Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 14, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | MARIMED INC. | |
Entity Central Index Key | 1,522,767 | |
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 | 171,330,991 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,017 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 652,998 | $ 569,356 |
Accounts receivable, net | 1,325,688 | 532,607 |
Deferred rents receivable | 608,135 | 536,248 |
Due from third parties | 1,024,263 | 556,680 |
Due from related parties | 134,781 | 187,508 |
Note receivable, current portion | 44,053 | 40,130 |
Other current assets | 82,425 | 16,003 |
Total current assets | 3,872,343 | 2,438,532 |
Fixed assets, net | 16,544,124 | 5,305,060 |
Note receivable, long-term portion | 590,619 | 624,167 |
Other assets | 365,332 | 195,342 |
Total assets | 21,372,418 | 8,563,101 |
Current liabilities: | ||
Accounts payable and accrued expenses | 5,092,162 | 2,159,129 |
Due to related parties | 94,996 | 148,338 |
Mortgages payable, current portion | 119,595 | 113,115 |
Notes payable | 1,825,000 | 3,475,000 |
Deferred revenue | 226,950 | |
Other current liabilities | 225,000 | 225,000 |
Total current liabilities | 7,356,753 | 6,347,532 |
Mortgages payable, long-term portion | 2,664,894 | 2,751,997 |
Notes payable | 3,250,000 | |
Other liabilities | 15,513 | 15,013 |
Total liabilities | 13,287,160 | 9,114,542 |
Stockholders' equity: | ||
Series A preferred stock, $0.001 par value; 50,000,000 and 5,000,000 shares authorized at September 30, 2017 and December 31, 2016, respectively; no shares issued or outstanding at September 30, 2017 and December 31, 2016 | ||
Series A preferred stock subscribed but not yet issued; 500,000 and 300,000 shares at September 30, 2017 and December 31, 2016, respectively | 500 | 300 |
Common stock, $0.001 par value; 500,000,000 and 100,000,000 shares authorized at September 30, 2017 and December 31, 2016, respectively; 166,170,991 and 64,074,683 shares issued at September 30, 2017 and December 31, 2016, respectively; 166,080,991 and 64,074,683 shares outstanding at September 30, 2017 and December 31, 2016, respectively | 166,171 | 64,075 |
Common stock subscribed but not yet issued; 4,800,000 and 400,000 shares at September 30, 2017 and December 31, 2016, respectively | 4,800 | 400 |
Subscriptions receivable | (25,000) | (25,000) |
Common stock warrants | 1,452,355 | 1,172,028 |
Treasury stock, at cost; 90,000 and zero shares at September 30, 2017 and December 31, 2016, respectively | (45,000) | |
Additional paid-in capital | 16,451,922 | 8,457,407 |
Accumulated deficit | (10,655,348) | (10,777,657) |
Non-controlling interests | 734,858 | 557,006 |
Total stockholders' equity | 8,085,258 | (551,441) |
Total liabilities and stockholders' equity | $ 21,372,418 | $ 8,563,101 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Series A preferred stock, par value | $ 0.001 | $ 0.001 |
Series A preferred stock, shares authorized | 50,000,000 | 5,000,000 |
Series A preferred stock, shares issued | ||
Series A preferred stock, shares outstanding | ||
Series A preferred stock, shares subscribed but unissued | 500,000 | 300,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 500,000,000 | 100,000,000 |
Common stock, shares issued | 166,170,991 | 64,074,683 |
Common stock, shares outstanding | 166,080,991 | 64,074,683 |
Common stock, shares subscribed but unissued | 4,800,000 | 400,000 |
Treasury stock, shares | 90,000 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Statement [Abstract] | ||||
Revenues | $ 1,715,697 | $ 873,549 | $ 4,487,473 | $ 2,135,445 |
Cost of revenues | 447,967 | 422,722 | 1,294,388 | 953,562 |
Gross profit | 1,267,730 | 450,827 | 3,193,085 | 1,181,883 |
Operating expenses: | ||||
Personnel | 269,795 | 111,870 | 574,481 | 351,322 |
Marketing and promotion | 29,286 | 19,993 | 84,211 | 24,136 |
General and administrative | 581,391 | 197,505 | 1,173,351 | 475,530 |
Depreciation and amortization | 100,214 | 66,422 | 263,624 | 166,108 |
Total operating expenses | 980,686 | 395,790 | 2,095,667 | 1,017,096 |
Operating income | 287,044 | 55,037 | 1,097,418 | 164,787 |
Non-operating expenses: | ||||
Interest expense, net | 79,518 | 61,777 | 257,424 | 187,322 |
Equity compensation | 284,640 | 284,640 | 5,154 | |
Loss on debt conversions | 463,855 | 482,133 | ||
Write-off of deferred revenue | (226,940) | (226,940) | ||
Unrealized loss (gain) on trading securities | 120 | 268 | ||
Total non-operating expenses | 601,073 | 61,897 | 797,257 | 192,208 |
Net income (loss) | (314,029) | (6,860) | 300,161 | (27,421) |
Net income (loss) attributable to non-controlling interests | 78,421 | 53,962 | 177,852 | 182,768 |
Net income (loss) attributable to MariMed Inc. | $ (392,450) | $ (60,822) | $ 122,309 | $ (210,189) |
Net income (loss) per share | $ (0.002) | $ (0.001) | $ 0.001 | $ (0.004) |
Weighted average common shares outstanding | 163,737,564 | 64,074,683 | 97,982,499 | 52,018,689 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash flows from operating activities: | ||
Net income (loss) attributable to MariMed Inc. | $ 122,309 | $ (210,189) |
Net income (loss) attributable to non-controlling interests | 177,852 | 182,768 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 263,624 | 166,108 |
Equity compensation | 284,640 | 5,154 |
Loss on debt conversions | 482,133 | |
Unrealized trading losses, net | (268) | |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (793,081) | (302,237) |
Deferred rents receivable | (71,887) | |
Due from third parties | (467,583) | (355,130) |
Due from related parties | 52,727 | 77,594 |
Other current assets | (66,422) | (180,751) |
Other assets | (169,990) | (268) |
Accounts payable and accrued expenses | 3,095,297 | 256,035 |
Due to related parties | (53,342) | 108,477 |
Deferred revenue | (226,950) | |
Other liabilities | 500 | (20,000) |
Net cash provided by (used in) operating activities | 2,629,827 | (277,861) |
Cash flows from investing activities: | ||
Purchases of fixed assets | (11,502,688) | (3,346,355) |
Proceeds from issuance of notes receivable | 29,625 | 16,587 |
Net cash used in investing activities | (11,473,063) | (3,329,768) |
Cash flows from financing activities: | ||
Proceeds from subscribed preferred stock | 200,000 | |
Issuance of common stock | 5,150,000 | 206,157 |
Issuance of promissory notes | 3,650,000 | 2,867,592 |
Proceeds from (paydown of) mortgage payable | (80,622) | 892,810 |
Exercise of stock options | 7,500 | |
Distributions | (301,749) | |
Net cash provided by financing activities | 8,926,878 | 3,664,810 |
Net change to cash and cash equivalents | 83,642 | 57,181 |
Cash and cash equivalents at beginning of period | 569,356 | 160,859 |
Cash and cash equivalents at end of period | 652,998 | 218,040 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 418,738 | 158,489 |
Cash paid for taxes | 8,138 | |
Non-cash activities: | ||
Equity issued to convert debt | $ 2,050,000 |
Organization and Description of
Organization and Description of Business | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Organization and Description of Business | NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS MariMed Inc., formerly Worlds Online Inc. (the “Company”), is an industry leader in the emerging cannabis industry. The Company advises its clients in securing cannabis licenses, and in turn, develops and manages state-of-the-art, regulatory-compliant facilities for the cultivation, production, and dispensary of legal cannabis. In addition, the Company has created a brand of precision-dosed cannabis infused products, under the brand name Kalm Fusion™, which are licensed and distributed nationally. The Company’s stock is quoted on the OTCQB market under the ticker symbol MRMD (formerly WORX). The Company was originally incorporated in January 2011 in the state of Delaware. Since inception, the Company has operated an online portal that offers multi-user virtual environments to users. This segment of the business has had insignificant operations since early 2014. In May 2014, the Company, through its wholly-owned subsidiary MariMed Advisors Inc. (“MMA”), acquired Sigal Consulting LLC in exchange for (i) an aggregate amount of the Company’s common stock equal to 50% of the Company’s outstanding shares on the closing date of September 29, 2014, (ii) options to purchase three million shares of the Company’s common stock, exercisable over five years with exercise prices ranging from $0.15 to $0.35, and (iii) a 49% ownership interest in MMA. This transaction was accounted for as a purchase acquisition where the Company was both the legal and accounting acquirer. Accordingly, the Company recorded as goodwill the value of the common stock and options issued in excess of the Sigal assets acquired and liabilities assumed. This goodwill was subsequently deemed impaired in full and written down to zero. In June 2017, the Company acquired the remaining 49% interest in MMA in exchange for 75 million shares of common stock. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). In accordance with GAAP, these interim statements do not contain all of the disclosures normally required in annual statements. In addition, the results of operations of interim periods are not necessarily indicative of the results of operations to be expected for the full year. Accordingly, these interim financial statements should be read in conjunction with the Company’s audited annual financial statements and accompanying notes for the year ended December 31, 2016. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts within the financial statements and disclosures thereof. Actual results could differ from these estimates or assumptions. Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity date of three months or less to be cash equivalents. Revenue Recognition The Company’s main sources of revenue are comprised of sales and licensing of branded products, operational consulting, leasing, and advisory services. The Company recognizes revenue when all of the following criteria are met: evidence of an arrangement exists such as a signed contract, delivery has occurred, the price is fixed or determinable, and collectability is reasonably assured. This will usually be in the form of a receipt of customer acceptance and satisfaction with delivered product, or in the case of development and service revenue, when services have been performed. Deferred revenue represents cash payments received before revenue is earned; the corresponding costs are also deferred until such revenue is ultimately recognized. Research and Development Costs Research and development costs are charged to operations as incurred. Fixed Assets Fixed assets are stated at cost. Depreciation is provided on a straight-line basis over the estimated useful lives of the assets. When assets are retired or disposed, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income. Repairs and maintenance are charged to expense in the period incurred. Impairment of Long Lived Assets The Company evaluates the recoverability of its fixed assets and other assets in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification (“ASC”) 360-10-15, Impairment or Disposal of Long-Lived Assets Fair Value of Financial Instruments The Company follows the provisions of ASC 820, Fair Value Measurement Financial Instruments, Level 1 Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. Level 2 Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 3 Pricing inputs that are generally observable inputs and not corroborated by market data. The carrying amounts of the Company’s financial assets and liabilities, such as cash and accounts payable approximate their fair values due to the short maturity of these instruments. Extinguishment of Liabilities The Company accounts for extinguishment of liabilities in accordance with ASC 405-20, Extinguishments of Liabilities. Stock-Based Compensation The Company accounts for stock-based compensation using the fair value method as set forth in ASC 718, Compensation—Stock Compensation, Income Taxes The Company accounts for income taxes in accordance with ASC 740, Income Taxes ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. The Company did not take any uncertain tax positions and had no adjustments to unrecognized income tax liabilities or benefits for the nine months and year ended September 30, 2017 and December 31, 2016, respectively. Related Party Transactions The Company follows ASC 850, Related Party Disclosures In accordance with ASC 850, the Company’s financial statements include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business, as well as transactions that are eliminated in the preparation of financial statements. Comprehensive Income The Company reports comprehensive income and its components following guidance set forth by ASC 220, Comprehensive Income Earnings Per Share Earnings per common share is computed pursuant to ASC 260, Earnings Per Share As of September 30, 2017 and 2016, there were 6,748,898 and 9,825,000 potentially dilutive securities in the form of options and warrants. Such securities had an anti-dilutive effect on earnings per share, and in accordance with ASC 260, were excluded from the diluted net income per share calculation. For that reason, the calculations of basic and fully diluted net income per share were identical for the three and nine month periods ended September 30, 2017 and 2016. These options and warrants may dilute earnings per share in the future. Commitments and Contingencies Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. In accordance with ASC 450, Contingencies While not assured, management does not believe, based upon information available at this time, that a loss contingency will have material adverse effect on the Company’s financial position, results of operations or cash flows. Risk and Uncertainties The Company is subject to risks common to companies operating within the legal and medical marijuana industries, including, but not limited to, federal laws, government regulations and jurisdictional laws. Off Balance Sheet Arrangements The Company does not have any off-balance sheet arrangements. Reclassification Certain reclassifications have been made to prior periods’ data to conform to the current period presentation. These reclassifications had no effect on reported income (losses). Recent Accounting Pronouncements The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements will have a material impact on its financial condition or the results of its operations. |
Going Concern Consideration
Going Concern Consideration | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern Consideration | NOTE 3 - GOING CONCERN CONSIDERATION The accompanying financial statements have been prepared assuming the Company will continue as a going concern. While working capital (current assets less current liabilities) was negative at September 30, 2017, for the nine months then ended, the Company generated positive cash flow from operating activities, and revenues and income more than doubled from the same period a year ago. During the nine months ended September 30, 2017, the Company raised $9 million. The Company will need additional funding to fully implement its business plan. An inability to obtain additional funding may have a material adverse effect on the Company and its operations. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. |
Acquisition
Acquisition | 9 Months Ended |
Sep. 30, 2017 | |
Business Combinations [Abstract] | |
Acquisition | NOTE 4 – ACQUISITION In May 2014, the Company’s wholly-owned subsidiary, MariMed Advisors Inc. (“MMA”), acquired Sigal Consulting LLC (“Sigal”), a company partially owned by the CEO and CFO of the Company. The purchase price, which was distributed to the owners of Sigal, consisted of (i) 31,954,236 shares of the Company’s common stock, (ii) options to purchase three million shares of the Company’s common stock at prices ranging from $0.15 - $0.35 per share and which vest over two years and exercisable over five years, and (iii) a 49% interest in MMA. The value of the common stock issued was approximately $5,912,000, as determined by the fair value of the Company’s common stock on the closing date. The fair value of the stock options was approximately $570,000, as measured by the use of an option pricing model. The fair value of common stock issued and options granted for acquisition over the book value of Sigal was recorded as goodwill, which was subsequently impaired in full. In June, the Company issued 75 million shares of common stock to purchase the remaining 49% ownership of MMA. |
Deferred Revenue
Deferred Revenue | 9 Months Ended |
Sep. 30, 2017 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
Deferred Revenue | NOTE 5 – DEFERRED REVENUE Deferred revenue represented the conversion of a promissory note issued to a third party by the Company’s former parent, which was assumed by the Company in 201l, for future products and services of the Company’s online portal business segment. In the third quarter of 2017, the Company wrote off the entire carrying amount of deferred revenue in accordance with an agreement with the third party whereby the Company was released from all of its obligations to the third party and any actions or demands related thereto. |
Fixed Assets
Fixed Assets | 9 Months Ended |
Sep. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Fixed Assets | NOTE 6 – FIXED ASSETS Fixed assets are comprised of land and properties that have been acquired, built out for commercial use within the legal and medical cannabis industry, and then leased to third parties. These amounts are shown net of accumulated depreciation. During the nine months ended September 30, 2017, fixed asset purchases were $11.5 million compared to $3.3 million during the same period in 2016. These purchases included the acquisition of properties in Hagerstown, MD and Middleborough, MA, and the buildout of facilities in Lewes, DE, Clark County, NV, and Hagerstown, MD. Depreciation and amortization for the nine months ended September 30, 2017 and 2016 was approximately $264,000 and $166,000, respectively. |
Warrants and Stock Options
Warrants and Stock Options | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Warrants and Stock Options | NOTE 7 – WARRANTS AND STOCK OPTIONS During the nine months ended September 30, 2017, the Company issued warrants to purchase 100,000 shares of preferred stock and 873,898 shares of common stock; and options to purchase 200,000 shares of common stock. The Company recorded non-cash equity compensation of approximately $285,000 representing the estimated fair value of these instruments on the grant date, calculated using a binomial pricing model. During the three months ended September 30, 2017, options to purchase 4.8 million shares of common stock were exercised, at exercise prices ranging from $0.010 to $0.025. The issuance of shares associated with these exercises occurred after the quarter end, and accordingly the stock is reflected as Common Stock Subscribed But Not Yet Issued Stock options outstanding and exercisable as of September 30, 2017 were: Exercise Price Shares Under Option Remaining per Share Outstanding Exercisable Life in Years $ 0.025 200,000 200,000 0.22 $ 0.025 200,000 200,000 0.25 $ 0.080 200,000 200,000 2.22 $ 0.080 250,000 250,000 1.33 $ 0.130 600,000 600,000 2.75 $ 0.150 1,000,000 1,000,000 1.99 $ 0.250 1,000,000 1,000,000 1.99 $ 0.350 1,000,000 1,000,000 1.99 $ 0.550 200,000 10,000 2.90 4,650,000 4,460,000 |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 8 – RELATED PARTY TRANSACTIONS In May 2014, the Company acquired Sigal Consulting LLC, a company partially owned by the CEO and CFO of the Company. The details of this transaction are further disclosed in Note 4 above. On June 30, 2017, the Company acquired the remaining 49% interest in MariMed Advisors Inc. from its ownership group, which included the CEO and CFO of the Company, for an aggregate 75 million shares of common stock. This common stock is restricted for a period of 12 months following the transaction date. The caption Due from Related Parties The caption Due to Related Parties |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 9 – COMMITMENTS AND CONTINGENCIES An employment agreement with the former CEO of the Company, which expired on September 1, 2017, provided this individual with salary, car allowances, bonuses based on the Company reaching certain milestones, life insurance, stock options and a death benefit. The balance owed under this agreement at September 30, 2017 and December 31, 2016 was approximately $1,011,000 and $840,000, respectively. These amounts are reflected in the Company financial statements under the caption Accounts Payable and Accrued Expenses |
Non-Controlling Interests
Non-Controlling Interests | 9 Months Ended |
Sep. 30, 2017 | |
Noncontrolling Interest [Abstract] | |
Non-Controlling Interests | NOTE 10 - NON-CONTROLLING INTERESTS Non-controlling Interests |
Segments
Segments | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Segments | NOTE 11 – SEGMENTS In accordance with ASC 280, the following is information regarding the Company’s operating segments: Nine Months Ended September 30, 2017 2016 Revenues: Online portal operations $ 289 $ 510 Cannabis operations 4,487,184 2,134,935 Consolidated revenues $ 4,487,473 $ 2,135,445 Depreciation and amortization: Online portal operations $ — $ — Cannabis operations 263,624 166,108 Depreciation and amortization $ 263,624 $ 166,108 Net income (loss): Online portal operations $ (31,703 ) $ (355,058 ) Cannabis operations 331,864 327,637 Net income (loss) $ 300,161 $ (27,421 ) Capital expenditures: Online portal operations $ — $ — Cannabis operations 11,502,688 3,346,355 Combined capital expenditures $ 11,502,688 $ 3,346,355 Assets: Online portal operations $ 1,476 $ 9,137 Cannabis operations 21,370,942 7,687,828 Combined assets $ 21,372,418 $ 7,696,965 |
Material Transactions
Material Transactions | 9 Months Ended |
Sep. 30, 2017 | |
Material Transactions | |
Material Transactions | NOTE 12 – MATERIAL TRANSACTIONS In June 2015, the Company entered into a long-term tenancy agreement with First State Compassion Center, Inc. (“FSCC”) for the lease of its state-of-the-art medical cannabis facility in Delaware. FSCC is one of the companies to be awarded a medical marijuana license in the state. In April 2015, the Company entered into a long-term agreement with two companies that have been awarded medical marijuana licenses in the state of Illinois to lease two of the Company’s state-of-the-art medical cannabis facilities in the state. In August 2017, the Company issued 4,385,823 shares of common stock to retire promissory notes with principal balances of $2,050,000 plus accrued interest. On the transaction date, the fair value of the common stock was $0.63 per share, resulting in the company recording a non-cash loss on debt conversion of approximately $451,000. These former noteholders also received, in September 2017, warrants to purchase 863,898 shares of common stock. The fair value of these warrants on the grant date was approximately $257,000, which made up most of the non-cash equity compensation of approximately $285,000 recorded by the Company in the third quarter, as further discussed in Note 7 above. In September 2017, the Company entered into a letter of intent with Tikun Olam to expand the Company’s licensing of Tikun Olam’s unique cannabis strains into four additional legal cannabis states. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 13 - SUBSEQUENT EVENTS In October 2017, the Company received a certificate of occupancy for its recently completed facility in Hagerstown, MD, which is leased to a third party that has been awarded a medical marijuana license in the state. In November 2017, the Company purchased a 137,500 square foot industrial building in New Bedford, MA, a portion of which is tenant-occupied, and a portion of which will be renovated into a state-of-the-art medical cannabis facility to be leased to a cannabis licensee in the state. In November 2017, the Company entered into an exclusive licensing agreement for the production and distribution of its branded cannabis products in the state of Nevada, which is expected to commence in the fourth quarter of 2017. During the period October 1 through November 14, 2017, the Company issued 450,000 shares of its common stock. |
Summary of Significant Accoun19
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). In accordance with GAAP, these interim statements do not contain all of the disclosures normally required in annual statements. In addition, the results of operations of interim periods are not necessarily indicative of the results of operations to be expected for the full year. Accordingly, these interim financial statements should be read in conjunction with the Company’s audited annual financial statements and accompanying notes for the year ended December 31, 2016. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts within the financial statements and disclosures thereof. Actual results could differ from these estimates or assumptions. |
Cash Equivalents | Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity date of three months or less to be cash equivalents. |
Revenue Recognition | Revenue Recognition The Company’s main sources of revenue are comprised of sales and licensing of branded products, operational consulting, leasing, and advisory services. The Company recognizes revenue when all of the following criteria are met: evidence of an arrangement exists such as a signed contract, delivery has occurred, the price is fixed or determinable, and collectability is reasonably assured. This will usually be in the form of a receipt of customer acceptance and satisfaction with delivered product, or in the case of development and service revenue, when services have been performed. Deferred revenue represents cash payments received before revenue is earned; the corresponding costs are also deferred until such revenue is ultimately recognized. |
Research and Development Costs | Research and Development Costs Research and development costs are charged to operations as incurred. |
Fixed Assets | Fixed Assets Fixed assets are stated at cost. Depreciation is provided on a straight-line basis over the estimated useful lives of the assets. When assets are retired or disposed, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income. Repairs and maintenance are charged to expense in the period incurred. |
Impairment of Long Lived Assets | Impairment of Long Lived Assets The Company evaluates the recoverability of its fixed assets and other assets in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification (“ASC”) 360-10-15, Impairment or Disposal of Long-Lived Assets |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company follows the provisions of ASC 820, Fair Value Measurement Financial Instruments, Level 1 Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. Level 2 Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 3 Pricing inputs that are generally observable inputs and not corroborated by market data. The carrying amounts of the Company’s financial assets and liabilities, such as cash and accounts payable approximate their fair values due to the short maturity of these instruments. |
Extinguishment of Liabilities | Extinguishment of Liabilities The Company accounts for extinguishment of liabilities in accordance with ASC 405-20, Extinguishments of Liabilities. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock-based compensation using the fair value method as set forth in ASC 718, Compensation—Stock Compensation, |
Income Taxes | Income Taxes The Company accounts for income taxes in accordance with ASC 740, Income Taxes ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. The Company did not take any uncertain tax positions and had no adjustments to unrecognized income tax liabilities or benefits for the nine months and year ended September 30, 2017 and December 31, 2016, respectively. |
Related Party Transactions | Related Party Transactions The Company follows ASC 850, Related Party Disclosures In accordance with ASC 850, the Company’s financial statements include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business, as well as transactions that are eliminated in the preparation of financial statements. |
Comprehensive Income | Comprehensive Income The Company reports comprehensive income and its components following guidance set forth by ASC 220, Comprehensive Income |
Earnings Per Share | Earnings Per Share Earnings per common share is computed pursuant to ASC 260, Earnings Per Share As of September 30, 2017 and 2016, there were 6,748,898 and 9,825,000 potentially dilutive securities in the form of options and warrants. Such securities had an anti-dilutive effect on earnings per share, and in accordance with ASC 260, were excluded from the diluted net income per share calculation. For that reason, the calculations of basic and fully diluted net income per share were identical for the three and nine month periods ended September 30, 2017 and 2016. These options and warrants may dilute earnings per share in the future. |
Commitments and Contingencies | Commitments and Contingencies Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. In accordance with ASC 450, Contingencies While not assured, management does not believe, based upon information available at this time, that a loss contingency will have material adverse effect on the Company’s financial position, results of operations or cash flows. |
Risk and Uncertainties | Risk and Uncertainties The Company is subject to risks common to companies operating within the legal and medical marijuana industries, including, but not limited to, federal laws, government regulations and jurisdictional laws. |
Off Balance Sheet Arrangements | Off Balance Sheet Arrangements The Company does not have any off-balance sheet arrangements. |
Reclassification | Reclassification Certain reclassifications have been made to prior periods’ data to conform to the current period presentation. These reclassifications had no effect on reported income (losses). |
Recent Accounting Pronouncements | Recent Accounting Pronouncements The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements will have a material impact on its financial condition or the results of its operations. |
Warrants and Stock Options (Tab
Warrants and Stock Options (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Schedule of Stock Options Outstanding and Exercisable | Stock options outstanding and exercisable as of September 30, 2017 were: Exercise Price Shares Under Option Remaining per Share Outstanding Exercisable Life in Years $ 0.025 200,000 200,000 0.22 $ 0.025 200,000 200,000 0.25 $ 0.080 200,000 200,000 2.22 $ 0.080 250,000 250,000 1.33 $ 0.130 600,000 600,000 2.75 $ 0.150 1,000,000 1,000,000 1.99 $ 0.250 1,000,000 1,000,000 1.99 $ 0.350 1,000,000 1,000,000 1.99 $ 0.550 200,000 10,000 2.90 4,650,000 4,460,000 |
Segments (Tables)
Segments (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Schedule of Operating Segments | In accordance with ASC 280, the following is information regarding the Company’s operating segments: Nine Months Ended September 30, 2017 2016 Revenues: Online portal operations $ 289 $ 510 Cannabis operations 4,487,184 2,134,935 Consolidated revenues $ 4,487,473 $ 2,135,445 Depreciation and amortization: Online portal operations $ — $ — Cannabis operations 263,624 166,108 Depreciation and amortization $ 263,624 $ 166,108 Net income (loss): Online portal operations $ (31,703 ) $ (355,058 ) Cannabis operations 331,864 327,637 Net income (loss) $ 300,161 $ (27,421 ) Capital expenditures: Online portal operations $ — $ — Cannabis operations 11,502,688 3,346,355 Combined capital expenditures $ 11,502,688 $ 3,346,355 Assets: Online portal operations $ 1,476 $ 9,137 Cannabis operations 21,370,942 7,687,828 Combined assets $ 21,372,418 $ 7,696,965 |
Organization and Description 22
Organization and Description of Business (Details Narrative) - $ / shares | 1 Months Ended | ||
Jun. 30, 2017 | May 31, 2014 | Sep. 30, 2017 | |
Minimum [Member] | |||
Exercise price per share | $ 0.010 | ||
Maximum [Member] | |||
Exercise price per share | $ 0.025 | ||
MariMed Advisors Inc. [Member] | |||
Common stock outstanding shares percentage | 50.00% | ||
Options to purchase of shares | 3,000,000 | ||
Exercisable contractual term | 5 years | ||
Ownership percentage | 49.00% | 49.00% | |
Common stock shares acquired | 75,000,000 | ||
MariMed Advisors Inc. [Member] | Minimum [Member] | |||
Exercise price per share | $ 0.15 | ||
MariMed Advisors Inc. [Member] | Maximum [Member] | |||
Exercise price per share | $ 0.35 |
Summary of Significant Accoun23
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Accounting Policies [Abstract] | |||
Unrecognized tax benefits | |||
Potentially dilutive securities | 6,748,898 | 9,825,000 |
Going Concern Consideration (De
Going Concern Consideration (Details Narrative) | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Raised value | $ 9,000,000 |
Acquisition (Details Narrative)
Acquisition (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Aug. 31, 2017 | Jun. 30, 2017 | May 31, 2014 | Sep. 30, 2017 | Sep. 30, 2017 | |
Number of common stock shares issued | 4,385,823 | ||||
Options to purchase shares of common stock | 4,800,000 | 200,000 | |||
Minimum [Member] | |||||
Exercise price per share | $ 0.010 | $ 0.010 | |||
Maximum [Member] | |||||
Exercise price per share | $ 0.025 | $ 0.025 | |||
MariMed Advisors Inc. [Member] | |||||
Number of common stock shares issued | 31,954,236 | ||||
Options to purchase shares of common stock | 3,000,000 | ||||
Ownership percentage | 49.00% | 49.00% | |||
Number of common stock shares issued, value | $ 5,912,000 | ||||
Fair value of stock option | $ 570,000 | ||||
Common stock shares acquired | 75,000,000 | ||||
MariMed Advisors Inc. [Member] | Minimum [Member] | |||||
Exercise price per share | $ 0.15 | ||||
MariMed Advisors Inc. [Member] | Maximum [Member] | |||||
Exercise price per share | $ 0.35 |
Fixed Assets (Details Narrative
Fixed Assets (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Property, Plant and Equipment [Abstract] | ||||
Purchases of fixed assets | $ 11,502,688 | $ 3,346,355 | ||
Depreciation and amortization | $ 100,214 | $ 66,422 | $ 263,624 | $ 166,108 |
Warrants and Stock Options (Det
Warrants and Stock Options (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Number of warrant issued | 863,898 | 863,898 | ||
Options to purchase shares of common stock | 4,800,000 | 200,000 | ||
Non-cash equity compensation | $ 284,640 | $ 284,640 | $ 5,154 | |
Minimum [Member] | ||||
Exercise price of common stock | $ 0.010 | $ 0.010 | ||
Maximum [Member] | ||||
Exercise price of common stock | $ 0.025 | $ 0.025 | ||
Preferred Stock [Member] | ||||
Number of warrant issued | 100,000 | 100,000 | ||
Common Stock [Member] | ||||
Number of warrant issued | 873,898 | 873,898 |
Warrants and Stock Options - Sc
Warrants and Stock Options - Schedule of Warrant and Stock Options Outstanding and Exercisable (Details) | 9 Months Ended |
Sep. 30, 2017$ / sharesshares | |
Outstanding shares under option | 4,650,000 |
Exercisable shares under option | 4,460,000 |
Range One [Member] | |
Outstanding and exercisable exercise price per share | $ / shares | $ 0.025 |
Outstanding shares under option | 200,000 |
Exercisable shares under option | 200,000 |
Outstanding remaining life in years | 2 months 19 days |
Range Two [Member] | |
Outstanding and exercisable exercise price per share | $ / shares | $ 0.025 |
Outstanding shares under option | 200,000 |
Exercisable shares under option | 200,000 |
Outstanding remaining life in years | 2 months 30 days |
Range Three [Member] | |
Outstanding and exercisable exercise price per share | $ / shares | $ 0.080 |
Outstanding shares under option | 200,000 |
Exercisable shares under option | 200,000 |
Outstanding remaining life in years | 2 years 2 months 19 days |
Range Four [Member] | |
Outstanding and exercisable exercise price per share | $ / shares | $ 0.080 |
Outstanding shares under option | 250,000 |
Exercisable shares under option | 250,000 |
Outstanding remaining life in years | 1 year 3 months 29 days |
Range Five [Member] | |
Outstanding and exercisable exercise price per share | $ / shares | $ 0.130 |
Outstanding shares under option | 600,000 |
Exercisable shares under option | 600,000 |
Outstanding remaining life in years | 2 years 9 months |
Range Six [Member] | |
Outstanding and exercisable exercise price per share | $ / shares | $ 0.150 |
Outstanding shares under option | 1,000,000 |
Exercisable shares under option | 1,000,000 |
Outstanding remaining life in years | 1 year 11 months 26 days |
Range Seven [Member] | |
Outstanding and exercisable exercise price per share | $ / shares | $ 0.250 |
Outstanding shares under option | 1,000,000 |
Exercisable shares under option | 1,000,000 |
Outstanding remaining life in years | 1 year 11 months 26 days |
Range Eight [Member] | |
Outstanding and exercisable exercise price per share | $ / shares | $ 0.350 |
Outstanding shares under option | 1,000,000 |
Exercisable shares under option | 1,000,000 |
Outstanding remaining life in years | 1 year 11 months 26 days |
Range Nine [Member] | |
Outstanding and exercisable exercise price per share | $ / shares | $ 0.550 |
Outstanding shares under option | 200,000 |
Exercisable shares under option | 10,000 |
Outstanding remaining life in years | 2 years 10 months 25 days |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - MariMed Advisors Inc. [Member] - shares | 1 Months Ended | |
Jun. 30, 2017 | May 31, 2014 | |
Ownership percentage | 49.00% | 49.00% |
Common stock shares acquired | 75,000,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Agreement term description | An employment agreement with the former CEO of the Company, which expired on September 1, 2017, provided this individual with salary, car allowances, bonuses based on the Company reaching certain milestones, life insurance, stock options and a death benefit. | |
Balance owed | $ 1,011,000 | $ 840,000 |
Non-Controlling Interests (Deta
Non-Controlling Interests (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Noncontrolling Interest [Abstract] | |||||
Net income attributable to non-controlling interests | $ 78,421 | $ 53,962 | $ 177,852 | $ 182,768 | |
Accumulated deficit attributable to non-controlling interests | $ 734,858 | $ 734,858 | $ 557,006 |
Segments - Schedule of Operatin
Segments - Schedule of Operating Segments (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenues | $ 4,487,473 | $ 2,135,445 | ||
Depreciation and amortization | $ 100,214 | $ 66,422 | 263,624 | 166,108 |
Net income (loss) | 300,161 | (27,421) | ||
Capital expenditures | 11,502,688 | 3,346,355 | ||
Assets | 21,372,418 | 7,696,965 | 21,372,418 | 7,696,965 |
Online Portal Operations [Member] | ||||
Revenues | 289 | 510 | ||
Depreciation and amortization | ||||
Net income (loss) | (31,703) | (355,058) | ||
Capital expenditures | ||||
Assets | 1,476 | 9,137 | 1,476 | 9,137 |
Cannabis Operations [Member] | ||||
Revenues | 4,487,184 | 2,134,935 | ||
Depreciation and amortization | 263,624 | 166,108 | ||
Net income (loss) | 331,864 | 327,637 | ||
Capital expenditures | 11,502,688 | 3,346,355 | ||
Assets | $ 21,370,942 | $ 7,687,828 | $ 21,370,942 | $ 7,687,828 |
Material Transactions (Details
Material Transactions (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Aug. 31, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Material Transactions | |||||
Number of common stock shares issued, shares | 4,385,823 | ||||
Outstanding principal amount | $ 2,050,000 | ||||
Common stock price per share | $ 0.63 | ||||
Loss on debt conversion | $ 451,000 | $ 463,855 | $ 482,133 | ||
Number of warrant issued | 863,898 | 863,898 | |||
Fair value of warrant | $ 257,000 | ||||
Non-cash equity compensation | $ 284,640 | $ 284,640 | $ 5,154 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) | 1 Months Ended | ||
Nov. 14, 2017shares | Aug. 31, 2017shares | Sep. 30, 2017ft² | |
Number of common stock shares issued, shares | 4,385,823 | ||
Subsequent Event [Member] | |||
Number of common stock shares issued, shares | 450,000 | ||
Subsequent Event [Member] | November 2017 [Member] | |||
Area of land purchased | ft² | 137,500 |