Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2023 | Nov. 14, 2023 | |
Details | ||
Registrant CIK | 0001352952 | |
Fiscal Year End | --12-31 | |
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 000-52635 | |
Entity Registrant Name | CFN ENTERPRISES INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 90-1559541 | |
Entity Address, Address Line One | 600 E. 8TH STREET | |
Entity Address, City or Town | WHITEFISH | |
Entity Address, Country | MT | |
Entity Address, Postal Zip Code | 59937 | |
Country Region | 833 | |
City Area Code | 420 | |
Local Phone Number | 2636 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 82,210,664 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Current assets | ||
Cash | $ 1,741,005 | $ 12,474 |
Restricted cash | 20,366 | 20,128 |
Accounts receivable, net | 712,881 | 28,245 |
Inventory | 1,864,800 | 0 |
Prepaid expenses | 74,250 | 0 |
Total current assets | 4,413,302 | 60,847 |
Goodwill | 8,676,430 | 0 |
Property and equipment, net | 164,775 | 53,570 |
Right of use asset | 2,382,627 | 110,321 |
Deposits | 297,269 | 0 |
Other assets | 55,676 | 46,766 |
Assets held for sale | 0 | 599,047 |
Total assets | 15,990,079 | 870,551 |
Current liabilities | ||
Accounts payable | 2,487,171 | 2,357,614 |
Accrued liabilities | 3,318,398 | 2,343,654 |
Payments made in advance of securities date | 0 | 217,500 |
Due to related party | 575,314 | 503,259 |
Deferred revenue | 10,767 | 10,978 |
Current portion of notes payable | 3,854,300 | 3,088,250 |
Due to seller | 1,000,000 | 0 |
Contingent consideration | 208,000 | 0 |
Current portion of right of use liability | 912,215 | 262,727 |
Current liabilities of discontinued operations | 79,823 | 79,823 |
Total current liabilities | 12,445,987 | 8,863,805 |
Right of use liability | 1,724,267 | 200,758 |
Long-term note payable, net of current portion and discounts | 4,071,631 | 978,337 |
Total liabilities | 18,241,885 | 10,042,900 |
Stockholders' deficit | ||
Common shares | 82,210 | 37,690 |
Additional paid-in capital | 60,759,497 | 49,786,056 |
Accumulated deficit | (63,093,517) | (58,996,099) |
Total stockholders' deficit | (2,251,806) | (9,172,349) |
Total liabilities and stockholders' deficit | 15,990,079 | 870,551 |
Series A Preferred Stock | ||
Stockholders' deficit | ||
Preferred shares | 1 | 1 |
Series B Preferred Stock | ||
Stockholders' deficit | ||
Preferred shares | $ 3 | $ 3 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS - Parenthetical - $ / shares | Sep. 30, 2023 | Dec. 31, 2022 |
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | |
Preferred Stock, Shares Authorized | 2,000,000 | |
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 500,000,000 | 500,000,000 |
Common Stock, Shares, Issued | 82,210,664 | 37,609,664 |
Common Stock, Shares, Outstanding | 82,210,664 | 37,609,664 |
Series A Preferred Stock | ||
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Preferred Stock, Shares Authorized | 500 | 500 |
Preferred Stock, Shares Issued | 500 | 500 |
Preferred Stock, Shares Outstanding | 500 | 500 |
Series B Preferred Stock | ||
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Preferred Stock, Shares Authorized | 3,000 | 3,000 |
Preferred Stock, Shares Issued | 3,000 | 3,000 |
Preferred Stock, Shares Outstanding | 3,000 | 3,000 |
UNAUDITED CONDENSED CONSOLIDATE
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
Net revenues | $ 1,678,571 | $ 840,970 | $ 1,943,830 | $ 3,828,634 |
Cost of revenue | 1,225,536 | 1,309,853 | 1,449,211 | 5,710,701 |
Gross profit (loss) | 453,035 | (468,883) | 494,619 | (1,882,067) |
Operating expenses | ||||
Selling, general and administrative | 1,597,681 | 513,200 | 3,722,829 | 1,788,872 |
Total operating expenses | 1,597,681 | 513,200 | 3,722,829 | 1,788,872 |
Loss from operations | (1,144,646) | (982,083) | (3,228,210) | (3,670,939) |
Other income (expense) | ||||
Interest expense | (765,919) | (115,257) | (869,420) | (267,644) |
Gain on property and equipment | 0 | 0 | 9,253 | 87,933 |
Unrealized loss on marketable securities | 0 | (24,750) | 0 | (44,244) |
Gain on extinguishment of debt | 0 | 0 | 13,219 | 0 |
Other income | 0 | 0 | 157,502 | 3,772 |
Interest income | 82 | 43 | 238 | 52 |
Total other income (expense), net | (765,837) | (139,963) | (689,207) | (220,130) |
Provision for income taxes | 0 | 0 | 0 | 0 |
Net loss | (1,910,483) | (1,122,046) | (3,917,417) | (3,891,069) |
Preferred stock interest | 60,000 | 60,000 | 180,000 | 180,000 |
Net loss available to common shareholders | (1,970,483) | (1,182,046) | (4,097,417) | (4,071,069) |
Net loss attributable to non-controlling interest | 0 | 422 | 0 | 467 |
Net loss available to CFN Enterprises common shareholders | $ (1,970,483) | $ (1,182,468) | $ (4,097,417) | $ (4,071,536) |
Net loss per common share - basic and diluted | $ (0.02) | $ (0.03) | $ (0.08) | $ (0.12) |
Basic and diluted | 81,990,884 | 33,822,379 | 54,346,145 | 32,951,092 |
UNAUDITED CONDENSED CONSOLIDA_2
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT - USD ($) | Common Stock | Additional Paid-in Capital | Retained Earnings | Noncontrolling Interest | Total | Series A Preferred Stock | Series B Preferred Stock |
Equity, Attributable to Parent, Beginning Balance at Dec. 31, 2021 | $ 31,679 | $ 46,399,451 | $ (48,833,880) | $ 7,003 | $ (2,395,743) | $ 1 | $ 3 |
Shares, Outstanding, Beginning Balance at Dec. 31, 2021 | 31,679,481 | 500 | 3,000 | ||||
Preferred stock interest | $ 0 | 0 | 60,000 | 0 | 60,000 | $ 0 | $ 0 |
Payment of CSIS debt by shareholder | 0 | 415,875 | 0 | 415,875 | 0 | 0 | |
Net Income (Loss) Attributable to Parent | 0 | 0 | (1,302,182) | (23) | (1,302,204) | 0 | 0 |
Equity, Attributable to Parent, Ending Balance at Mar. 31, 2022 | $ 31,679 | 46,815,326 | (50,196,062) | 6,980 | (3,342,072) | $ 1 | $ 3 |
Shares, Outstanding, Ending Balance at Mar. 31, 2022 | 31,679,481 | 500 | 3,000 | ||||
Preferred stock interest | $ 0 | 0 | (60,000) | 0 | (60,000) | $ 0 | $ 0 |
Equity, Attributable to Parent, Beginning Balance at Dec. 31, 2021 | $ 31,679 | 46,399,451 | (48,833,880) | 7,003 | (2,395,743) | $ 1 | $ 3 |
Shares, Outstanding, Beginning Balance at Dec. 31, 2021 | 31,679,481 | 500 | 3,000 | ||||
Purchase of property and equipment with common stock | 700,000 | ||||||
Warrants issued with promissory notes | 302,537 | ||||||
Stock compensation expense | 0 | ||||||
Preferred stock interest | 180,000 | ||||||
Payment of CSIS debt by shareholder | 1,212,080 | ||||||
Non-controlling interest | (467) | ||||||
Shares, Outstanding, Ending Balance at Sep. 30, 2022 | 33,822,379 | 500 | 3,000 | ||||
Preferred stock interest | (180,000) | ||||||
Equity, Including Portion Attributable to Noncontrolling Interest, Ending Balance at Sep. 30, 2022 | $ 33,822 | 49,411,944 | (52,904,949) | 6,536 | (3,452,643) | $ 1 | $ 3 |
Conversion of accrued preferred stock interest into shares | 0 | ||||||
Issuance of common stock pursuant to business combination | 0 | ||||||
Equity, Attributable to Parent, Beginning Balance at Mar. 31, 2022 | $ 31,679 | 46,815,326 | (50,196,062) | 6,980 | (3,342,072) | $ 1 | $ 3 |
Shares, Outstanding, Beginning Balance at Mar. 31, 2022 | 31,679,481 | 500 | 3,000 | ||||
Issuance of common stock for proceeds | $ 1,143 | 798,877 | 0 | 0 | 800,020 | $ 0 | $ 0 |
Issuance of common stock for proceeds, Shares | 1,142,898 | ||||||
Purchase of property and equipment with common stock | $ 1,000 | 699,000 | 0 | 0 | 700,000 | 0 | 0 |
Purchase of property and equipment with common stock, Shares | 1,000,000 | ||||||
Warrants issued with promissory notes | $ 0 | 302,537 | 0 | 0 | 302,537 | 0 | 0 |
Preferred stock interest | 0 | 0 | 60,000 | 0 | 60,000 | 0 | 0 |
Payment of CSIS debt by shareholder | 0 | 477,723 | 0 | 0 | 477,723 | 0 | 0 |
Net Income (Loss) Attributable to Parent | $ 0 | 0 | (1,466,841) | (22) | (1,466,863) | $ 0 | $ 0 |
Shares, Outstanding, Ending Balance at Jun. 30, 2022 | 33,822,379 | 500 | 3,000 | ||||
Preferred stock interest | $ 0 | 0 | (60,000) | 0 | (60,000) | $ 0 | $ 0 |
Equity, Including Portion Attributable to Noncontrolling Interest, Ending Balance at Jun. 30, 2022 | $ 33,822 | 49,093,462 | (51,722,903) | 6,958 | (2,588,657) | $ 1 | $ 3 |
Preferred stock interest | 60,000 | 60,000 | |||||
Payment of CSIS debt by shareholder | 318,482 | 318,482 | |||||
Net Income (Loss) Attributable to Parent | (1,122,046) | (422) | (1,122,468) | ||||
Shares, Outstanding, Ending Balance at Sep. 30, 2022 | 33,822,379 | 500 | 3,000 | ||||
Preferred stock interest | (60,000) | (60,000) | |||||
Equity, Including Portion Attributable to Noncontrolling Interest, Ending Balance at Sep. 30, 2022 | $ 33,822 | 49,411,944 | (52,904,949) | 6,536 | (3,452,643) | $ 1 | $ 3 |
Equity, Including Portion Attributable to Noncontrolling Interest, Beginning Balance at Jun. 30, 2022 | $ 33,822 | 49,093,462 | (51,722,903) | 6,958 | (2,588,657) | $ 1 | $ 3 |
Equity, Attributable to Parent, Beginning Balance at Dec. 31, 2022 | (9,172,349) | ||||||
Shares, Outstanding, Beginning Balance at Dec. 31, 2022 | 37,690,664 | 500 | 3,000 | ||||
Preferred stock interest | $ 0 | 0 | 60,000 | 0 | 60,000 | $ 0 | $ 0 |
Stock Issued During Period, Value, New Issues | $ 2,400 | 597,600 | 0 | 0 | 600,000 | 0 | 0 |
Stock Issued During Period, Shares, New Issues | 2,400,000 | ||||||
Net Income (Loss) Attributable to Parent | $ 0 | 0 | (551,222) | 0 | (551,222) | $ 0 | $ 0 |
Shares, Outstanding, Ending Balance at Mar. 31, 2023 | 40,090,664 | 500 | 3,000 | ||||
Preferred stock interest | $ 0 | 0 | (60,000) | 0 | (60,000) | $ 0 | $ 0 |
Equity, Including Portion Attributable to Noncontrolling Interest, Ending Balance at Mar. 31, 2023 | 40,090 | 50,383,656 | (59,607,321) | 0 | (9,183,571) | 1 | 3 |
Equity, Including Portion Attributable to Noncontrolling Interest, Beginning Balance at Dec. 31, 2022 | $ 37,690 | 49,786,056 | (58,996,099) | 0 | (9,172,349) | $ 1 | $ 3 |
Equity, Attributable to Parent, Beginning Balance at Dec. 31, 2022 | (9,172,349) | ||||||
Shares, Outstanding, Beginning Balance at Dec. 31, 2022 | 37,690,664 | 500 | 3,000 | ||||
Purchase of property and equipment with common stock | 0 | ||||||
Warrants issued with promissory notes | 811,861 | ||||||
Stock compensation expense | 1,156,100 | ||||||
Preferred stock interest | 180,000 | ||||||
Payment of CSIS debt by shareholder | 0 | ||||||
Non-controlling interest | 0 | ||||||
Equity, Attributable to Parent, Ending Balance at Sep. 30, 2023 | (2,251,806) | ||||||
Shares, Outstanding, Ending Balance at Sep. 30, 2023 | 82,210,664 | 500 | 3,000 | ||||
Preferred stock interest | (180,000) | ||||||
Equity, Including Portion Attributable to Noncontrolling Interest, Ending Balance at Sep. 30, 2023 | $ 82,210 | 60,759,497 | (63,093,518) | 0 | (2,251,807) | $ 1 | $ 3 |
Equity, Including Portion Attributable to Noncontrolling Interest, Beginning Balance at Dec. 31, 2022 | $ 37,690 | 49,786,056 | (58,996,099) | 0 | (9,172,349) | $ 1 | $ 3 |
Conversion of accrued preferred stock interest into shares | 450,000 | ||||||
Issuance of common stock pursuant to business combination | 8,000,000 | ||||||
Shares, Outstanding, Beginning Balance at Mar. 31, 2023 | 40,090,664 | 500 | 3,000 | ||||
Warrants issued with promissory notes | $ 0 | 185,788 | 0 | 0 | 185,788 | $ 0 | $ 0 |
Stock compensation expense | 0 | 1,156,100 | 0 | 0 | 1,156,100 | 0 | 0 |
Preferred stock interest | 0 | 0 | 60,000 | 0 | 60,000 | 0 | 0 |
Net Income (Loss) Attributable to Parent | $ 0 | 0 | (1,455,712) | 0 | (1,455,712) | $ 0 | $ 0 |
Shares, Outstanding, Ending Balance at Jun. 30, 2023 | 41,710,664 | 500 | 3,000 | ||||
Preferred stock interest | $ 0 | 0 | (60,000) | 0 | (60,000) | $ 0 | $ 0 |
Equity, Including Portion Attributable to Noncontrolling Interest, Ending Balance at Jun. 30, 2023 | 41,710 | 52,128,924 | (61,123,034) | 0 | (8,952,396) | 1 | 3 |
Equity, Including Portion Attributable to Noncontrolling Interest, Beginning Balance at Mar. 31, 2023 | 40,090 | 50,383,656 | (59,607,321) | 0 | (9,183,571) | 1 | 3 |
Conversion of accrued preferred stock interest into shares | $ 1,620 | 403,380 | 0 | 0 | 405,000 | 0 | 0 |
Conversion of accrued preferred stock interest into shares Shares | 1,620,000 | ||||||
Warrants issued in connection with note payable | $ 0 | 626,073 | 0 | 0 | 626,073 | 0 | 0 |
Preferred stock interest | $ 0 | 0 | 60,000 | 0 | 60,000 | 0 | 0 |
Shares Issued As Payment For Accrued Interest, Value | 405,000 | ||||||
Shares Issued As Payment For Accrued Interest, Shares | 1,620,000 | ||||||
Net Income (Loss) Attributable to Parent | $ 0 | 0 | (1,910,483) | 0 | (1,910,483) | $ 0 | $ 0 |
Equity, Attributable to Parent, Ending Balance at Sep. 30, 2023 | (2,251,806) | ||||||
Shares, Outstanding, Ending Balance at Sep. 30, 2023 | 82,210,664 | 500 | 3,000 | ||||
Preferred stock interest | $ 0 | 0 | (60,000) | 0 | (60,000) | $ 0 | $ 0 |
Equity, Including Portion Attributable to Noncontrolling Interest, Ending Balance at Sep. 30, 2023 | 82,210 | 60,759,497 | (63,093,518) | 0 | (2,251,807) | 1 | 3 |
Equity, Including Portion Attributable to Noncontrolling Interest, Beginning Balance at Jun. 30, 2023 | 41,710 | 52,128,924 | (61,123,034) | 0 | (8,952,396) | 1 | 3 |
Conversion of accrued preferred stock interest into shares | $ 500 | 44,500 | 0 | 0 | 45,000 | 0 | 0 |
Conversion of accrued preferred stock interest into shares Shares | 500,000 | ||||||
Issuance of common stock pursuant to business combination | $ 40,000 | $ 7,960,000 | $ 0 | $ 0 | $ 8,000,000 | $ 0 | $ 0 |
Issuance of common stock pursuant to business combination Shares | 40,000,000 |
UNAUDITED CONDENSED CONSOLIDA_3
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Cash flows from operating activities | ||
Net loss | $ (3,917,417) | $ (3,891,069) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Depreciation and amortization | 50,995 | 1,209,788 |
Amortization of right of use asset | 187,616 | 148,300 |
Amortization of debt discount | 178,721 | 0 |
Stock compensation expense | 1,156,100 | 0 |
Gain on property and equipment | (9,253) | (87,933) |
Gain on extinguishment of debt | (13,219) | 0 |
Unrealized loss (gain) on marketable securities | 0 | 44,244 |
Amortization of deferred financing cost | 0 | 72,855 |
Non-controlling interest | 0 | (467) |
Changes in operating assets and liabilities | ||
Accounts receivable, net | (509,296) | 87,424 |
Inventory | (1,864,800) | 140,481 |
Prepaid expenses and other assets | (83,160) | 11,540 |
Accounts payable and accrued expenses | 1,339,090 | 805,325 |
Deferred revenue | (211) | (6,524) |
Payments made in advance of securities date | 32,500 | 250,000 |
Right of use liability, net | (313,595) | (171,547) |
Net cash used in operating activities | (3,765,929) | (1,387,583) |
Cash flows from investing activities | ||
Cash acquired pursuant to business combination | 134,060 | 0 |
Sale of assets held for sale | 608,300 | 0 |
Purchase of property and equipment, net | (162,200) | (127,588) |
Net cash provided/(used) in investing activities | 580,160 | (127,588) |
Cash flows from financing activities | ||
Proceeds from (Repayments of) Related Party Debt | 72,055 | 45,443 |
Proceeds from Notes Payable | 5,000,000 | 1,233,000 |
Repayments of Notes Payable | (507,517) | (34,493) |
Proceeds from sale of common stock | 350,000 | 210,000 |
Net cash provided by financing activities | 4,914,537 | 1,453,950 |
Net change in cash and cash equivalents | 1,728,769 | (61,221) |
Cash and restricted cash at beginning of period | 32,602 | 190,029 |
Cash and restricted cash at end of period | 1,761,371 | 128,808 |
Cash at beginning of period | 12,474 | 170,015 |
Restricted cash at beginning of period | 20,128 | 20,014 |
Cash and restricted cash at beginning of period | 32,602 | 190,029 |
Cash at end of period | 1,741,005 | 108,741 |
Restricted cash at end of period | 20,366 | 20,067 |
Cash and restricted cash at end of period | 1,761,371 | 128,808 |
Cash paid for income taxes | 0 | 0 |
Cash paid for interest | 0 | 0 |
Supplemental disclosure of non-cash investing and financing activities | ||
Issuance of common stock pursuant to business combination | 8,000,000 | 0 |
Due to seller and contingent consideration pursuant to business combination | 1,208,000 | 0 |
Conversion of accrued preferred stock interest into shares | 450,000 | 0 |
Right of use asset and liability | 187,863 | 0 |
Payment of CSIS debt by shareholder | 0 | 1,212,080 |
Warrants issued with promissory notes | 811,861 | 302,537 |
Accrual of preferred stock interest | 120,000 | 180,000 |
Purchase of property and equipment with common stock | 0 | 700,000 |
Purchase of equipment with notes payable | 0 | 55,016 |
Settlement of accounts payable with sale of equipment | $ 0 | $ 212,067 |
NOTE 1_ ORGANIZATION AND BASIS
NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2023 | |
Notes | |
NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION | NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION Organization CFN Enterprises Inc., formerly known as Accelerize Inc., or the Company, is a Delaware corporation incorporated on November 22, 2005. Effective October 22, 2019, the Company filed a certificate of amendment to its certificate of incorporation with the Secretary of State of the State of Delaware to change its corporate name to CFN Enterprises Inc. On May 15, 2019, the Company entered into an asset purchase agreement or the Emerging Growth Agreement with Emerging Growth, LLC, or Emerging Growth, pursuant to which the Company acquired certain assets from Emerging Growth related to its sponsored content and marketing business for a purchase price consideration consisting of $420,000 in cash, 30,000,000 shares of the Company’s common stock, and 3,000 shares of Series B preferred stock with a total stated value of $3,000,000 which bears interest at 6% per annum and is convertible into the Company’s common stock at a conversion price to be mutually agreed in the future, without voting rights or a liquidation preference except with respect to default interest. The securities were issued pursuant to an exemption under Section 4(a)(2) of the Securities Act of 1933, as amended. The closing of the purchase of the assets pursuant to the Emerging Growth Agreement occurred on June 20, 2019. On January 22, 2021, the Company invested $35,000 in a new joint venture focused on sponsored content and marketing called East West Asset Management or East West. East West was formed as a Limited Liability Company in the State of Nevada on November 13, 2020. CFN owns 50% of the entity and one of its officers holds the title of Member Manager in East West. The Company has concluded that East West is a variable interest entity in accordance with applicable accounting standards and guidance. As such, the accounts and results of East West have been included in the Company’s condensed consolidated financial statements. On August 23, 2021, the Company entered into securities purchase agreements with CNP Operating, LLC, a Colorado limited liability company, or CNP Operating, and the owners of all of the equity interests of CNP Operating, or the Owners, whereby the Company acquired 100% of CNP Operating from the Owners in exchange for an aggregate of 23.6 million shares of the Company’s common stock. The securities were issued pursuant to an exemption under Section 4(a)(2) of the Securities Act of 1933, as amended. On August 25, 2021 the transaction was closed and CNP Operating became a wholly owned subsidiary of the Company. CNP Operating is a cannabidiol manufacturer. In the fourth quarter of 2022 and the first quarter of 2023, the Company took steps to wind down the operations of CNP Operating and focus on the CFN Business. On July 1, 2023, the Company and its wholly owned subsidiary, RANCO, LLC, a Delaware limited liability company, or Ranco, entered into an asset purchase agreement, or the Asset Purchase Agreement with RAN CoPacking Solutions LLC, a California limited liability company, or the Seller and the members of the Seller (collectively, the Founders). The assets of the Seller acquired by Ranco consist of assets for co-packing and white label manufacturing services, including comprehensive solutions for third party logistics (3PL) related areas such as storage, order fulfillment, solutions for custom packaging and hardware needs for many different industries, and media and design services, along with strategic marketing support, to help clients establish and enhance their brand presence in the market, or the Purchased Assets. Ranco acquired the Purchased Assets and assumed certain liabilities of the Seller or the Acquisition, in exchange for an aggregate of 40 million shares of Company common stock, or the Acquisition Shares, and $1 million in cash consideration, payable in quarterly installments in an amount equal to the lesser of (i) Ranco’s gross revenues attributable to the Purchased Assets from and after the closing, net of all accrued debts, liabilities, and obligations of the Ranco and all amounts necessary or advisable to reserve, designate, or set aside for actual or anticipated costs, payments, liabilities, obligations, and claims with respect to the Purchased Assets, all as determined in good faith by Ranco, and (ii) $250,000, until paid in full, or the Cash Consideration. The Acquisition Shares were issued pursuant to an exemption under Section 4(a)(2) of the Securities Act of 1933, as amended. The Asset Purchase Agreement also contains an earn out provision providing for the issuance of (i) 8 million shares of Company common stock to be issued upon Ranco achieving $19 million in gross revenue attributable to the Purchased Assets and a net profit of $3.9 million within the twelve month period beginning three months from the closing of the Acquisition, or the First Earnout Period, and (ii) 8 million shares of Company common stock to be issued upon Ranco achieving $29 million in gross revenue attributable to the Purchased Assets and a net profit of $5.9 million within the twelve month period beginning on the day immediately following the end of the First Earnout Period. Also on July 1, 2023, Ranco entered into the Packwoods Private Label Services and Intellectual Property Licensing Agreement, or the Licensing Agreement, with PW Industries LLC, a Wyoming limited liability company, or PW, RS Distributions LLC, a Delaware limited liability company, or RS, and Packaging Innovations LLC, a Wyoming limited liability company, or PI, and together with PW and RS, the Licensors, for the exclusive manufacturing, packaging and distribution of, and wholesale and retail sales of a variety hemp-based inhalable (pre-roll and vaporizer), edible products, and disposable nicotine-based inhalable vaporizer products, and the purchase of packaging materials to be used with Packwoods-branded cannabis products (containing more than 0.3% delta-9 THC by weight) and the distribution of those packaging materials to licensed cannabis manufacturers designated by PW, using the Licensor’s licensed property for a 5 year exclusive term, subject to certain exclusions. The Company’s current operations consist of the sponsored content and marketing business, or the CFN Business, from the assets acquired pursuant to the Emerging Growth Agreement, and the business of Ranco, or the Ranco Business, consisting of co-packing and white label manufacturing services, including comprehensive solutions for third party logistics (3PL) related areas such as storage, order fulfillment, solutions for custom packaging and hardware needs for many different industries, and media and design services, along with strategic marketing support, to help clients establish and enhance their brand presence in the market, and the manufacturing, packaging and distribution of, and wholesale and retail sales of a variety hemp-based inhalable (pre-roll and vaporizer), edible products, and disposable nicotine-based inhalable vaporizer products, and the purchase of packaging materials to be used with Packwoods-branded cannabis products (containing more than 0.3% delta-9 THC by weight) and the distribution of those packaging materials to licensed cannabis manufacturers designated by PW, using the Licensor’s licensed property for a 5 year exclusive term, subject to certain exclusions. Going Concern The accompanying consolidated financial statements have been prepared on a going concern basis which implies the Company will continue to meet its obligations for the next 12 months as of the date these financial statements are issued. The Company had a working capital deficit of $8,032,685 and an accumulated deficit of $63,093,517 as of September 30, 2023. The Company also had a net loss of $3,917,417 for the nine months ended September 30, 2023. Management’s plan to continue as a going concern includes raising capital in the form of debt or equity, growing the CFN Business, growing the newly acquired Ranco Business managing and reducing operating and overhead costs and continuing to pursue strategic transactions and opportunities including launching an e-commerce network focused on the sale of general wellness cannabidiol, or CBD, products. These matters, among others, raise substantial doubt about the ability of the Company to continue as a going concern. These financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern. Basis of Presentation and Consolidation The accompanying consolidated financial statements include the results of operations of the Company and its subsidiaries CNP Operating, CFN Real Estate, LLC, a Delaware limited liability company, CFN Real Estate II, LLC, a Delaware limited liability company, CNP of Wyoming, LLC, a Colorado limited liability company, and Ranco, LLC, a Delaware limited liability company. All intercompany accounts and transactions between the Company and its subsidiaries have been eliminated in consolidation. During the period ended June 30, 2022 the Company concluded that East West was a variable interest entity in accordance with applicable accounting standards and guidance. As such, the accounts and results of East West have been included in the Company’s consolidated financial statements. As of December 31, 2022, East West was fully impaired and valued at $0. These unaudited condensed financial statements reflect all adjustments including normal recurring adjustments, which, in the opinion of management, are necessary to present fairly the financial position, results of operations, and cash flows for the periods presented in accordance with accounting principles generally accepted in the United States of America, or GAAP. These unaudited condensed consolidated financial statements and notes included herein should be read in conjunction with the Company’s consolidated financial statements and notes thereto for the years ended December 31, 2022 and 2021, which are included in the Company’s December 31, 2022 Annual Report on Form 10-K filed with the United States Securities and Exchange Commission on April 17, 2023. The Company assumes that the users of the interim financial information herein have read, or have access to, the audited consolidated financial statements for the preceding period, and that the adequacy of additional disclosure needed for a fair presentation of these may be determined in that context. The results of operations for the period ended September 30, 2023 are not necessarily indicative of results for the entire year ending December 31, 2023. |
NOTE 2_ SUMMARY OF SIGNIFICANT
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2023 | |
Notes | |
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of consolidated financial statements in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reporting amounts of revenues and expenses during the reported period. Actual results will differ from those estimates. Included in these estimates are assumptions about collection of accounts receivable, useful life of fixed assets and intangible assets, borrowing rate considered for operating lease right-of-use asset and related operating lease liability, and assumptions used in Black-Scholes valuation methods, such as expected volatility, risk-free interest rate, and expected dividend rate. Financial Statement Reclassification Certain account balances from prior periods have been reclassified in these consolidated financial statements to conform to current period classifications. Cash and Cash Equivalents The Company considers all highly liquid temporary cash investments with an original maturity of three months or less when purchased, to be cash equivalents. The Company has restricted cash as a result of its corporate card program through its bank, which requires collateral placed in a money market account. At September 30, 2023, the Company had a restricted cash balance of $20,366 included as a component of total cash and restricted cash as presented on the accompanying unaudited condensed consolidated statement of cash flows. Accounts Receivable The Company’s account receivables for the CFN Business are due from customers relating to contracts to provide investor relation services for the CFN Business. For the Ranco Business, accounts receivables are due from customers for products sold and manufacturing, packing and labeling services provided. Collateral is currently not required. The Company also maintains allowances for doubtful accounts for estimated losses resulting from the inability of the Company’s customers to make payments. The Company periodically reviews these estimated allowances, including an analysis of the customers’ payment history and creditworthiness, the age of the trade receivable balances and current economic conditions that may affect a customer’s ability to make payments as well as historical collection trends for its customers as a whole. Based on this review, the Company specifically reserves for those accounts deemed uncollectible or likely to become uncollectible. When receivables are determined to be uncollectible, principal amounts of such receivables outstanding are deducted from the allowance. The allowance for doubtful accounts as of September 30, 2023 and December 31, 2022 amounted to $454,012 and $470,532 respectively. Inventory The Company’s inventory consists of finished goods acquired for its Ranco business. As of September 30, 2023, all inventory consisted of disposable nicotine-based inhalable vaporizer products purchased from overseas. The inventory is valued at the lower of cost (specific identification) or estimated net realizable value. As of September 30, 2023, the Company valued the inventory at $1,864,800. Concentration of Credit Risks The Company is subject to concentrations of credit risk primarily from cash and cash equivalents and accounts receivable. The Company’s cash and restricted cash accounts are held at a financial institution and are insured by the Federal Deposit Insurance Corporation, or the FDIC, up to $250,000. From time-to-time, the Company’s bank balances exceed the FDIC insurance limit. To reduce its risk associated with the failure of such financial institutions, the Company periodically evaluates the credit quality of the financial institution in which it holds deposits. As of September 30, 2023, the Company had $1,491,005 in excess of federally insured limits. Revenue Recognition The Company recognizes revenue in accordance with Accounting Standards Codification, or ASC, 606, the core principle of which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. To achieve this core principle, five basic criteria must be met before revenue can be recognized: (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 performance obligations in the contract; and (5) recognize revenue when or as the Company satisfies a performance obligation. The Company accounts for revenues when both parties to the contract have approved the contract, the rights and obligations of the parties are identified, payment terms are identified, and collectability of consideration is probable. Payment terms vary by client and the services offered. CFN Business Subsequent to the closing of the Emerging Growth Agreement on June 20, 2019, the Company’s revenue is generated from the sale of promotional service packages to its customers ranging from 3 to 6 months. The Company offers different packages tailored to the type and stage of the potential customer, such as public companies looking to increase their shareholder base, as well as private companies potentially looking to go public and attract capital and publicity. The services provided by the Company include advertising, publishing of interviews and articles across its network and featuring of client content on its newsletters and social media. The packages all have fixed prices that are billed monthly over the terms of the agreement in even amounts. The Company recognizes revenue for its performance obligation associated with its contracts with customers over time as work is performed, which is deemed to occur evenly throughout the duration of the contract. This also reflects the pattern in which costs are incurred on performing the contracts. To the extent revenue recognized on contracts at each period end exceeds collections, the amounts are reflected as accounts receivable. To the extent collections on contracts at each period end exceeds revenue recognized, the amounts are reflected as deferred revenue. Ranco Business The Company performs services including white label manufacturing and co-packing for customers. Customers will drop off their product and the Company will perform the services via their employees and contractors. When the services are complete, the Company has satisfied its performance obligations. Revenue is recognized at this point in time. The Company will order products that are manufactured overseas, such as custom boxes, packaging and hardware. These products are generally shipped from overseas to the customer. When these products are shipped out from the manufacturer, the Company has satisfied its performance obligations. Revenue is recognized at this point in time. Lastly, the Company provides certain shipping and third party logistics services for customers. When the services are complete, the Company has satisfied its performance obligations. Revenue is recognized at this point in time. Disaggregation of Revenue The following is a disaggregation of revenue for the three months ended September 30, 2023 and 2022 respectively: Three Months Ended September 30, 2023 2022 Services $ 399,603 $ 119,028 Products 384,380 721,942 Shipping and logistics 894,588 - $ 1,678,571 $ 840,970 The following is a disaggregation of revenue for the nine months ended September 30, 2023 and 2022 respectively: Nine Months Ended September 30, 2023 2022 Services $ 622,378 $ 343,997 Products 426,863 3,484,637 Shipping and logistics 894,588 - $ 1,943,830 $ 3,828,634 Cost of Revenue Cost of revenue includes direct labor and materials. Cost of revenues also includes inbound and outbound shipping, freight and delivery costs. Shipping and Handling Fees and Costs Amounts billed to customers for shipping and handling fees are presented in revenue. Costs incurred for shipping and handling are included in cost of revenue. Fair Value of Financial Instruments The Company accounts for assets and liabilities measured at fair value on a recurring basis in accordance with ASC Topic 820, Fair Value Measurements and Disclosures, or ASC 820. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements, establishes a framework for measuring fair value, and expands disclosure about such fair value measurements. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below: Level 1: Observable inputs such as quoted market prices in active markets for identical assets or liabilities. Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. Level 3: Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions. The carrying value of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, deferred revenue and due to related party approximate their fair value due to the short-term maturity of these items. The Company’s notes payable approximate their fair value due to the market rate of interest on the notes. The Company’s contingent consideration recorded in connection with the Ranco acquisition (see Note 3) is a Level 3 liability. The liability is valued using a probability weighted analysis of the respective earn out provisions. Business Combinations The Company accounts for acquisitions in which it obtains control of one or more businesses as a business combination. The purchase price of the acquired businesses is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. The excess of the purchase price over those fair values is recognized as goodwill. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments, in the period in which they are determined, to the assets acquired and liabilities assumed with the corresponding offset to goodwill. If the assets acquired are not a business, the Company accounts for the transaction or other event as an asset acquisition. Under both methods, the Company recognizes the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired entity. In addition, for transactions that are business combinations, the Company evaluates the existence of goodwill or a gain from a bargain purchase. Goodwill represents the excess of the purchase price of an acquired entity over the fair value of identifiable tangible and intangible assets acquired and liabilities assumed in a business combination. Impairment Long-Lived Assets In accordance with ASC 360-10, the Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made. Goodwill Goodwill and identifiable intangible assets that have indefinite useful lives are not amortized, but instead are tested annually for impairment and upon the occurrence of certain events or substantive changes in circumstances. The annual goodwill impairment test allows for the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. An entity may choose to perform the qualitative assessment on none, some or all of its reporting units or an entity may bypass the qualitative assessment for any reporting unit and proceed directly to step one of the quantitative impairment test. If it is determined, on the basis of qualitative factors, that the fair value of a reporting unit is, more likely than not, less than its carrying value, the quantitative impairment test is required. The quantitative impairment test calculates any goodwill impairment as the difference between the carrying amount of a reporting unit and its fair value, but not to exceed the carrying amount of goodwill. It is the Company’s practice, at a minimum, to perform a qualitative or quantitative goodwill impairment test in the fourth quarter every year. Contingent Consideration The Company records a contingent consideration liability relating to earn the Company’s shares included in its acquisition agreements. The estimated fair value of the contingent consideration is recorded using significant unobservable measures and other fair value inputs and is therefore classified as a Level 3 financial instrument. The Company estimates and records the acquisition date fair value of contingent consideration as part of purchase price consideration for acquisitions. Additionally, each reporting period, the Company estimates changes in the fair value of contingent consideration and recognizes any change in fair in the consolidated statement of operations. The estimate of the fair value of contingent consideration requires very subjective assumptions to be made of future operating results, discount rates and probabilities assigned to various potential operating result scenarios. Future revisions to these assumptions could materially change the estimate of the fair value of contingent consideration and, therefore, materially affect the Company’s future financial results. The contingent consideration liability is to be settled with the issuance of shares of common stock once contingent provisions set forth in respective acquisition agreements have been achieved. Upon achievement of contingent provisions, respective liabilities are relieved and offset by increases to common stock and additional paid-in capital in the stockholders’ equity section of the Company’s consolidated balance sheets. Advertising The Company expenses advertising costs as incurred. Advertising expenses for the three months ended September 30, 2023 and 2022 amounted to $24,487 and $4,761, respectively. Advertising expenses for the nine months ended September 30, 2023 and 2022 amounted to $52,773 and $23,172, respectively. Income Taxes Income taxes are accounted for in accordance with the provisions of ASC Topic 740, Accounting for Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized, but no less than quarterly. For interim periods, the Company uses the effective income tax rate method resulting in zero income tax for the nine months ended September 30, 2023 and 2022. Property and Equipment Property and equipment are recorded at cost and are depreciated on a straight-line basis over their estimated useful lives of five years. Maintenance and repairs are charged to expense as incurred. Significant renewals and betterments are capitalized. Basic and Diluted Earnings Per Share Basic earnings per share are calculated by dividing income available to stockholders by the weighted-average number of common shares outstanding during each period. Diluted earnings per share are computed using the weighted average number of common and dilutive common share equivalents outstanding during the period. Dilutive common share equivalents consist of shares issuable upon the exercise of stock options and warrants (calculated using the modified-treasury stock method). As of September 30, 2023, the Company had no outstanding stock options, 11,988,500 outstanding warrants and 3,500 shares of preferred stock which were excluded from the calculation of diluted earnings per share because their effects were anti-dilutive. As of September 30, 2022, the Company had 0 outstanding stock options and 988,500 outstanding warrants which were excluded from the calculation of diluted earnings per share because their effects were anti-dilutive. As a result, the basic and diluted earnings per share are the same for each of the periods presented. Share-Based Payments The Company accounts for stock-based compensation in accordance with ASC Topic 718, Compensation-Stock Compensation, or ASC 718. Under the fair value recognition provisions of this topic, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as an expense on a straight-line basis over the requisite service period, which is the vesting period. The Company has elected to use the Black-Scholes option-pricing model to estimate the fair value of its options, which incorporates various subjective assumptions including volatility, risk-free interest rate, expected life, and dividend yield to calculate the fair value of stock option awards. Compensation expense recognized in the statements of operations is based on awards ultimately expected to vest and reflects estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Common Stock Awards The Company has granted common stock awards to non-employees in exchange for services provided. The Company measures the fair value of these awards using the fair value of the services provided or the fair value of the awards granted. The fair value of the awards is recognized on a straight-line basis as services are rendered. The share-based payments related to common stock awards for the settlement of services provided by non-employees is recorded on the consolidated statement of comprehensive loss in the same manner and charged to the same account as if such settlements had been made in cash. Warrants In connection with certain financing, consulting and collaboration arrangements, the Company has issued warrants to purchase shares of its common stock. The outstanding warrants are standalone instruments that are not puttable or mandatorily redeemable by the holder and are classified as equity awards. The Company measures the fair value of the awards using the Black-Scholes option pricing model as of the measurement date. Warrants are recorded at fair value as expense over the requisite service period or at the date of issuance, if there is not a service period. Warrants granted in connection with ongoing arrangements are more fully described in Note 6, Stockholders’ Deficit. Leases The Company adopted Accounting Standards Update No. 2016-02, Leases (“Topic 842”) using the modified retrospective method. This accounting standard requires a lessee to recognize an asset and liability for most leases on its balance sheet. The Company elected the practical expedient method permitted under the transition guidance, which allows a carryforward of historical lease classification, the assessment on whether a contract was or contains a lease, and the initial direct costs for any leases that existed prior to July 1, 2019. The Company also elected to recognize the associated lease payments in the consolidated statements of operations on a straight-line basis over the lease term. Under Topic 842, the Company determines if an arrangement is a lease at inception. ROU assets and lease liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement and leases with an initial term of 12 months or less are not included in lease liabilities or ROU asset. As most leases do not provide an implicit rate, a rate which approximates the Company’s incremental borrowing rate is used, based on the information available at commencement date, in determining the present value of lease payments. The ROU asset also includes any lease payments made prior to commencement and is recorded net of any lease incentives received. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. Lease agreements may contain variable costs such as common area maintenance, insurance, real estate taxes or other costs. Variable lease costs are expensed as incurred. Lease agreements generally do not contain residual value guarantees or restrictive covenants. Over the lease term, the Company uses the effective interest rate method to account for the lease liability as lease payments are made and the ROU asset is amortized in a manner that results in straight-line expense recognition. At December 31, 2022, management determined that certain events and circumstances occurred that indicated that the net book value of CNP’s ROU assets may not be recoverable. As such, the Company recorded an impairment charge of $339,768. |
NOTE 3_ BUSINESS COMBINATIONS
NOTE 3: BUSINESS COMBINATIONS | 9 Months Ended |
Sep. 30, 2023 | |
Notes | |
NOTE 3: BUSINESS COMBINATIONS | NOTE 3: BUSINESS COMBINATIONS RAN CoPacking Solutions LLC The Company evaluated the Asset Purchase Agreement pursuant to ASC 805 and ASU 2017-01, Topic 805, Business Combinations. The Company first determined that the Seller met the definition of a business as it includes inputs and a substantive process that together significantly contribute to the ability to create outputs. The Seller’s results of operations are included in the Company’s consolidated financial statements from the date of acquisition.The acquisition method of accounting requires, among other things, that the assets acquired and liabilities assumed in a business combination be measured at their estimated respective fair values as of the closing date of the acquisition. Goodwill recognized in connection with this transaction represents primarily the potential economic benefits that the Company believes may arise from the acquisition The purchase price allocation is preliminary and could be significantly revised as a result of additional information obtained regarding assets acquired and liabilities assumed and revisions of estimates of fair values of tangible assets and related deferred tax assets and liabilities. The Company will finalize its valuation and the allocation of the purchase price, along with required retrospective adjustments, if any, within a year following the acquisition date. Total fair value of the preliminary purchase price consideration as of July 1, 2023 was determined as follows: Cash (due to seller) $ 1,000,000 Common stock 8,000,000 Contingent consideration 208,000 Purchase price consideration $ 9,208,000 On July 1, 2023, the Company issued 40,000,000 shares of common stock pursuant to the Asset Purchase Agreement for a fair value of $8,000,000, or $0.20 per share. Pursuant to the Asset Purchase Agreement, the Company owes the Seller $1,000,000 in cash consideration. The amount was recorded as a due to seller liability on the consolidated balance sheet. As of September 30, 2023, no payments were made. In accordance with the Earn Out provisions per the Asset Purchase Agreement, the Company determined an initial fair value of $208,000 based on the fair value of the shares at the acquisition date and probabilities of the respective Earn Out terms. There was no change in fair value of the contingent consideration at September 30, 2023. Preliminary Purchase Price Allocation The Company has made a preliminary allocation of the purchase price in regard to the acquisition related to the assets acquired and the liabilities assumed as of the purchase date. The following table summarizes the preliminary purchase price allocation: Cash $ 134,060 Accounts receivable 175,340 Deposits 297,269 Goodwill 8,676,430 Right of use asset 2,272,059 Accounts payable (48,430) Current portion of right of use liability (538,243) Right of use of liability (1,760,485) Purchase price consideration $ 9,208,000 Goodwill is primarily attributable to the go-to-market synergies that are expected to arise as a result of the acquisition and other intangible assets that do not qualify for separate recognition. The goodwill is not deductible for tax purposes. The results of RAN CoPacking Solutions LLC RAN CoPacking Solutions LLC Unaudited Pro Forma Financial Information The following unaudited pro forma financial information presents the Company’s financial results as if the RAN CoPacking Solutions LLC Nine Months Ended September 30, 2023 2022 Net revenues $ 4,137,571 $ 6,982,954 Net loss $ (4,192,796) $ (3,815,533) Net loss per common share $ (0.08) $ (0.12) |
NOTE 4_ PROPERTY AND EQUIPMENT
NOTE 4: PROPERTY AND EQUIPMENT | 9 Months Ended |
Sep. 30, 2023 | |
Notes | |
NOTE 4: PROPERTY AND EQUIPMENT | NOTE 4: PROPERTY AND EQUIPMENT The Company’s property and equipment relating to continuing operations consisted of the following: September 30, December 31, 2023 2022 Machinery & equipment $ - $ 50,000 Furniture and equipment and leasehold improvements 14,772 14,772 Tradeshow booth 162,200 - 176,972 64,772 Less: Accumulated depreciation (12,197) (11,202) $ 164,775 $ 53,570 At December 31, 2022, management determined that certain events and circumstances occurred that indicated that the net book value of CNP’s long-lived assets may not be recoverable. As such, the Company recorded an impairment charge of $3,276,193 to record the estimated residual value of the property and equipment, which was determined to be $50,000. This remaining residual value was fully depreciated in the third quarter of 2023. Depreciation expense for the three months ended September 30, 2023 and 2022 amounted to $45,332 and $421,336, respectively. Depreciation expense for the nine months ended September 30, 2023 and 2022 amounted to $50,996 and $1,209,788, respectively. |
NOTE 5_ NOTES PAYABLE
NOTE 5: NOTES PAYABLE | 9 Months Ended |
Sep. 30, 2023 | |
Notes | |
NOTE 5: NOTES PAYABLE | NOTE 5: NOTES PAYABLE On September 10, 2019, the Company entered into a promissory note payable whereby the Company borrowed $500,000 bearing interest at 8% per annum. Interest on the note is payable quarterly on the first business day of December, March, June and September commencing December 1, 2019. In May 2021, the Company and the holder of the promissory note reached an agreement to extend the maturity date of the note from September 30, 2022 to September 30, 2024. In connection with the extension, the Company issued 160,000 shares of its common stock to the noteholder in lieu of $40,000 of interest accrued and accruing on the promissory note through December 31, 2022. In 2022, the maturity date was extended to 2024. In connection with the promissory note on September 10, 2019, the Company issued warrants to purchase 33,333 shares of the Company’s common stock at an exercise price of $1.50 per share. The warrants were exercised on June 30, 2021 and the Company received $50,000. The note was discounted by $17,624 allocated from the valuation of the warrants issued. The discount recorded on the note is being amortized as interest expense through the maturity date. As of September 30, 2023, the net book value of the promissory note amounted to $500,000, including the principal amount of $50,000 which was fully amortized. On October 28, 2019, the Company’s subsidiary CNP Operating entered into a promissory note payable with Complete Business Solutions Group, Inc (“CBSG”) whereby the Company borrowed $3,050,000. The outstanding balance of the note was $2,218,000 at December 31, 2022. At December 31, 2022, the Company reversed $1,312,080 previously recorded to additional paid-in capital in 2022 to reflect the outstanding principal of $2,218,000. The note is currently in default and personally guaranteed by Anthony Zingarelli. On September 30, 2019, the Company’s subsidiary CNP Operating entered into a promissory note payable with Eagle Six Consultants, Inc. (“Eagle”) whereby the Company borrowed $550,000 bearing interest at 16% per annum. The outstanding balance of the note was $302,489 at September 30, 2023. The note is currently in default. On June 24, 2020, the Company entered into a Loan Authorization and Agreement with the SBA under which the Company borrowed $150,000 and issued to the SBA a note and security agreement for the amount borrowed. Outstanding borrowings accrue interest at a rate of 3.75% per annum, and installment payments, including principal and interest, of $731 are due monthly and begin 12 months from the date of the loan agreement. The balance of any remaining principal and interest is due 30 years from the date of the loan agreement. As collateral for the borrowing, the Company granted the SBA a security interest in substantially all assets of the Company. On May 12, 2021, the Company’s subsidiary CNP Operating restructured the CSBG note payable of $2,957,000, the Eagle #1 note payable of $550,000 and the Eagle #2 note payable of $300,000 by entering into a payment and indemnification agreement with the receivers/trustee of CBSG and Eagle. The receiver has agreed that the balance of the outstanding amounts will be paid over the course of 24 months in equal payments of $158,625. Further, the Company shall pay $20,000 per month toward the balance and Anthony Zingarelli (“Zingarelli”) and Colorado Sky Industrial Supply LLC (“CSIS”), agree to personally pay the sum of $138,625 per month. Zingarelli is the only member of CNP Operating that signed a personal guarantee on the loans and Zingarelli is the sole member of CSIS. Zingarelli and CSIS has agreed to indemnify and hold the Company harmless from any and all losses, liabilities and claims. If a loss is incurred by the Company with respect to any claims, Zingarelli shall reimburse the Company for the amount of any such loss. The Company has recorded the Zingarelli payments during the period as contributions to additional paid in capital through December 31, 2021. This note is currently in default. On November 19, 2020, the Company’s subsidiary CNP Operating purchased equipment for $58,095 which was financed at zero interest rate. The monthly payments of $968 will be made for the next 60 months and mature on November 19, 2025. Imputed interest was not material. The outstanding balance of the note was $34,892 at December 31, 2022. In 2022, CNP purchased equipment for $55,016 which was financed at zero interest rate with the same lender with similar terms. The outstanding balance of the note was $48,513 at December 31, 2022, and was fully repaid in 2023. On October 19, 2021, the Company borrowed $250,000 from a lender and issued a promissory note for the repayment of the amount borrowed. The promissory note is unsecured, has a maturity date of December 31, 2024 and all principal is due upon maturity. The amount borrowed accrues interest at 12% per annum and accrued interest is payable monthly commencing on December 1, 2021. The promissory note contains customary events of default permitting acceleration of repayment for nonpayment of amounts due, a bankruptcy related proceeding, breach of representations or covenants, sale of substantially all assets, and change of control. On April 8, 2022, the Company entered into two promissory notes for aggregate proceeds of $676,000. The promissory note is unsecured, has a maturity date of April 30, 2024 and all principal is due upon maturity. The notes bear interest at 18% per annum and accrued interest is payable monthly commencing on August 1, 2022. In connection with the notes, the Company granted 676,000 warrants to the lenders with an exercise price of $1.00 per share. On October 4, 2022, the Company converted the entire $676,000 in principal and $50,700 in accrued interest on its convertible notes into an aggregate of 2,906,800 shares of common stock. On May 11, 2022, the Company’s subsidiary, CFN Real Estate II, LLC, entered into a promissory note with a lender for the repayment of $500,000 in connection with the $500,000 refinancing of the Company’s property located in Wray, Colorado. The company received the proceeds from the refinancing on May 16, 2022. Accrued interest at the rate of 12% is payable monthly commencing on June 15, 2022, and the principal of the promissory note is payable upon maturity on June 15, 2024. Upon the Company’s sale of the property in April 2023 (see Note 7), the note was fully repaid. On May 8, 2023, the Company entered into a promissory note with two lenders for aggregate proceeds of $1,150,000. The notes are unsecured and have a maturity date 15 months following their issuance. Beginning on the fourth month after issuance, the Company will make monthly repayments totaling $143,750, including principal and interest. Total principal and interest to be repaid is $1,725,000, and any remaining outstanding balance is due at maturity. In connection with the notes, the Company granted an aggregate of 1,150,000 warrants to the lenders with an exercise price of $0.25 per share. The fair value of the warrants was $185,788, which was recognized as a debt discount and will be amortized to interest expense over the life of the notes. During the nine months ended September 30, 2023, amortization of debt discount was $53,507. As of September 30, 2023, note payable, net of unamortized discount of $132,281, was $1,017,719 for these two notes. On July 1, 2023, the Company entered into a promissory note with two lenders for aggregate proceeds of $3,850,000. The notes are unsecured and have a maturity date 15 months following their issuance. In connection with the notes, the Company granted an aggregate of 3,850,000 warrants to the lenders with an exercise price of $0.25 per share. The fair value of the warrants was $626,073, which was recognized as a debt discount and will be amortized to interest expense over the life of the notes. During the nine months ended September 30, 2023, amortization of debt discount was $125,215. As of September 30, 2023, note payable, net of unamortized discount of $500,858, was $3,349,141 for these two notes. On July 1, 2023, the May and July notes were rolled over to Ranco, LLC for an aggregate of $5,000,000 (the “Ranco Notes”). The Ranco Notes have a 15 month term and are subject to mandatory equal repayments commencing on the fourth month following issuance, for an aggregate repayment of $7,500,000. The Ranco Notes are secured by the assets of Ranco and guaranteed by the Company. Future scheduled maturities of long-term debt are as follows: September 30, 2023 2024 3,854,300 2025 3,892,727 2026 50,882 2027 23,702 Thereafter 104,320 7,925,930 The aggregate current portion of long-term debt as of June 30, 2023 amounted is $3,854,300, which represents the contractual principal payments due in the next 12 months period as well as any notes in default. |
NOTE 6_ STOCKHOLDERS' DEFICIT
NOTE 6: STOCKHOLDERS' DEFICIT | 9 Months Ended |
Sep. 30, 2023 | |
Notes | |
NOTE 6: STOCKHOLDERS' DEFICIT | NOTE 6: STOCKHOLDERS’ DEFICIT Common Stock On December 6, 2021, the Company effected a reverse split of its outstanding common stock in the ratio of 1-for-15. In January 2023, the Company issued 2,400,000 shares of common stock at a purchase price of $0.25 per share for $600,000 in gross proceeds. In May 2023, the Company and Emerging Growth reached an agreement whereby the Company issued 1,620,000 shares of its common stock as payment for $405,000 in outstanding accrued interest on the Series B Preferred Stock through June 30, 2023. In July 2023, the Company issued 40,000,000 shares of common stock at a price of $0.20 per share, or total fair value of $8,000,000, pursuant to the Ranco business combination. In August 2023, the Company and Emerging Growth reached an agreement whereby the Company issued 500,000 shares of its common stock as payment for $45,000 in outstanding accrued interest on the Series B Preferred Stock through September 30, 2023 . As of September 30, 2023 and December 31, 2022, there was $0 and $217,500, respectively, in payments made in advance of securities date. Preferred Stock The Company is authorized to issue 2,000,000 shares of preferred stock with a par value of $0.001 per share, of which 500 have been authorized as Series A Preferred Stock and 3,000 have been authorized as Series B Preferred Stock. For the nine months ending September 30, 2023 and 2022, the Company incurred $180,000 and $180,000, respectively, of interest from the outstanding preferred stock. In May, 2023, the Company and Emerging Growth reached an agreement whereby the Company issued 1,620,000 shares of its common stock as payment for $405,000 in outstanding accrued interest on the Series B Preferred Stock through June 30, 2023. In August, 2023, the Company and Emerging Growth reached an agreement whereby the Company issued 500,000 shares of its common stock as payment for $45,000 in outstanding accrued interest on the Series B Preferred Stock through September 30, 2023 . Warrants The following summarizes the Company’s warrant activity for the six months ended September 30, 2023: Warrants Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life (Years) Outstanding at December 31, 2022 988,500 $ 2.25 2.39 Granted 7,150,000 0.25 4.89 Forfeited - Outstanding at June 30, 2023 8,138,500 $ 0.49 4.53 Granted 3,850,000 0.25 4.75 Forfeited - Outstanding at September 30, 2023 11,988,500 $ 0.41 4.43 Vested and expected to vest at September 30, 2023 11,988,500 $ 0.41 4.43 Exercisable at September 30, 2023 11,988,500 $ 0.41 4.43 On May 19, 2023, the Company entered into an advisory agreement with the Isaac Shehebar 2008 AIJJ Grantor Retained Annuity Trust and Ezra A. Chehebar (the “Advisors”), existing shareholders of the Company, for consulting services and to advise the Company’s executive team on strategic, branding, marketing, distribution, networking and other general business matters. As consideration under the advisory agreement, on May 22, 2023, the Company issued an aggregate of 6,000,000 five-year warrants to purchase common stock at a price of $0.25 per share to the Advisors. The warrants are immediately exercisable. During the nine months ending September 30, 2023, the Company recorded stock-based compensation expense of $1,156,100 pertaining to these warrants, which was included in additional paid-in capital. In connection with the May 2023 notes (see Note 5), the Company issued 1,150,000 warrants to purchase common stock. The warrants have an exercise price of $0.25 per share, are immediately exercisable and have a term of 5 years. The fair value of the warrants was $185,788, which was recognized as a debt discount and will be amortized to interest expense over the life of the notes. During the nine months ended September 30, 2023, amortization of debt discount was $53,507. In connection with the July 2023 notes (see Note 5), the Company issued 3,850,000 warrants to purchase common stock. The warrants have an exercise price of $0.25 per share, are immediately exercisable and have a term of 5 years. The fair value of the warrants was $626,073, which was recognized as a debt discount and will be amortized to interest expense over the life of the notes. During the nine months ended September 30, 2023, amortization of debt discount was $125,215. As of September 30, 2023, all outstanding warrants were fully vested and there was no remaining unrecorded compensation expense. Options The Company had a Stock Option Plan, or the Plan, under which the total number of shares of capital stock of the Company that may be subject to options under the Plan was 1,500,000 shares of Common Stock from either authorized but unissued shares or treasury shares. The Plan expired on December 14, 2016. As of September 30, 2023, there were no outstanding options. |
NOTE 7_ LEASES
NOTE 7: LEASES | 9 Months Ended |
Sep. 30, 2023 | |
Notes | |
NOTE 7: LEASES | NOTE 7: LEASES On June 20, 2019, the Company entered into a Lease Agreement with Emerging Growth for the lease of office space in Whitefish, Montana, for a period of one year at a rate of $1,500 per month. On August 5, 2020, the Company entered into a lease agreement with Emerging Growth for additional office space in Whitefish, Montana, replacing its previous lease from June 20, 2019. The term of the lease commenced on September 1, 2020 for a period of one year at a rate of $4,500 per month. The lease contains an option for the Company to renew the lease for a period of one additional year at a monthly rent subject to a 3% increase. Management has elected a policy to exclude leases with an initial term of 12 months or less from the balance sheet presentation required under ASC 842. As a result, the office lease has been excluded from balance sheet presentation as it has an original term of 12 months or less. On March 30, 2021, the Company entered into a new lease with Emerging Growth, which took the place of the old lease effective April 1, 2021. The lease provides for payments of $4,500 per month and has a term of three years and contains an option for the Company to renew the lease for a period of one additional year at a monthly rent subject to a 3% increase. On June 4, 2019, the Company’s subsidiary CNP Operating entered into a Lease Agreement with Blair Investments, LLC for the lease of office space in Centennial Colorado, for a period of 3 year at a rate of $10,521 per month. On September 26, 2019, this agreement was terminated and replaced with a new agreement starting October 1, 2019 and expiring on June 30, 2023. The agreement is personally guaranteed by Anthony Zingarelli. On December 9, 2021, CFN Real Estate LLC, a Delaware limited liability company, and wholly-owned subsidiary of the Company, entered into a Lease Agreement (with Option to Purchase), or the Lease, with H2S2 LLC, a Colorado limited liability company, for property in Eaton, Colorado, consisting of 9.53 acres of agricultural land zoned with use for special review for hemp processing and storage, an 8,500 square foot C1D1 rated steel building, triple tunnel green houses with a total of 8,712 square feet, a shop building consisting of 3,825 square feet and a 2,280 square foot residence. The Lease has an eleven month term and contains an option to purchase the premises, each terminating on November 30, 2022. The total monthly rent under the lease during the term is an aggregate of $354,000, consisting of a $14,000 monthly lease payment, and an aggregate of $200,000 in non-refundable payments towards the option. The total purchase price for the premises under the option is $1.2 million, inclusive of the $200,000 in payments made during the term of the lease. If the option is exercised, the lease contains a 30-day automatic extension of the term at $14,000. At December 31, 2022, management determined that certain events and circumstances occurred that indicated that the net book value of CNP’s ROU assets may not be recoverable. As such, the Company recorded an impairment charge of $339,768. On April 1, 2023, Emerging Growth LLC entered into a new lease agreement for its premises in Whitefish, Montana commencing April 1, 2023, for a period of five years at a rate of $3,750 per month, which lease contains an option for the Company to renew the lease for a period of one additional year at a monthly rent subject to a 3% increase. In connection with this lease, the Company recorded a ROU asset and liability of $187,863. In connection with the Ranco acquisition, the Company agreed to assume the Seller’s lease for property related to the Purchased Assets in Los Angeles, California, consisting of approximately 46,000 square feet of space. The Ranco operating lease agreement commenced on July 1, 2022 and expires on July 31, 2027. The lease requires monthly base rent payments of $49,782 and required a security deposit of $297,269. Upon the Ranco acquisition, the Company recognized a right of use asset of $2,270,059 and right of use liability of $1,760,485. Furthermore, the Company acquired the existing security deposit of $297,269. As of September 30, 2023, the Company recognized a right of use asset of $2,132,953 and right of use liability of $ 2,165,615. |
NOTE 8_ ASSETS HELD FOR SALE
NOTE 8: ASSETS HELD FOR SALE | 9 Months Ended |
Sep. 30, 2023 | |
Notes | |
NOTE 8: ASSETS HELD FOR SALE | NOTE 8: ASSETS HELD FOR SALE As of December 31, 2022, the Company determined that its property and equipment in Wray, Colorado (via CFN Real Estate II) were to be listed for sale. Accordingly, the Company reported the disposal group of the long-lived assets at its lower of the carrying value or the fair value less cost to sell. Through March 31, 2023, the Company had $599,047 in assets held for sale on its consolidated balance sheet. On April 12, 2023, the Company sold its property, including the machinery and equipment, at Wray, Colorado for $699,000 and received net proceeds of $608,300 after selling expenses. Accordingly, the Company recorded a gain on disposal of $9,253. In connection with the sale, the Company repaid $525,000, including $500,000 in principal and $25,000 in accrued interest, on CFN Real Estate II’s related note payable with Physician Strategic, resulting in a gain on extinguishment of debt of $13,219. As of September 30, 2023 and December 31, 2022, the assets held for sale balance was $0 and $599,047, respectively. |
NOTE 9_ RELATED PARTY TRANSACAT
NOTE 9: RELATED PARTY TRANSACATIONS | 9 Months Ended |
Sep. 30, 2023 | |
Notes | |
NOTE 9: RELATED PARTY TRANSACATIONS | NOTE 9: RELATED PARTY TRANSACTIONS As of September 30, 2023 and December 31, 2022, there was $575,314 and $503,259 in amounts due to related parties, respectively, including $428,700 due to CSIS. The advances are unsecured, non-interest bearing and due on demand. In connection with the Ranco acquisition, the Company entered into acquisition agreements with the founders of RAN CoPacking Solutions LLC. |
NOTE 10_ COMMITMENTS AND CONTIN
NOTE 10: COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2023 | |
Notes | |
NOTE 10: COMMITMENTS AND CONTINGENCIES | NOTE 10: COMMITMENTS AND CONTINGENCIES Legal Proceedings From time to time, the Company may become involved in legal proceedings arising in the ordinary course of business. Except as set forth below, the Company is not presently a party to any legal proceedings that it currently believes, if determined adversely to the Company, would individually or taken together have a material adverse effect on the Company’s business, operating results, financial condition or cash flows. In October 2022, CAKE Software Inc., or CAKE, filed a lawsuit against the Company in the Supreme Court of the State of New York, County of New York, captioned CAKE Software, Inc. v. Accelerize Inc. n/k/a CFN Enterprises Inc., Index No. 653838/2022. On December 6, 2022, CAKE filed an amended complaint, which is the operative complaint in this matter. CAKE's lawsuit stems from an Asset Purchase Agreement, or the APA, executed by the parties in May 2019, in which CAKE was the buyer of certain assets from the Company. CAKE alleges that the Company breached the APA by not paying a purported outstanding amount due which was to be calculated post-closing, and for breaching certain representations and warranties in the APA. CAKE further seeks indemnification under the APA for what it alleges are liabilities the Company retained after the closing of the sale. Based on its claims, CAKE is seeking compensatory damages of at least $1,045,441.86, attorney's fees, interests and costs, and such other relief as the court may deem just and appropriate. In January 2023, the Company filed its initial Answer and Counterclaims, denying the material allegations and asserting its own claims against CAKE and Perseus Operating Group, or Perseus, a division of Constellation Software Inc. (TSX:CSU, OTCPK: CNSWF; www.csisoftware.com), or Constellation Software. On July 19, 2023, the parties held a mediation but were unsuccessful in reaching an agreement. On September 25, 2023, after prevailing on a motion for leave to amend its initial Answer with Counterclaims, the Company filed its Amended Answer with Counterclaims against CAKE and Constellation Software itself, instead of its operating group, Perseus. The Amended Answer with Counterclaims is the Company’s operative pleading in this matter, and through it, the Company asserts that CAKE breached the APA by failing to pay the Company an earn-out, calculated in accordance with the APA, over a three-year period and totaling no less than $12,375,000, and that CAKE failed to pay the Company a $500,000 holdback amount. The Company further alleges that Constellation Software is the alter ego of CAKE, and therefore, is also liable under the APA. Through its amended counterclaims, the Company seeks compensatory damages of no less than $12,875,000, encompassing the earn-out amounts owed and the holdback amount, plus attorneys' fees, interests and costs, and other such relief as the court may deem just and proper. On November 3, 2023, CAKE and Constellation Software filed replies to the Company’s amended counterclaims. Currently, the parties are engaged in the discovery process and a Status Conference with the Court regarding discovery is scheduled for December 8, 2023. The Company expects to vigorously defend against CAKE and Constellation Software’s claims, and to pursue its own counterclaims against CAKE, Constellation Software, and any other persons that it may identify through discovery to have harmed the Company or to have taken any action to interfere with the Company’s ability to receive its earn-out and/or the holdback amount. The Company has determined that potential losses in this matter are neither probable or reasonably possible at this time. On October 18, 2021, the Company settled a vendor dispute in the amount of $100,000 of which the initial payment of $40,000 was paid on the execution of the settlement and balance to paid in 48 equal monthly payments of $1,250. The balance as of September 30, 2023 and December 31, 2022, is $32,500 and $41,250, respectively. |
NOTE 11_ SUBSEQUENT EVENTS
NOTE 11: SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2023 | |
Notes | |
NOTE 11: SUBSEQUENT EVENTS | NOTE 11: SUBSEQUENT EVENTS Management has evaluated subsequent events through November 14, 2023, the date the consolidated financial statements were available to be issued. Based on this evaluation, no additional material events were identified which require adjustment or disclosure in these financial statements. |
NOTE 2_ SUMMARY OF SIGNIFICAN_2
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Use of Estimates (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Policies | |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reporting amounts of revenues and expenses during the reported period. Actual results will differ from those estimates. Included in these estimates are assumptions about collection of accounts receivable, useful life of fixed assets and intangible assets, borrowing rate considered for operating lease right-of-use asset and related operating lease liability, and assumptions used in Black-Scholes valuation methods, such as expected volatility, risk-free interest rate, and expected dividend rate. |
NOTE 2_ SUMMARY OF SIGNIFICAN_3
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Financial Statement Reclassification (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Policies | |
Financial Statement Reclassification | Financial Statement Reclassification Certain account balances from prior periods have been reclassified in these consolidated financial statements to conform to current period classifications. |
NOTE 2_ SUMMARY OF SIGNIFICAN_4
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Cash and Cash Equivalents (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Policies | |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid temporary cash investments with an original maturity of three months or less when purchased, to be cash equivalents. The Company has restricted cash as a result of its corporate card program through its bank, which requires collateral placed in a money market account. At September 30, 2023, the Company had a restricted cash balance of $20,366 included as a component of total cash and restricted cash as presented on the accompanying unaudited condensed consolidated statement of cash flows. |
NOTE 2_ SUMMARY OF SIGNIFICAN_5
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Accounts Receivable (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Policies | |
Accounts Receivable | Accounts Receivable The Company’s account receivables for the CFN Business are due from customers relating to contracts to provide investor relation services for the CFN Business. For the Ranco Business, accounts receivables are due from customers for products sold and manufacturing, packing and labeling services provided. Collateral is currently not required. The Company also maintains allowances for doubtful accounts for estimated losses resulting from the inability of the Company’s customers to make payments. The Company periodically reviews these estimated allowances, including an analysis of the customers’ payment history and creditworthiness, the age of the trade receivable balances and current economic conditions that may affect a customer’s ability to make payments as well as historical collection trends for its customers as a whole. Based on this review, the Company specifically reserves for those accounts deemed uncollectible or likely to become uncollectible. When receivables are determined to be uncollectible, principal amounts of such receivables outstanding are deducted from the allowance. The allowance for doubtful accounts as of September 30, 2023 and December 31, 2022 amounted to $454,012 and $470,532 respectively. |
NOTE 2_ SUMMARY OF SIGNIFICAN_6
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Inventory (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Policies | |
Inventory | Inventory The Company’s inventory consists of finished goods acquired for its Ranco business. As of September 30, 2023, all inventory consisted of disposable nicotine-based inhalable vaporizer products purchased from overseas. The inventory is valued at the lower of cost (specific identification) or estimated net realizable value. As of September 30, 2023, the Company valued the inventory at $1,864,800. |
NOTE 2_ SUMMARY OF SIGNIFICAN_7
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Concentration of Credit Risks (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Policies | |
Concentration of Credit Risks | Concentration of Credit Risks The Company is subject to concentrations of credit risk primarily from cash and cash equivalents and accounts receivable. The Company’s cash and restricted cash accounts are held at a financial institution and are insured by the Federal Deposit Insurance Corporation, or the FDIC, up to $250,000. From time-to-time, the Company’s bank balances exceed the FDIC insurance limit. To reduce its risk associated with the failure of such financial institutions, the Company periodically evaluates the credit quality of the financial institution in which it holds deposits. As of September 30, 2023, the Company had $1,491,005 in excess of federally insured limits. |
NOTE 2_ SUMMARY OF SIGNIFICAN_8
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Revenue Recognition (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Policies | |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with Accounting Standards Codification, or ASC, 606, the core principle of which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. To achieve this core principle, five basic criteria must be met before revenue can be recognized: (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 performance obligations in the contract; and (5) recognize revenue when or as the Company satisfies a performance obligation. The Company accounts for revenues when both parties to the contract have approved the contract, the rights and obligations of the parties are identified, payment terms are identified, and collectability of consideration is probable. Payment terms vary by client and the services offered. CFN Business Subsequent to the closing of the Emerging Growth Agreement on June 20, 2019, the Company’s revenue is generated from the sale of promotional service packages to its customers ranging from 3 to 6 months. The Company offers different packages tailored to the type and stage of the potential customer, such as public companies looking to increase their shareholder base, as well as private companies potentially looking to go public and attract capital and publicity. The services provided by the Company include advertising, publishing of interviews and articles across its network and featuring of client content on its newsletters and social media. The packages all have fixed prices that are billed monthly over the terms of the agreement in even amounts. The Company recognizes revenue for its performance obligation associated with its contracts with customers over time as work is performed, which is deemed to occur evenly throughout the duration of the contract. This also reflects the pattern in which costs are incurred on performing the contracts. To the extent revenue recognized on contracts at each period end exceeds collections, the amounts are reflected as accounts receivable. To the extent collections on contracts at each period end exceeds revenue recognized, the amounts are reflected as deferred revenue. Ranco Business The Company performs services including white label manufacturing and co-packing for customers. Customers will drop off their product and the Company will perform the services via their employees and contractors. When the services are complete, the Company has satisfied its performance obligations. Revenue is recognized at this point in time. The Company will order products that are manufactured overseas, such as custom boxes, packaging and hardware. These products are generally shipped from overseas to the customer. When these products are shipped out from the manufacturer, the Company has satisfied its performance obligations. Revenue is recognized at this point in time. Lastly, the Company provides certain shipping and third party logistics services for customers. When the services are complete, the Company has satisfied its performance obligations. Revenue is recognized at this point in time. Disaggregation of Revenue The following is a disaggregation of revenue for the three months ended September 30, 2023 and 2022 respectively: Three Months Ended September 30, 2023 2022 Services $ 399,603 $ 119,028 Products 384,380 721,942 Shipping and logistics 894,588 - $ 1,678,571 $ 840,970 The following is a disaggregation of revenue for the nine months ended September 30, 2023 and 2022 respectively: Nine Months Ended September 30, 2023 2022 Services $ 622,378 $ 343,997 Products 426,863 3,484,637 Shipping and logistics 894,588 - $ 1,943,830 $ 3,828,634 |
NOTE 2_ SUMMARY OF SIGNIFICAN_9
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Cost of Revenue (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Policies | |
Cost of Revenue | Cost of Revenue Cost of revenue includes direct labor and materials. Cost of revenues also includes inbound and outbound shipping, freight and delivery costs. |
NOTE 2_ SUMMARY OF SIGNIFICA_10
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Shipping and Handling Fees and Costs (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Policies | |
Shipping and Handling Fees and Costs | Shipping and Handling Fees and Costs Amounts billed to customers for shipping and handling fees are presented in revenue. Costs incurred for shipping and handling are included in cost of revenue. |
NOTE 2_ SUMMARY OF SIGNIFICA_11
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Fair Value of Financial Instruments (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Policies | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company accounts for assets and liabilities measured at fair value on a recurring basis in accordance with ASC Topic 820, Fair Value Measurements and Disclosures, or ASC 820. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements, establishes a framework for measuring fair value, and expands disclosure about such fair value measurements. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below: Level 1: Observable inputs such as quoted market prices in active markets for identical assets or liabilities. Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. Level 3: Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions. The carrying value of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, deferred revenue and due to related party approximate their fair value due to the short-term maturity of these items. The Company’s notes payable approximate their fair value due to the market rate of interest on the notes. The Company’s contingent consideration recorded in connection with the Ranco acquisition (see Note 3) is a Level 3 liability. The liability is valued using a probability weighted analysis of the respective earn out provisions. |
NOTE 2_ SUMMARY OF SIGNIFICA_12
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Business Combinations (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Policies | |
Business Combinations | Business Combinations The Company accounts for acquisitions in which it obtains control of one or more businesses as a business combination. The purchase price of the acquired businesses is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. The excess of the purchase price over those fair values is recognized as goodwill. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments, in the period in which they are determined, to the assets acquired and liabilities assumed with the corresponding offset to goodwill. If the assets acquired are not a business, the Company accounts for the transaction or other event as an asset acquisition. Under both methods, the Company recognizes the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired entity. In addition, for transactions that are business combinations, the Company evaluates the existence of goodwill or a gain from a bargain purchase. Goodwill represents the excess of the purchase price of an acquired entity over the fair value of identifiable tangible and intangible assets acquired and liabilities assumed in a business combination. |
NOTE 2_ SUMMARY OF SIGNIFICA_13
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Impairment (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Policies | |
Impairment | Impairment Long-Lived Assets In accordance with ASC 360-10, the Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made. Goodwill Goodwill and identifiable intangible assets that have indefinite useful lives are not amortized, but instead are tested annually for impairment and upon the occurrence of certain events or substantive changes in circumstances. The annual goodwill impairment test allows for the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. An entity may choose to perform the qualitative assessment on none, some or all of its reporting units or an entity may bypass the qualitative assessment for any reporting unit and proceed directly to step one of the quantitative impairment test. If it is determined, on the basis of qualitative factors, that the fair value of a reporting unit is, more likely than not, less than its carrying value, the quantitative impairment test is required. The quantitative impairment test calculates any goodwill impairment as the difference between the carrying amount of a reporting unit and its fair value, but not to exceed the carrying amount of goodwill. It is the Company’s practice, at a minimum, to perform a qualitative or quantitative goodwill impairment test in the fourth quarter every year. |
NOTE 2_ SUMMARY OF SIGNIFICA_14
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Contingent Consideration (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Policies | |
Contingent Consideration | Contingent Consideration The Company records a contingent consideration liability relating to earn the Company’s shares included in its acquisition agreements. The estimated fair value of the contingent consideration is recorded using significant unobservable measures and other fair value inputs and is therefore classified as a Level 3 financial instrument. The Company estimates and records the acquisition date fair value of contingent consideration as part of purchase price consideration for acquisitions. Additionally, each reporting period, the Company estimates changes in the fair value of contingent consideration and recognizes any change in fair in the consolidated statement of operations. The estimate of the fair value of contingent consideration requires very subjective assumptions to be made of future operating results, discount rates and probabilities assigned to various potential operating result scenarios. Future revisions to these assumptions could materially change the estimate of the fair value of contingent consideration and, therefore, materially affect the Company’s future financial results. The contingent consideration liability is to be settled with the issuance of shares of common stock once contingent provisions set forth in respective acquisition agreements have been achieved. Upon achievement of contingent provisions, respective liabilities are relieved and offset by increases to common stock and additional paid-in capital in the stockholders’ equity section of the Company’s consolidated balance sheets. |
NOTE 2_ SUMMARY OF SIGNIFICA_15
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Advertising (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Policies | |
Advertising | Advertising The Company expenses advertising costs as incurred. Advertising expenses for the three months ended September 30, 2023 and 2022 amounted to $24,487 and $4,761, respectively. Advertising expenses for the nine months ended September 30, 2023 and 2022 amounted to $52,773 and $23,172, respectively. |
NOTE 2_ SUMMARY OF SIGNIFICA_16
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Income Taxes (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Policies | |
Income Taxes | Income Taxes Income taxes are accounted for in accordance with the provisions of ASC Topic 740, Accounting for Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized, but no less than quarterly. For interim periods, the Company uses the effective income tax rate method resulting in zero income tax for the nine months ended September 30, 2023 and 2022. |
NOTE 2_ SUMMARY OF SIGNIFICA_17
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Property and Equipment (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Policies | |
Property and Equipment | Property and Equipment Property and equipment are recorded at cost and are depreciated on a straight-line basis over their estimated useful lives of five years. Maintenance and repairs are charged to expense as incurred. Significant renewals and betterments are capitalized. |
NOTE 2_ SUMMARY OF SIGNIFICA_18
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Basic and Diluted Earnings Per Share (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Policies | |
Basic and Diluted Earnings Per Share | Basic and Diluted Earnings Per Share Basic earnings per share are calculated by dividing income available to stockholders by the weighted-average number of common shares outstanding during each period. Diluted earnings per share are computed using the weighted average number of common and dilutive common share equivalents outstanding during the period. Dilutive common share equivalents consist of shares issuable upon the exercise of stock options and warrants (calculated using the modified-treasury stock method). As of September 30, 2023, the Company had no outstanding stock options, 11,988,500 outstanding warrants and 3,500 shares of preferred stock which were excluded from the calculation of diluted earnings per share because their effects were anti-dilutive. As of September 30, 2022, the Company had 0 outstanding stock options and 988,500 outstanding warrants which were excluded from the calculation of diluted earnings per share because their effects were anti-dilutive. As a result, the basic and diluted earnings per share are the same for each of the periods presented. |
NOTE 2_ SUMMARY OF SIGNIFICA_19
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Share-Based Payment (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Policies | |
Share-Based Payment | Share-Based Payments The Company accounts for stock-based compensation in accordance with ASC Topic 718, Compensation-Stock Compensation, or ASC 718. Under the fair value recognition provisions of this topic, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as an expense on a straight-line basis over the requisite service period, which is the vesting period. The Company has elected to use the Black-Scholes option-pricing model to estimate the fair value of its options, which incorporates various subjective assumptions including volatility, risk-free interest rate, expected life, and dividend yield to calculate the fair value of stock option awards. Compensation expense recognized in the statements of operations is based on awards ultimately expected to vest and reflects estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. |
NOTE 2_ SUMMARY OF SIGNIFICA_20
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Common Stock Awards (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Policies | |
Common Stock Awards | Common Stock Awards The Company has granted common stock awards to non-employees in exchange for services provided. The Company measures the fair value of these awards using the fair value of the services provided or the fair value of the awards granted. The fair value of the awards is recognized on a straight-line basis as services are rendered. The share-based payments related to common stock awards for the settlement of services provided by non-employees is recorded on the consolidated statement of comprehensive loss in the same manner and charged to the same account as if such settlements had been made in cash. |
NOTE 2_ SUMMARY OF SIGNIFICA_21
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Warrants (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Policies | |
Warrants | Warrants In connection with certain financing, consulting and collaboration arrangements, the Company has issued warrants to purchase shares of its common stock. The outstanding warrants are standalone instruments that are not puttable or mandatorily redeemable by the holder and are classified as equity awards. The Company measures the fair value of the awards using the Black-Scholes option pricing model as of the measurement date. Warrants are recorded at fair value as expense over the requisite service period or at the date of issuance, if there is not a service period. Warrants granted in connection with ongoing arrangements are more fully described in Note 6, Stockholders’ Deficit. |
NOTE 2_ SUMMARY OF SIGNIFICA_22
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Leases (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Policies | |
Leases | Leases The Company adopted Accounting Standards Update No. 2016-02, Leases (“Topic 842”) using the modified retrospective method. This accounting standard requires a lessee to recognize an asset and liability for most leases on its balance sheet. The Company elected the practical expedient method permitted under the transition guidance, which allows a carryforward of historical lease classification, the assessment on whether a contract was or contains a lease, and the initial direct costs for any leases that existed prior to July 1, 2019. The Company also elected to recognize the associated lease payments in the consolidated statements of operations on a straight-line basis over the lease term. Under Topic 842, the Company determines if an arrangement is a lease at inception. ROU assets and lease liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement and leases with an initial term of 12 months or less are not included in lease liabilities or ROU asset. As most leases do not provide an implicit rate, a rate which approximates the Company’s incremental borrowing rate is used, based on the information available at commencement date, in determining the present value of lease payments. The ROU asset also includes any lease payments made prior to commencement and is recorded net of any lease incentives received. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. Lease agreements may contain variable costs such as common area maintenance, insurance, real estate taxes or other costs. Variable lease costs are expensed as incurred. Lease agreements generally do not contain residual value guarantees or restrictive covenants. Over the lease term, the Company uses the effective interest rate method to account for the lease liability as lease payments are made and the ROU asset is amortized in a manner that results in straight-line expense recognition. At December 31, 2022, management determined that certain events and circumstances occurred that indicated that the net book value of CNP’s ROU assets may not be recoverable. As such, the Company recorded an impairment charge of $339,768. |
NOTE 2_ SUMMARY OF SIGNIFICA_23
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Revenue Recognition: Disaggregation of Revenue (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Tables/Schedules | |
Disaggregation of Revenue | The following is a disaggregation of revenue for the three months ended September 30, 2023 and 2022 respectively: Three Months Ended September 30, 2023 2022 Services $ 399,603 $ 119,028 Products 384,380 721,942 Shipping and logistics 894,588 - $ 1,678,571 $ 840,970 The following is a disaggregation of revenue for the nine months ended September 30, 2023 and 2022 respectively: Nine Months Ended September 30, 2023 2022 Services $ 622,378 $ 343,997 Products 426,863 3,484,637 Shipping and logistics 894,588 - $ 1,943,830 $ 3,828,634 |
NOTE 3_ BUSINESS COMBINATIONS_
NOTE 3: BUSINESS COMBINATIONS: Schedule of Business Acquisitions by Acquisition, Contingent Consideration (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Tables/Schedules | |
Schedule of Business Acquisitions by Acquisition, Contingent Consideration | Cash (due to seller) $ 1,000,000 Common stock 8,000,000 Contingent consideration 208,000 Purchase price consideration $ 9,208,000 |
NOTE 3_ BUSINESS COMBINATIONS_2
NOTE 3: BUSINESS COMBINATIONS: Schedule of Recognized Identified Assets Acquired and Liabilities Assumed (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Tables/Schedules | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | Cash $ 134,060 Accounts receivable 175,340 Deposits 297,269 Goodwill 8,676,430 Right of use asset 2,272,059 Accounts payable (48,430) Current portion of right of use liability (538,243) Right of use of liability (1,760,485) Purchase price consideration $ 9,208,000 |
NOTE 4_ PROPERTY AND EQUIPMENT_
NOTE 4: PROPERTY AND EQUIPMENT: Property, Plant and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Tables/Schedules | |
Property, Plant and Equipment | September 30, December 31, 2023 2022 Machinery & equipment $ - $ 50,000 Furniture and equipment and leasehold improvements 14,772 14,772 Tradeshow booth 162,200 - 176,972 64,772 Less: Accumulated depreciation (12,197) (11,202) $ 164,775 $ 53,570 |
NOTE 5_ NOTES PAYABLE_ Schedule
NOTE 5: NOTES PAYABLE: Schedule of Maturities of Long-Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Tables/Schedules | |
Schedule of Maturities of Long-Term Debt | Future scheduled maturities of long-term debt are as follows: September 30, 2023 2024 3,854,300 2025 3,892,727 2026 50,882 2027 23,702 Thereafter 104,320 7,925,930 |
NOTE 6_ STOCKHOLDERS' DEFICIT_
NOTE 6: STOCKHOLDERS' DEFICIT: Schedule of Stockholders' Equity Note, Warrants or Rights (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Tables/Schedules | |
Schedule of Stockholders' Equity Note, Warrants or Rights | The following summarizes the Company’s warrant activity for the six months ended September 30, 2023: Warrants Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life (Years) Outstanding at December 31, 2022 988,500 $ 2.25 2.39 Granted 7,150,000 0.25 4.89 Forfeited - Outstanding at June 30, 2023 8,138,500 $ 0.49 4.53 Granted 3,850,000 0.25 4.75 Forfeited - Outstanding at September 30, 2023 11,988,500 $ 0.41 4.43 Vested and expected to vest at September 30, 2023 11,988,500 $ 0.41 4.43 Exercisable at September 30, 2023 11,988,500 $ 0.41 4.43 |
NOTE 1_ ORGANIZATION AND BASI_2
NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION (Details) - USD ($) | 9 Months Ended | ||
May 15, 2019 | Sep. 30, 2023 | Dec. 31, 2022 | |
Stock Issued During Period, Value, Acquisitions | $ 3,000,000 | ||
Working Capital Deficit | $ 8,032,685 | ||
Accumulated deficit | 63,093,517 | $ 58,996,099 | |
Net Income (Loss) Available to Common Stockholders, Basic | $ 3,917,417 | ||
Series B Preferred Stock | |||
Stock Issued During Period, Shares, Acquisitions | 3,000 | ||
Common Stock | |||
Stock Issued During Period, Shares, Acquisitions | 30,000,000 | ||
Asset Purchased Agreement With Emerging Growth Llc | |||
Payments to Acquire Businesses, Gross | $ 420,000 |
NOTE 2_ SUMMARY OF SIGNIFICA_24
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Accounts Receivable (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Details | ||
Accounts Receivable, Allowance for Credit Loss | $ 454,012 | $ 470,532 |
NOTE 2_ SUMMARY OF SIGNIFICA_25
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Inventory (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Details | ||
Inventory | $ 1,864,800 | $ 0 |
NOTE 2_ SUMMARY OF SIGNIFICA_26
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Concentration of Credit Risks (Details) | Sep. 30, 2023 USD ($) |
Details | |
Cash, FDIC Insured Amount | $ 250,000 |
Funds in excess of Federal Insured Limits | $ 1,491,005 |
NOTE 2_ SUMMARY OF SIGNIFICA_27
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Revenue Recognition: Disaggregation of Revenue (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Service | ||||
Net revenues | $ 399,603 | $ 119,028 | $ 622,378 | $ 343,997 |
Product | ||||
Net revenues | 384,380 | 721,942 | 426,863 | 3,484,637 |
Shipping and Handling | ||||
Net revenues | 894,588 | 0 | 894,588 | 0 |
Net revenues | $ 1,678,571 | $ 840,970 | $ 1,943,830 | $ 3,828,634 |
NOTE 2_ SUMMARY OF SIGNIFICA_28
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Advertising (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Details | ||||
Advertising Expense | $ 24,487 | $ 4,761 | $ 52,773 | $ 23,172 |
NOTE 2_ SUMMARY OF SIGNIFICA_29
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Basic and Diluted Earnings Per Share (Details) - shares | Sep. 30, 2023 | Dec. 31, 2022 |
Warrant | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 11,988,500 | 988,500 |
Share-Based Payment Arrangement, Option | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 0 | 0 |
Preferred Stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 3,500 |
NOTE 2_ SUMMARY OF SIGNIFICA_30
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Leases (Details) | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Details | |
Impairment Charge on ROU assets | $ 339,768 |
NOTE 3_ BUSINESS COMBINATIONS_3
NOTE 3: BUSINESS COMBINATIONS: Schedule of Business Acquisitions by Acquisition, Contingent Consideration (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Details | ||||
Due to seller | $ 1,000,000 | $ 1,000,000 | $ 0 | |
Issuance of common stock pursuant to business combination | 8,000,000 | 8,000,000 | $ 0 | |
Contingent consideration | 208,000 | 208,000 | $ 0 | |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net | $ 9,208,000 | $ 9,208,000 |
NOTE 3_ BUSINESS COMBINATIONS (
NOTE 3: BUSINESS COMBINATIONS (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | |
Issuance of common stock pursuant to business combination | $ 8,000,000 | $ 8,000,000 | $ 0 |
Common Stock | |||
Issuance of common stock pursuant to business combination Shares | 40,000,000 | ||
Issuance of common stock pursuant to business combination | $ 40,000 |
NOTE 3_ BUSINESS COMBINATIONS_4
NOTE 3: BUSINESS COMBINATIONS: Schedule of Recognized Identified Assets Acquired and Liabilities Assumed (Details) | Sep. 30, 2023 USD ($) |
Details | |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Cash and Equivalents | $ 134,060 |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Receivables | 175,340 |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Other | 297,269 |
Business Combination, Recognized Identifiable Assets Acquired AndLiabilities Assumed, Goodwill | 8,676,430 |
Business Combination, Recognized Identifiable Assets Acquired AndLiabilities Assumed, Right of Use Asset | 2,272,059 |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Accounts Payable | (48,430) |
Business Combination, Recognized Identifiable Assets Acquired AndLiabilities Assumed, Right of Use Liability, Current | (538,243) |
Business Combination, Recognized Identifiable Assets Acquired AndLiabilities Assumed, Right of Use Liability, Noncurrent | (1,760,485) |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net | $ 9,208,000 |
NOTE 4_ PROPERTY AND EQUIPMEN_2
NOTE 4: PROPERTY AND EQUIPMENT: Property, Plant and Equipment (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment, Gross | $ 176,972 | $ 64,772 |
Less: Accumulated depreciation | (12,197) | (11,202) |
Property and equipment, net | 164,775 | 53,570 |
Machinery and Equipment | ||
Property, Plant and Equipment, Gross | 0 | 50,000 |
Furniture and Fixtures | ||
Property, Plant and Equipment, Gross | 14,772 | 14,772 |
Retail Site | ||
Property, Plant and Equipment, Gross | $ 162,200 | $ 0 |
NOTE 4_ PROPERTY AND EQUIPMENT
NOTE 4: PROPERTY AND EQUIPMENT (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Details | ||||
Impairment charge to record the residual value of property and equipment | $ 3,276,193 | |||
Depreciation | $ 45,332 | $ 421,336 | $ 50,996 | $ 1,209,788 |
NOTE 5_ NOTES PAYABLE (Details)
NOTE 5: NOTES PAYABLE (Details) - USD ($) | 9 Months Ended | |||||||||||||||
Jul. 01, 2023 | May 08, 2023 | Oct. 04, 2022 | May 11, 2022 | Apr. 08, 2022 | Nov. 19, 2020 | Jun. 24, 2020 | Sep. 30, 2019 | Sep. 10, 2019 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | Oct. 19, 2021 | May 12, 2021 | Dec. 31, 2019 | Oct. 28, 2019 | |
Long-Term Debt | $ 7,925,930 | |||||||||||||||
Long-Term Debt, Gross | $ 250,000 | |||||||||||||||
Notes Payable | $ 2,957,000 | |||||||||||||||
Outstanding Amount | 158,625 | |||||||||||||||
Balance Paid Per Month | 20,000 | |||||||||||||||
Total Paid Per Month | 138,625 | |||||||||||||||
Property and equipment, net | 164,775 | $ 53,570 | ||||||||||||||
Purchase of equipment with notes payable | 0 | $ 55,016 | ||||||||||||||
Accrued Interest Rate | 12% | |||||||||||||||
Proceeds from Notes Payable | 5,000,000 | $ 1,233,000 | ||||||||||||||
Current portion of notes payable | 3,854,300 | $ 3,088,250 | ||||||||||||||
Common Stock | ||||||||||||||||
Shares issued pursuant to conversion of debt, Shares | 2,906,800 | |||||||||||||||
C S B G | Eagle One | ||||||||||||||||
Notes Payable | 550,000 | |||||||||||||||
C S B G | Eagl Two | ||||||||||||||||
Notes Payable | $ 300,000 | |||||||||||||||
CNP Operating | ||||||||||||||||
Long-Term Debt, Gross | $ 550,000 | $ 3,050,000 | ||||||||||||||
Outstanding Balance | $ 302,489 | 2,218,000 | $ 2,218,000 | |||||||||||||
Debt Instrument, Interest Rate During Period | 16% | |||||||||||||||
Promissory Note Payable | ||||||||||||||||
Proceeds from Long-Term Lines of Credit | $ 500,000 | |||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 8% | |||||||||||||||
Debt Instrument, Unamortized Discount | $ 17,624 | |||||||||||||||
Long-Term Debt | 500,000 | |||||||||||||||
Long-Term Debt, Gross | 50,000 | |||||||||||||||
Promissory Note Payable | Warrant in Connection with Promissory Note | ||||||||||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 33,333 | |||||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 1.50 | |||||||||||||||
SBA | ||||||||||||||||
Debt Instrument, Interest Rate During Period | 3.75% | |||||||||||||||
Proceeds from Loans | $ 150,000 | |||||||||||||||
Debt Instrument, Periodic Payment | $ 731 | |||||||||||||||
Promissory Note Payable 6 | ||||||||||||||||
Long-Term Debt | 48,513 | |||||||||||||||
Debt Instrument, Periodic Payment | $ 968 | |||||||||||||||
Property and equipment, net | $ 58,095 | |||||||||||||||
Purchase of equipment with notes payable | 55,016 | |||||||||||||||
Promissory Note Payable 7 | ||||||||||||||||
Debt Instrument, Interest Rate During Period | 18% | |||||||||||||||
Proceeds from Loans | $ 676,000 | |||||||||||||||
Promissory Note Payable 8 | ||||||||||||||||
Debt Instrument, Interest Rate During Period | 12% | |||||||||||||||
Proceeds from Loans | $ 500,000 | |||||||||||||||
Promissory Note Payable 9 | ||||||||||||||||
Proceeds from Loans | $ 1,150,000 | |||||||||||||||
Promissory Note Payable 10 | ||||||||||||||||
Proceeds from Loans | $ 3,850,000 | |||||||||||||||
Ranco Notes | ||||||||||||||||
Proceeds from Notes Payable | $ 5,000,000 |
NOTE 5_ NOTES PAYABLE_ Schedu_2
NOTE 5: NOTES PAYABLE: Schedule of Maturities of Long-Term Debt (Details) | Sep. 30, 2023 USD ($) |
Details | |
Long-Term Debt, Maturity, Year Two | $ 3,854,300 |
Long-Term Debt, Maturity, Year Three | 3,892,727 |
Long-Term Debt, Maturity, Year Four | 50,882 |
Long-Term Debt, Maturity, Year Five | 23,702 |
Long-Term Debt, Maturity, after Year Five | 104,320 |
Long-Term Debt | $ 7,925,930 |
NOTE 6_ STOCKHOLDERS' DEFICIT (
NOTE 6: STOCKHOLDERS' DEFICIT (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Dec. 06, 2021 | Jan. 31, 2021 | Sep. 30, 2023 | Jun. 30, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Stockholders' Equity, Reverse Stock Split | the Company effected a reverse split of its outstanding common stock in the ratio of 1-for-15 | ||||||
Proceeds from sale of common stock | $ 350,000 | $ 210,000 | |||||
Shares Issued As Payment For Accrued Interest, Value | $ 405,000 | ||||||
Issuance of common stock pursuant to business combination | 8,000,000 | 8,000,000 | 0 | ||||
Conversion of accrued preferred stock interest into shares | 45,000 | $ 405,000 | 450,000 | 0 | |||
Payments made in advance of securities date | $ 0 | $ 0 | $ 217,500 | ||||
Preferred Stock, Shares Authorized | 2,000,000 | 2,000,000 | |||||
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | |||||
Dividends, Paid-in-kind | $ 180,000 | $ 180,000 | |||||
Series A Preferred Stock | |||||||
Issuance of common stock pursuant to business combination | $ 0 | ||||||
Conversion of accrued preferred stock interest into shares | $ 0 | 0 | |||||
Preferred Stock, Shares Authorized | 500 | 500 | 500 | ||||
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | $ 0.001 | ||||
Series B Preferred Stock | |||||||
Issuance of common stock pursuant to business combination | $ 0 | ||||||
Conversion of accrued preferred stock interest into shares | $ 0 | $ 0 | |||||
Preferred Stock, Shares Authorized | 3,000 | 3,000 | 3,000 | ||||
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | $ 0.001 | ||||
Common Stock | |||||||
Shares Issued As Payment For Accrued Interest, Shares | 1,620,000 | ||||||
Issuance of common stock pursuant to business combination Shares | 40,000,000 | ||||||
Issuance of common stock pursuant to business combination | $ 40,000 | ||||||
Conversion of accrued preferred stock interest into shares Shares | 500,000 | 1,620,000 | |||||
Conversion of accrued preferred stock interest into shares | $ 500 | $ 1,620 | |||||
Stock Issuance 2 | |||||||
Shares issued as for exercise of warrant | 2,400,000 | ||||||
Proceeds from sale of common stock | $ 600,000 |
NOTE 6_ STOCKHOLDERS' DEFICIT_2
NOTE 6: STOCKHOLDERS' DEFICIT: Schedule of Stockholders' Equity Note, Warrants or Rights (Details) - Warrant | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | 42 Months Ended |
Sep. 30, 2023 $ / shares shares | Jun. 30, 2023 $ / shares shares | Sep. 30, 2023 $ / shares shares | Dec. 31, 2022 $ / shares shares | Jun. 30, 2026 | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Non-Option Equity Instruments, Outstanding, Number | 11,988,500 | 8,138,500 | 11,988,500 | 988,500 | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value | $ / shares | $ 0.41 | $ 0.49 | $ 0.41 | $ 2.25 | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Outstanding, Weighted Average Remaining Contractual Terms | 4 years 5 months 4 days | 2 years 4 months 20 days | 4 years 6 months 10 days | ||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Net of Forfeitures | 3,850,000 | 7,150,000 | |||
Share-Based Compensation Arrangements by Share-Based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ / shares | $ 0.25 | $ 0.25 | |||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Remaining Contractual Term | 4.75 | 4.89 | |||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Forfeitures in Period | 0 | 0 | |||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number | 11,988,500 | 11,988,500 | |||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Exercise Price | $ / shares | $ 0.41 | $ 0.41 | |||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Remaining Contractual Term | 4 years 5 months 4 days | ||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercisable, Number | 11,988,500 | 11,988,500 | |||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercisable, Weighted Average Exercise Price | $ / shares | $ 0.41 | $ 0.41 | |||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term | 4 years 5 months 4 days |
NOTE 7_ LEASES (Details)
NOTE 7: LEASES (Details) - USD ($) | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2023 | Sep. 01, 2020 | Jun. 20, 2019 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Impairment Charge on ROU assets | $ 339,768 | |||||
Right of use asset and liability | $ 187,863 | $ 0 | ||||
Office Space In Whitefish Montana | ||||||
Operating Lease Monthly Rent | $ 3,750 | $ 4,500 | $ 1,500 | |||
Emerging Growth | ||||||
Operating Lease Monthly Rent | 4,500 | |||||
Office Space in Centennial, CO | ||||||
Operating Lease Monthly Rent | 10,521 | |||||
Office space In H2S2 LLC | ||||||
Operating Lease Monthly Rent | $ 14,000 |
NOTE 8_ ASSETS HELD FOR SALE (D
NOTE 8: ASSETS HELD FOR SALE (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||||
Apr. 12, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Mar. 31, 2023 | Dec. 31, 2022 | |
Details | |||||||
Assets held for sale | $ 0 | $ 0 | $ 599,047 | $ 599,047 | |||
Proceeds from Sale of Real Estate | $ 699,000 | ||||||
Sale of assets held for sale | 608,300 | $ 0 | |||||
Gain on property and equipment | 0 | $ 0 | 9,253 | 87,933 | |||
Gain on extinguishment of debt | $ 0 | $ 0 | $ 13,219 | $ 0 |
NOTE 9_ RELATED PARTY TRANSAC_2
NOTE 9: RELATED PARTY TRANSACATIONS (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Details | ||
Due to related party | $ 575,314 | $ 503,259 |
NOTE 10_ COMMITMENTS AND CONT_2
NOTE 10: COMMITMENTS AND CONTINGENCIES (Details) - USD ($) | Oct. 18, 2021 | Sep. 30, 2023 | Dec. 31, 2022 |
Details | |||
Proceeds from Legal Settlements | $ 100,000 | ||
Payments for Legal Settlements | 40,000 | ||
Monthly Installment | $ 1,250 | ||
Balance, Legal Amount Paid During The Period | $ 41,250 | $ 32,500 |