Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 13, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | GREEN SPIRIT INDUSTRIES INC. | |
Entity Central Index Key | 1,381,240 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 30,025,005 | |
Trading Symbol | GSRX | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,017 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Current Assets | ||
Cash | $ 48,439 | |
Cash, held in escrow | 2,180,766 | |
Prepaid Expenses | 52,000 | |
Total Current Assets | 2,281,205 | |
Other Assets | ||
Licenses | 375,000 | |
Rent deposit | 7,300 | |
Construction in progress (Note 6) | 171,183 | |
Total Other Assets | 553,483 | |
Total Assets | 2,834,688 | |
Current Liabilities | ||
Accounts Payable | 24,346 | |
Advances Payable | 1,000 | |
Total Current Liabilities | 25,346 | |
Total Liabilities | 25,346 | |
Commitments and Contingencies (Note 7) | ||
Stockholders' Equity (Note 3) | ||
Preferred Stock, convertible, $.001 par value; 1,000 shares authorized; 1,000 issued and outstanding as of September 30, 2017 | 1 | |
Common Stock $.001 par value 100,000,000 authorized; 30,025,005 and 247,554 issued and outstanding as of September 30, 2017 and December 31, 2016, respectively | 30,025 | 248 |
Additional paid-in capital | 6,735,974 | (248) |
Retained deficit | (3,956,658) | |
Total Stockholders' Equity | 2,809,342 | |
Total Liabilities and Stockholders' Equity | $ 2,834,688 |
Consolidated Balance Sheets (U3
Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 1,000 | 1,000 |
Preferred stock, shares issued | 1,000 | |
Preferred stock, shares outstanding | 1,000 | |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 30,025,005 | 247,554 |
Common stock, shares outstanding | 30,025,005 | 247,554 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenues | ||||
Revenues | ||||
Total Revenues | ||||
Operating expenses | ||||
Consulting Fees | 89,174 | 119,174 | ||
General and administrative | 211,262 | 232,227 | ||
Professional Fees | 84,007 | 140,257 | ||
Stock based compensation (Note 3) | ||||
Consulting fees | 275,000 | 1,344,600 | ||
Investor relations | 991,000 | |||
Professional fees | 1,129,400 | |||
Total Stock based compensation | 275,000 | 3,465,000 | ||
Total Operating Expenses | 659,443 | 3,956,658 | ||
Loss from operations before provision for income taxes | (659,443) | (3,956,658) | ||
Provision for income taxes | ||||
Net loss | $ (659,443) | $ (3,956,658) | ||
Basic loss per share | $ (0.02) | $ (0.25) | ||
Weighted average number of common shares outstanding | 30,023,646 | 15,731,153 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Stockholders' Equity (Unaudited) - 9 months ended Sep. 30, 2017 - USD ($) | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-In Capital [Member] | Retained Deficit [Member] | Total |
Balance at Dec. 31, 2016 | $ 248 | $ (248) | |||
Balance, shares at Dec. 31, 2016 | 247,554 | ||||
Capitalization of subsidiary | 1,000 | 1,000 | |||
Effect of Share Exchange Agreement on May 11, 2017 Shares issued to Peach Management, LLC | $ 1 | $ 16,691 | (16,692) | ||
Effect of Share Exchange Agreement on May 11, 2017 Shares issued to Peach Management, LLC, shares | 1,000 | 16,690,912 | |||
Effect of Debt Exchange Agreement on May 11, 2017 Shares issued to Peter Zachariou | $ 1,600 | (1,600) | |||
Effect of Debt Exchange Agreement on May 11, 2017 Shares issued to Peter Zachariou, shares | 1,600,000 | ||||
Issuance of shares and warrants for cash | $ 8,461 | 3,291,539 | 3,300,000 | ||
Issuance of shares and warrants for cash, shares | 8,461,539 | ||||
Issuance of shares for services | $ 3,025 | 3,151,975 | 3,155,000 | ||
Issuance of shares for services, shares | 3,025,000 | ||||
Issuance of warrants for services | 310,000 | 310,000 | |||
Net loss | (3,956,658) | (3,956,658) | |||
Balance at Sep. 30, 2017 | $ 1 | $ 30,025 | $ 6,735,974 | $ (3,956,658) | $ 2,809,342 |
Balance, shares at Sep. 30, 2017 | 1,000 | 30,025,005 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash Flows from Operating Activities | ||
Net loss | $ (3,956,658) | |
Adjustments to Reconcile Net Loss to Net Cash used in Operating Activities | ||
Issuance of common stock and warrants for services | 3,465,000 | |
Changes in operating assets and liabilities: | ||
Prepaid expenses | (52,000) | |
Accounts Payable | 24,346 | |
Net cash used in operating activities | (519,312) | |
Cash Flows from Investing Activities | ||
Licenses | (375,000) | |
Rent deposit | (7,300) | |
Construction in Progress | (171,183) | |
Net cash used in investing activities | (553,483) | |
Cash Flows from Financing Activities | ||
Issuance of common stock and warrants | 3,300,000 | |
Capitalization of subsidiary | 1,000 | |
Advances payable | 1,000 | |
Advances payable, related party | 150,000 | |
Advances payable, related party | (150,000) | |
Net cash provided by financing activities | 3,302,000 | |
Net increase in cash | 2,229,205 | |
Cash at beginning of period | ||
Cash at end of period | 2,229,205 | |
Supplemental Disclosures of Cash Flow Information | ||
Interest | ||
Income Taxes |
Nature of Operations
Nature of Operations | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations | 1. Nature of Operations Green Spirit Industries Inc. (“the Company”) is a Nevada corporation formed under the name Cyberspace Vita, Inc. (“Cyberspace”) on November 7, 2006. Our initial business plan was related to the online sale of vitamins and supplements. On May 11, 2017, we entered into a share exchange agreement (the “Exchange Agreement”) with Peter Zachariou, the majority shareholder of Cyberspace (the “Shareholder”), Project 1493, LLC, a limited liability company organized under the laws of the Commonwealth of Puerto Rico (“1493”), and the sole member of 1493 (the “Member”), pursuant to which the Member transferred all of the outstanding membership interests of 1493 to the Company in exchange for 16,690,912 restricted shares of common stock of the Company (the “Exchange Shares”), warrants to purchase up to 3,000,000 shares of common stock at an exercise price of $0.50 per share for a period of three (3) years from the date of issuance (the “Exchange Warrants”) and 1,000 shares of Series A Preferred Stock that grants the holders thereof fifty-one percent (51%) voting power (the “Preferred Shares” and together with the Exchange Shares, and the Exchange Warrants, the “Exchange Securities”). As a result of the Exchange Agreement, 1493 became a wholly-owned subsidiary of the Company, and the business of 1493 became the business of the Company. At the time of the Exchange Agreement, the Company was not engaged in any business activity. The Company accounted for the acquisition of 1493 as a reverse merger and all prior periods presented are those of 1493. Project 1493, LLC (“1493”) was organized under the laws of the Commonwealth of Puerto Rico on March 17, 2017. The Company was formerly known as Grey Finland Advisors, LLC (“Grey”), which was organized under the laws of the Commonwealth of Puerto Rico on March 24, 2011, and has had no operations since that time. 1493 filed a Certificate of Restoration on March 17, 2017 and elected to change its name to Project 1493, LLC. The Company is in the business of acquiring, developing and operating medical cannabis dispensaries throughout Puerto Rico. To date, the Company has acquired a ll of the legal rights, permits, licenses, leasing contracts and assets pertaining to four medical cannabis dispensaries pursuant to two Final Purchasing Agreements (“FPA”). (Note 7). In addition, the Company has also entered into an agreement to lease property for the location of a fifth dispensary for which the Company is in the process of seeking pre-qualification for a cannabis dispensary license. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation The consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been omitted. However, in the opinion of management, all adjustments (which include only normal recurring adjustments, unless otherwise indicated) necessary to present fairly the consolidated financial position and results of its operations for the periods presented have been made. The results for interim periods are not necessarily indicative of trends or of results to be expected for the full year. These consolidated financial statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 2016 (including the notes thereto) set forth in Form 8-K filed with the Securities and Exchange Commission on May 16, 2017. Use of Estimates and Assumptions The consolidated financial statements that are prepared in conformity with U.S. generally accepted accounting principles 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 reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Cash and cash equivalents The Company considers all cash on hand, cash in banks and all highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents. At times, cash and cash equivalent balances at a limited number of banks and financial institutions may exceed insurable amounts. The Company believes it mitigates its risks by depositing cash or investing in cash equivalents in major financial institutions. At September 30, 2017 the Company had a cash and a cash held in escrow balance of $2,229,205. Cash held in escrow, in the name of the Company, is held by Sichenzia Ross Ference Kesner LLP (“Sichenzia”). The escrow account was established to hold the deposits from the sale of common stock. There are no restrictions on the funds held by Sichenzia on the Company’s behalf. Revenue Recognition The Company will recognize revenue when: ● Persuasive evidence of an arrangement exists: ● Delivery has occurred; ● Price is fixed or determinable; and ● Collectability is reasonably assured. The Company follows the provisions of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic (“ASC”) 605, “Revenue Recognition”, which includes the guidelines of Staff Accounting Bulletin No. 104 as described above. Inventory The Company’s inventory will be stated at the lower of cost or market with cost being determined using the first-in, first-out method. Share based Compensation Compensation cost relating to share-based payment transactions (including the cost of all employee stock options) is required to be recognized in the consolidated financial statements and covers a wide range of share-based compensation arrangements including share options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans. That cost will be measured based on the estimated fair value of the equity or liability instruments issued. See Note 3. Fair Value of Financial Instruments The carrying value of the Company’s current liabilities approximates fair value because of the short maturity of these instruments. Unless otherwise noted, it is management’s opinion the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. Income Taxes The Company will follow the accrual method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the estimated tax consequences attributable to differences between the financial statement carrying values and their respective income tax basis (temporary differences). The effect on the deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company was organized under the laws of the Commonwealth of Puerto Rico, and therefore will be taxed at normal U.S. federal corporate income tax rates. Basic Earnings per Share The Company computes net loss per share in accordance with FASB ASC 260 “Earnings per Share”, which specifies the computation, presentation and disclosure requirements for earnings (loss) per share for entities with publicly held common stock. Basic net loss per share amounts is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted earnings per share are the same as basic earnings per share due to the Company’s net loss. Potentially dilutive securities have been excluded from the Company’s earnings per share calculation due to the effect being anti-dilutive. The total number of potentially dilutive securities which have been excluded is 6,038,462. (Note 3). Recent Accounting Pronouncements As of September 30, 2017 and through November 9, 2017, there were several new accounting pronouncements issued by the Financial Accounting Standards Board. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s financial position or future operating results. The Company will monitor these emerging issues to assess any potential future impact on its financial statements. |
Equity
Equity | 9 Months Ended |
Sep. 30, 2017 | |
Stockholders' Equity Note [Abstract] | |
Equity | 3. Equity Authorized and Outstanding Capital Stock We have authorized 100,000,000 shares of common stock, par value $0.001, of which 30,025,005 are currently issued and outstanding. We currently have 9,999,000 shares of “blank check” preferred stock, and 1,000 shares of Series A Preferred Stock. Common Stock The holders of our common stock are entitled to one vote per share. In addition, the holders of our common stock will be entitled to receive ratably dividends, if any, declared by our board of directors out of legally available funds; however, the current policy of our board of directors is to retain earnings, if any, for operations and growth. Upon liquidation, dissolution or winding-up, the holders of our common stock will be entitled to share ratably in all assets that are legally available for distribution. The holders of our common stock will have no preemptive, subscription, redemption or conversion rights. The rights, preferences and privileges of holders of our common stock will be subject to, and may be adversely affected by, the rights of the holders of any series of preferred stock, which may be designated solely by action of our board of directors and issued in the future. The following table illustrates the common stock transactions for the nine months ended September 30, 2017: Preferred Common Category Shares Shares Cash 8,461,538 Share Exchange Agreement 1,000 16,690,912 Debt Exchange Agreement 0 1,600,000 Services 0 3,025,000 Total 1,000 29,777,450 On May 11, 2017, the Company authorized the issuance of 16,690,912 shares of common stock at $0.39 and 1,000 shares of preferred stock at $1.00 per share, (100% of the preferred stock issued) to Peach Management, LLC (“Peach”) in accordance with the Share Exchange Agreement. See Note 7. On May 11, 2017, the Company authorized the issuance of 1,600,000 shares of common stock at $0.96 to Peter Zachariou for the Debt Exchange Agreement. See Note 7. On May 11, 2017, the Company authorized the issuance of 235,000 shares of common stock at $0.96 to Leslie Ball, Chief Executive Officer, for services rendered to the Company. On May 11, 2017, the Company authorized the issuance of 50,000 shares of common stock at $0.96 to Thomas Gingerich, Chief Financial Officer, for services rendered to the Company. On May 11, 2017, the Company authorized the issuance of 1,000,000 shares of common stock at $0.96 to RedChip Companies, Inc. for investor relation services rendered to the Company. On May 11, 2017, the Company authorized the issuance of 750,000 shares of common stock at $0.96 to RD3 Acquisitions, LLC for investor relation services rendered to the Company. On May 11, 2017, the Company authorized the issuance of 665,000 shares of common stock at $0.96 to Darrin Ocasio for legal services rendered to the Company. On May 11, 2017, the Company authorized the issuance of 150,000 shares of common stock at $0.96 to ACB Management, Inc. for legal services rendered to the Company. On May 11, 2017, the Company authorized the issuance of 150,000 shares of common stock at $0.96 to Granada Investments, LLC for professional services rendered to the Company. On July 5, 2017, the Company authorized the issuance of 25,000 shares of common stock at $11.00 to Manuel Antonio Viota Diaz for services rendered to the Company. Series A Preferred Stock The holder of Series A Preferred Stock shall have full voting rights and shall vote together as a single class with the holders of the Company’s common stock. The holder of Series A Preferred Stock is entitled to fifty-one percent (51%) of the total votes on all matters brought before shareholders of the Company, regardless of the actual number of shares of Series A Preferred Stock then outstanding. In addition, the Company is prohibited from issuing any other class of preferred stock without first obtaining the prior approval of the holders of Series A Preferred Stock. Blank Check Preferred Stock Our board of directors will be authorized, subject to any limitations prescribed by law, without further vote or action by our stockholders, to issue from time to time shares of preferred stock in one or more series. Each series of preferred stock will have the number of shares, designations, preferences, voting powers, qualifications and special or relative rights or privileges as shall be determined by our board of directors, which may include, among others, dividend rights, voting rights, liquidation preferences, conversion rights and preemptive rights. Warrants As of September 30, 2017, we have outstanding warrants to purchase 6,038,463 shares of common stock (the “ Warrants The Company may issue warrants to non-employees in capital raising transactions or for services. In accordance with guidance in ASC Topic 718, the cost of warrants issued to non-employees is measured on the grant date based on the fair value. The fair value is determined using the Black-Scholes option pricing model. The resulting amount is charged to expense on the straight-line basis over the period in which the Company expects to receive the benefit, which is generally the vesting period. During the nine months ended September 30, 2017, $310,000 was charged to expense. The fair value of stock warrants was determined at the date of grant using the Black-Scholes option pricing model. The Black-Scholes option model requires management to make various estimates and assumptions, including expected term, expected volatility, risk-free rate, and dividend yield. The expected term represents the period of time that stock-based compensation awards granted are expected to be outstanding and is estimated based on considerations including the vesting period, contractual term and anticipated employee exercise patterns. Expected volatility is based on the historical volatility of the Company’s stock. The risk-free rate is based on the U.S. Treasury yield curve in relation to the contractual life of stock-based compensation instrument. The dividend yield assumption is based on historical patterns and future expectations for the Company dividends. The following table includes the estimates and assumptions used in the Black Scholes model: Stock price $ 0.96 Exercise price $ 0.50 Expected term 3 years Expected volatility 72.0 % Annual risk-free rate 1.55 % Dividend yield 0.00 % The following table is a summary of outstanding warrants to purchase shares of common stock at September 30, 2017 and activity during the nine months then ended: Weighted Number of Exercise Average Shares Price Price Issued during quarter ended September 30, 2017 6,038,463 $ 0.50 $ 0.50 Expired and forfeited - - - Exercised - - - Warrants as of September 30, 2017 6,038,463 $ 0.50 $ 0.50 All of the outstanding warrants granted during the period ended September 30, 2017 were fully vested on the grant date. Subsidiary Equity On March 17, 2017, 1493 authorized the issuance of 1,000 units to Peach for $1,000, used for prepaid expenses on behalf of the Company. Peach is beneficially owned 100% by the Briggs Family 2017 Trust, Peach’s sole manager. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 4. Income Taxes Deferred income taxes are reported using the liability method. Deferred tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Current and accumulated deferred tax benefit will be at the effective U.S. Federal corporate income tax rates. |
Construction in Progress
Construction in Progress | 9 Months Ended |
Sep. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Construction in Progress | 5. Construction in progress On June 8, 2017, the Company entered into construction contracts for the construction and build-out of two dispensaries for the Carolina and Dorado locations for $123,700 and $84,800, respectively. On August 14, 2017 the Company entered into a construction contract for the construction and build-out of a dispensary for the San Juan location for $117,200. As of September 30, 2017, the Company has paid $171,183 on interim payment applications to the contractor. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 6. Commitments and Contingencies Share Exchange Agreement On May 11, 2017, Cyberspace Vita, Inc., a Nevada corporation (the “Company”) entered into a share exchange agreement (the “Exchange Agreement”) with Peter Zachariou, the majority shareholder of the Company (the “Shareholder”), Project 1493, LLC, a limited liability company organized under the laws of the Commonwealth of Puerto Rico (“1493”), and the sole member of 1493 (the “Member”), pursuant to which the Member transferred all of the outstanding membership interests of 1493 to the Company in exchange for 16,690,912 restricted shares of common stock of the Company (the “Exchange Shares”), warrants to purchase up to 3,000,000 shares of common stock at an exercise price of $0.50 per share for a period of three (3) years from the date of issuance (the “Exchange Warrants”) and 1,000 shares of Series A Preferred Stock that grants the holders thereof fifty-one percent (51%) voting power (the “Preferred Shares” and together with the Exchange Shares, and the Exchange Warrants, the “Exchange Securities”). The transaction closed on May 11, 2017 (the “Closing Date”). Debt Exchange Agreement On May 11, 2017, the Company also entered into a debt exchange agreement (the “Debt Exchange”) with Fountainhead Capital Management Limited (“Fountainhead”), a related party, whereby Fountainhead agreed to cancel a promissory note in the aggregate amount of $510,652 plus accrued interest of $129,265. As consideration, Fountainhead received an aggregate of 1,800,000 shares of the Common Stock, of which 200,000 shares of Common Stock have already been issued. Escrow Agreement On April 18, 2017, the Company entered into an escrow agreement with PRIHBC with the intention of purchasing three pre-qualified medicinal cannabis licenses for $300,000. The agreement states the funds will be held by the escrow agent, Sichenzia Ross Ference Kesner LLP (“Sichenzia”). The Company deposited $150,000 into the escrow account as of June 30, 2017. The escrow agreement expired June 2, 2017. As of June 30, 2017, the Company had not paid PRIHBC towards the purchase of the dispensaries. The Company paid $200,000 and $100,000 on July 7, 2017 and August 1, 2017, respectively, paying the obligation in full. Memorandum of Understanding and Final Purchasing Agreement - PRIHBC On April 19, 2017, the Company entered into a Memorandum of Understanding (“MOU”) with PRIHBC to purchase three pre-qualified medical marijuana licenses in Puerto Rico for $300,000. The Company deposited $150,000 into escrow with Sichenzia for a deposit towards the purchase price. The agreement sells all legal rights, permits, licenses, leasing contracts and assets of the three dispensaries from PRIHBC to the Company. As of June 30, 2017 the funds had not been disbursed from escrow. During the due diligence period, the Company has exclusive negotiation rights regarding the proposed acquisition. On July 7, 2017, the Company entered into a final purchasing agreement (the “PRIHBC Agreement”) with Puerto Rico Industrial Holdings Biotech Corporation, a corporation formed under the laws of the Commonwealth of Puerto Rico (“PRIHBC”), pursuant to which we acquired all of the legal rights, permits, licenses, leasing contracts and assets pertaining to three dispensaries located in Carolina, Dorado and Fajardo, in exchange for $300,000, $150,000 of which shall be deposited into an escrow account until the closing of the PRIHBC Agreement. The Company paid $200,000 and $100,000 on July 7, 2017 and August 1, 2017, paying the obligation in full. In connection with the PRIHBC Agreement, 1493, PRIHBC and entered into an assignment of lease on June 15, 2017, (the “Carolina Lease Assignment”) which transfers and/or assigns the rights under the lease agreement for the location of the Carolina Dispensary to 1493. PRIHBC entered into such lease agreement, with Heras to lease approximately 2,500 rentable square feet for a term of five (5) years, commencing on September 1, 2016. The lease payments for such location will be $4,500 per month, with an annual increase of 5%. 1493, PRIHBC and Efron Dorado, S.E., a corporation formed under the laws of the Commonwealth of Puerto Rico (“Efron”), entered into an assignment of lease on June 7, 2017, (the “Dorado Lease Assignment”) which transfers and/or assigns the rights under the lease agreement for the location of the to 1493. Pursuant to a non-compete clause set forth in the PRIHBC Agreement, PRIHBC has agreed not to establish a medical cannabis dispensary within a two-mile radius from any of the three dispensaries. Each of the parties to the PRIH Agreement has made customary representations and considerations in the PRIH Agreement. Memorandum of Understanding and Final Purchasing Agreement – Good Vibes Distributors, LLC (“GVD”) On April 6, 2017, the Company entered into a MOU with Good Vibes Distributors, LLC (“GVD”) to purchase one medicinal cannabis dispensary in Puerto Rico for $75,000 (the “San Juan Dispensary”). The MOU called for $7,500 funded into escrow with Sichenzia for a deposit towards the purchase price. The agreement sells all assets, rights and licenses from GVD to the Company. On July 7, 2017, the Company entered into a final purchasing agreement (the “GVD Agreement”) with Good Vibes Distributors, LLC, a corporation formed under the laws of the Commonwealth of Puerto Rico (“GVD”), pursuant to which it acquired the dispensary prequalification license for the San Juan Dispensary, in exchange for $75,000. Pursuant to the GVD Agreement, the Company agreed to deposit the $7,500 to an escrow account until the closing of the GVD Agreement. The Company paid $75,000 on July 7, 2017, paying the obligation in full Pursuant to non-compete clause set forth in the GVD Agreement, GVD has agreed not to establish a Medical Cannabis dispensary within a two-mile radius from the San Juan Dispensary. Each of parties to the GVD Agreement has made customary representations and considerations in the GVD Agreement. On July 11, 2017, the Company entered into a lease agreement (the “Lease Agreement”) with Olympic Properties, Inc., a corporation formed under the laws of the Commonwealth of Puerto Rico, to lease approximately 1,500 square feet and 8 parking spaces on the first floor of 509-511 Andalucia Street in San Juan, Puerto Rico, for the location of the San Juan Dispensary. The lease payments pursuant to the Lease Agreement shall be $1,600 per month for the initial three (3) years commencing on August 1, 2017, after which the lease payment shall increase each year by 5% commencing on July 31, 2020. Long Term Supply Agreement On April 18, 2017, the Company entered into a long term supply agreement (“supply agreement”) to purchase flower and manufactured products for the dispensaries upon approval of the appropriate licensing by the Puerto Rico Department of Health. The Company will purchase at least 50% of all flower and manufactured products to be sold in the dispensaries owned by the Company or its affiliates. The supply agreement is valid for ten years from the moment of its coming into effect. If neither party announces termination of the supply agreement thirty days before its stated expiration, the supply agreement shall be automatically extended for each subsequent year with no limit of years. Risk of Prosecution for Marijuana-Related Companies A company that is connected to the marijuana industry must be aware that marijuana-related companies may be at risk of federal, and perhaps state, criminal prosecution. The Department of Treasury recently issued guidance noting: “The Controlled Substances Act” (“CSA”) makes it illegal under federal law to manufacture, distribute, or dispense marijuana. Many states impose and enforce similar prohibitions. As of September 30, 2017, the Company has not been notified of any pending investigations regarding its planned business activities, and is not currently involved in any such investigations with any regulators. Effect of Hurricanes Irma and Maria On September 5, 2017 Hurricane Irma landed in Puerto Rico, causing severe flooding and wind-related damage to the island. Power losses, lack of water and fuel were prevalent throughout the island. On September 20, 2017, approximately two weeks later, Hurricane Maria landed in Puerto Rico, causing more flooding, wind-related damage, water contamination and power losses. Although a large portion of the island suffered tangible damage, the Company’s construction sites did not suffer any substantial damage. While construction was delayed due to power loss construction commenced again in mid-October. The Company estimates completion of the dispensaries during the first quarter of 2018. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | 7. Subsequent Events Letter of Intent – Green Gold Cultivators and Greenlife Business On October 20, 2017, the Company entered into a Letter of Intent (the “LOI”) with Green Gold Cultivators (“GGC”) and Greenlife Business, as broker (“Greenlife”), to purchase 100% of all of the issued and outstanding shares of stock in GGC, a cultivation business, and $200,000 of wholesale inventory (the “Transaction”). In consideration of the Transaction, the Company will pay a total of $4,000,000 (The “Purchase Price”), of which 5%, or $200,000, shall be paid to Greenlife as broker. Pursuant to the terms of the LOI, the Company agreed to make a refundable deposit of $200,000 into an account. The Company deposited $200,000 into escrow on October 30, 2017. The LOI also provides that GGC agrees to enter into a non-compete and non-solicitation agreement, the terms and conditions of which shall be set forth in a formal written agreement satisfactory to GGC and the Company. Subject to a satisfactory due diligence investigation by the Company and entry into a definitive agreement, the anticipated closing date of the Transaction shall be on or before December 15, 2017, subject to the right of the Company to extend such time for a period of forty-five days thereafter in the event the Company requires additional time to conduct its due diligence investigation. Term sheet – Mythic Cuts, Inc. On October 27, 2017, the Company entered into a Term Sheet with Mythic Cuts, Inc. (“Mythic”) to form a limited liability company (“LLC”) for the purpose of operating within the cannabis industry. The LLC will be named Mythic Cuts Oakland, LLC (“Mythic Oakland”), which the Company and Mythic intend to operate as a cannabis cloning company. It is contemplated that Mythic Oakland will enter into a lease or sub-lease agreement with the Company in Oakland, California. The Company will own 51% of the Membership Interests for a purchase price of $1,600,000. Closing shall be subject to satisfactory completion by GSRX of due diligence and upon the delivery of certain corporate and financial information reasonably requested by GSRX from Mythic. Letter of Intent – The Green Room and Greenlife Business On November 9, 2017, the Company entered into a Letter of Intent (the “Letter”) with The Green Room (the “Seller”) and Greenlife, pursuant to which Seller wishes to sell, transfer and assign to the Company, and the Company wishes to purchase and assume from Seller, certain assets and certain specified liabilities of the cannabis dispensary business of Seller (the “Proposed Transaction”), subject to the terms and conditions of the Letter. In consideration of the Proposed Transaction, the Company will pay a total of $350,000 (the “Purchase Price”). The Company agreed to make a non-refundable deposit in the amount of $7,000, or 2% of the Purchase Price, into an escrow account held in the name of the Seller. The Letter further provides that Seller shall enter into a non-compete and non-solicitation agreement pursuant to which Seller shall be prohibited from competing in retail sales in the cannabis industry for a period of twelve (12) months, the specific terms and conditions of which shall be set forth in a formal agreement satisfactory to each the Company and Seller. Subject to a satisfactory due diligence investigation by the Company, and entry into a definitive agreement by and among the parties, the anticipated closing date of the Proposed Transaction shall be on or before December 8, 2017, subject to the right of the Company to extend such time for a period of forty-five days thereafter in the event the Company requires additional time to conduct its due diligence investigation. |
Summary of Significant Accoun14
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been omitted. However, in the opinion of management, all adjustments (which include only normal recurring adjustments, unless otherwise indicated) necessary to present fairly the consolidated financial position and results of its operations for the periods presented have been made. The results for interim periods are not necessarily indicative of trends or of results to be expected for the full year. These consolidated financial statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 2016 (including the notes thereto) set forth in Form 8-K filed with the Securities and Exchange Commission on May 16, 2017. |
Use of Estimates and Assumptions | Use of Estimates and Assumptions The consolidated financial statements that are prepared in conformity with U.S. generally accepted accounting principles 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 reported amounts of expenses during the reporting period. Actual results could differ from those estimates. |
Cash and cash equivalents | Cash and cash equivalents The Company considers all cash on hand, cash in banks and all highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents. At times, cash and cash equivalent balances at a limited number of banks and financial institutions may exceed insurable amounts. The Company believes it mitigates its risks by depositing cash or investing in cash equivalents in major financial institutions. At September 30, 2017 the Company had a cash and a cash held in escrow balance of $2,229,205. Cash held in escrow, in the name of the Company, is held by Sichenzia Ross Ference Kesner LLP (“Sichenzia”). The escrow account was established to hold the deposits from the sale of common stock. There are no restrictions on the funds held by Sichenzia on the Company’s behalf. |
Revenue Recognition | Revenue Recognition The Company will recognize revenue when: ● Persuasive evidence of an arrangement exists: ● Delivery has occurred; ● Price is fixed or determinable; and ● Collectability is reasonably assured. The Company follows the provisions of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic (“ASC”) 605, “Revenue Recognition”, which includes the guidelines of Staff Accounting Bulletin No. 104 as described above. |
Inventory | Inventory The Company’s inventory will be stated at the lower of cost or market with cost being determined using the first-in, first-out method. |
Share based Compensation | Share based Compensation Compensation cost relating to share-based payment transactions (including the cost of all employee stock options) is required to be recognized in the consolidated financial statements and covers a wide range of share-based compensation arrangements including share options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans. That cost will be measured based on the estimated fair value of the equity or liability instruments issued. See Note 3. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying value of the Company’s current liabilities approximates fair value because of the short maturity of these instruments. Unless otherwise noted, it is management’s opinion the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. |
Income Taxes | Income Taxes The Company will follow the accrual method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the estimated tax consequences attributable to differences between the financial statement carrying values and their respective income tax basis (temporary differences). The effect on the deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company was organized under the laws of the Commonwealth of Puerto Rico, and therefore will be taxed at normal U.S. federal corporate income tax rates. |
Basic Earnings per Share | Basic Earnings per Share The Company computes net loss per share in accordance with FASB ASC 260 “Earnings per Share”, which specifies the computation, presentation and disclosure requirements for earnings (loss) per share for entities with publicly held common stock. Basic net loss per share amounts is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted earnings per share are the same as basic earnings per share due to the Company’s net loss. Potentially dilutive securities have been excluded from the Company’s earnings per share calculation due to the effect being anti-dilutive. The total number of potentially dilutive securities which have been excluded is 6,038,462. (Note 3). |
New Accounting Pronouncements | Recent Accounting Pronouncements As of September 30, 2017 and through November 9, 2017, there were several new accounting pronouncements issued by the Financial Accounting Standards Board. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s financial position or future operating results. The Company will monitor these emerging issues to assess any potential future impact on its financial statements. |
Equity (Tables)
Equity (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Stockholders' Equity Note [Abstract] | |
Schedule of Common Stock Transactions | The following table illustrates the common stock transactions for the nine months ended September 30, 2017: Preferred Common Category Shares Shares Cash 8,461,538 Share Exchange Agreement 1,000 16,690,912 Debt Exchange Agreement 0 1,600,000 Services 0 3,025,000 Total 1,000 29,777,450 |
Schedule of Estimates and Assumptions in Black Scholes Model | The following table includes the estimates and assumptions used in the Black Scholes model: Stock price $ 0.96 Exercise price $ 0.50 Expected term 3 years Expected volatility 72.0 % Annual risk-free rate 1.55 % Dividend yield 0.00 % |
Summary of Outstanding Warrants Activity | The following table is a summary of outstanding warrants to purchase shares of common stock at September 30, 2017 and activity during the nine months then ended: Weighted Number of Exercise Average Shares Price Price Issued during quarter ended September 30, 2017 6,038,463 $ 0.50 $ 0.50 Expired and forfeited - - - Exercised - - - Warrants as of September 30, 2017 6,038,463 $ 0.50 $ 0.50 |
Nature of Operations (Details N
Nature of Operations (Details Narrative) | 9 Months Ended |
Sep. 30, 2017$ / sharesshares | |
Number of exchange for restricted shares of common stock | 16,690,912 |
Maximum number of warrants to purchase of common stock shares | 3,000,000 |
Exercise price of warrant | $ / shares | $ 0.50 |
Issuance of exchange warrants term | 3 years |
Voting percentage | 51.00% |
Series A Preferred Stock [Member] | |
Number of preferred stock shares grants during period | 1,000 |
Summary of Significant Accoun17
Summary of Significant Accounting Policies (Details Narrative) | 9 Months Ended |
Sep. 30, 2017USD ($)shares | |
Accounting Policies [Abstract] | |
Cash held in escrow balance | $ | $ 2,229,205 |
Potentially dilutive securities | shares | 6,038,462 |
Equity (Details Narrative)
Equity (Details Narrative) - USD ($) | May 11, 2017 | Mar. 17, 2017 | Sep. 30, 2017 | Jul. 05, 2017 | Dec. 31, 2016 |
Common stock, shares authorized | 100,000,000 | 100,000,000 | |||
Common stock, par value | $ 0.001 | $ 0.001 | |||
Common stock, shares issued | 30,025,005 | 247,554 | |||
Common stock, shares outstanding | 30,025,005 | 247,554 | |||
Preferred stock, shares authorized | 1,000 | 1,000 | |||
Preferred stock, par value | $ 0.001 | $ 0.001 | |||
Outstanding warrants to purchase | 6,038,463 | ||||
Exercise price of warrant | $ 0.50 | ||||
Issuance of authorized units | 1,000 | ||||
Prepaid expenses | $ 1,000 | ||||
Beneficially owned percentage | 100.00% | ||||
Series A Preferred Stock [Member] | |||||
Preferred stock voting percentage | The holder of Series A Preferred Stock is entitled to fifty-one percent (51%) of the total votes on all matters brought before shareholders of the Company, regardless of the actual number of shares of Series A Preferred Stock then outstanding. | ||||
Peach Management, LLC [Member] | |||||
Common stock, shares authorized | 16,690,912 | ||||
Common stock, par value | $ 0.39 | ||||
Preferred stock, shares authorized | 1,000 | ||||
Preferred stock, par value | $ 1 | ||||
Preferred stock issued percentage | 100.00% | ||||
Peter Zachariou [Member] | |||||
Common stock, shares authorized | 1,600,000 | ||||
Common stock, par value | $ 0.96 | ||||
Leslie Ball [Member] | |||||
Common stock, shares authorized | 235,000 | ||||
Common stock, par value | $ 0.96 | ||||
Thomas Gingerich [Member] | |||||
Common stock, shares authorized | 50,000 | ||||
Common stock, par value | $ 0.96 | ||||
RedChip Companies, Inc [Member] | |||||
Common stock, shares authorized | 1,000,000 | ||||
Common stock, par value | $ 0.96 | ||||
RD3 Acquisitions, LLC [Member] | |||||
Common stock, shares authorized | 750,000 | ||||
Common stock, par value | $ 0.96 | ||||
Darrin Ocasio [Member] | |||||
Common stock, shares authorized | 665,000 | ||||
Common stock, par value | $ 0.96 | ||||
ACB Management Inc [Member] | |||||
Common stock, shares authorized | 150,000 | ||||
Common stock, par value | $ 0.96 | ||||
Granada Investments, LLC [Member] | |||||
Common stock, shares authorized | 150,000 | ||||
Common stock, par value | $ 0.96 | ||||
Manuel Antonio Viota Diaz [Member] | |||||
Common stock, shares authorized | 25,000 | ||||
Common stock, par value | $ 11 | ||||
Blank Check [Member] | |||||
Preferred stock, shares authorized | 9,999,000 | ||||
Warrant [Member] | |||||
Warrant expense | $ 310,000 | ||||
Issuance of warrants period | 3 years |
Equity - Schedule of Common Sto
Equity - Schedule of Common Stock Transactions (Details) | 9 Months Ended |
Sep. 30, 2017shares | |
Preferred Shares [Member] | |
Cash | |
Share Exchange Agreement | 1,000 |
Debt Exchange Agreement | 0 |
Services | 0 |
Total | 1,000 |
Common Shares [Member] | |
Cash | 8,461,538 |
Share Exchange Agreement | 16,690,912 |
Debt Exchange Agreement | 1,600,000 |
Services | 3,025,000 |
Total | 29,777,450 |
Equity - Schedule of Estimates
Equity - Schedule of Estimates and Assumptions in Black Scholes Model (Details) - Warrant [Member] | 9 Months Ended |
Sep. 30, 2017$ / shares | |
Stock price | $ 0.96 |
Exercise price | $ 0.50 |
Expected term | 3 years |
Expected volatility | 72.00% |
Annual risk-free rate | 1.55% |
Dividend yield | 0.00% |
Equity - Summary of Outstanding
Equity - Summary of Outstanding Warrants Activity (Details) | 9 Months Ended |
Sep. 30, 2017$ / sharesshares | |
Stockholders' Equity Note [Abstract] | |
Number of shares, Issued during quarter ended September 30, 2017 | shares | 6,038,463 |
Number of shares, Expired and forfeited | shares | |
Number of shares, Exercised | shares | |
Number of shares, Warrants as of September 30, 2017 | shares | 6,038,463 |
Exercise price, Issued during quarter ended September 30, 2017 | $ 0.50 |
Exercise price, Expired and forfeited | |
Exercise price, Exercised | |
Exercise price, Warrants as of September 30, 2017 | 0.50 |
Weighted average price, Issued during quarter ended September 30, 2017 | 0.50 |
Weighted average price, Expired and forfeited | |
Weighted average price, Exercised | |
Weighted average price, Warrants as of September 30, 2017 | $ 0.50 |
Construction in Progress (Detai
Construction in Progress (Details Narrative) - USD ($) | Aug. 14, 2017 | Jun. 08, 2017 | Sep. 30, 2017 |
Payment to contractor | $ 171,183 | ||
Carolina [Member] | |||
Construction contracts | $ 123,700 | ||
Dorado [Member] | |||
Construction contracts | $ 84,800 | ||
San Juan [Member] | |||
Construction contracts | $ 117,200 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) | Aug. 01, 2017USD ($) | Jul. 11, 2017USD ($)ft² | Jul. 07, 2017USD ($) | May 11, 2017USD ($)shares | Apr. 19, 2017USD ($) | Apr. 18, 2017USD ($) | Apr. 06, 2017USD ($) | Dec. 02, 2016USD ($)ft² | Aug. 26, 2016USD ($)ft² | Sep. 30, 2017USD ($)$ / sharesshares | Jun. 30, 2017USD ($) |
Number of exchange for restricted shares of common stock | shares | 16,690,912 | ||||||||||
Maximum number of warrants to purchase of common stock shares | shares | 3,000,000 | ||||||||||
Exercise price of warrant | $ / shares | $ 0.50 | ||||||||||
Issuance of exchange warrants term | 3 years | ||||||||||
Voting percentage | 51.00% | ||||||||||
Payment to acquire licenses | $ 375,000 | ||||||||||
Escrow deposit | $ 2,229,205 | ||||||||||
Escrow Agreement [Member] | |||||||||||
Payment to acquire licenses | $ 300,000 | ||||||||||
Escrow deposit | $ 150,000 | ||||||||||
Maturity date | Jun. 2, 2017 | ||||||||||
Obligation payment | $ 100,000 | $ 200,000 | |||||||||
Memorandum of Understanding [Member] | |||||||||||
Payment to acquire licenses | $ 300,000 | ||||||||||
Escrow deposit | $ 150,000 | ||||||||||
Obligation payment | $ 100,000 | 200,000 | |||||||||
Memorandum of Understanding and Final Purchasing Agreement [Member] | Carolina Dispensary [Member] | |||||||||||
Payment to acquire licenses | 300,000 | ||||||||||
Memorandum of Understanding and Final Purchasing Agreement [Member] | Dorado Dispensary and Fajardo Dispensary [Member] | |||||||||||
Payment to acquire licenses | 150,000 | ||||||||||
Carolina Lease Assignment [Member] | |||||||||||
Payment to acquire licenses | $ 4,500 | ||||||||||
Rentable square feet | ft² | 2,500 | ||||||||||
Lease term | 5 years | ||||||||||
Increase in lease payment percentage | 5.00% | ||||||||||
Dorado Lease Assignment [Member] | |||||||||||
Payment to acquire licenses | $ 57,000 | ||||||||||
Rentable square feet | ft² | 1,900 | ||||||||||
Lease term | 3 years | ||||||||||
Monthly marketing fee | $ 158 | ||||||||||
Lease Agreement [Member] | |||||||||||
Payment to acquire licenses | $ 1,600 | ||||||||||
Rentable square feet | ft² | 1,500 | ||||||||||
Lease term | 3 years | ||||||||||
Increase in lease payment percentage | 5.00% | ||||||||||
Lease expiration date | Jul. 31, 2020 | ||||||||||
Fountainhead Capital Management Limited [Member] | |||||||||||
Promissory note in the aggregate amount | $ 510,652 | ||||||||||
Accrued interest | $ 129,265 | ||||||||||
Received an aggregate shares of common stock | shares | 1,800,000 | ||||||||||
Number of common stock issued | shares | 200,000 | ||||||||||
Good Vibes Distributors, LLC [Member] | Memorandum of Understanding and Final Purchasing Agreement [Member] | |||||||||||
Payment to acquire licenses | 75,000 | $ 75,000 | |||||||||
Escrow deposit | 7,500 | $ 7,500 | |||||||||
Obligation payment | $ 75,000 | ||||||||||
Series A Preferred Stock [Member] | |||||||||||
Number of preferred stock shares grants during period | shares | 1,000 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Nov. 09, 2017 | Oct. 20, 2017 | Oct. 30, 2017 | Oct. 27, 2017 | Sep. 30, 2017 |
Purchase of issued and outstanding shares, percentage | 51.00% | ||||
Escrow deposit | $ 2,229,205 | ||||
Subsequent Event [Member] | |||||
Escrow deposit | $ 200,000 | $ 200,000 | |||
Subsequent Event [Member] | Green Gold Cultivators [Member] | |||||
Purchase of issued and outstanding shares, percentage | 100.00% | ||||
Wholesale inventory | $ 200,000 | ||||
Payments for consideration | $ 4,000,000 | ||||
Subsequent Event [Member] | GreenLife [Member] | |||||
Purchase of issued and outstanding shares, percentage | 5.00% | ||||
Payments for consideration | $ 200,000 | ||||
Subsequent Event [Member] | Mythic Cuts, Inc [Member] | |||||
Membership interest percentage | 51.00% | ||||
Purchase price | $ 1,600,000 | ||||
Subsequent Event [Member] | Green Room and Greenlife Business [Member] | |||||
Payments for consideration | $ 350,000 | ||||
Escrow deposit | $ 7,000 | ||||
Percent of purchase price into escrow account | 2.00% |