Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 22, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | TWO RIVERS WATER & FARMING Co | |
Entity Central Index Key | 0001302946 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 87,145,235 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2019 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Current Assets: | ||
Cash and cash equivalents | $ 401 | $ 6 |
Accounts receivable, related party | 17 | 0 |
Deposits and other current assets | 63 | 58 |
Total Current Assets | 481 | 64 |
Long Term Assets | ||
Property, equipment and software, net | 5 | 20 |
Land | 3,252 | 3,299 |
Water assets | 24,891 | 24,891 |
Supply rights | 480 | |
Investment in GCP1 | 2,192 | 2,289 |
Goodwill | 14,100 | |
Other long term assets | 98 | 96 |
Total Long Term Assets | 45,018 | 30,595 |
TOTAL ASSETS: | 45,499 | 30,695 |
Current Liabilities: | ||
Accounts payable | 1,305 | 1,243 |
Accrued liabilities | 5,963 | 5,780 |
Current portion of notes payable, net of discount | 9,329 | 8,099 |
Preferred dividend payable | 4,988 | 4,970 |
Total Current Liabilities | 21,585 | 20,092 |
Notes payable, net of current portion | 868 | 1,173 |
Total Liabilities | 22,453 | 21,265 |
Commitments & Contingencies (Notes 4,7,9,10) | ||
Stockholders' Equity: | ||
Common stock, $0.001 par value, 200,000,000 shares authorized, 83,195,939 shares issued and outstanding at September 30, 2019 and 45,574,458 shares issued and outstanding at December 31, 2018 | 84 | 46 |
Preferred shares, $0.001 par value, 5,000,000 shares authorized, 64,935 shares issued and outstanding at September 30, 2019 and December 31, 2018. | 252 | 252 |
Additional paid-in capital | 95,942 | 81,186 |
Accumulated (deficit) | (95,596) | (94,454) |
Total Two Rivers Water & Farming Company Stockholders' Equity | 682 | (12,970) |
Noncontrolling interest in subsidiaries | 22,364 | 22,364 |
Total Stockholders' Equity | 23,046 | 9,394 |
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY | $ 45,499 | $ 30,659 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 83,195,939 | 45,574,458 |
Common stock, shares outstanding | 83,195,939 | 45,574,458 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 64,935 | 64,935 |
Preferred stock, shares outstanding | 64,935 | 64,935 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Revenue: | ||||
Total Revenue | $ 108 | $ 5 | $ 145 | $ 22 |
Direct cost of revenue | ||||
Gross Margin | 108 | 5 | 145 | 22 |
Operating Expenses | ||||
General and administrative | 312 | 661 | 1,149 | 1,838 |
Dam demolition expense | (825) | 1,800 | (825) | 1,800 |
Depreciation and amortization | 16 | 17 | 48 | 75 |
Total operating expenses | (497) | 2,478 | 372 | 3,713 |
Profit (Loss) from Operations | 605 | (2,473) | (227) | (3,691) |
Other Income (Expense) | ||||
Interest expense | (390) | (217) | (918) | (736) |
Gain (loss) on disposal of assets and intangibles | 37 | 85 | 114 | |
Loss on debt settlement | 33 | |||
Other income | 1 | 4 | 1 | 15 |
Gain on de-consolidation of GrowCo | 12,773 | |||
Loss on investment in GrowCo Partners 1, LLC | (26) | (98) | (617) | |
Total other income (expense) | (415) | (176) | (897) | 11,549 |
Net Profit (Loss) from Continuing Operations Before Taxes | 190 | (2,649) | (1,124) | 7,858 |
Income tax (provision) benefit | ||||
Net Profit (Loss) from Continuing Operations After Taxes | 190 | (2,649) | (1,124) | 7,858 |
Net (Loss) from Deconsolidation and Discontinued Operations | (810) | |||
Net Profit (Loss) before Preferred Dividends and Non-Controlling Interest | 190 | (2,649) | (1,124) | 7,048 |
Preferred distributions | (6) | (6) | (18) | (1,002) |
Net loss attributable to non-controlling interest | ||||
Net Profit (Loss) Attributable to Common Shareholders | $ 184 | $ (2,655) | $ (1,142) | $ 6,046 |
Profit (Loss) Per Common Share - Basic: | $ 0 | $ (0.08) | $ (0.02) | $ 0.18 |
Profit (Loss) Per Common Share - Basic and Dilutive: | $ 0 | $ (0.08) | $ (0.02) | $ 0.16 |
Weighted Average Shares Outstanding: | ||||
Basic | 71,006,000 | 34,256,000 | 57,057,000 | 33,529,000 |
Dilutive | 85,867,000 | 34,256,000 | 57,057,000 | 37,149,000 |
Distribution Rights [Member] | ||||
Revenue: | ||||
Total Revenue | $ 100 | $ 100 | ||
Land Leasing [Member] | ||||
Revenue: | ||||
Total Revenue | 34 | |||
Other [Member] | ||||
Revenue: | ||||
Total Revenue | 5 | 5 | 8 | |
Sales [Member] | ||||
Revenue: | ||||
Total Revenue | $ 3 | $ 3 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Cash Flows from Operating Activities: | |||||
Net loss, before NCI | $ (1,142) | $ 6,046 | |||
Net loss from discontinued operations | 810 | ||||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | |||||
Depreciation and amortization | 16 | 17 | 48 | 75 | |
Accretion of debt discount | 313 | 178 | |||
Loss (Gain) from debt extinguishment | (33) | ||||
Loss of modification of convertible debt | (8) | ||||
Stock issued for services | 144 | ||||
Stock option and warrant exercise | 290 | 1,220 | |||
Gain on deconsolidation | (12,773) | ||||
Loss of investment in GrowCo | 26 | 98 | 617 | ||
Loss (Gain) from disposal of fixed assets | (85) | (114) | |||
Net change in operating assets and liabilities | |||||
Decrease (Increase) in accounts receivable, related party | (4) | 2 | |||
Decrease in deposits, prepaid expenses and other assets | (2) | (47) | |||
Increase (decrease) in accounts payable | 77 | 93 | |||
Increase in distribution payable to preferred shareholders | 18 | 1,002 | |||
Increase in accrued liabilities and other | (503) | 2,067 | |||
Net Cash Used in Operating Activities | (789) | (824) | |||
Cash Flows from Investing Activities: | |||||
Purchase of property and equipment | (33) | ||||
Sale of property and equipment | 47 | 72 | |||
Investment in water assets | (102) | ||||
Acquisition | 9 | ||||
Net Cash Used in Investing Activities | 23 | (30) | |||
Cash Flows from Financing Activities: | |||||
Borrowings on debt - related party | 20 | ||||
Proceeds from debt | 1,235 | 1,426 | |||
Payment on notes payable | (94) | (532) | |||
Net Cash Provided by Financing Activities | 1,161 | 894 | |||
Net Increase in Cash & Cash Equivalents | 395 | 40 | |||
Beginning Cash & Cash Equivalents | 6 | 14 | $ 14 | ||
Ending Cash & Cash Equivalents | $ 401 | $ 54 | 401 | 54 | $ 6 |
Supplemental Disclosure of Cash Flow Information | |||||
Cash paid for interest | 196 | ||||
Shares issued in exchange for debt | 357 | ||||
Conversion of debt, preferred shares into Two Rivers common stock | 287 | 100 | |||
Land exchanged for debt | 58 | ||||
Equipment exchanged for debt | 14 | ||||
Debt discount from beneficial conversion feature | 516 | ||||
Cashless exercise of warrants | $ 1 | $ 1 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) $ in Thousands | Voting Common Stock [Member] | Water Redev Preferred Stock [Member] | Additional Paid-in Capital [Member] | Accumulated (Deficit) [Member] | Non-Controlling Interest [Member] | Total |
Balance at Dec. 31, 2017 | $ 34 | $ 252 | $ 77,267 | $ (97,168) | $ 31,752 | $ 12,137 |
Balance, shares at Dec. 31, 2017 | 32,750,000 | 65,000 | ||||
Net Income (Loss) attributed to Two Rivers common shareholders | 6,046 | 6,046 | ||||
Prior period adjustment preferred shares | (100) | (100) | ||||
Stock issued in exchange for debt settlement | $ 2 | 98 | 100 | |||
Stock issued in exchange for debt settlement, shares | 874,000 | |||||
Shares issued for TR Capital conversions | ||||||
Shares issued for TR Capital conversions, shares | 15,000 | |||||
Stock Based Compensation | 1,190 | 1,190 | ||||
Shares issued for services | $ 0 | (1) | (1) | |||
Shares issued for services, shares | 1,091,000 | |||||
RSU issuance | $ 0 | 0 | ||||
RSU issuance, shares | 118,000 | |||||
Warrant issuance | 30 | 30 | ||||
Non-controlling interest | (383) | (383) | ||||
GrowCo deconsolidation | (8,858) | (8,858) | ||||
Balance at Sep. 30, 2018 | $ 36 | $ 252 | 78,484 | (91,122) | 22,511 | 10,161 |
Balance, shares at Sep. 30, 2018 | 34,848,000 | 65,000 | ||||
Balance at Dec. 31, 2018 | $ 46 | $ 252 | 81,186 | (94,454) | 22,364 | 9,394 |
Balance, shares at Dec. 31, 2018 | 45,575,000 | 65,000 | ||||
Net Income (Loss) attributed to Two Rivers common shareholders | (1,142) | (1,142) | ||||
Stock issued in exchange for debt settlement | $ 4 | 283 | 287 | |||
Stock issued in exchange for debt settlement, shares | 4,220,000 | |||||
Stock Based Compensation | 230 | 230 | ||||
Shares issued for services | $ (1) | (143) | (144) | |||
Shares issued for services, shares | 755,000 | |||||
Warrant issuance | 60 | 60 | ||||
Beneficial conversion feature on convertible debt | 516 | 516 | ||||
Warrant exercise | $ 2 | (2) | ||||
Warrant exercise, shares | 1,324,000 | |||||
Refundable shares issued for debt | $ 1 | 356 | 357 | |||
Refundable shares issued for debt, shares | 1,322,000 | |||||
Shares issued for acquisition | $ 30 | 13,170 | 13,200 | |||
Shares issued for acquisition, shares | 30,000 | |||||
Balance at Sep. 30, 2019 | $ 84 | $ 252 | $ 95,942 | $ (95,596) | $ 22,364 | $ 23,046 |
Balance, shares at Sep. 30, 2019 | 83,196,000 | 65,000 |
Organization and Business
Organization and Business | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Organization and Business | NOTE 1 – ORGANIZATION AND BUSINESS Unless the context requires otherwise, references in this document to “Two Rivers,” or the “Company” is to Two Rivers Water & Farming Company and its subsidiaries. Corporate Evolution Prior to 2009, the Company was named Navidec Financial Services, Inc. (“Navidec”) and had been engaged in mortgage lending and other enterprises unrelated to its current lines of business. Navidec was incorporated in the state of Colorado on December 20, 2002. On July 28, 2009, Navidec formed a wholly-owned Colorado corporation for the purpose of acquiring farm and water assets in the Colorado Huerfano/Cucharas watershed. On November 19, 2009, with shareholder approval, Navidec changed its name to Two Rivers Water Company. On December 11, 2012, with shareholder approval, the Company changed its name to Two Rivers Water & Farming Company. On January 29, 2014, the board of directors approved a plan to reorganize our subsidiaries in a more integrated manner based on functional operations. We formed a new company, TR Capital Partners, LLC or TR Capital, which issued all of its common units to Two Rivers Water & Farming Capital. TR Capital then initiated the transactions described below under “Placement of Preferred Units”. Following the completion of those transactions in September 2014, TR Capital and our other direct and indirect subsidiaries (excluding HCIC Holdings, LLC and Huerfano-Cucharas Irrigation Company) entered into a series of related transactions as the result of which assets and operations of such other subsidiaries transferred to TR Capital. As a result of those transactions, TR Capital owns all of the operations formerly conducted by those subsidiaries. Overview In 2009, we began acquiring and developing irrigated farmland and associated water rights and infrastructure. As of September 30, 2019, we own approximately 7,076 gross acres. Gross acres owned showed a net increase of 811 acres from 6,265 gross acres at December 31, 2018 due the addition of acreage owned by Huerfano Cucharas Irrigation Company that was previously not reported. We are focused on water assets we have acquired and will acquire in the future. Since 2009, we have acquired strategic water assets and land in the Huerfano and Cucharas river basins in southeastern Colorado, thus the name Two Rivers. Our water asset area spans over 1,900 square miles and drops in elevation from over 14,000 feet down to the confluence of the Arkansas River, just east of Pueblo Colorado at 4,500 feet. We operate in a natural, gravity fed water alluvial. This basin is the last undeveloped basin along the front range of Colorado. We plan to develop this basin to properly manage the water contained therein and serve the community while providing returns to our investors. Since October 2016, we have refocused on monetizing our assets through asset sales and reinvestment. We plan to sell assets that we have determined will not yield significant future returns to our shareholders and invest strategically in the assets that we believe will. We plan to take net proceeds, if any, from these sales and continue to invest in our water and water infrastructure. In May 2014, we formed GrowCo, Inc., a wholly owned subsidiary of Two Rivers through the issuance of 20,000,000 shares of common stock. On August 1, 2014, we announced that we were placing 10,000,000 GrowCo shares in a trust to be distributed to Two Rivers’ common shareholders. As of June 30, 2018, the Company owned 10,000,000 GrowCo shares out of reported shares outstanding of 34,343,000, or 29.12%. The reported outstanding shares were provided to the Company by GrowCo’s management. The Company requested from GrowCo management financial information to complete the Company’s June 30, 2018 financials. On July 17, 2018 the Company was notified by GrowCo’s management that GrowCo would not provide the requested financial information. This event triggered the Company’s management to re-examine the consolidation and VIE (variable interest entity) rules under US GAAP. Management concluded that as of April 1, 2018 the consolidation of GrowCo and GrowCo’s related entities was no longer required under US GAAP. Water Redevelopment Company We formed Water Redevelopment Company (“Water Redev”) in February 2017 for the purpose of separating our water assets from the rest of our business and to facilitate raising additional capital to invest in our water assets. Water Redevelopment Company is a subsidiary of Two Rivers and focuses on development and redevelopment of infrastructure for water management and delivery. Water Redevelopment’s primary area of focus is in the Huerfano-Cucharas river basin in southeastern Colorado. Although no final decision has been reached, we are considering various alternatives and proposals for financing and restructuring Water Redev including a spin-off to shareholders, direct funding and partial or full rights sales. Vaxa Entities On July 31, 2019, Two Rivers completed its acquisition of a 100% interest in Vaxa Global, LLC and its two wholly-owned subsidiaries, Ekstrak Labs, LLC and Gramz Holdings, LLC (together the “Vaxa Entities”), from Easby Land & Cattle Company, LLC, in exchange for 30,000,000 Two Rivers’ common shares plus an additional 20,000,000 Two Rivers’ common shares subject to an earn-out performance by the Vaxa Entities over a 12 month period. The number of earn-out shares will equal the lesser of: ● The quotient of 10 times the consolidated earnings before income taxes, depreciation and amortization, or EBITDA, of Vaxa for the twelve months ending June 30, 2020, divided by $1.00; and ● 20,000,000. It is expected that the earn-out shares, if any, would be issued by August 2020. We intend to expand Vaxa’s operations to grow hemp on land that we own, using water that we supply. This will, in turn, provide additional hemp products to Ekstrak and Gramz™. In September 2019, Vaxa entered into an agreement to purchase over $700,000 in extraction and processing equipment, and all seeds, clone and biological assets, as well as the 2019 hemp crop from Butte Valley farm, from Montverde Partners, LLC (“Montverde”), in exchange for 3,000,000 shares of our common stock which were contributed by Easby Land & Cattle, LLC. Monteverde is a joint venture partner of Vaxa in the Butte Valley hemp farming operation near Walsenburg, Colorado. The transaction closed in October 2019. Vaxa Global, LLC Vaxa Global, LLC farms and distributes Canadian originated patented-processed hemp for biomass sale and CBD extraction within the United States to states that are approved to extract CBD. Vaxa hemp is 100% organic, non-GMO, solvent free, THC free and 100% food-grade edible. Vaxa originated from one of the first industrial hemp distributors/farmers/manufactures in Canada into the US. Ekstrak Labs, LLC Ekstrak Labs, LLC is an emerging company in isolate extraction. Eskstrak plans to build state-of-the-art facilities with machinery that is proven to deliver optimal extraction results. Eskstrak is developing joint venture partnerships for brand diversification into various products and creating product lines for affiliated brands through white label wholesale products. Gramz Holdings, LLC Gramz Holdings, LLC is a supplier of Nature’s Whole Spectrum™, natural whole plant compounds in consumer products designed to maintain the composition of the plant’s natural source and state. Gramz™ was founded to respect the potential medicinal and therapeutic value of hemp’s whole plant composition. Gramzs™ products include Gramz Whole Plant Matrix™ Sublingual Drops and Gramz Herbal Topical, with R&D in progress for additional products for both humans and pets. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of Two Rivers, Huerfano-Cucharas Irrigation Company, TR Capital and its subsidiaries: Two Rivers Farms, and Two Rivers Water. All significant inter-company balances and transactions have been eliminated in consolidation. Under guidance in ASC 810-10-05-8 “Consolidation of VIEs” (Variable Interest Entities) the Company’s management has determined that GrowCo and its related entities, GCP1, GCP Super Units, GCP2, should no longer be consolidated for financial statement purposes. The Company now reports its ownership position under the equity method of accounting. Prior to June 30, 2018, GrowCo and its related entities were consolidated. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Item 210 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete financial statements, although the Company believes that the disclosures made are adequate to make the information not misleading. In the opinion of management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation for the periods presented have been included as required by Regulation S-X, Rule 10-01. Operating results for the three and nine months ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ended December 31, 2019. It is suggested that these condensed consolidated financial statements be read in conjunction with the Company’s consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the Securities and Exchange Commission on April 15, 2019. Deconsolidation of GrowCo, Inc. Even though the Company no longer consolidates GrowCo and GrowCo’s related entities into the Company’s financials, Management has determined that the Company is a guarantor of GrowCo’s $4M Secured Notes. The Company did not sign these notes as a guarantor but has provided collateral owned by the Company with a 2018 appraised value of $2,359,000. Since Two Rivers’ Management desires to present a conservative representation of its financial information it has determined to set the probability of collection against its collateral at 100% of the recent appraised value. The Company has recorded a contingent liability of $2,359,000 and offset this amount as an increase in the Company’s investment in GCP1 (ASC 460-10-55-23c). Additionally, US GAAP (ASC 810-10-40) provides guidance on “Derecognition” of a previously consolidated entity or entities. Under this guidance, Two Rivers shall account for the deconsolidation of a subsidiary or derecognition of a group of assets specified in ASC 810-10-40-3A by recognizing a gain or loss in net income attributable to the parent, measured as the difference between: a. The aggregate of all of the following: 1. The fair value of any consideration received. In Two Rivers’ case, no consideration was received. 2. The fair value of any retained noncontrolling investment in the former subsidiary or group of assets at the date the subsidiary is deconsolidated, or the group of assets is derecognized. In Two Rivers case, there were no retained noncontrolling investments in GrowCo or its related entities. 9 3. The carrying amount of any noncontrolling interest in the former subsidiary (including any accumulated other comprehensive income attributable to the noncontrolling interest) at the date the subsidiary is deconsolidated. In Two Rivers case, the total amount of the noncontrolling interest to derecognized is as follows as of April 1, 2018: Entity April 1, 2018 GrowCo (1,230,000 ) GrowCo Partners 1, LLC 3,621,000 GCP Super Units, LLC 5,016,000 TR Cap 20150630 Distribution, LLC 497,000 TR Cap 20150930 Distribution, LLC 460,000 TR Cap 20151231 Distribution, LLC 495,000 Total $ 8,859,000 b. The carrying amount of the former subsidiary’s assets and liabilities or the carrying amount of the group of assets. With the above guidance, during the year ended December 31, 2018 the Company determined that the effect of the deconsolidation of GrowCo produced a gain of $12,773,000 which is a non cash adjustment. This amount consists of elimination of the noncontrolling interest in GrowCo of $8,859,000 and $3,914,000 from the removal of GrowCo’s assets and liabilities. The $3,914,000 represented the amount of GrowCo liabilities over GrowCo’s assets. Investment in GrowCo Partners 1, LLC (GCP1) Due to the deconsolidation of GrowCo and its related entities, which include GCP1, the Company’s investment in GCP1 is now accounted for under the equity method. Non-controlling Interest Below is the detail of non-controlling interest shown on the condensed consolidated balance sheets. Entity September 30, 2019 Dec 31, 2018 TR Capital $ 20,342,000 $ 20,342,000 HCIC 1,379,000 1,379,000 F-1 29,000 29,000 F-2 162,000 162,000 DFP 452,000 452,000 Total $ 22,364,000 $ 22,364,000 Reclassification Certain amounts previously reported have been reclassified to conform to current presentation. Certain labels of accounts/classifications have been changed. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ materially from those estimates. Cash and Cash Equivalents For purposes of reporting cash flows, Two Rivers considers cash and cash equivalents to include highly liquid investments with original maturities of 90 days or less. Those are readily convertible into cash and not subject to significant risk from fluctuations in interest rates. The recorded amounts for cash equivalents approximate fair value due to the short-term nature of these financial instruments. Concentration of Credit Risk Financial instruments that potentially subject Two Rivers to significant concentrations of credit risk include cash equivalents, marketable investments, advances and accounts receivable. The Company maintains its cash balances in the form of bank demand deposits, money market accounts that management believes to be of high credit quality. Accounts receivable are typically uncollateralized and are derived from transactions with and from customers primarily located in the United States. Fair Value of Measurements and Disclosures Fair Value of Assets and Liabilities Acquired Fair value is the price that would be received from the sale of an asset or paid to transfer a liability (i.e., an exit price) in the principal or most advantageous market in an orderly transaction between market participants. In determining fair value, the accounting standards established a three-level hierarchy that distinguishes between (i) market data obtained or developed from independent sources (i.e., observable data inputs) and (ii) a reporting entity’s own data and assumptions that market participants would use in pricing an asset or liability (i.e., unobservable data inputs). Financial assets and financial liabilities measured and reported at fair value are classified in one of the following categories, in order of priority of observability and objectivity of pricing inputs: ● Level 1 – ● Level 2 ● Level 3 The fair value measurement level for an asset or liability is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques should maximize the use of observable inputs and minimize the use of unobservable inputs. Recurring Fair Value Measurements The carrying value of the Company’s financial assets and financial liabilities is their cost, which may differ from fair value. The carrying value of cash held as demand deposits, money market and certificates of deposit, marketable investments, accounts receivable, short-term borrowings, accounts payable and accrued liabilities approximated their fair value. Marketable investments are valued at Level 1 due to readily available market quotes. The fair value of the Company’s long-term debt, including the current portion approximated its carrying value. Fair value for long-term debt was estimated based on quoted market prices of the identical debt instruments or values of comparable borrowings. Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed principally on the straight-line method over the estimated useful life of each type of asset, which ranges from three to twenty-seven and a half years. Maintenance and repairs are charged to expense as incurred; improvements and betterments are capitalized. Upon retirement or disposition, the related costs and accumulated depreciation are removed from the accounts, and any resulting gains or losses are credited or charged to income. Below is a summary of premises and equipment: Asset Type Life in Years September 30, 2019 December 31, 2018 Office equipment, furniture 5 – 7 $ 12,000 $ 12,000 Computers 3 46,000 46,000 Vehicles 5 9,000 25,000 Farm equipment 7 – 10 147,000 147,000 Buildings 27.5 10,000 10,000 Website 3 7,000 7,000 Subtotal 231,000 247,000 Less: Accumulated depreciation (226,000 ) (227,000 ) Net book value $ 5,000 $ 20,000 Land Land acquired for farming is recorded at cost. Some of the land acquired has not been farmed for many years, if not decades. Therefore, additional expenditures are required to make the land ready for efficient farming. Expenditures for leveling the land are added to the cost of the land. Irrigation is not capitalized in the cost of Land ( Property and Equipment The Company’s land located in El Paso County, Colorado, is being partially developed into 35 to 40 acre lots to be sold. For the year ended December 31, 2018 the Company recognized a gain of $238,000 from approximately $360,000 in land sales. For the nine months ended September 30, 2019, we sold two lots totaling 78 acres for a gross sales price of $116,000, recognized a gain of approximately $68,000. This transaction provided cash of approximately $47,000, paid in full the first mortgage of the El Paso land note for approximately $58,000, and direct expenses of sale of approximately $11,000. In the three months ended September 30, 2019, there were no land sales. Water Rights and Infrastructure Subsequent to purchase of water rights and water infrastructure, management periodically evaluates the carrying value of its assets, and if the carrying value is in excess of fair market value, the Company will establish an impairment allowance. No amortization or depreciation is taken on the water rights. See the discussion below concerning Impairments – Water rights and infrastructure. Intangibles Two Rivers recognizes the estimated fair value of water rights acquired by the Company’s purchase of stock in HCIC and Orlando. These intangible assets will not be amortized because they have an indefinite remaining useful life based on many factors and considerations, including, the historical upward valuation of water rights within Colorado. In conjunction with the acquisition of Vaxa, the Company recognized goodwill of approximately $14,100,000 based on the issuance of 30,000,000 shares at the closing share price ($0.44) on the date of acquisition (July 31, 2019) plus net liabilities acquired (See NOTE 8). Impairments Property and Equipment Once per year we review all property, equipment and software owned by the Company and compare the net book value of such assets with the fair market value of each piece of equipment having a net book value greater than $5,000. If it is determined that the net book value is greater than the fair market value, an impairment will be recorded. If impairment is necessary, a loss on the value of the affected asset will be recorded, and the impairment will not be reversed in future periods. Land Once per year we review each parcel of land owned by the Company together with improvements to each parcel and compare the carrying cost with the fair market value. If it appears that our carrying value may be greater than the fair market value, an independent appraisal will be ordered. If the appraised value is less than our carrying value, an impairment will be recorded. If impairment is necessary, a loss on the value of our land will be recorded, and the impairment will not be reversed in future periods. Water Rights and Infrastructure Once per year we assess the value of the water rights held by the Company, comparing our estimated values with recent sales of comparable water rights along with depreciation of the infrastructures. In the event that such assessment indicates that the carrying value is greater than the fair market value of the water rights or the depreciable replacement cost of our infrastructure, an impairment will be recorded. If impairment is necessary, a loss on value of our water rights will be recorded, and the impairment will not be reversed in future periods. Prior to the year ended December 31, 2017, the Company recognized a $30,000 impairment on the Company’s land and water shares. For the year ended December 31, 2017, the Company examined the depreciable replacement cost of its water infrastructure. This analysis caused the recognition of $6,900,000 impairment to the water infrastructure. In 2018, the Company obtained two independent appraisals covering its water assets. The appraisals were in excess of the Company’s carrying value of it water rights and infrastructure. For the year ended December 31, 2018 and the nine months ended September 30, 2019, the Company did not recognize any impairments. Revenue Recognition Effective January 1, 2018, the Company adopted ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products, land, licensing agreements and farming contracts by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. For the comparative periods, revenue has not been adjusted and continues to be reported under ASC 605 — Revenue Recognition. Under ASC 605, revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured. There was no impact on the Company’s financial statements as a result of adopting Topic 606 for the three and nine months ended September 30, 2019 and 2018. Farming For the three and nine months ended September 30, 2019 the Company had approximately $0 in net crop share revenues. For the three and nine months ended September 30, 2018, the Company recognized approximately $0 in net crop share revenues. During 2018, the Company entered into a crop share arrangement for a percentage of a hemp crop produced on 4 acres of farm land at Butte Valley in Huerfano County, Colorado. A net payment of $18,000 for the Company’s share was received in the three months ended December 31, 2018 Vaxa generates revenue from hemp farming operations, distribution agreements and CBD consumer product sales. For the nine months ended September 30, 2019, Vaxa generated approximately $103,000 in revenue. Prior to the acquisition, Vaxa entered into a farm lease with the Company to run a pilot hemp farming operation in Butte Valley on property that the Company owned. Member Assessments Once per year the HCIC board estimates HCIC’s expenses, less anticipated water revenues, and establishes an annual assessment per ownership share. One-half of the member assessment is recorded in the second quarter of the calendar year and the other one-half of the member assessment is recorded in the third quarter of the calendar year. Assessments paid by Two Rivers Water Company to HCIC are eliminated in consolidation of the financial statements. HCIC does not reserve against any unpaid assessments. Assessments due, but unpaid, are secured by the member’s ownership of HCIC. The value of this ownership is significantly greater than the annual assessments. Stock Based Compensation Beginning January 1, 2006, the Company adopted the provisions of ASC 718 and accounts for stock-based compensation in accordance with ASC 718. Under the fair value recognition provisions of this standard, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense on a straight-line basis over the requisite service period, which generally is the vesting period. The Company elected the modified-prospective method, under which prior periods are not revised for comparative purposes. The valuation provisions of ASC 718 apply to new grants and to grants that were outstanding as of the effective date and are subsequently modified. All options granted prior to the adoption of ASC 718 and outstanding during the periods presented were fully vested at the date of adoption. Dam Demolition Expense During the year ended December 31, 2018 a court date has been set for a hearing of the State of Colorado’s legal action to compel the Company to demolish Cucharas #5 reservoir. A contingent liability, with an offsetting expense of $1,800,000 has been recognized. In July 2019, the Company reached a settlement with the State of Colorado, whereby the Company will pay approximately $1,000,000 plus interest to the State of Colorado in exchange for a full settlement of the above legal action. The Company recognized a reduction of this contingent liability from $1,800,000 to approximately $1,000,000, along with additional non-cash gains of approximately $25,000 from the negotiations and resolution of previously recorded accounts payable, on Two Rivers’ in these financial statements. In the three months ending September 30, 2019, the Company made payments of approximately $82,000 to the State of Colorado in compliance with the payment terms of the settlement agreement. The balance of the accrued expense for the settlement was approximately $893,000 on September 30, 2019. Debt and Equity The Company follows beneficial conversion feature guidance in ASC 470-20, which applies to convertible stock as well as convertible debt. A beneficial conversion feature is defined as a nondetachable conversion feature that is in the money at the commitment date. The beneficial conversion feature guidance requires recognition of the conversion option’s in-the-money portion, the intrinsic value of the option, in equity, with an offsetting reduction to the carrying amount of the instrument. The resulting discount is amortized as interest over the life of the instrument, if a stated maturity date exists, or to the earliest conversion date, if there is no stated maturity date. If the earliest conversion date is immediately upon issuance, the expense must be recognized at inception. When there is a subsequent change to the conversion ratio based on a future occurrence, the new conversion price may trigger the recognition of an additional beneficial conversion feature on occurrence. On May 21, 2019, the Company entered into a convertible promissory note with an investor of the Company in the amount of $262,500. The note bears 10% interest and is payable in full on May 21, 2020. The Company has recorded a beneficial conversion feature of $258,000, which is recorded as a discount on the note payable and being amortized over the life of the note. As of September 30, 2019 the balance of the beneficial conversion feature is approximately $168,000. On May 21, 2019, the Company entered into a convertible promissory note with an investor of the Company in the amount of $262,500. The note bears 10% interest and is payable in full on May 21, 2020. The Company has recorded a beneficial conversion feature of approximately $258,000, which is recorded as a discount on the note payable and being amortized over the life of the note. As of September 30, 2019, the balance of the beneficial conversion feature is approximately $168,000. On September 19, 2019 the Company entered into a convertible promissory note with an investor of the Company in the amount of $575,000. The note bears 12% interest and is payable in full on March 19, 2020. The note is convertible after 180 days so no beneficial conversion feature was recognized. The Company recognized a total original issue discount amount of approximately $413,000 on the note consisting of a fixed amount of $58,000 and $356,000 for shares issued. Approximately 83% of the shares issued by the Company ($297,000 of the note discount) are returnable to the Company if the note is repaid on or before the maturity date. Preferred Dividend Payable Preferred dividend payable represents dividends payable to holders of preferred units of TR Capital, approximately $4,937,000 as of September 30, 2019 and preferred dividends owed to holders of the Water Redevelopment Company preferred shares of approximately $51,000. Beginning on July 1, 2018, the Company terminated the accrual of the preferred dividends payable to TR Capital preferred members due to a binding letter of intent executed with an outside strategic partner. Additionally, TR Capital has not declared dividends due the Company’s financial condition. Income Taxes The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, the Company has determined the deferred tax assets and liabilities on the basis of the differences between the financial statement and tax basis of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If the Company determines that it would be able to realize our deferred tax assets in the future in excess of their net recorded amount, it would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) it determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, it recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statement of operations. As of September 30, 2019, no accrued interest or penalties are included on the related tax liability line in the balance sheet. Net (Loss) per Share Basic net income per share is computed by dividing net income (loss) attributed to Two Rivers available to common shareholders for the period by the weighted average number of common shares outstanding for the period. Diluted net income (loss) per share is computed by dividing the net income for the period by the weighted average number of common and potential common shares outstanding during the period. The dilutive effect of the outstanding 3,058,500 options, and 17,537,896 warrants at December 31, 2018, have an exercise price in excess of the Company’s closing price of $0.17/share as of December 28, 2018; therefore these shares have not been included in the determination of diluted earnings per share since, under ASC 260 they would be anti-dilutive. As of September 30, 2019, the total number of warrants outstanding were 5,948,730, including 4,225,778 issued to Black Mountain which have an exercise price of $0.07878/share. The common shares used in the computation of basic and diluted net income (loss) per share are reconciled as follows: Nine Months Ended September 30, 2019 2018 Weighted average number of shares outstanding – basic 71,006,000 57,057,000 Dilutive effect of convertible debt 8,912,000 - Dilutive effect of warrant exercise 5,949,000 - Weighted average number of shares outstanding – diluted 85,867,000 57,057,000 Recently Issued Accounting Pronouncements In March 2019 - the Financial Accounting Standards Board (“FASB”) Update 2019-01— Leases (Topic 842): Codification Improvements. 1) A public business entity 2) A not-for-profit entity that has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market 3) An employee benefit plan that files financial statements with the U.S. Securities and Exchange Commission (SEC). For all other entities, the effective date is for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early application is permitted. An entity should apply the amendments as of the date that it first applied Topic 842, using the same transition methodology in accordance with paragraph 842-10-65-1(c). Management has determined to not adopt this application early. Further, it will have a minimal impact on the Company’s financial statements. In August 2018, FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), “ Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement”. In March 2018, the FASB issued ASU No. 2018-05, Income Taxes (Topic 740) – “ Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118” In February 2018, the FASB issued ASU No. 2018-02, “ Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income”. In July 2017, the FASB issued Accounting Standards Update (“ASU”) “ Income Statement – Reporting Comprehensive Income (Topic 220) In July 2017, FASB issued ASU “ Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815) In May 2017, the FASB issued ASU 2017-09, “ Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting” In January 2017, the FASB issued ASU No. 2017-1, Business Combinations (Topic 805): Clarifying the Definition of a Business. The amendments in this update clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The amendments of this ASU are effective for public business entities for annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. The amendments in this Update are to be applied prospectively on or after the effective date. Currently, the Company believes that this ASU has no impact on its financial statements and reporting; however, in the future it may have an impact on its financial statements with the adoption of this new accounting pronouncement. In February 2016, the FASB issued ASU 2016-02, “Leases” Topic 842, which amends the guidance in former ASC Topic 840, Leases Management does not believe that any other recently issued, but not effective, accounting standards if currently adopted would have a material effect on the accompanying consolidated financial statements. |
Investments and Long-Lived Asse
Investments and Long-Lived Assets | 9 Months Ended |
Sep. 30, 2019 | |
Investments, All Other Investments [Abstract] | |
Investments and Long-Lived Assets | NOTE 3 – INVESTMENTS AND LONG-LIVED ASSETS Land Upon purchasing land, the value is recorded at the purchase price or fair value, whichever is more appropriate. Costs incurred to prepare the land for the intended purpose are also capitalized in the recorded cost of the land. No amortization or depreciation is taken on land. However, the land is reviewed by management at least once per year to ascertain if a further analysis is necessary for any potential impairments. Water Rights and Infrastructure The Company has acquired both direct flow water rights and water storage rights. It has obtained water rights through the purchase of shares in a mutual ditch company, which it accomplished through its purchase of shares in HCIC, or through the purchase of an entity holding water rights, which it effected through its purchase of a membership interest of Orlando. The Company may also acquire water rights through outright purchase. In all cases, such rights are recognized under decrees of the Colorado water court and administered under the jurisdiction of the Office of the State Engineer. Upon purchasing water rights, the value is recorded at our purchase price. If a majority interest is acquired in a company holding water assets (potentially with other assets including water delivery infrastructure, right of ways, and land), the Company determines the fair value of the assets. To assist with the valuation, the Company may consider reports from a third-party valuation firm. If the value of the water rights is greater than what the Company paid then a bargain purchase gain is recognized. If the value of the water assets are less than what the Company paid then goodwill is recognized. Subsequent to purchase, management periodically evaluates the carrying value of its assets, and if the carrying value is in excess of fair market value, the Company will establish an impairment allowance. Currently, there are no impairments on the Company’s land and water shares. No amortization or depreciation is taken on the water rights. Gain on Disposal of Assets During the nine months ended September 30, 2019 and 2018, we sold sub-divided, unimproved lots of land located in El Paso County Colorado and recognized a gain of approximately $68,000 and $80,000, respectively. For the nine months ended September 30, 2019, we recognized approximately $85,000 gain from sale and disposal of equipment. |
Notes Payable
Notes Payable | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Notes Payable | NOTE 4 – NOTES PAYABLE Below is a summary of the Company’s consolidated long-term debt: September 30, 2019 December 31, 2018 Note Principal Balance Accrued Discount Principal Interest Security HCIC seller carry back $ 6,323,000 $ 1,050,000 $ - $ 6,323,000 6 % Shares in the Mutual Ditch Company CWCB 622,000 11,000 - 690,000 2.5 % Certain Orlando and Farmland assets GrowCo note 390,000 29,000 - 390,000 6 % None Bridge loan Harding 7,000 1,000 - 15,000 12 % Added to lien on El Paso Land notes 271,000 76,000 - 271,000 12 % Second lien on Easby Credit Line (Vaxa), related party 486,000 8,000 - - - Unsecured Promissory Note (Vaxa) 250,000 - - - - Biomass material Investors Fiduciary, related party 786,000 133,000 - 551,000 20 % Shares of HCIC Auctus Convertible Note 262,500 9,000 168,000 - 10 % Unsecured Morningview Convertible Note 262,500 9,000 168,000 - 10 % Unsecured Labry’s Convertible Note 575,000 2,000 388,000 - 12 % Unsecured WRC convertible notes 300,000 101,000 - 500,000 12 % Lien on water supply agreement Butte Valley Land notes 400,000 101,000 - 200,000 18 % Butte Valley Land McFinney Agri-Finance - - - 60,000 6.8 % 2,400 acres of land in Ellicott Colorado Powderhorn/Silverback note - - - 203,000 12 % Third lien on Equipment loans - - - 57,000 5-8 % Equipment Morningview Financial note - - - 75,000 18 % Unsecured Total 10,935,000 $ 1,530,000 $ (724,000 ) 9,335,000 Less: note discounts (724,000 ) (63,000 ) Less: Current portion net of discount (9,343,000 ) (8,045,000 ) Long term portion $ 868,000 $ 1,227,000 |
Short-Term Convertible Note Pay
Short-Term Convertible Note Payable | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Short-Term Convertible Note Payable | NOTE 5 – SHORT-TERM CONVERTIBLE NOTE PAYABLE On September 24, 2019, we entered into an agreement (“Agreement”) with an accredited investor (“Note Holder”) to provide a net of $457,500 in short term working capital. Two Rivers intends to use these funds for the payment of certain debts, payments on accounts and working capital. The face value of the convertible debt is $575,000 with a purchase price of $517,500, a 6-month term and an interest rate of 10% per annum. The debt is convertible at a per common stock price at the lower of 70% multiplied by the 10-day trailing market price of Two Rivers’ common shares (representing a discount rate of 30%) or $0.30/share. The Convertible note is subject to other terms and conditions. Two Rivers issued 1,101,532 shares of its common stock (the “Returnable Shares”) to the Note Holder, as well as an additional 220,306 shares of Common Stock (the “Commitment Shares”), subject to the terms and conditions of the Agreement and the Note, pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933. If Two Rivers pays the convertible debt prior to 180 days from the date of the convertible note, the Returnable Shares shall be returned by the Note Holder to Two Rivers. If Two Rivers fails to pay the convertible note by that date, the Note Holder may retain the Returnable Shares. In August 2019, Investors Fiduciary, LLC loaned $75,000 to the Company under the existing credit line to bring the balance to approximately $786,000 as of September 30, 2019. The credit line contains a conversion feature at a rate of $0.14 per share. Investors Fiduciary is controlled by Greg Harrington, CEO of the Company and Gerald Anderton, Sr., Chairman of the Board of the Company is an investor. On May 24, 2019, we entered into separate securities purchase agreements with two investors pursuant to which we received $480,000 in cash, which we intend to use for the payment of outstanding indebtedness and accounts payable and for working capital. Pursuant to the securities purchase agreements, we issued convertible promissory notes, having a total principal amount of $525,000. Each of the notes has a one-year term and bears interest at the rate of 10% per annum. We sold the notes for an aggregate purchase price of $525,000, less $45,000 for payment for legal fees and original issue discount. Each of the notes is convertible into common stock at a price equal to 60% of the trailing market price of common stock (representing a discount of 40%). The minimum conversion price for each note is $0.20 per share unless and until such time, if any, as we do not make a principal and interest payment when due with respect to the note. |
Information on Business Segment
Information on Business Segments | 9 Months Ended |
Sep. 30, 2019 | |
Segment Reporting [Abstract] | |
Information on Business Segments | NOTE 6 – INFORMATION ON BUSINESS SEGMENTS We organize our business segments based on the nature of the products and services offered. Currently, we focus on the Farms and Water business with Two Rivers Water & Farming Company as the Parent company. Therefore, we report our segments by these lines of businesses: Farms and Water. Water contains our Water Business (HCIC and Orlando). Our Parent category is not a separate reportable operating segment. Segment allocations may differ from those on the face of the income statement. In 2017, the prior farming operations were discontinued; however, we continue to report with a Farming Business since we are expanding our farming business in 2019. In the following tables of financial data, the total of the operating results of these business segments is reconciled, as appropriate, to the corresponding consolidated amount. There are some corporate expenses that were not allocated to the business segments, and these expenses are contained in the “Total Operating Expenses” under Parent. Operating results for each of the segments of the Company are as follows (in thousands): Nine Months Ended September 30, 2019 Nine Months Ended September 30, 2018 Parent Vaxa Water Total Parent Greenhouse Water Total Revenue $ 34 $ 103 $ 8 $ 145 $ 10 $ - $ 12 $ 22 Less: Direct Cost of Revenue - - - - - - - - Gross Margin 34 103 8 145 10 - 12 22 Expenses Total Operating Expenses (611 ) (14 ) 253 (372 ) (886 ) - (997 ) (1,883 ) Total Other Income (Expense) (484 ) 7 (420 ) (897 ) 11,928 - (2,209 ) 9,719 Net Income (Loss) from Operations Before Income Taxes (1,061 ) 96 (159 ) (1,124 ) 11,052 - (3,194 ) 7,858 Income Taxes (Expense) Credit - - - - - - - - Net Income (Loss) from Operations (1,061 ) 96 (159 ) (1,124 ) 11,052 - (3,194 ) 7,858 Net Income (Loss) from Discontinued Operations - - - - - (810 ) - (810 ) Preferred dividends - - (18 ) (18 ) (986 ) - (16 ) (1,002 ) Non-controlling interest - - - - - - - - Net Income (Loss) $ (1,061 ) $ 96 $ (177 ) $ (1,142 ) $ 10,066 $ - $ (3,210 ) $ 6,046 Segmented Assets $ 24,856 $ 24,856 $ 20,131 $ 45,500 $ 10,746 $ - $ 20,175 $ 30,921 |
Equity Transactions
Equity Transactions | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
Equity Transactions | NOTE 7 – EQUITY TRANSACTIONS The Company has authorized 200,000,000 shares of common stock with a par value of $0.001. The total issued common stock as of September 30, 2019, was 83,195,969 common shares. During the nine months ended September 30, 2019, Two Rivers issued the following common stock: ● 1,179,817 shares issued to Morningview as a $75,000 principal paydown plus interest, which represents the debt being fully paid at June 30, 2019 and which did not produce a loss because the conversion was made under the terms of the convertible debt agreement; ● 3,040,350 shares issued to Powderhorn/Silverback as a $127,665 principal paydown plus interest, which represents the debt being fully paid at June 30, 2019 and which did not produce a loss because the conversion was made under the terms of the convertible debt agreement; ● 555,560 shares issued to an investor relations firm. The shares issued were valued at $0.1283/share with a corresponding expense of approximately $71,000; ● 545,455 shares issued to Silverback for a cashless exercise of warrants; ● 255,231 shares issued to Black Mountain for a cashless exercise of warrants; ● 14,840 shares issued for a conversion from TR Capital; ● 523,395 shares issued to Black Mountain for a cashless exercise of warrants; ● 30,000,000 shares issued to Easby Land & Cattle Company, LLC. The shares were valued at $0.44/share or approximately $13,200,000; ● 185,000 shares issued to a chief financial officer firm. The shares issued were valued at $0.27/share with a corresponding expense of approximately $50,000; ● 139,985 shares issued for a conversion from TR Capital; and ● 1,321,838 shares issued to Labrys Fund, LP (see Note 5). During the nine months ended September 30, 2018, Two Rivers issued 374,250 common stock to Black Mountain for a $100,000 principal reduction in its Note Payable. During the nine months ended September 30, 2019, Two Rivers recognized $289,000 in stock based compensation to its employees and directors. During the nine months ended September 30, 2018, Two Rivers recognized $373,000 in stock based compensation to its employees and directors. During the nine months ended September 30, 2019, the Company recorded a total of $516,000 in beneficial conversion features related to Convertible Promissory Notes. On May 21, 2019, the Company entered into a convertible promissory note with an investor of the Company in the amount of $262,500. The note bears 10% interest and is payable in full on May 21, 2020. The Company has recorded a beneficial conversion feature of approximately $258,000, which is recorded as a discount on the note payable and being amortized over the life of the note. As of September 30, 2019, the balance of the beneficial conversion feature is approximately $168,000. |
Acquisition of Vaxa Global
Acquisition of Vaxa Global | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
Acquisition of Vaxa Global | NOTE 8 – ACQUISITION OF VAXA GLOBAL On July 31, 2019, the Company closed on the purchase of all the membership interests in Vaxa Global, LLC (“Vaxa”) and its two wholly-owned subsidiaries from the sole member Easby Land & Cattle, LLC (“Easby”). Greg Harrington, the managing member of Easby became the CEO of the Company and a member of the Board of Directors in September 2019. Vaxa is in the business of hemp farming, extraction and manufactured consumer CBD products. The closing occurred pursuant to a Share Exchange Agreement between the Company and Easby on February 22, 2019, as amended. Pursuant to the Share Exchange Agreement, the Company issued a total of 30,000,000 shares of common stock to Easby at the closing for the Vaxa membership interests. There was no cash consideration paid for the acquisition. The Purchase Price for the acquisition, $13,200,000 was calculated using the closing price Two Rivers common stock on the date of closing, $0.44/share, multiplied by 30,000,000 shares. In addition to the shares issued at closing, the Company may be required to issue additional shares of common stock pursuant to an earn-out covenant in the share exchange agreement. The number of earn-out shares will equal the lesser of: i.) the quotient of 10 times the consolidated earnings before income taxes, depreciation and amortization, or EBITDA, of Vaxa for the twelve months ending June 30, 2020, divided by $1.00; and ii.) 20,000,000. It is expected that the earn-out shares, if any, would be issued by August 2020. There was no valuation applied to the earnout on the acquisition date due to the historical performance of Vaxa and the Company’s expectation of the likelihood of material earnings during the window. The earnout valuation will be reviewed quarterly until its expiration in June 2020. The acquisition date estimated fair value of the consideration transferred totaled $13,200,000, which consisted of the following: Cash paid $ 0 Common Stock Issued 13,200,000 Total Purchase Price $ 13,200,000 Net Assets Acquired $ 511,000 Net Liabilities & Retained Earnings (1,411,000 ) Goodwill 14,100,000 Total Purchase Price $ 13,200,000 The primary asset of Vaxa at the time of acquisition was an exclusive distribution agreement with a Canadian grower and supplier of cannabidiol-rich hemp biomass. The agreement was from its inception in December 2017 runs for a five-year term. The agreement calls for fixed payments of $700,000 for the exclusive supply rights at competitive fixed prices. Vaxa had recognized the value of the agreement as intangible asset and is amortizing the value over the 5 year period. The balance, net of amortization, on the time of acquisition was approximately $480,000. During the preliminary purchase price allocation period, which may be up to one year from the business combination date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. After the preliminary purchase price allocation period, the Company may record adjustments to assets acquired or liabilities assumed subsequent to the purchase price allocation period in its operating results in the period in which the adjustments were determined. Pro forma results The following table sets forth the audited pro forma results of the Company as if the acquisition was effective on the first day of each period presented. These combined results are not necessarily indicative of the results that may have been achieved had the companies always been combined. Six Months Twelve Months Ending Ending Jun 30, 2019 Dec 31, 2018 (unaudited) (unaudited) Revenue $ 70,000 $ 66,000 Net Income (Loss) $ (1,608,000 ) $ 1,820,000 Basic Net Income (Loss) per share $ (0.02 ) $ 0.03 Diluted Net Income (Loss) per share $ (0.02 ) $ 0.03 Weighted average shares – basic 79,967 65,139 Weighted average shares – diluted 79,967 67,408 |
Going Concern
Going Concern | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern | NOTE 9 – GOING CONCERN The consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has not generated significant revenues and has a net loss of $1,142,000 during the nine months ended September 30, 2019. Cash consumed from our operations during the nine months ended September 30, 2019 was $789,000. At September 30, 2019, the Company had a working capital deficit of $21,104,000 and an accumulated deficit of approximately $95,596,000. The HCIC seller carry back debt are in technical default. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability or classification of assets or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern. The following paragraphs describe management’s plans to mitigate. We are in the process of working with the Vaxa Entities and its funders to continue to fund Two Rivers operations. There is no assurances that this additional funding will occur. Additionally, we continue to reduce our general and administrative expenses and cash required for our operations. Management Plans We believe that the actions discussed above are probable of occurring and mitigating the substantial doubt raised by our historical operating results. We believe the actions will satisfy our estimated liquidity needs 12 months from the issuance of these financial statements. However, we cannot predict, with certainty, the outcome of our actions to generate liquidity, including the availability of additional financing, or whether such actions would generate the expected liquidity as currently planned. There is, however, no assurance that the Company will be able to raise any additional capital through any type of offering on terms acceptable to the Company, as existing cash on hand will be insufficient to finance operations over the next twelve months. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 10 - COMMITMENTS AND CONTINGENCIES GrowCo $4M Notes Guaranty During the period ended December 31, 2015, GrowCo issued $4,000,000 in secured promissory notes to 17 individual investors. The notes have a security interest in the land, water and improvements on the 40 acres where GrowCo Partners 1 has its greenhouse and associated warehouse. The notes pay 22.5% in annual interest, with interest paid monthly, and are due April 1, 2020. GrowCo cannot prepay the notes; however, noteholders have the right to call the notes at the first anniversary, or thereafter, of each note with a 60-day notice to the Company. Due to the past due interest owed to the secured $4M Note holders, these notes are in technical default. On January 19, 2018, Blue & Green, LLC (“Blue Green”) filed a complaint against GrowCo claiming a default on payments by GrowCo to Blue Green under the terms of the $4 million GrowCo $2,115,000 promissory note held by Blue Green. The complaint requested immediate payment of the note, back due interest in excess of $300,000, and attorney fees. Even though the Company no longer consolidates GrowCo and GrowCo’s related entities into the Company’s financials (see above Note 2 – Principals of Consolidation), under ASC 460-10-05, Management has determined that the Company is a guarantor of the $4M Secured Notes. The Company did not sign these notes as a guarantor but has provided collateral owned by the Company with a recent appraised value of $2,359,000. Since Two Rivers’ Management desires to present a conservative representation of its financial information it has determined to set the probability of collection against its collateral at 100% of the recent appraised value. The Company has recorded a contingent liability of $2,359,000 and offset this amount as an increase in the Company’s investment in GCP1 (ASC 460-10-55-23c). Operating Leases In January 2016, the Company entered into a new lease with the Colorado Center in Denver Colorado for the corporate headquarters. The space is 1,775 square feet and monthly payments of $3,900, with minor escalations and common area maintenance charges. The lease terminated on June 30, 2018. On March 1, 2017, the Company entered into a sub-lease agreement with its related party McGrow for its office facilities. McGrow did not fulfill its sub-lease agreement. In 2018, Two Rivers paid Colorado Center $24,000 as a penalty for early lease termination. In February 2017, we entered into a new lease with Parker Road Campus, LLC in Aurora, Colorado, for our corporate headquarters. This space is 1,554 square feet and monthly payments of $2,201 which began on April 1, 2017. The lease terminates on March 31, 2020. The amounts due at the base rate are as follows: Period Amount Due July 1 – December 31, 2019 $ 16,000 2020 $ 7,000 2021 - Defined Contribution Plan Two Rivers does not have a defined contribution plan. Employment Agreements Since January 1, 2011, the Company has entered into a series of employment agreements with Wayne Harding in various capacities including Chief Financial Officer initially and later as Chief Executive Officer and Chairman. The initial term of the contract was one year, which renews automatically for successive one-year terms unless and until either party delivers notice of termination within 30 days of the expiration of the then current term. The original employment agreement was modified in 2017. On September 10, 2019, Harding resigned his positions as Chief Executive Officer and Member of the Board of Directors effective September 30, 2019. On September 10, 2019, Harding and the Company entered into a Management Services Agreement effective October 1, 2019 with a four month renewable term. The Board determines annual incentive compensation at the Board’s sole discretion. If there is a change of control, Mr. Harding is entitled to an accelerated option vesting. Prior Board of Directors Litigation On August 8, 2017, a summons was issued in the Arapahoe County District Court on behalf of former board members Dennis Channer, Rockey Wells and John Stroh demanding the Company pay $139,000 in attorneys’ fees owed to Ryley Carlock & Applewhite (“RCA”) for services rendered to the former board members at their behest while members of the board. The Company has agreed to pay $139,000 to RCA on behalf of Channer, Wells and Stroh. The $139,000 is included in our accounts payable on the balance sheet. DFP Litigation On October 18, 2017, at the Company filed a lawsuit against former employees of the its DFP farming operation for alleged theft. We are in the process of gathering evidence of the theft and setting a court hearing date. A former employee of DFP has filed a counter claim against the Company, which amount is immaterial. Management believes that claims against former employees are in excess of any counter claims. The counter claim on the lawsuit was settled in November 2019 and the Company will pursue an insurance claim for the theft losses. |
Related Party
Related Party | 9 Months Ended |
Sep. 30, 2019 | |
Related Party Transactions [Abstract] | |
Related Party | NOTE 11 – RELATED PARTY During the nine months ended September 30, 2019 Mr. Harding loaned the Company an additional $2,500. During the same period, the Company made repayments of approximately $11,000 leaving an outstanding balance of approximately $7,000 at September 30, 2019. In August 2019, the Company received $75,000 in Bridge loans from Gerald Anderton which were added to the balance of the Credit Agreement with Investors Fiduciary, LLC. Mr. Anderton is an investor in Investors Fiduciary and currently serves on Two Rivers’ Board and as Chairman of the Board. Greg Harrington, Chief Executive Officer of the Company is the controlling shareholder of Investors Fiduciary. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 12 – SUBSEQUENT EVENTS Pursuant to ASC 855, management has evaluated all events and transactions that occurred from September 30, 2019 ● On November 7, 2019, Two Rivers entered into an agreement (“Agreement”) with the Note Holder, an accredited investor, to provide a net of $315,000 in short term working capital. Two Rivers intends to use these funds for the payment of certain debts, payments on accounts and working capital. The face value of the convertible debt is $394,500 with a purchase price of $354,600, a 6-month term and an interest rate of 12% per annum. The debt is convertible at a price equal to the lower of (1) 70% multiplied by the lowest closing bid price or trading price (whichever is lower) of Two Rivers’ common shares during the 10 trading days immediately preceding the conversion date (representing a discount rate of 30%) and (2) $0.30 per share. The convertible note is subject to other terms and conditions. Two Rivers issued 1,083,791 shares of its common stock (the “Returnable Shares”) to the Note Holder, as well as an additional 200,000 shares of Common Stock (the “Commitment Shares”), subject to the terms and conditions of the Agreement and the Note, pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933. If Two Rivers pays the convertible debt prior to 180 days from the date of the convertible note, the Returnable Shares shall be returned by the Note Holder to Two Rivers. If Two Rivers fails to pay the convertible note by that date, the Note Holder may retain the Returnable Shares. ● On October 18, 2019, Black Mountain completed the cashless exercise of 2,665,505 shares of Common Stock. ● In September 2019, Vaxa entered into an agreement to purchase over $700,000 in extraction and processing equipment, and all seeds, clone and biological assets, as well as the 2019 hemp crop from Butte Valley farm, from Montverde Partners, LLC (“Montverde”), in exchange for 3,000,000 shares of our common stock which were contributed by Easby Land & Cattle, LLC. Monteverde is a joint venture partner of Vaxa in the Butte Valley hemp farming operation near Walsenburg, Colorado. The transaction closed in October 2019. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of Two Rivers, Huerfano-Cucharas Irrigation Company, TR Capital and its subsidiaries: Two Rivers Farms, and Two Rivers Water. All significant inter-company balances and transactions have been eliminated in consolidation. Under guidance in ASC 810-10-05-8 “Consolidation of VIEs” (Variable Interest Entities) the Company’s management has determined that GrowCo and its related entities, GCP1, GCP Super Units, GCP2, should no longer be consolidated for financial statement purposes. The Company now reports its ownership position under the equity method of accounting. Prior to June 30, 2018, GrowCo and its related entities were consolidated. |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Item 210 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete financial statements, although the Company believes that the disclosures made are adequate to make the information not misleading. In the opinion of management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation for the periods presented have been included as required by Regulation S-X, Rule 10-01. Operating results for the three and nine months ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ended December 31, 2019. It is suggested that these condensed consolidated financial statements be read in conjunction with the Company’s consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the Securities and Exchange Commission on April 15, 2019. |
Deconsolidation of GrowCo, Inc. | Deconsolidation of GrowCo, Inc. Even though the Company no longer consolidates GrowCo and GrowCo’s related entities into the Company’s financials, Management has determined that the Company is a guarantor of GrowCo’s $4M Secured Notes. The Company did not sign these notes as a guarantor but has provided collateral owned by the Company with a 2018 appraised value of $2,359,000. Since Two Rivers’ Management desires to present a conservative representation of its financial information it has determined to set the probability of collection against its collateral at 100% of the recent appraised value. The Company has recorded a contingent liability of $2,359,000 and offset this amount as an increase in the Company’s investment in GCP1 (ASC 460-10-55-23c). Additionally, US GAAP (ASC 810-10-40) provides guidance on “Derecognition” of a previously consolidated entity or entities. Under this guidance, Two Rivers shall account for the deconsolidation of a subsidiary or derecognition of a group of assets specified in ASC 810-10-40-3A by recognizing a gain or loss in net income attributable to the parent, measured as the difference between: a. The aggregate of all of the following: 1. The fair value of any consideration received. In Two Rivers’ case, no consideration was received. 2. The fair value of any retained noncontrolling investment in the former subsidiary or group of assets at the date the subsidiary is deconsolidated, or the group of assets is derecognized. In Two Rivers case, there were no retained noncontrolling investments in GrowCo or its related entities. 3. The carrying amount of any noncontrolling interest in the former subsidiary (including any accumulated other comprehensive income attributable to the noncontrolling interest) at the date the subsidiary is deconsolidated. In Two Rivers case, the total amount of the noncontrolling interest to derecognized is as follows as of April 1, 2018: Entity April 1, 2018 GrowCo (1,230,000 ) GrowCo Partners 1, LLC 3,621,000 GCP Super Units, LLC 5,016,000 TR Cap 20150630 Distribution, LLC 497,000 TR Cap 20150930 Distribution, LLC 460,000 TR Cap 20151231 Distribution, LLC 495,000 Total $ 8,859,000 b. The carrying amount of the former subsidiary’s assets and liabilities or the carrying amount of the group of assets. With the above guidance, during the year ended December 31, 2018 the Company determined that the effect of the deconsolidation of GrowCo produced a gain of $12,773,000 which is a non cash adjustment. This amount consists of elimination of the noncontrolling interest in GrowCo of $8,859,000 and $3,914,000 from the removal of GrowCo’s assets and liabilities. The $3,914,000 represented the amount of GrowCo liabilities over GrowCo’s assets. |
Investment in GrowCo Partners 1, LLC (GCP1) | Investment in GrowCo Partners 1, LLC (GCP1) Due to the deconsolidation of GrowCo and its related entities, which include GCP1, the Company’s investment in GCP1 is now accounted for under the equity method. |
Non-controlling Interest | Non-controlling Interest Below is the detail of non-controlling interest shown on the condensed consolidated balance sheets. Entity September 30, 2019 Dec 31, 2018 TR Capital $ 20,342,000 $ 20,342,000 HCIC 1,379,000 1,379,000 F-1 29,000 29,000 F-2 162,000 162,000 DFP 452,000 452,000 Total $ 22,364,000 $ 22,364,000 |
Reclassification | Reclassification Certain amounts previously reported have been reclassified to conform to current presentation. Certain labels of accounts/classifications have been changed. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ materially from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents For purposes of reporting cash flows, Two Rivers considers cash and cash equivalents to include highly liquid investments with original maturities of 90 days or less. Those are readily convertible into cash and not subject to significant risk from fluctuations in interest rates. The recorded amounts for cash equivalents approximate fair value due to the short-term nature of these financial instruments. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject Two Rivers to significant concentrations of credit risk include cash equivalents, marketable investments, advances and accounts receivable. The Company maintains its cash balances in the form of bank demand deposits, money market accounts that management believes to be of high credit quality. Accounts receivable are typically uncollateralized and are derived from transactions with and from customers primarily located in the United States. |
Fair Value of Measurements and Disclosures | Fair Value of Measurements and Disclosures Fair Value of Assets and Liabilities Acquired Fair value is the price that would be received from the sale of an asset or paid to transfer a liability (i.e., an exit price) in the principal or most advantageous market in an orderly transaction between market participants. In determining fair value, the accounting standards established a three-level hierarchy that distinguishes between (i) market data obtained or developed from independent sources (i.e., observable data inputs) and (ii) a reporting entity’s own data and assumptions that market participants would use in pricing an asset or liability (i.e., unobservable data inputs). Financial assets and financial liabilities measured and reported at fair value are classified in one of the following categories, in order of priority of observability and objectivity of pricing inputs: ● Level 1 – ● Level 2 ● Level 3 The fair value measurement level for an asset or liability is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques should maximize the use of observable inputs and minimize the use of unobservable inputs. Recurring Fair Value Measurements The carrying value of the Company’s financial assets and financial liabilities is their cost, which may differ from fair value. The carrying value of cash held as demand deposits, money market and certificates of deposit, marketable investments, accounts receivable, short-term borrowings, accounts payable and accrued liabilities approximated their fair value. Marketable investments are valued at Level 1 due to readily available market quotes. The fair value of the Company’s long-term debt, including the current portion approximated its carrying value. Fair value for long-term debt was estimated based on quoted market prices of the identical debt instruments or values of comparable borrowings |
Property and Equipment | Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed principally on the straight-line method over the estimated useful life of each type of asset, which ranges from three to twenty-seven and a half years. Maintenance and repairs are charged to expense as incurred; improvements and betterments are capitalized. Upon retirement or disposition, the related costs and accumulated depreciation are removed from the accounts, and any resulting gains or losses are credited or charged to income. Below is a summary of premises and equipment: Asset Type Life in Years September 30, 2019 December 31, 2018 Office equipment, furniture 5 – 7 $ 12,000 $ 12,000 Computers 3 46,000 46,000 Vehicles 5 9,000 25,000 Farm equipment 7 – 10 147,000 147,000 Buildings 27.5 10,000 10,000 Website 3 7,000 7,000 Subtotal 231,000 247,000 Less: Accumulated depreciation (226,000 ) (227,000 ) Net book value $ 5,000 $ 20,000 |
Land | Land Land acquired for farming is recorded at cost. Some of the land acquired has not been farmed for many years, if not decades. Therefore, additional expenditures are required to make the land ready for efficient farming. Expenditures for leveling the land are added to the cost of the land. Irrigation is not capitalized in the cost of Land ( Property and Equipment The Company’s land located in El Paso County, Colorado, is being partially developed into 35 to 40 acre lots to be sold. For the year ended December 31, 2018 the Company recognized a gain of $238,000 from approximately $360,000 in land sales. For the nine months ended September 30, 2019, we sold two lots totaling 78 acres for a gross sales price of $116,000, recognized a gain of approximately $68,000. This transaction provided cash of approximately $47,000, paid in full the first mortgage of the El Paso land note for approximately $58,000, and direct expenses of sale of approximately $11,000. In the three months ended September 30, 2019, there were no land sales. |
Water Rights and Infrastructure | Water Rights and Infrastructure Subsequent to purchase of water rights and water infrastructure, management periodically evaluates the carrying value of its assets, and if the carrying value is in excess of fair market value, the Company will establish an impairment allowance. No amortization or depreciation is taken on the water rights. See the discussion below concerning Impairments – Water rights and infrastructure. |
Intangibles | Intangibles Two Rivers recognizes the estimated fair value of water rights acquired by the Company’s purchase of stock in HCIC and Orlando. These intangible assets will not be amortized because they have an indefinite remaining useful life based on many factors and considerations, including, the historical upward valuation of water rights within Colorado. In conjunction with the acquisition of Vaxa, the Company recognized goodwill of approximately $14,100,000 based on the issuance of 30,000,000 shares at the closing share price ($0.44) on the date of acquisition (July 31, 2019) plus net liabilities acquired (See NOTE 8). |
Impairments | Impairments Property and Equipment Once per year we review all property, equipment and software owned by the Company and compare the net book value of such assets with the fair market value of each piece of equipment having a net book value greater than $5,000. If it is determined that the net book value is greater than the fair market value, an impairment will be recorded. If impairment is necessary, a loss on the value of the affected asset will be recorded, and the impairment will not be reversed in future periods. Land Once per year we review each parcel of land owned by the Company together with improvements to each parcel and compare the carrying cost with the fair market value. If it appears that our carrying value may be greater than the fair market value, an independent appraisal will be ordered. If the appraised value is less than our carrying value, an impairment will be recorded. If impairment is necessary, a loss on the value of our land will be recorded, and the impairment will not be reversed in future periods. Water Rights and Infrastructure Once per year we assess the value of the water rights held by the Company, comparing our estimated values with recent sales of comparable water rights along with depreciation of the infrastructures. In the event that such assessment indicates that the carrying value is greater than the fair market value of the water rights or the depreciable replacement cost of our infrastructure, an impairment will be recorded. If impairment is necessary, a loss on value of our water rights will be recorded, and the impairment will not be reversed in future periods. Prior to the year ended December 31, 2017, the Company recognized a $30,000 impairment on the Company’s land and water shares. For the year ended December 31, 2017, the Company examined the depreciable replacement cost of its water infrastructure. This analysis caused the recognition of $6,900,000 impairment to the water infrastructure. In 2018, the Company obtained two independent appraisals covering its water assets. The appraisals were in excess of the Company’s carrying value of it water rights and infrastructure. For the year ended December 31, 2018 and the nine months ended September 30, 2019, the Company did not recognize any impairments. |
Revenue Recognition | Revenue Recognition Effective January 1, 2018, the Company adopted ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products, land, licensing agreements and farming contracts by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. For the comparative periods, revenue has not been adjusted and continues to be reported under ASC 605 — Revenue Recognition. Under ASC 605, revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured. There was no impact on the Company’s financial statements as a result of adopting Topic 606 for the three and nine months ended September 30, 2019 and 2018. Farming For the three and nine months ended September 30, 2019 the Company had approximately $0 in net crop share revenues. For the three and nine months ended September 30, 2018, the Company recognized approximately $0 in net crop share revenues. During 2018, the Company entered into a crop share arrangement for a percentage of a hemp crop produced on 4 acres of farm land at Butte Valley in Huerfano County, Colorado. A net payment of $18,000 for the Company’s share was received in the three months ended December 31, 2018 Vaxa generates revenue from hemp farming operations, distribution agreements and CBD consumer product sales. For the nine months ended September 30, 2019, Vaxa generated approximately $103,000 in revenue. Prior to the acquisition, Vaxa entered into a farm lease with the Company to run a pilot hemp farming operation in Butte Valley on property that the Company owned. Member Assessments Once per year the HCIC board estimates HCIC’s expenses, less anticipated water revenues, and establishes an annual assessment per ownership share. One-half of the member assessment is recorded in the second quarter of the calendar year and the other one-half of the member assessment is recorded in the third quarter of the calendar year. Assessments paid by Two Rivers Water Company to HCIC are eliminated in consolidation of the financial statements. HCIC does not reserve against any unpaid assessments. Assessments due, but unpaid, are secured by the member’s ownership of HCIC. The value of this ownership is significantly greater than the annual assessments. |
Stock Based Compensation | Stock Based Compensation Beginning January 1, 2006, the Company adopted the provisions of ASC 718 and accounts for stock-based compensation in accordance with ASC 718. Under the fair value recognition provisions of this standard, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense on a straight-line basis over the requisite service period, which generally is the vesting period. The Company elected the modified-prospective method, under which prior periods are not revised for comparative purposes. The valuation provisions of ASC 718 apply to new grants and to grants that were outstanding as of the effective date and are subsequently modified. All options granted prior to the adoption of ASC 718 and outstanding during the periods presented were fully vested at the date of adoption. |
Dam Demolition Expense | Dam Demolition Expense During the year ended December 31, 2018 a court date has been set for a hearing of the State of Colorado’s legal action to compel the Company to demolish Cucharas #5 reservoir. A contingent liability, with an offsetting expense of $1,800,000 has been recognized. In July 2019, the Company reached a settlement with the State of Colorado, whereby the Company will pay approximately $1,000,000 plus interest to the State of Colorado in exchange for a full settlement of the above legal action. The Company recognized a reduction of this contingent liability from $1,800,000 to approximately $1,000,000, along with additional non-cash gains of approximately $25,000 from the negotiations and resolution of previously recorded accounts payable, on Two Rivers’ in these financial statements. In the three months ending September 30, 2019, the Company made payments of approximately $82,000 to the State of Colorado in compliance with the payment terms of the settlement agreement. The balance of the accrued expense for the settlement was approximately $893,000 on September 30, 2019. |
Debt and Equity | Debt and Equity The Company follows beneficial conversion feature guidance in ASC 470-20, which applies to convertible stock as well as convertible debt. A beneficial conversion feature is defined as a nondetachable conversion feature that is in the money at the commitment date. The beneficial conversion feature guidance requires recognition of the conversion option’s in-the-money portion, the intrinsic value of the option, in equity, with an offsetting reduction to the carrying amount of the instrument. The resulting discount is amortized as interest over the life of the instrument, if a stated maturity date exists, or to the earliest conversion date, if there is no stated maturity date. If the earliest conversion date is immediately upon issuance, the expense must be recognized at inception. When there is a subsequent change to the conversion ratio based on a future occurrence, the new conversion price may trigger the recognition of an additional beneficial conversion feature on occurrence. On May 21, 2019, the Company entered into a convertible promissory note with an investor of the Company in the amount of $262,500. The note bears 10% interest and is payable in full on May 21, 2020. The Company has recorded a beneficial conversion feature of $258,000, which is recorded as a discount on the note payable and being amortized over the life of the note. As of September 30, 2019 the balance of the beneficial conversion feature is approximately $168,000. On May 21, 2019, the Company entered into a convertible promissory note with an investor of the Company in the amount of $262,500. The note bears 10% interest and is payable in full on May 21, 2020. The Company has recorded a beneficial conversion feature of approximately $258,000, which is recorded as a discount on the note payable and being amortized over the life of the note. As of September 30, 2019, the balance of the beneficial conversion feature is approximately $168,000. On September 19, 2019 the Company entered into a convertible promissory note with an investor of the Company in the amount of $575,000. The note bears 12% interest and is payable in full on March 19, 2020. The note is convertible after 180 days so no beneficial conversion feature was recognized. The Company recognized a total original issue discount amount of approximately $413,000 on the note consisting of a fixed amount of $58,000 and $356,000 for shares issued. Approximately 83% of the shares issued by the Company ($297,000 of the note discount) are returnable to the Company if the note is repaid on or before the maturity date. |
Preferred Dividend Payable | Preferred Dividend Payable Preferred dividend payable represents dividends payable to holders of preferred units of TR Capital, approximately $4,937,000 as of September 30, 2019 and preferred dividends owed to holders of the Water Redevelopment Company preferred shares of approximately $51,000. Beginning on July 1, 2018, the Company terminated the accrual of the preferred dividends payable to TR Capital preferred members due to a binding letter of intent executed with an outside strategic partner. Additionally, TR Capital has not declared dividends due the Company’s financial condition. |
Income Taxes | Income Taxes The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, the Company has determined the deferred tax assets and liabilities on the basis of the differences between the financial statement and tax basis of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If the Company determines that it would be able to realize our deferred tax assets in the future in excess of their net recorded amount, it would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) it determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, it recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statement of operations. As of September 30, 2019, no accrued interest or penalties are included on the related tax liability line in the balance sheet. |
Net (Loss) Per Share | Net (Loss) per Share Basic net income per share is computed by dividing net income (loss) attributed to Two Rivers available to common shareholders for the period by the weighted average number of common shares outstanding for the period. Diluted net income (loss) per share is computed by dividing the net income for the period by the weighted average number of common and potential common shares outstanding during the period. The dilutive effect of the outstanding 3,058,500 options, and 17,537,896 warrants at December 31, 2018, have an exercise price in excess of the Company’s closing price of $0.17/share as of December 28, 2018; therefore these shares have not been included in the determination of diluted earnings per share since, under ASC 260 they would be anti-dilutive. As of September 30, 2019, the total number of warrants outstanding were 5,948,730, including 4,225,778 issued to Black Mountain which have an exercise price of $0.07878/share. The common shares used in the computation of basic and diluted net income (loss) per share are reconciled as follows: Nine Months Ended September 30, 2019 2018 Weighted average number of shares outstanding – basic 71,006,000 57,057,000 Dilutive effect of convertible debt 8,912,000 - Dilutive effect of warrant exercise 5,949,000 - Weighted average number of shares outstanding – diluted 85,867,000 57,057,000 |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In March 2019 - the Financial Accounting Standards Board (“FASB”) Update 2019-01— Leases (Topic 842): Codification Improvements. 1) A public business entity 2) A not-for-profit entity that has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market 3) An employee benefit plan that files financial statements with the U.S. Securities and Exchange Commission (SEC). For all other entities, the effective date is for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early application is permitted. An entity should apply the amendments as of the date that it first applied Topic 842, using the same transition methodology in accordance with paragraph 842-10-65-1(c). Management has determined to not adopt this application early. Further, it will have a minimal impact on the Company’s financial statements. In August 2018, FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), “ Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement”. In March 2018, the FASB issued ASU No. 2018-05, Income Taxes (Topic 740) – “ Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118” In February 2018, the FASB issued ASU No. 2018-02, “ Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income”. In July 2017, the FASB issued Accounting Standards Update (“ASU”) “ Income Statement – Reporting Comprehensive Income (Topic 220) In July 2017, FASB issued ASU “ Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815) In May 2017, the FASB issued ASU 2017-09, “ Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting” In January 2017, the FASB issued ASU No. 2017-1, Business Combinations (Topic 805): Clarifying the Definition of a Business. The amendments in this update clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The amendments of this ASU are effective for public business entities for annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. The amendments in this Update are to be applied prospectively on or after the effective date. Currently, the Company believes that this ASU has no impact on its financial statements and reporting; however, in the future it may have an impact on its financial statements with the adoption of this new accounting pronouncement. In February 2016, the FASB issued ASU 2016-02, “Leases” Topic 842, which amends the guidance in former ASC Topic 840, Leases Management does not believe that any other recently issued, but not effective, accounting standards if currently adopted would have a material effect on the accompanying consolidated financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Schedule of Noncontrolling Interest to Derecognized | The carrying amount of any noncontrolling interest in the former subsidiary (including any accumulated other comprehensive income attributable to the noncontrolling interest) at the date the subsidiary is deconsolidated. In Two Rivers case, the total amount of the noncontrolling interest to derecognized is as follows as of April 1, 2018: Entity April 1, 2018 GrowCo (1,230,000 ) GrowCo Partners 1, LLC 3,621,000 GCP Super Units, LLC 5,016,000 TR Cap 20150630 Distribution, LLC 497,000 TR Cap 20150930 Distribution, LLC 460,000 TR Cap 20151231 Distribution, LLC 495,000 Total $ 8,859,000 |
Schedule of Detail of Non-controlling Interest | Below is the detail of non-controlling interest shown on the condensed consolidated balance sheets. Entity September 30, 2019 Dec 31, 2018 TR Capital $ 20,342,000 $ 20,342,000 HCIC 1,379,000 1,379,000 F-1 29,000 29,000 F-2 162,000 162,000 DFP 452,000 452,000 Total $ 22,364,000 $ 22,364,000 |
Schedule of Premises and Equipment | Below is a summary of premises and equipment: Asset Type Life in Years September 30, 2019 December 31, 2018 Office equipment, furniture 5 – 7 $ 12,000 $ 12,000 Computers 3 46,000 46,000 Vehicles 5 9,000 25,000 Farm equipment 7 – 10 147,000 147,000 Buildings 27.5 10,000 10,000 Website 3 7,000 7,000 Subtotal 231,000 247,000 Less: Accumulated depreciation (226,000 ) (227,000 ) Net book value $ 5,000 $ 20,000 |
Schedule of Basic and Diluted Net Income (Loss) Per Share | The common shares used in the computation of basic and diluted net income (loss) per share are reconciled as follows: Nine Months Ended September 30, 2019 2018 Weighted average number of shares outstanding – basic 71,006,000 57,057,000 Dilutive effect of convertible debt 8,912,000 - Dilutive effect of warrant exercise 5,949,000 - Weighted average number of shares outstanding – diluted 85,867,000 57,057,000 |
Notes Payable (Tables)
Notes Payable (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Long Term Debt | Below is a summary of the Company’s consolidated long-term debt: September 30, 2019 December 31, 2018 Note Principal Balance Accrued Discount Principal Interest Security HCIC seller carry back $ 6,323,000 $ 1,050,000 $ - $ 6,323,000 6 % Shares in the Mutual Ditch Company CWCB 622,000 11,000 - 690,000 2.5 % Certain Orlando and Farmland assets GrowCo note 390,000 29,000 - 390,000 6 % None Bridge loan Harding 7,000 1,000 - 15,000 12 % Added to lien on El Paso Land notes 271,000 76,000 - 271,000 12 % Second lien on Easby Credit Line (Vaxa), related party 486,000 8,000 - - - Unsecured Promissory Note (Vaxa) 250,000 - - - - Biomass material Investors Fiduciary, related party 786,000 133,000 - 551,000 20 % Shares of HCIC Auctus Convertible Note 262,500 9,000 168,000 - 10 % Unsecured Morningview Convertible Note 262,500 9,000 168,000 - 10 % Unsecured Labry’s Convertible Note 575,000 2,000 388,000 - 12 % Unsecured WRC convertible notes 300,000 101,000 - 500,000 12 % Lien on water supply agreement Butte Valley Land notes 400,000 101,000 - 200,000 18 % Butte Valley Land McFinney Agri-Finance - - - 60,000 6.8 % 2,400 acres of land in Ellicott Colorado Powderhorn/Silverback note - - - 203,000 12 % Third lien on Equipment loans - - - 57,000 5-8 % Equipment Morningview Financial note - - - 75,000 18 % Unsecured Total 10,935,000 $ 1,530,000 $ (724,000 ) 9,335,000 Less: note discounts (724,000 ) (63,000 ) Less: Current portion net of discount (9,343,000 ) (8,045,000 ) Long term portion $ 868,000 $ 1,227,000 |
Information on Business Segme_2
Information on Business Segments (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Segment Reporting [Abstract] | |
Schedule of Operating Results by Segment | Operating results for each of the segments of the Company are as follows (in thousands): Nine Months Ended September 30, 2019 Nine Months Ended September 30, 2018 Parent Vaxa Water Total Parent Greenhouse Water Total Revenue $ 34 $ 103 $ 8 $ 145 $ 10 $ - $ 12 $ 22 Less: Direct Cost of Revenue - - - - - - - - Gross Margin 34 103 8 145 10 - 12 22 Expenses Total Operating Expenses (611 ) (14 ) 253 (372 ) (886 ) - (997 ) (1,883 ) Total Other Income (Expense) (484 ) 7 (420 ) (897 ) 11,928 - (2,209 ) 9,719 Net Income (Loss) from Operations Before Income Taxes (1,061 ) 96 (159 ) (1,124 ) 11,052 - (3,194 ) 7,858 Income Taxes (Expense) Credit - - - - - - - - Net Income (Loss) from Operations (1,061 ) 96 (159 ) (1,124 ) 11,052 - (3,194 ) 7,858 Net Income (Loss) from Discontinued Operations - - - - - (810 ) - (810 ) Preferred dividends - - (18 ) (18 ) (986 ) - (16 ) (1,002 ) Non-controlling interest - - - - - - - - Net Income (Loss) $ (1,061 ) $ 96 $ (177 ) $ (1,142 ) $ 10,066 $ - $ (3,210 ) $ 6,046 Segmented Assets $ 24,856 $ 24,856 $ 20,131 $ 45,500 $ 10,746 $ - $ 20,175 $ 30,921 |
Acquisition of Vaxa Global (Tab
Acquisition of Vaxa Global (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
Schedule of Acquisition Fair Value of Consideration | Cash paid $ 0 Common Stock Issued 13,200,000 Total Purchase Price $ 13,200,000 Net Assets Acquired $ 511,000 Net Liabilities & Retained Earnings (1,411,000 ) Goodwill 14,100,000 Total Purchase Price $ 13,200,000 |
Schedule of Acquisition Pro Forma | These combined results are not necessarily indicative of the results that may have been achieved had the companies always been combined. Six Months Twelve Months Ending Ending Jun 30, 2019 Dec 31, 2018 (unaudited) (unaudited) Revenue $ 70,000 $ 66,000 Net Income (Loss) $ (1,608,000 ) $ 1,820,000 Basic Net Income (Loss) per share $ (0.02 ) $ 0.03 Diluted Net Income (Loss) per share $ (0.02 ) $ 0.03 Weighted average shares – basic 79,967 65,139 Weighted average shares – diluted 79,967 67,408 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Lease Amount Due at Base Rate | The amounts due at the base rate are as follows: Period Amount Due July 1 – December 31, 2019 $ 16,000 2020 $ 7,000 2021 - |
Organization and Business (Deta
Organization and Business (Details Narrative) $ in Thousands | Jul. 31, 2019shares | Sep. 30, 2019USD ($)ashares | May 31, 2014shares | Dec. 31, 2018ashares | Jun. 30, 2018shares | Aug. 01, 2014shares |
Acres owned | a | 7,076 | |||||
Number of shares outstanding | 83,195,939 | 45,574,458 | ||||
GrowCo [Member] | ||||||
Shares issued by subsidiary | 20,000,000 | |||||
Shares reserved for issuance | 10,000,000 | 10,000,000 | ||||
Number of shares outstanding | 34,343,000 | |||||
Shares outstanding, percentage | 29.12% | |||||
Vaxa Global, LLC and Vaxa Entities [Member] | ||||||
Ownership percentage | 100.00% | |||||
Easby Land & Cattle Company, LLC [Member] | ||||||
Number of shares in exchange for equity interest | 30,000,000 | |||||
Additional common shares subject to an earn-out performance | 20,000,000 | |||||
Earn-out performance, period | 12 months | |||||
Earnings before income taxes, depreciation and amortization description | The quotient of 10 times the consolidated earnings before income taxes, depreciation and amortization, or EBITDA, of Vaxa for the twelve months ending June 30, 2020, divided by $1.00; and 20,000,000 | |||||
Butte Valley Farm [Member] | Montverde Partners, LLC [Member] | ||||||
Purchase in extraction and processing equipment | $ | $ 700 | |||||
Purchase in extraction and processing equipment, shares | 3,000,000 | |||||
Vaxa Global, LLC [Member] | ||||||
Earnings before income taxes, depreciation and amortization description | Vaxa hemp is 100% organic, non-GMO, solvent free, THC free and 100% food-grade edible | |||||
Cucharas River [Member] | ||||||
Water asset area | a | 1,900 | |||||
Arkansas River [Member] | ||||||
Water asset area | a | 14,000 | |||||
Colorado [Member] | ||||||
Water asset area | a | 4,500 | |||||
Minimum [Member] | ||||||
Acres owned | a | 811 | |||||
Maximum [Member] | ||||||
Acres owned | a | 6,265 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) | Sep. 19, 2019USD ($) | May 21, 2019USD ($) | Jan. 02, 2019USD ($) | Dec. 28, 2018$ / shares | Jul. 31, 2019USD ($)$ / sharesshares | Sep. 30, 2019USD ($)a | Dec. 31, 2018USD ($)a | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)a$ / sharesshares | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($)ashares | Dec. 31, 2017USD ($) |
Gain on deconsolidation | $ 12,773,000 | |||||||||||
Non controlling interest | $ 22,364,000 | $ 22,364,000 | $ 22,364,000 | $ 22,364,000 | ||||||||
Sale of acres | a | 78 | 78 | ||||||||||
Gain on sale of land | $ 68,000 | 238,000 | ||||||||||
Proceeds from sale of land | 116,000 | 360,000 | ||||||||||
Land | $ 3,252,000 | 3,299,000 | 3,252,000 | 3,299,000 | ||||||||
Goodwill | $ 14,100,000 | 14,100,000 | 14,100,000 | |||||||||
Issuance of shares | shares | 30,000,000 | |||||||||||
Share price | $ / shares | $ 0.44 | |||||||||||
Fair value of equipment | 5,000 | 20,000 | 5,000 | 20,000 | ||||||||
Impairment charges | $ 6,900,000 | |||||||||||
Net crop share revenues | 0 | 0 | 0 | 0 | ||||||||
Net payment for shares received | 18,000 | |||||||||||
Other revenues from grazing leases and member assessments | 103,000 | |||||||||||
Dam Demolition Expense | 1,800,000 | |||||||||||
Debt instrument, beneficial conversion feature | 516,000 | |||||||||||
Debt instrument discount issued | (724,000) | (63,000) | (724,000) | (63,000) | ||||||||
Preferred dividend payable | 4,988,000 | $ 4,970,000 | $ 4,988,000 | $ 4,970,000 | ||||||||
Lease rate per month | $ 3,000 | |||||||||||
Lease maturity date | Mar. 31, 2020 | |||||||||||
Stock Options [Member] | ||||||||||||
Anti-dilutive shares | shares | 3,058,500 | |||||||||||
Exercise price of options | $ / shares | $ 0.17 | |||||||||||
Warrant [Member] | ||||||||||||
Anti-dilutive shares | shares | 5,948,730 | 17,537,896 | ||||||||||
Convertible Promissory Note [Member] | ||||||||||||
Debt instrument, beneficial conversion feature | $ 516,000 | |||||||||||
Convertible Promissory Note [Member] | Investor [Member] | ||||||||||||
Debt instrument, face amount | $ 575,000 | $ 262,000 | ||||||||||
Debt instrument, interest rate | 12.00% | 10.00% | ||||||||||
Debt instrument, maturity date | Mar. 19, 2020 | May 21, 2020 | ||||||||||
Debt instrument, beneficial conversion feature | $ 258,000 | 168,000 | ||||||||||
Debt instrument discount issued | $ 413,000 | 297,000 | 297,000 | |||||||||
Shares issued percentage | 83.00% | |||||||||||
Convertible Promissory Note [Member] | Investor [Member] | Share Issued 1 [Member] | ||||||||||||
Debt instrument discount issued | $ 58,000 | |||||||||||
Convertible Promissory Note [Member] | Investor [Member] | Share Issued 2 [Member] | ||||||||||||
Debt instrument discount issued | $ 356,000 | |||||||||||
Settlement Agreement [Member] | ||||||||||||
Dam Demolition Expense | 82,000 | |||||||||||
Full settlement of legal action | 893,000 | |||||||||||
Colorado [Member] | ||||||||||||
Full settlement of legal action | $ 1,000,000 | |||||||||||
Contingent liability recognized | 1,800,000 | |||||||||||
Anticipated amount of contigent liability after reduction | 1,000,000 | |||||||||||
Additional non-cash gains from negotiations and resolution | $ 25,000 | |||||||||||
El Paso Land [Member] | ||||||||||||
Gain on sale of land | 11,000 | |||||||||||
Proceeds from sale of land | 47,000 | |||||||||||
Land | 58,000 | $ 58,000 | ||||||||||
Land and Water [Member] | ||||||||||||
Impairment charges | $ 30,000 | |||||||||||
Minimum [Member] | ||||||||||||
Useful life of assets | 3 years | |||||||||||
Sale of acres | a | 35 | 35 | ||||||||||
Fair value of equipment | 5,000 | $ 5,000 | ||||||||||
Maximum [Member] | ||||||||||||
Useful life of assets | 27 years 6 months | |||||||||||
Sale of acres | a | 40 | 40 | ||||||||||
Deconsolidation Date As of April 1, 2018 [Member] | ||||||||||||
Gain on deconsolidation | $ 12,773,000 | |||||||||||
Non controlling interest | 8,859,000 | $ 8,859,000 | $ 8,859,000 | 8,859,000 | ||||||||
Removal cost from assets and liabilities | 3,914,000 | |||||||||||
Removal cost liabilities over assets | 3,914,000 | |||||||||||
GrowCo [Member] | ||||||||||||
Guaranteed debt amount | 4,000,000 | 4,000,000 | ||||||||||
Debt collateral amount | $ 2,359,000 | $ 2,359,000 | $ 2,359,000 | $ 2,359,000 | ||||||||
Debt collateral, percentage | 100.00% | 100.00% | ||||||||||
Debt contingent liability | $ 2,359,000 | |||||||||||
GrowCo [Member] | Deconsolidation Date As of April 1, 2018 [Member] | ||||||||||||
Non controlling interest | $ (1,230,000) | (1,230,000) | ||||||||||
TR Capital [Member] | ||||||||||||
Non controlling interest | 20,342,000 | $ 20,342,000 | 20,342,000 | $ 20,342,000 | ||||||||
TR Capital [Member] | Water Redev Preferred Stock [Member] | ||||||||||||
Preferred dividend payable | 4,937,000 | 4,937,000 | ||||||||||
Water Redevelopment Company [Member] | Water Redev Preferred Stock [Member] | ||||||||||||
Preferred dividend payable | $ 51,000 | $ 51,000 | ||||||||||
Black Mountain [Member] | ||||||||||||
Anti-dilutive shares | shares | 4,225,778 | |||||||||||
Exercise price of options | $ / shares | $ 0.07878 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Noncontrolling Interest to Derecognized (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Noncontrolling interest in subsidiary | $ 22,364 | $ 22,364 |
Deconsolidation Date As of April 1, 2018 [Member] | ||
Noncontrolling interest in subsidiary | 8,859 | $ 8,859 |
GrowCo [Member] | Deconsolidation Date As of April 1, 2018 [Member] | ||
Noncontrolling interest in subsidiary | (1,230) | |
GrowCo Partners 1, LLC [Member] | Deconsolidation Date As of April 1, 2018 [Member] | ||
Noncontrolling interest in subsidiary | 3,621 | |
GCP Super Units, LLC [Member] | Deconsolidation Date As of April 1, 2018 [Member] | ||
Noncontrolling interest in subsidiary | 5,016 | |
TR Cap 20150630 Distribution, LLC [Member] | Deconsolidation Date As of April 1, 2018 [Member] | ||
Noncontrolling interest in subsidiary | 497 | |
TR Cap 20150930 Distribution, LLC [Member] | Deconsolidation Date As of April 1, 2018 [Member] | ||
Noncontrolling interest in subsidiary | 460 | |
TR Cap 20151231 Distribution, LLC [Member] | Deconsolidation Date As of April 1, 2018 [Member] | ||
Noncontrolling interest in subsidiary | $ 495 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Schedule of Detail of Non-controlling Interest (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Noncontrolling interest in subsidiary | $ 22,364 | $ 22,364 |
TR Capital [Member] | ||
Noncontrolling interest in subsidiary | 20,342 | 20,342 |
HCIC [Member] | ||
Noncontrolling interest in subsidiary | 1,379 | 1,379 |
F-1 [Member] | ||
Noncontrolling interest in subsidiary | 29 | 29 |
F-2 [Member] | ||
Noncontrolling interest in subsidiary | 162 | 162 |
DFP [Member] | ||
Noncontrolling interest in subsidiary | $ 452 | $ 452 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Schedule of Premises and Equipment (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Premises and equipment, Subtotal | $ 231 | $ 247 |
Less: Accumulated Depreciation | (226) | (227) |
Premises and equipment, Net book value | $ 5 | 20 |
Minimum [Member] | ||
Useful life of assets | 3 years | |
Premises and equipment, Net book value | $ 5 | |
Maximum [Member] | ||
Useful life of assets | 27 years 6 months | |
Office Equipment and Furniture [Member] | ||
Premises and equipment, Subtotal | $ 12 | 12 |
Office Equipment and Furniture [Member] | Minimum [Member] | ||
Useful life of assets | 5 years | |
Office Equipment and Furniture [Member] | Maximum [Member] | ||
Useful life of assets | 7 years | |
Computers [Member] | ||
Useful life of assets | 3 years | |
Premises and equipment, Subtotal | $ 46 | 46 |
Vehicles [Member] | ||
Useful life of assets | 5 years | |
Premises and equipment, Subtotal | $ 9 | 25 |
Farm Equipment [Member] | ||
Premises and equipment, Subtotal | $ 147 | 147 |
Farm Equipment [Member] | Minimum [Member] | ||
Useful life of assets | 7 years | |
Farm Equipment [Member] | Maximum [Member] | ||
Useful life of assets | 10 years | |
Buildings [Member] | ||
Useful life of assets | 27 years 6 months | |
Premises and equipment, Subtotal | $ 10 | 10 |
Website [Member] | ||
Useful life of assets | 3 years | |
Premises and equipment, Subtotal | $ 7 | $ 7 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Schedule of Basic and Diluted Net Income (Loss) Per Share (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Accounting Policies [Abstract] | ||||
Weighted average number of shares outstanding - basic | 71,006,000 | 34,256,000 | 57,057,000 | 33,529,000 |
Dilutive effect of convertible debt | 8,912,000 | |||
Dilutive effect of warrant exercise | 5,949,000 | |||
Weighted average number of shares outstanding - diluted | 85,867,000 | 34,256,000 | 57,057,000 | 37,149,000 |
Investments and Long-Lived As_2
Investments and Long-Lived Assets (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Depreciation and amortization | $ 16 | $ 17 | $ 48 | $ 75 |
Gain from sale and disposal of equipment | 85 | 114 | ||
Colorado [Member] | ||||
Gain on disposal of assets | 68 | $ 80 | ||
Land and Water [Member] | ||||
Impairment of long lived assets | ||||
Water Rights [Member] | ||||
Depreciation and amortization |
Notes Payable - Schedule of Lon
Notes Payable - Schedule of Long Term Debt (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Principal balance | $ 10,935,000 | $ 9,335,000 |
Accrued Interest | 1,530,000 | |
Less: note discounts | (724,000) | (63,000) |
Less: Current portion net of discount | (9,343,000) | (8,045,000) |
Long term portion | 868,000 | 1,227,000 |
HCIC Seller Carryback Note [Member] | ||
Principal balance | 6,323,000 | $ 6,323,000 |
Accrued Interest | $ 1,050,000 | |
Interest Rate | 6.00% | |
Security | Shares in the Mutual Ditch Company | Shares in the Mutual Ditch Company |
Less: note discounts | ||
CWCB Note [Member] | ||
Principal balance | 622,000 | $ 690,000 |
Accrued Interest | $ 11,000 | |
Interest Rate | 2.50% | |
Security | Certain Orlando and Farmland assets | Certain Orlando and Farmland assets |
Less: note discounts | ||
GrowCo Note [Member] | ||
Principal balance | 390,000 | $ 390,000 |
Accrued Interest | $ 29,000 | |
Interest Rate | 6.00% | |
Security | None | None |
Less: note discounts | ||
Bridge Loan Harding [Member] | ||
Principal balance | 7,000 | $ 15,000 |
Accrued Interest | $ 1,000 | |
Interest Rate | 12.00% | |
Security | Added to lien on Ellicott land | Added to lien on Ellicott land |
Less: note discounts | ||
El Paso Land Notes [Member] | ||
Principal balance | 271,000 | $ 271,000 |
Accrued Interest | $ 76,000 | |
Interest Rate | 12.00% | |
Security | Second lien on Ellicott land | Second lien on Ellicott land |
Less: note discounts | ||
Easby Credit Line (Vaxa), Related Party [Member] | ||
Principal balance | 486,000 | |
Accrued Interest | $ 8,000 | |
Interest Rate | ||
Security | Unsecured | Unsecured |
Less: note discounts | ||
Promissory Note (Vaxa) [Member] | ||
Principal balance | 250,000 | |
Accrued Interest | ||
Interest Rate | ||
Security | Biomass material | Biomass material |
Less: note discounts | ||
Investors Fiduciary, Related Party [Member] | ||
Principal balance | 786,000 | $ 551,000 |
Accrued Interest | $ 133,000 | |
Interest Rate | 20.00% | |
Security | Shares of HCIC | Shares of HCIC |
Less: note discounts | ||
Auctus Convertible Note [Member] | ||
Principal balance | 262,500 | |
Accrued Interest | $ 9,000 | |
Interest Rate | 10.00% | |
Security | Unsecured | Unsecured |
Less: note discounts | $ 168,000 | |
Morningview Convertible Note [Member] | ||
Principal balance | 262,500 | |
Accrued Interest | $ 9,000 | |
Interest Rate | 10.00% | |
Security | Unsecured | Unsecured |
Less: note discounts | $ 168,000 | |
Labry's Convertible Note [Member] | ||
Principal balance | 575,000 | |
Accrued Interest | $ 2,000 | |
Interest Rate | 12.00% | |
Security | Unsecured | Unsecured |
Less: note discounts | $ 388,000 | |
WRC Convertible Notes [Member] | ||
Principal balance | 300,000 | $ 500,000 |
Accrued Interest | $ 101,000 | |
Interest Rate | 12.00% | |
Security | Lien on water supply agreement | Lien on water supply agreement |
Less: note discounts | ||
Butte Valley Land Notes [Member] | ||
Principal balance | 400,000 | $ 200,000 |
Accrued Interest | $ 101,000 | |
Interest Rate | 18.00% | |
Security | Butte Valley Land | Butte Valley Land |
Less: note discounts | ||
McFinney Agri Finance [Member] | ||
Principal balance | $ 60,000 | |
Accrued Interest | ||
Interest Rate | 6.80% | |
Security | 2,400 acres of land in Ellicott Colorado | 2,400 acres of land in Ellicott Colorado |
Less: note discounts | ||
Powderhorn/Silverback Note [Member] | ||
Principal balance | $ 203,000 | |
Accrued Interest | ||
Interest Rate | 12.00% | |
Security | Third lien on Ellicott land | Third lien on Ellicott land |
Less: note discounts | ||
Equipment Loans [Member] | ||
Principal balance | $ 57,000 | |
Accrued Interest | ||
Security | Equipment | Equipment |
Less: note discounts | ||
Equipment Loans [Member] | Minimum [Member] | ||
Interest Rate | 5.00% | |
Equipment Loans [Member] | Maximum [Member] | ||
Interest Rate | 8.00% | |
Morningview Financial Note [Member] | ||
Principal balance | $ 75,000 | |
Accrued Interest | ||
Interest Rate | 18.00% | |
Security | Unsecured | Unsecured |
Less: note discounts |
Notes Payable - Schedule of L_2
Notes Payable - Schedule of Long Term Debt (Details) (Parenthetical) - a | Sep. 30, 2019 | Dec. 31, 2018 |
Acres of pasture land | 7,076 | |
McFinney Agri-Finance Note [Member] | ||
Acres of pasture land | 2,400 | 2,400 |
Short-Term Convertible Note P_2
Short-Term Convertible Note Payable (Details Narrative) | Sep. 25, 2019USD ($)Integer$ / sharesshares | Aug. 31, 2019USD ($)$ / shares | May 24, 2019USD ($)$ / shares |
Investors Fiduciary LLC [Member] | |||
Debt instrument conversion price | $ / shares | $ 0.14 | ||
Proceeds from line of credit | $ 75,000 | ||
Line of credit | $ 786,000 | ||
Agreement [Member] | Note Holder [Member] | |||
Short term working capital | $ 457,500 | ||
Debt instrument, face amount | 575,000 | ||
Purchase price of convertible debt | $ 517,500 | ||
Debt instrument term | 6 months | ||
Debt instrument, interest rate | 10.00% | ||
Debt instrument conversion percentage | 70.00% | ||
Trading days | Integer | 10 | ||
Debt discount rate | 30.00% | ||
Debt instrument conversion price | $ / shares | $ 0.30 | ||
Agreement [Member] | Note Holder [Member] | Returnable Shares [Member] | |||
Number of common stock issued | shares | 1,101,532 | ||
Agreement [Member] | Note Holder [Member] | Commitment Shares [Member] | |||
Number of common stock issued | shares | 220,306 | ||
Securities Purchase Agreements [Member] | Two Investors [Member] | |||
Debt instrument, face amount | $ 525,000 | ||
Purchase price of convertible debt | $ 525,000 | ||
Debt instrument term | 1 year | ||
Debt instrument, interest rate | 10.00% | ||
Debt instrument conversion percentage | 60.00% | ||
Debt discount rate | 40.00% | ||
Debt instrument conversion price | $ / shares | $ 0.20 | ||
Proceeds from issuance debt | $ 480,000 | ||
Payment for legal fees and original issue discount | $ 45,000 |
Information on Business Segme_3
Information on Business Segments - Schedule of Operating Results by Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Revenue | $ 108 | $ 5 | $ 145 | $ 22 | |
Less: direct cost of revenue | |||||
Gross Margin | 108 | 5 | 145 | 22 | |
Total Operating Expenses | 497 | (2,478) | (372) | (3,713) | |
Total Other Income (Expense) | (415) | (176) | (897) | 11,549 | |
Net (Loss) from Operations Before Income Taxes | 190 | (2,649) | (1,124) | 7,858 | |
Income Taxes (Expense)/Credit | |||||
Net (Loss) from Operations | 190 | (2,649) | (1,124) | 7,858 | |
Net (Loss) from Discontinued Operations | (810) | ||||
Preferred dividends | 6 | 6 | 18 | 1,002 | |
Non-controlling interest | |||||
Net Loss | 184 | (2,655) | (1,142) | 6,046 | |
Segment Assets | 45,499 | 30,921 | 45,499 | 30,921 | $ 30,695 |
Parent (Two Rivers) [Member] | |||||
Revenue | 34 | 10 | |||
Less: direct cost of revenue | |||||
Gross Margin | 34 | 10 | |||
Total Operating Expenses | (611) | (886) | |||
Total Other Income (Expense) | (484) | 11,928 | |||
Net (Loss) from Operations Before Income Taxes | (1,061) | 11,052 | |||
Income Taxes (Expense)/Credit | |||||
Net (Loss) from Operations | (1,061) | 11,052 | |||
Net (Loss) from Discontinued Operations | |||||
Preferred dividends | (986) | ||||
Non-controlling interest | |||||
Net Loss | (1,061) | 10,066 | |||
Segment Assets | 24,856 | 10,746 | 24,856 | 10,746 | |
Vaxa (Vaxa Global, LLC ) [Member] | |||||
Revenue | 103 | ||||
Less: direct cost of revenue | |||||
Gross Margin | 103 | ||||
Total Operating Expenses | (14) | ||||
Total Other Income (Expense) | 7 | ||||
Net (Loss) from Operations Before Income Taxes | 96 | ||||
Income Taxes (Expense)/Credit | |||||
Net (Loss) from Operations | 96 | ||||
Net (Loss) from Discontinued Operations | |||||
Preferred dividends | |||||
Non-controlling interest | |||||
Net Loss | 96 | ||||
Segment Assets | 24,856 | 24,856 | |||
Water (TR Cap) [Member] | |||||
Revenue | 8 | 12 | |||
Less: direct cost of revenue | |||||
Gross Margin | 8 | 12 | |||
Total Operating Expenses | 253 | (997) | |||
Total Other Income (Expense) | (420) | (2,209) | |||
Net (Loss) from Operations Before Income Taxes | (159) | (3,194) | |||
Income Taxes (Expense)/Credit | |||||
Net (Loss) from Operations | (159) | (3,194) | |||
Net (Loss) from Discontinued Operations | |||||
Preferred dividends | (18) | (16) | |||
Non-controlling interest | |||||
Net Loss | (177) | (3,210) | |||
Segment Assets | $ 20,131 | 20,175 | $ 20,131 | 20,175 | |
Green-house (GrowCo., GCP1, GCP2) [Member] | |||||
Revenue | |||||
Less: direct cost of revenue | |||||
Gross Margin | |||||
Total Operating Expenses | |||||
Total Other Income (Expense) | |||||
Net (Loss) from Operations Before Income Taxes | |||||
Income Taxes (Expense)/Credit | |||||
Net (Loss) from Operations | |||||
Net (Loss) from Discontinued Operations | (810) | ||||
Preferred dividends | |||||
Non-controlling interest | |||||
Net Loss | |||||
Segment Assets |
Equity Transactions (Details Na
Equity Transactions (Details Narrative) - USD ($) | May 21, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 |
Common stock, shares authorized | 200,000,000 | 200,000,000 | 200,000,000 | |||
Common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | |||
Common stock, shares issued | 83,195,939 | 83,195,939 | 45,574,458 | |||
Number of common shares issued for debt, value | $ 287,000 | $ 100,000 | ||||
Loss on stock issuance | 33,000 | |||||
Beneficial conversion features | 516,000 | |||||
Convertible Promissory Note [Member] | ||||||
Beneficial conversion features | $ 516,000 | |||||
Chief Financial Officer [Member] | ||||||
Number of common shares issued | 185,000 | |||||
Number of common shares issued, value | $ 50,000 | |||||
Shares issued price per share | $ 0.27 | $ 0.27 | ||||
Employees and Directors [Member] | ||||||
Stock based compensation | $ 289,000 | 373,000 | ||||
Investor [Member] | Convertible Promissory Note [Member] | ||||||
Beneficial conversion features | $ 258,000 | $ 168,000 | ||||
Debt instrument, face amount | $ 262,500 | |||||
Debt instrument, interest rate | 10.00% | |||||
Maturity date | May 21, 2020 | |||||
Morning Convertible Note [Member] | ||||||
Number of common shares issued for debt | 1,179,817 | |||||
Number of common shares issued for debt, value | $ 75,000 | |||||
Loss on stock issuance | ||||||
Powderhorn/Silverback [Member] | ||||||
Number of common shares issued for debt | 3,040,350 | |||||
Number of common shares issued for debt, value | $ 127,665 | |||||
Loss on stock issuance | ||||||
Investor Relations Firm [Member] | ||||||
Number of common shares issued | 555,560 | |||||
Number of common shares issued, value | $ 71,000 | |||||
Shares issued price per share | 0.1283 | $ 0.1283 | ||||
Silverback [Member] | ||||||
Number of shares issued for cashless exercise of warrants | 545,455 | |||||
Black Mountain [Member] | ||||||
Loss on stock issuance | $ 100,000 | |||||
Number of common shares issued | 374,250 | |||||
Number of shares issued for cashless exercise of warrants | 255,231 | |||||
Black Mountain [Member] | Warrant [Member] | ||||||
Number of shares issued for cashless exercise of warrants | 523,395 | |||||
TR Capital [Member] | ||||||
Number of common shares issued for debt | 14,840 | |||||
TR Capital [Member] | Convertible Note [Member] | ||||||
Number of common shares issued for debt | 139,985 | |||||
Easby Land & Cattle Company, LLC [Member] | ||||||
Number of common shares issued | 30,000,000 | |||||
Number of common shares issued, value | $ 13,200,000 | |||||
Shares issued price per share | $ 0.44 | $ 0.44 | ||||
Labrys Fund, LP [Member] | ||||||
Number of common shares issued | 1,321,838 |
Acquisition of Vaxa Global (Det
Acquisition of Vaxa Global (Details Narrative) - USD ($) | Jul. 31, 2019 | Sep. 30, 2019 |
Purchase Price of the acquisition | $ 13,200,000 | |
Vaxa Global, LLC (Vaxa) [Member] | Share Exchange Agreement [Member] | ||
Number of common stock shares issued | 30,000,000 | |
Purchase Price of the acquisition | $ 13,200,000 | |
Acquisition price per share | $ 0.44 | |
Earn-out shares, description | The number of earn-out shares will equal the lesser of: i.) the quotient of 10 times the consolidated earnings before income taxes, depreciation and amortization, or EBITDA, of Vaxa for the twelve months ending June 30, 2020, divided by $1.00; and ii.) 20,000,000. | |
Payments for business acquisition | $ 700,000 | |
Intangible asset amortization period | 5 years | |
Amortization of acquisition amount | $ 480,000 |
Acquisition of Vaxa Global - Sc
Acquisition of Vaxa Global - Schedule of Acquisition Fair Value of Consideration (Details) - USD ($) | Jul. 31, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 |
Cash paid | $ 9,000 | |||
Goodwill | $ 14,100,000 | $ 14,100,000 | ||
Vaxa Global, LLC (Vaxa) [Member] | Share Exchange Agreement [Member] | ||||
Cash paid | $ 0 | |||
Common Stock Issued | 13,200,000 | |||
Total Purchase Price | $ 13,200,000 | |||
Net Assets Acquired | 511,000 | |||
Net Liabilities & Retained Earnings | (1,411,000) | |||
Goodwill | 14,100,000 | |||
Total Purchase Price | $ 13,200,000 |
Acquisition of Vaxa Global - _2
Acquisition of Vaxa Global - Schedule of Acquisition Pro Forma (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019 | Dec. 31, 2018 | |
Business Combinations [Abstract] | ||
Revenue | $ 70,000 | $ 66,000 |
Net Income (Loss) | $ (1,608,000) | $ 1,820,000 |
Basic Net Income (Loss) per share | $ (0.02) | $ 0.03 |
Diluted Net Income (Loss) per share | $ (0.02) | $ 0.03 |
Weighted average shares - basic | 79,967,000 | 65,139,000 |
Weighted average shares - diluted | 79,967,000 | 67,408,000 |
Going Concern (Details Narrativ
Going Concern (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||
Net profit (loss) attributable to common shareholders | $ 184 | $ (2,655) | $ (1,142) | $ 6,046 | |
Net cash used in operating activities | (789) | $ (824) | |||
Working capital deficit | (21,104) | (21,104) | |||
Accumulated deficit | $ (95,596) | $ (95,596) | $ (94,454) |
Commitments and Contingencies_2
Commitments and Contingencies (Details Narrative) | Jan. 02, 2019USD ($) | Jan. 19, 2018USD ($) | Aug. 08, 2017USD ($) | Feb. 28, 2017USD ($)a | Jan. 31, 2016USD ($)a | Sep. 30, 2019USD ($)a | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2015USD ($)a |
Area of land | a | 7,076 | ||||||||
Repayments of notes payable | $ 94,000 | $ 532,000 | |||||||
Promissory note | 10,935,000 | $ 9,335,000 | |||||||
Monthly payments on operating lease | $ 3,000 | ||||||||
Lease termination date | Mar. 31, 2020 | ||||||||
GrowCo [Member] | |||||||||
Guaranteed debt amount | 4,000,000 | ||||||||
Debt collateral amount | $ 2,359,000 | $ 2,359,000 | |||||||
Debt collateral, percentage | 100.00% | ||||||||
Debt contingent liability | $ 2,359,000 | ||||||||
Colorado Centre LLC [Member] | |||||||||
Area of land | a | 1,775 | ||||||||
Monthly payments on operating lease | $ 3,900 | ||||||||
Lease termination date | Jun. 30, 2018 | ||||||||
Penalty amount | $ 24,000 | ||||||||
Parker Road Campus, LLC [Member] | |||||||||
Area of land | a | 1,554 | ||||||||
Monthly payments on operating lease | $ 2,201 | ||||||||
Lease termination date | Mar. 31, 2020 | ||||||||
Ryley Carlock & Applewhite [Member] | |||||||||
Attorneys' fees owed for services rendered | $ 139,000 | ||||||||
Accounts payable | $ 139,000 | ||||||||
GrowCo $4 Notes [Member] | |||||||||
Debt instrument, face amount | $ 4,000,000 | ||||||||
Area of land | a | 40 | ||||||||
Debt instrument, interest rate | 22.50% | ||||||||
Maturity due date | Apr. 1, 2020 | ||||||||
Blue & Green, LLC [Member] | |||||||||
Repayments of notes payable | $ 4,000,000 | ||||||||
Promissory note | 2,115,000 | ||||||||
Interest on debt | $ 300,000 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Lease Amount Due at Base Rate (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
July 1 - December 31, 2019 | $ 16 |
2020 | 7 |
2021 |
Related Party (Details Narrativ
Related Party (Details Narrative) - USD ($) | Aug. 31, 2019 | Sep. 30, 2019 |
Due to related party | $ 7,000 | |
Mr. Wayne Harding [Member] | ||
Short-term loan | 2,500 | |
Repayments of related rarty debt | $ 11,000 | |
Investors [Member] | Credit Agreement [Member] | ||
Proceeds from debt | $ 75,000 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) | Nov. 07, 2019USD ($)Integer$ / sharesshares | Oct. 18, 2019shares | Sep. 25, 2019USD ($)Integer$ / sharesshares | Sep. 30, 2019shares | Sep. 30, 2018shares |
Black Mountain [Member] | |||||
Number of common stock issued | 374,250 | ||||
Montverde Partners, LLC [Member] | |||||
Agreement description | Vaxa entered into an agreement to purchase over $700,000 in extraction and processing equipment, and all seeds, clone and biological assets, as well as the 2019 hemp crop from Butte Valley farm, from Montverde Partners, LLC (“Montverde”), in exchange for 3,000,000 shares of our common stock which were contributed by Easby Land & Cattle, LLC. | ||||
Number of shares in exchange for equity interest | 3,000,000 | ||||
Agreement [Member] | Note Holder [Member] | |||||
Short term working capital | $ | $ 457,500 | ||||
Debt instrument, face amount | $ | 575,000 | ||||
Purchase price of convertible debt | $ | $ 517,500 | ||||
Debt instrument term | 6 months | ||||
Debt instrument, interest rate | 10.00% | ||||
Debt instrument conversion percentage | 70.00% | ||||
Trading days | Integer | 10 | ||||
Debt discount rate | 30.00% | ||||
Debt instrument conversion price | $ / shares | $ 0.30 | ||||
Agreement [Member] | Note Holder [Member] | Returnable Shares [Member] | |||||
Number of common stock issued | 1,101,532 | ||||
Agreement [Member] | Note Holder [Member] | Commitment Shares [Member] | |||||
Number of common stock issued | 220,306 | ||||
Subsequent Event [Member] | Black Mountain [Member] | |||||
Shares issued for cashless exercise common stock | 2,665,505 | ||||
Subsequent Event [Member] | Agreement [Member] | Note Holder [Member] | |||||
Short term working capital | $ | $ 315,000,000 | ||||
Debt instrument, face amount | $ | 394,500,000 | ||||
Purchase price of convertible debt | $ | $ 354,600,000 | ||||
Debt instrument term | 6 months | ||||
Debt instrument, interest rate | 12.00% | ||||
Debt instrument conversion percentage | 70.00% | ||||
Trading days | Integer | 10 | ||||
Debt discount rate | 30.00% | ||||
Debt instrument conversion price | $ / shares | $ 0.30 | ||||
Subsequent Event [Member] | Agreement [Member] | Note Holder [Member] | Returnable Shares [Member] | |||||
Number of common stock issued | 1,083,791 | ||||
Subsequent Event [Member] | Agreement [Member] | Note Holder [Member] | Commitment Shares [Member] | |||||
Number of common stock issued | 200,000 |