share-Based Payment |
Recently adopted accounting pronouncements | Recently adopted accounting pronouncements Effective January 1, 2019, the Company adopted ASU 2016-02, “ Leases (Topic 842)” ASU 2016-02, “ Leases (Topic 842)” For contracts entered into on or after the effective date, where we are the lessee, at the inception of a contract the Company assess whether the contract is, or contains, a lease. Our 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 we have the right to direct the use of the asset. We allocate the consideration in the contract to each lease component based on its relative stand-alone price to determine the lease payments. Leases entered into prior to January 1, 2019, are accounted for under ASC 840 and were not reassessed. For leases entered into on or after the effective date, where we are the lessor, at the inception of the contract the Company assess whether the contract is a sales-type, direct financing or operating lease by reviewing the terms of the lease and determining if the lessee obtains control of the underlying asset implicitly or explicitly. If a change to a pre-existing lease occurs, we evaluate if the modification results in a separate new lease or a modified lease. A new lease results when a modification provides additional right of use. The new lease or modified lease is then reassessed to determine its classification based on the modified terms. As disclosed in Note 3, on January 1, 2019, the Chino Valley lease was modified to increase the monthly base rent from $35,000 to $40,000. Additionally, on May 31, 2020, the Chino Valley lease was modified to decrease the monthly base rent from $40,000 to $32,800 and the Tempe lease was modified to increase the monthly base rent from $33,500 to $49,200. At the commencement of the modified terms, the Company reassessed its lease classification and concluded it remained properly classified as an operating lease. The adoption of ASU 2016-02 did not have a material impact on the operating leases where the Company is a lessor. The Company will continue to record revenues from rental properties for its operating leases on a straight-line basis. Any revenue on the straight-line basis exceeding the monthly payment amount required on the operating lease is reflected as a deferred rent receivable. Effective May 31, 2020, the Company amended its leases for which it is the lessor on its Chino Valley, Tempe, Kingman and Green Valley properties. The amendments resulted in an abatement of rent for the months of June and July 2020. This rent abatement resulted in a deferred rent receivable as of September 30, 2020 of $176,004 (see Note 3). For leases where the Company is a lessee, primarily for the Company’s administrative office lease, the Company analyzed if it would be required to record a lease liability and a right of use asset on its condensed consolidated balance sheets at fair value upon adoption of ASU 2016-02. Since the terms of the Company’s operating lease for its office space is 12 months or less, pursuant to ASC 842, the Company determined that the lease meets the definition of a short-term lease and the Company did not recognize a right-of use asset and lease liability arising from this lease. |
Recently issued accounting pronouncements | Recently issued accounting pronouncements 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 condensed consolidated financial statements. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Schedule of potentially dilutive shares have been excluded from the calculation of diluted net (loss) per share | September 30, 2020 2019 Convertible debt 404,000 404,000 Stock options 1,325,000 1,290,000 1,729,000 1,694,000 |
Concentrations and Risks (Table
Concentrations and Risks (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Risks and Uncertainties [Abstract] | |
Schedule of future minimum lease payments | Future annual base rent: 2020 (remainder of year) $ 273,209 2021 1,082,005 2022 1,074,000 2023 1,074,000 2024 1,074,000 Thereafter 16,468,000 Total $ 21,045,214 |
Rental Properties (Tables)
Rental Properties (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Rental Properties Disclosure [Abstract] | |
Schedule of rental properties, net | Description Useful Life September 30, December 31, Building and building improvements 5-39 $ 6,260,524 $ 6,250,959 Land - 2,283,214 2,283,214 Rental properties, at cost 8,543,738 8,534,173 Less: accumulated depreciation (1,427,002 ) (1,159,366 ) Rental properties, net $ 7,116,736 $ 7,374,807 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Stockholders' Equity Note [Abstract] | |
Schedule of stock option activities | Number of Weighted Weighted Aggregate Balance Outstanding December 31, 2019 1,290,000 $ 0.99 5.74 $ - Granted 125,000 1.00 - - Forfeited (90,000 ) 1.00 - - Balance Outstanding September 30, 2020 1,325,000 $ 0.99 5.10 $ - Exercisable, September 30, 2020 1,200,000 $ 0.99 4.98 - Balance Non-vested at December 31, 2019 125,000 $ 1.00 $ - Granted 125,000 1.00 - Forfeited (90,000 ) 1.00 Vested during the period (35,000 ) 1.00 - - Balance Non-vested at September 30, 2020 125,000 $ 1.00 6.25 $ - |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) | Jan. 02, 2019 | May 01, 2018 | May 31, 2020 | Jul. 31, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 |
Summary of Significant Accounting Policies (Details) [Line Items] | |||||||
Rental and advisory revenue | $ 878,759 | $ 855,659 | |||||
Percentage of rental and advisory revenue | 96.90% | 91.00% | |||||
Amount of cash excess of FDIC | $ 328,000 | $ 390,000 | |||||
Federal deposit insurance corporation limits | $ 250,000 | ||||||
Number of reportable segments | 1 | ||||||
Deferred rent receivable | $ 176,004 | ||||||
Building and Building Improvements [Member] | Minimum [Member] | |||||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||||
Estimated useful life of assets | 5 years | ||||||
Building and Building Improvements [Member] | Maximum [Member] | |||||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||||
Estimated useful life of assets | 39 years | ||||||
Office Equipment [Member] | |||||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||||
Estimated useful life of assets | 5 years | ||||||
Furniture and Fixtures [Member] | |||||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||||
Estimated useful life of assets | 7 years | ||||||
Vehicles [Member] | Minimum [Member] | |||||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||||
Estimated useful life of assets | 5 years | ||||||
Vehicles [Member] | Maximum [Member] | |||||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||||
Estimated useful life of assets | 10 years | ||||||
Chino Valley Lease [Member] | |||||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||||
Increase in monthly base rent payable | $ 35,000 | $ 32,800 | |||||
Chino Valley Lease [Member] | Minimum [Member] | |||||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||||
Increase in monthly base rent payable | $ 35,000 | 35,000 | |||||
Decrease in monthly base rent payable | $ 40,000 | ||||||
Chino Valley Lease [Member] | Maximum [Member] | |||||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||||
Increase in monthly base rent payable | $ 40,000 | $ 40,000 | |||||
Decrease in monthly base rent payable | 32,800 | ||||||
Tempe Lease [Member] | Minimum [Member] | |||||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||||
Increase in monthly base rent payable | 33,500 | ||||||
Tempe Lease [Member] | Maximum [Member] | |||||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||||
Increase in monthly base rent payable | $ 49,200 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - Schedule of potentially dilutive shares have been excluded from the calculation of diluted net (loss) per share - shares | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Shares excluded from the calculation of diluted earnings per share | 1,729,000 | 1,694,000 |
Convertible debt [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Shares excluded from the calculation of diluted earnings per share | 404,000 | 404,000 |
Stock options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Shares excluded from the calculation of diluted earnings per share | 1,325,000 | 1,290,000 |
Concentrations and Risks (Detai
Concentrations and Risks (Details) - USD ($) | Jan. 02, 2019 | May 01, 2018 | May 29, 2020 | Dec. 31, 2019 | Jul. 31, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 |
Concentrations and Risks (Details) [Line Items] | |||||||||
Facilities totaling at least | $ 8,000,000 | $ 8,000,000 | |||||||
Least of improvements | 8,000,000 | 8,000,000 | |||||||
Security deposits payable - related parties | $ 71,800 | 71,800 | $ 71,800 | ||||||
Percentage of total revenues | 96.90% | 91.00% | |||||||
Advisory services | $ 8,188 | 9,393 | $ 9,393 | ||||||
Deferred rent receivable - related parties | 176,004 | $ 176,004 | |||||||
Terminate date , description | April 2040 | ||||||||
Total revenues [Member] | |||||||||
Concentrations and Risks (Details) [Line Items] | |||||||||
Rental revenue | $ 297,793 | $ 299,324 | $ 878,759 | $ 855,659 | |||||
Percentage of total revenues | 98.40% | 88.50% | 96.90% | 91.00% | |||||
Tenants [Member] | |||||||||
Concentrations and Risks (Details) [Line Items] | |||||||||
Percentage of total revenues | 87.10% | 84.30% | |||||||
Mr. Abrams [Member] | |||||||||
Concentrations and Risks (Details) [Line Items] | |||||||||
Convertible debt | $ 2,000,000 | $ 2,000,000 | |||||||
Chino Valley [Member] | |||||||||
Concentrations and Risks (Details) [Line Items] | |||||||||
Lease term | 22 years | ||||||||
Lease expiration date | Apr. 30, 2040 | ||||||||
Base rent per month | $ 35,000 | $ 32,800 | |||||||
Advisory Services Agreement, Description | (i) any unpaid rent and interest, plus (ii) 5% of the base rent which would have been earned after termination for the balance of the term. | ||||||||
Chino Valley [Member] | Minimum [Member] | |||||||||
Concentrations and Risks (Details) [Line Items] | |||||||||
Base rent per month | $ 35,000 | 35,000 | |||||||
Chino Valley [Member] | Maximum [Member] | |||||||||
Concentrations and Risks (Details) [Line Items] | |||||||||
Base rent per month | $ 40,000 | $ 40,000 | |||||||
New Green Valley Lease [Member] | |||||||||
Concentrations and Risks (Details) [Line Items] | |||||||||
Lease term | 22 years | ||||||||
Lease expiration date | Apr. 30, 2040 | ||||||||
Base rent per month | $ 3,500 | 3,500 | |||||||
Advisory Services Agreement, Description | (i) any unpaid rent and interest, plus (ii) 5% of the base rent which would have been earned after termination for the balance of the term. | ||||||||
Zoned Arizona [Member] | |||||||||
Concentrations and Risks (Details) [Line Items] | |||||||||
Lease term | 22 years | ||||||||
Lease expiration date | Apr. 30, 2040 | ||||||||
Base rent per month | $ 33,500 | $ 49,200 | |||||||
Advisory Services Agreement, Description | (i) any unpaid rent and interest, plus (ii) 5% of the base rent which would have been earned after termination for the balance of the term. | ||||||||
Facilities totaling at least | 8,000,000 | 8,000,000 | |||||||
Kingman Lease [Member] | |||||||||
Concentrations and Risks (Details) [Line Items] | |||||||||
Lease term | 22 years | ||||||||
Lease expiration date | Apr. 30, 2040 | ||||||||
Base rent per month | $ 4,000 | $ 4,000 | |||||||
Advisory Services Agreement, Description | (i) any unpaid rent and interest, plus (ii) 5% of the base rent which would have been earned after termination for the balance of the term. | ||||||||
Convertible debt | $ 2,000,000 | $ 2,000,000 | |||||||
Broken Arrow [Member] | |||||||||
Concentrations and Risks (Details) [Line Items] | |||||||||
Lease expiration date | Apr. 30, 2040 | ||||||||
Percentage of total revenues | 10.00% | ||||||||
Broken Arrow [Member] | January 1, 2019 [Member] | |||||||||
Concentrations and Risks (Details) [Line Items] | |||||||||
Advisory Services Agreement, Description | (i) reduce the gross revenue fee payable by Broken Arrow from 10% to 0%, and (ii) add a $250 hourly advisory fee payable by Broken Arrow. Except as set forth herein, the terms of the Broken Arrow CASA remain in full force and effect. | ||||||||
Cjk Casa [Member] | January 1, 2019 [Member] | |||||||||
Concentrations and Risks (Details) [Line Items] | |||||||||
Advisory Services Agreement, Description | (i) reduce the gross revenue fee payable by CJK from 10% to 0%, and (ii) add a $250 hourly advisory fee payable by CJK. Except as set forth herein, the terms of the CJK CASA remain in full force and effect. |
Concentrations and Risks (Det_2
Concentrations and Risks (Details) - Schedule of future minimum lease payments | Sep. 30, 2020USD ($) |
Schedule of future minimum lease payments [Abstract] | |
2020 (remainder of year) | $ 273,209 |
2021 | 1,082,005 |
2022 | 1,074,000 |
2023 | 1,074,000 |
2024 | 1,074,000 |
Thereafter | 16,468,000 |
Total | $ 21,045,214 |
Rental Properties (Details)
Rental Properties (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Rental Properties Disclosure [Abstract] | ||||
Depreciation and amortization of rental properties | $ 89,298 | $ 88,820 | $ 267,636 | $ 266,460 |
Rental Properties (Details) - S
Rental Properties (Details) - Schedule of rental properties, net - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
Rental Properties (Details) - Schedule of rental properties, net [Line Items] | ||
Rental properties, at cost | $ 8,543,738 | $ 8,534,173 |
Less: accumulated depreciation | (1,427,002) | (1,159,366) |
Rental properties, net | 7,116,736 | 7,374,807 |
Building and Building Improvements [Member] | ||
Rental Properties (Details) - Schedule of rental properties, net [Line Items] | ||
Rental properties, at cost | $ 6,260,524 | 6,250,959 |
Building and Building Improvements [Member] | Minimum [Member] | ||
Rental Properties (Details) - Schedule of rental properties, net [Line Items] | ||
Estimated useful life of assets | 5 years | |
Building and Building Improvements [Member] | Maximum [Member] | ||
Rental Properties (Details) - Schedule of rental properties, net [Line Items] | ||
Estimated useful life of assets | 39 years | |
Land [Member] | ||
Rental Properties (Details) - Schedule of rental properties, net [Line Items] | ||
Rental properties, at cost | $ 2,283,214 | $ 2,283,214 |
Convertible Note Receivable (De
Convertible Note Receivable (Details) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 19, 2020 | Mar. 19, 2020 | Sep. 30, 2020 | |
Convertible Note Receivable (Details) [Line Items] | ||||
Bears interest rate | 12.00% | |||
Convertible note receivable | $ 100,000 | |||
Interest receivable | $ 3,490 | |||
Debt instrument, description | the Company may convert all or a portion of the principal balance and all accrued and unpaid interest due into a number of units equal to the proportion of the outstanding amount being converted multiplied by 33% of the total number of units issued and outstanding at the time of conversion, constituting 33% of the total percentage interest (the “Conversion Percentage”). | constituting 10% of the total outstanding units and 10% of the total percentage interest following such issuance and at the time of such issuance. | ||
Convertible note receivable, description | (i) KCB does not elect to exercise its rights of prepayment prior to the Maturity Date, (ii) the Company does not elect to exercise its rights of conversion, and (iii) KCB pays to the Company all outstanding principal and interest accrued and due under the terms of the KCB Debenture on the Maturity Date, the Company will still be entitled to receive a number of units, in addition to such payment amount, constituting 8% of the total outstanding units and 8% of the total percentage interest following such issuance and at the time of such issuance. | |||
KCB Debenture [Member] | ||||
Convertible Note Receivable (Details) [Line Items] | ||||
Initial investment | $ 100,000 | $ 100,000 | ||
Original principal amount | $ 100,000 | $ 100,000 | ||
Bears interest rate | 6.50% | 6.50% |
Convertible Note Payable (Detai
Convertible Note Payable (Details) - USD ($) | Jan. 09, 2017 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Mar. 01, 2018 |
Convertible Note Payable (Details) [Line Items] | |||||||
Bear interest rate | 12.00% | 12.00% | |||||
Interest Expense | $ 30,000 | ||||||
Mr. Abrams Debenture [Member] | |||||||
Convertible Note Payable (Details) [Line Items] | |||||||
Principal balance | $ 2,000,000 | 2,000,000 | $ 2,000,000 | $ 2,000,000 | $ 2,000,000 | ||
Convertible notes payable exchange cash | $ 2,000,000 | ||||||
Percentage of debenture interest | 6.00% | ||||||
Common stock conversion price per share (in Dollars per share) | $ 5 | ||||||
Bear interest rate | 12.00% | ||||||
Accrued interest payable | $ 30,000 | 30,000 | $ 30,000 | ||||
Interest Expense | $ 30,000 | $ 90,000 | $ 90,000 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Jan. 09, 2017 | |
Related Party Transactions (Details) [Line Items] | ||||||
Bear interest rate | 12.00% | 12.00% | ||||
Interest expenses - related parties | $ 300 | $ 300 | $ 900 | $ 900 | ||
Convertible Debenture [Member] | ||||||
Related Party Transactions (Details) [Line Items] | ||||||
Debentures accrued interest | 6.00% | |||||
Common stock conversion price per share (in Dollars per share) | $ 5 | |||||
Bear interest rate | 12.00% | |||||
Mr Mclaren [Member] | ||||||
Related Party Transactions (Details) [Line Items] | ||||||
Principal amount of convertible debt | $ 20,000 | |||||
Convertible notes payable exchange cash | $ 20,000 | |||||
Principal balance of debentures | 20,000 | $ 20,000 | ||||
Accrued interest payable | $ 3,900 | $ 3,900 | $ 3,000 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) | Jan. 06, 2020 | Jan. 14, 2019 | Aug. 09, 2016 | Jan. 09, 2016 | Dec. 13, 2013 | Jan. 31, 2020 | Jan. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 |
Stockholders' Equity (Details) [Line Items] | ||||||||||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 | ||||||||
Preferred stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 | ||||||||
Number of options outstanding, granted | 125,000 | |||||||||
Number of options vested and exercisable | 1,200,000 | |||||||||
Stock options [Member] | ||||||||||
Stockholders' Equity (Details) [Line Items] | ||||||||||
Shares per price (in Dollars per share) | $ 0.34 | |||||||||
Stock-based compensation expense (in Dollars) | $ 19,810 | $ 17,709 | ||||||||
Purchase of common stock | 125,000 | |||||||||
Exercise price (in Dollars per share) | $ 1 | |||||||||
Sale of stock, description | (i) 35,000 of such shares on January 6, 2020; and (ii) as to 10,000 of such shares on January 6, 2021 and each year thereafter through January 6, 2029. The fair value of this option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions: dividend yield of 0%; expected volatility of 110%; risk-free interest rate of 1.81%; and, an estimated holding period of 10 years. In connection with these options, the Company valued these options at a fair value of $23,388 and will record stock-based compensation expense over the vesting period. In July 2020, this employee was terminated and 90,000 unvested options were cancelled. | |||||||||
Number of options outstanding, granted | 1,325,000 | |||||||||
Number of options vested and exercisable | 1,200,000 | |||||||||
Unvested stock-based compensation expense (in Dollars) | $ 34,582 | |||||||||
2016 Plan [Member] | ||||||||||
Stockholders' Equity (Details) [Line Items] | ||||||||||
Issued shares of common stock, shares | 10,000,000 | |||||||||
Stock option awards | 75,000 | 40,000 | ||||||||
Stock option exercisable | 75,000 | 40,000 | ||||||||
Future issuance shares | 9,925,000 | 9,960,000 | ||||||||
2014 Plan [Member] | ||||||||||
Stockholders' Equity (Details) [Line Items] | ||||||||||
Stock option exercisable | 1,125,000 | 1,125,000 | ||||||||
Terms of plan, description | The Company also continues to maintain its 2014 Equity Compensation Plan (the “2014 Plan”), pursuant to which 1,250,000 previously awarded stock options are outstanding. The 2014 Plan has been superseded by the 2016 Plan. Accordingly, no additional shares subject to the existing 2014 Plan will be issued and the 1,250,000 shares issuable upon exercise of stock options will be issued pursuant to the 2014 Plan, if exercised. | |||||||||
Stock option to purchase | 1,250,000 | 1,250,000 | ||||||||
Preferred Stock [Member] | ||||||||||
Stockholders' Equity (Details) [Line Items] | ||||||||||
Preferred stock, shares authorized | 5,000,000 | |||||||||
Preferred stock, par value (in Dollars per share) | $ 0.001 | |||||||||
Preferred stock, voting rights description | The holders of the preferred stock are entitled to fifty (50) votes for each share held. | |||||||||
Shares per price (in Dollars per share) | $ 1 | |||||||||
Preferred stock outstanding transactions description | at least 51% of the total number of shares of preferred stock outstanding | |||||||||
Common stock price per share (in Dollars per share) | $ 0.311 | |||||||||
Director [Member] | ||||||||||
Stockholders' Equity (Details) [Line Items] | ||||||||||
Common stock issued for services, shares | 110,000 | 100,000 | ||||||||
Common stock issued for services, fair value (in Dollars) | $ 24,200 | $ 31,100 | ||||||||
Common stock price per share (in Dollars per share) | $ 0.22 | |||||||||
Stock-based compensation expense (in Dollars) | $ 24,200 | $ 31,100 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - Schedule of stock option activities | 9 Months Ended |
Sep. 30, 2020USD ($)$ / sharesshares | |
Schedule of stock option activities [Abstract] | |
Number of Options, Outstanding, Beginning balance | shares | 1,290,000 |
Weighted Average Remaining Contractual Term (Years), Beginning balance | 5 years 270 days |
Aggregate Intrinsic Value, Beginning balance | $ | |
Weighted Average Exercise Price, Beginning balance | $ / shares | $ 0.99 |
Number of Options, Granted | shares | 125,000 |
Aggregate Intrinsic Value, Granted | $ | |
Weighted Average Exercise Price, Granted | $ / shares | $ 1 |
Number of Options, Forfeited | shares | (90,000) |
Aggregate Intrinsic Value, Forfeited | $ | |
Weighted Average Exercise Price, Forfeited | $ / shares | $ 1 |
Number of Options, Outstanding, Ending balance | shares | 1,325,000 |
Weighted Average Remaining Contractual Term (Years), Ending balance | 5 years 36 days |
Aggregate Intrinsic Value, Ending balance | $ | |
Weighted Average Exercise Price, Ending balance | $ / shares | $ 0.99 |
Number of Options, Exercisable | shares | 1,200,000 |
Weighted Average Remaining Contractual Term (Years), Exercisable | 4 years 357 days |
Aggregate Intrinsic Value, Exercisable | $ | |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 0.99 |
Number of Options, Balance Non-vested at December 31, 2019 | shares | 125,000 |
Aggregate Intrinsic Value, Balance Non-vested at December 31, 2019 | $ | |
Weighted Average Exercise Price, Balance Non-vested at December 31, 2019 | $ / shares | $ 1 |
Number of Options, Granted, Non-vested | shares | 125,000 |
Weighted Average Exercise Price, Granted, Non-vested | $ / shares | $ 1 |
Number of Options, Forfeited, Non-vested | shares | (90,000) |
Weighted Average Exercise Price, Forfeited, Non-vested | $ / shares | $ 1 |
Number of Options, Vested during the period | shares | (35,000) |
Aggregate Intrinsic Value, Vested during the period | $ | |
Weighted Average Exercise Price, Vested during the period | $ / shares | $ 1 |
Number of Options, Balance Non-vested at September 30, 2020 | shares | 125,000 |
Weighted Average Remaining Contractual Term (Years), Balance Non-vested at September 30, 2020 | 6 years 3 months |
Aggregate Intrinsic Value, Balance Non-vested at September 30, 2020 | $ | |
Weighted Average Exercise Price, Balance Non-vested at September 30, 2020 | $ / shares | $ 1 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | May 02, 2018 | May 23, 2018 | Apr. 22, 2016 | Sep. 30, 2020 | Dec. 31, 2019 | Apr. 30, 2018 |
Chief Executive Officer [Member] | ||||||
Commitments and Contingencies (Details) [Line Items] | ||||||
Current base annual salary of CEO | $ 215,000 | |||||
Bonus payable percentage, description | to award Mr. McLaren with an annual and/or quarterly bonus payable in either cash and/or equity of no less than 2% of the Company’s net income for the associated period. | |||||
Zoned Colorado Properties, LLC [Member] | ||||||
Commitments and Contingencies (Details) [Line Items] | ||||||
Purchase price of property | $ 499,857 | |||||
Payment terms of purchase agreement | Of the total purchase price, $274,857, or 55%, will be paid in cash at closing and $225,000, or 45%, will be financed by Seller at an interest rate of 6.5%, amortized over a five-year period, with a balloon payment at the end of the fifth year. | |||||
Refundable deposit into escrow | $ 45,000 | $ 45,000 | $ 45,000 | |||
Confidential advisory services agreements, description | Pursuant to the terms of the CASAs, Broken Arrow and CJK engaged the Company to perform certain advisory services in exchange for a fee equal to 10% of Broken Arrow’s and CJK’s gross revenues (the “Revenue Fee”). Effective January 1, 2019, the parties agreed to amend the May 1, 2018 leases to reduce the Revenue Fee payable pursuant to each of the CASAs from 10% of gross revenue to 0% of gross revenue. |