Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2021 | May 14, 2021 | |
Document Information Line Items | ||
Entity Registrant Name | Veritas Farms, Inc. | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 46,184,977 | |
Amendment Flag | false | |
Entity Central Index Key | 0001669400 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Document Period End Date | Mar. 31, 2021 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity File Number | 333-235300 | |
Entity Incorporation, State or Country Code | NV | |
Entity Interactive Data Current | Yes |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
CURRENT ASSETS | ||
Cash | $ 91,980 | $ 107,693 |
Inventories | 5,788,338 | 5,891,983 |
Accounts Receivable | 530,468 | 386,379 |
Prepaid Expenses | 256,132 | 270,557 |
Total Current Assets | 6,666,918 | 6,656,612 |
PROPERTY PLANT AND EQUIPMENT, net of accumulated depreciation of $1,612,153 and $1,483,736 respectively | 4,365,953 | 4,494,370 |
Intellectual Property | 55,000 | 55,000 |
Right of Use Assets, net of accumulated amortization | 200,080 | 930,826 |
Deposits | 80,393 | 271,213 |
TOTAL ASSETS | 11,368,344 | 12,408,021 |
CURRENT LIABILITIES | ||
Accounts Payable | 2,081,790 | 2,020,605 |
Accrued Expenses | 295,241 | 414,777 |
Accrued Interest, non related parties | 21,556 | 13,677 |
Convertible Notes Payable, net of discount of $-0- and $23,750 respectively | 200,000 | 176,250 |
Deferred Revenue | 17,157 | 16,256 |
Operating Lease Liability, current portion | 86,253 | 240,324 |
PPP Loan, current portion | 1,607,988 | 803,994 |
Long Term Debt, current portion | 67,996 | 66,080 |
Total Current Liabilities | 4,377,981 | 3,751,963 |
LONG-TERM LIABILITIES | ||
Long-term Debt, net of current portion | 259,611 | 278,527 |
Operating Lease Liability, net of current portion | 97,737 | 730,164 |
Total Liabilities | 4,735,329 | 4,760,654 |
STOCKHOLDERS’ EQUITY | ||
Common Stock, $0.001 par value, 200,000,000 shares authorized, 46,184,977 and 45,784,977 shares issued and outstanding at March 31, 2021 and December 31, 2020 respectively | 46,185 | 45,785 |
Additional Paid in Capital | 34,408,635 | 34,268,729 |
Accumulated Deficit | (27,821,806) | (26,667,147) |
Total Stockholders’ Equity | 6,633,015 | 7,647,367 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ 11,368,344 | $ 12,408,021 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parentheticals) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Accumulated depreciation (in Dollars) | $ 1,612,153 | $ 1,483,736 |
Net of discount (in Dollars) | $ 0 | $ 23,750 |
Common stock par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Common stock shares authorized | 200,000,000 | 200,000,000 |
Common stock shares issued | 46,184,977 | 45,784,977 |
Common stock shares outstanding | 46,184,977 | 45,784,977 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Income Statement [Abstract] | ||
Sales | $ 888,261 | $ 1,154,311 |
Cost of Sales | 601,428 | 676,698 |
Gross profit | 286,833 | 477,613 |
Operating Expenses | ||
Selling, General and Administrative | 1,166,946 | 2,795,818 |
Total Operating Expenses | 1,166,946 | 2,795,818 |
Operating Loss | (880,113) | (2,318,205) |
Other Expenses | ||
Loss on Lease Termination | 244,840 | |
Interest Expense – Related Party | 1,644 | |
Interest Expense – Non Related Party | 29,706 | 5,420 |
Total Other Expenses | 274,546 | 7,064 |
Loss before Provision for Income Taxes | (1,154,659) | (2,325,269) |
Income Tax Provision | ||
Net Loss | $ (1,154,659) | $ (2,325,269) |
Net Loss per Share, Basic and Diluted (in Dollars per share) | $ (0.03) | $ (0.06) |
Weighted Average Shares Outstanding, Basic and Diluted (in Shares) | 45,836,802 | 41,549,431 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) - USD ($) | Common Stock | Additional Paid in Capital | Accumulated Deficit | Total |
Balance at Dec. 31, 2019 | $ 41,422 | $ 31,228,397 | $ (19,074,608) | $ 12,195,212 |
Balance (in Shares) at Dec. 31, 2019 | 41,421,698 | |||
Stock-based Compensation | 472,726 | 472,726 | ||
Warrants Exercised | $ 153 | (153) | ||
Warrants Exercised (in Shares) | 153,279 | |||
Net Loss | (2,325,269) | (2,325,269) | ||
Balance at Mar. 31, 2020 | $ 41,575 | 31,700,970 | (21,399,877) | 10,342,669 |
Balance (in Shares) at Mar. 31, 2020 | 45,784,977 | |||
Balance at Dec. 31, 2020 | $ 45,785 | 34,268,729 | (26,667,147) | 7,647,367 |
Balance (in Shares) at Dec. 31, 2020 | 45,784,977 | |||
Issuance of Common Stock for Cash | $ 400 | 86,495 | 86,895 | |
Issuance of Common Stock for Cash (in Shares) | 400,000 | |||
Stock-based Compensation | 53,412 | 53,412 | ||
Net Loss | (1,154,659) | (1,154,659) | ||
Balance at Mar. 31, 2021 | $ 46,185 | $ 34,408,636 | $ (27,821,806) | $ 6,633,015 |
Balance (in Shares) at Mar. 31, 2021 | 46,184,977 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net Loss | $ (1,154,659) | $ (2,325,269) |
Adjustments to Reconcile Net Loss to Net Cash Used Operating Activities | ||
Depreciation | 128,417 | 128,658 |
Stock-based Compensation | 53,412 | 472,726 |
Changes in Operating Assets and Liabilities | ||
Inventories | 103,646 | (62,138) |
Prepaid Expenses | 14,425 | 289,384 |
Accounts Receivable | (143,186) | 40,949 |
Deposits | 190,820 | 10,983 |
Deferred Revenue | 15,559 | |
Accrued Interest, non related parties | 7,879 | |
Net change in Operating Lease Assets and Liabilities | (55,753) | (20,122) |
Accrued Expenses | (119,535) | 56,461 |
Accounts Payable | 61,184 | 309,238 |
NET CASH USED IN OPERATING ACTIVITIES | (913,352) | (1,046,222) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of Property and Equipment | (77,423) | |
NET CASH USED IN INVESTING ACTIVITIES | (77,423) | |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Payments of Long-term Debt | (16,999) | (16,999) |
Notes Payable | 201,644 | |
Proceeds from Note Payable | 827,744 | |
Proceeds from Issuance of Common Stock | 86,895 | |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 897,640 | 184,645 |
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS | (15,712) | (939,000) |
CASH AND CASH EQUIVALENTS - Beginning of Period | 107,693 | 1,076,543 |
CASH AND CASH EQUIVALENTS - End of Period | 91,980 | 137,543 |
Supplemental Disclosure of Cash Flow Information: | ||
Cash Paid for Interest | 3,675 | |
Non-Cash Transactions | ||
Operating Lease Right of Use Asset Obtained in Exchange for Lease Obligations | $ 1,049,067 |
Nature of Business and Summary
Nature of Business and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1: NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Business Veritas Farms, Inc. (formerly known as SanSal Wellness Holdings, Inc.) (the “Company” or “Veritas Farms TM Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the United States Securities and Exchange Commission (the “SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of March 31, 2021 and March 31, 2020, and the results of operations and cash flows for the periods presented. The results of operations for the three months ending March 31, 2021, are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in the Form 10-K for the year ended December 31, 2020, filed with the SEC on April 20, 2021. Principles of Consolidation The accompanying condensed consolidated financial statements reflect the accounts of Veritas Farms, Inc. and the company’s wholly owned subsidiary 271 Lake Davis Holdings, LLC, a Delaware limited liability company (“271 Lake Davis”). All significant inter-company accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from these estimates. Fair Value Measurement The Company has adopted the provisions of Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements. The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The carrying amounts of the Company’s short and long-term credit obligations approximate fair value because the effective yields on these obligations, which include contractual interest rates taken together with other features such as concurrent issuances of warrants and/or embedded conversion options, are comparable to rates of returns for instruments of similar credit risk. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value: Level 1 – quoted prices in active markets for identical assets or liabilities Level 2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable Level 3 – inputs that are unobservable (for example cash flow modeling inputs based on assumptions) The Company does not have any assets or liabilities measured at fair value on a recurring basis. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. At times, cash and cash equivalents may be in excess of FDIC insurance limits. As of March 31, 2021 and December 31, 2020, the Company had no cash equivalents. Revenue Recognition Under ASC 606, Revenue from Contracts with Customers (“ASC 606”), the Company recognizes revenues when its customer obtains control of promised goods or services, in an amount that reflects the consideration which it expects to receive in exchange for those goods. The Company recognizes revenues following the five-step model prescribed under Accounting Standards Update (“ASU”) 2014-09: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) we satisfy the performance obligation. Revenues from product sales are recognized when the customer obtains control of the Company’s product, which occurs at a point in time, typically upon delivery to the customer. The Company expenses incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that it would have recognized is one year or less or the amount is immaterial. Cost of Goods Sold Hemp Cultivation and Production Cost of goods sold includes the costs directly attributable to production of inventory such as cultivation costs, extraction costs, packaging costs, security, and allocated overhead. Overhead expenses include allocations of rent, administrative salaries, utilities, and related costs. Inventories Inventories consist of growing and processed plants and oils and are valued at the lower of cost or net realizable value. In evaluating whether inventories are stated at lower of cost or net realizable value, management considers such factors as inventories in hand, estimated time to sell such inventories and current market conditions. Write-offs for inventory obsolescence are recorded when, in the opinion of management, the value of specific inventory items has been impaired. Property, Plant and Equipment Purchase of property, plant and equipment are recorded at cost. Improvements and replacements of property, plant and equipment are capitalized. Maintenance and repairs that do not improve or extend the lives of property and equipment are charged to expense as incurred. When assets are sold or retired, their cost and related accumulated depreciation are removed from the accounts and any gain or loss is reported in the Consolidated Statements of Operations Impairment of Long-Lived Assets The carrying value of long-lived assets are reviewed when facts and circumstances suggest that the assets may be impaired or that the amortization period may need to be changed. The Company considers internal and external factors relating to each asset, including cash flows, local market developments, industry trends and other publicly available information. If these factors and the projected undiscounted cash flows of the Company over the remaining amortization period indicate that the asset will not be recoverable, the carrying value will be adjusted to the fair market value. The Company has determined that no impairment exists at March 31, 2021 and December 31, 2020. Stock-Based Compensation The Company accounts for share-based payments in accordance with ASC Topic 718, “Compensation - Stock Compensation,” which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on the grant date fair value of the award. In accordance with ASC 718-10-30-9, “Measurement Objective – Fair Value at Grant Date,” the Company estimates the fair value of the award using the Black-Scholes option pricing model for valuation of the share-based payments. The Company believes this model provides the best estimate of fair value due to its ability to incorporate inputs that change over time, such as volatility and interest rates, and to allow for actual exercise behavior of option holders. The simplified method is used to determine compensation expense since historical option exercise experience is limited relative to the number of options issued. The compensation cost is recognized ratably using the straight-line method over the expected vesting period. The Company accounts for stock-based compensation to other than employees in the same manner in which it accounts for stock-based compensation for employees. Income Taxes The Company accounts for income taxes under ASC 740, Income Taxes (“ASC 740”). Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. In accordance with ASC Topic 740 management evaluated the Company’s tax positions and concluded that the Company had taken no uncertain tax positions that require adjustment to the financial statements to comply with the provisions of this guidance. The Company is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. Income tax benefits are recognized for income tax positions taken or expected to be taken in a tax return, only when it is determined that the income tax position will more-likely than-not be sustained upon examination by taxing authorities. The Company has analyzed tax positions taken for filings with the Internal Revenue Service and all tax jurisdictions where it operates. The Company believes that income tax filing positions will be sustained upon examination and does not anticipate any adjustments that would result in a material adverse effect on the Company’s financial condition, results of operations or cash flows. Accordingly, the Company has not recorded any reserves, or related accruals for interest and penalties for uncertain income tax positions at March 31, 2021 and December 31, 2020. Leases The Company has one leased building in Fort Lauderdale, Florida that is classified as operating lease right-of use (“ROU”) assets and operating lease liabilities in the Company’s consolidated balance sheet. ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date for leases exceeding 12 months. Minimum lease payments include only the fixed lease component of the agreement. Operating lease expense is recognized on a straight-line basis over the lease term and is included in cost of Selling, General and Administrative expenses. ASC Topic 842, Leases (“ASC 842”) was effective for us beginning January 1, 2019. The Company elected the available practical expedients on adoption. The adoption had a material impact on our consolidated balance sheets but did not have a material impact on our consolidated income statements. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases. Finance leases are not material to the Company and were not impacted by the adoption of ASC 842, as operating lease liabilities and the corresponding assets were already recorded in the balance sheet under the previous guidance, ASC Topic 840, Leases. Related Party Transactions The Company follows ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions. Pursuant to ASC 850-10-20, related parties include: a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests. The consolidated financial statements shall include disclosures of related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which statements of operation are presented, and such other information deemed necessary for an understanding of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for which statements of operations are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d) amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement. |
Going Concern
Going Concern | 3 Months Ended |
Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
GOING CONCERN | NOTE 2: GOING CONCERN The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States, which contemplate continuation of the Company as a going concern. However, the Company has sustained substantial losses from operations since its inception. As of and for the period ended March 31, 2021, the Company had an accumulated deficit of $27,821,806, and a net loss of $1,154,659. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern. Continuation as a going concern is dependent on the ability to raise additional capital and financing, though there is no assurance of success. In December 2019, a novel strain of coronavirus (COVID-19) emerged. Because COVID-19 infections have been reported throughout the United States, certain federal, state and local governmental authorities have issued stay-at-home orders, proclamations and/or directives aimed at minimizing the spread of COVID-19. The ultimate impact of the COVID-19 pandemic on the Company’s operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak, new information which may emerge concerning the severity of the COVID-19 pandemic, and any additional preventative and protective actions that governments, or the Company, may direct, which may result in an extended period of continued business disruption, and reduced operations. Any resulting financial impact cannot be reasonably estimated at this time, but it may have a material adverse impact on our business, financial condition and results of operations. Management expects that its business will be impacted to some degree, but the significance of the impact of the COVID-19 outbreak on the Company’s business and the duration for which it may have an impact cannot be determined at this time. MANAGEMENT PLANS To become market leaders in the market, the Company will use three primary methods to market its products including: web-based marketing, traditional marketing, and medical marketing. The Company believes that it will require additional financing to fund its growth and achieve profitability The Company anticipates that such financing, will be generated from subsequent public or private offerings of its equity and/or debt securities. Outside financing, in concert with increased profitability of "Big Box" retail orders and Ecommerce allow management to conclude that the Company will continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern. |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2021 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | NOTE 3: INVENTORIES Inventory consists of: March 31, December 31, 2021 2020 Inventory Work In Progress $ 4,174,062 $ 4,202,811 Finished Goods 1,154,403 1,232,944 Other 459,873 456,228 Inventory $ 5,788,338 $ 5,891,983 |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 4: PROPERTY AND EQUIPMENT Estimated March 31, December 31, Life 2021 2020 PROPERTY AND EQUIPMENT Land and Land Improvements - $ 398,126 $ 398,126 Building and Improvements 39 1,553,722 1,553,722 Greenhouse 39 965,388 965,388 Fencing and Irrigation 15 203,793 203,793 Machinery and Equipment 7 2,480,474 2,480,474 Furniture and Fixtures 7 236,344 236,344 Computer Equipment 5 20,053 20,053 Vehicles 5 120,206 120,206 $ 5,978,106 $ 5,978,106 Less Accumulated Depreciation (1,612,153 ) (1,483,736 ) Property and Equipment $ 4,365,953 $ 4,494,370 Total depreciation expense was $128,942 and $101,174 for the three month periods ending March 31, 2021 and March 31, 2020, respectively. |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Mar. 31, 2021 | |
Long-term Debt, Unclassified [Abstract] | |
LONG-TERM DEBT | NOTE 5: LONG-TERM DEBT Long-term debt consisted of the following: March 31, December 31, 2021 2020 Notes Payable which require monthly payments of $3,058, $555, and $1,415, including interest at 5.16% per annum until December 1, 2022, May 1, 2023, and August 1, 2024, when the balances are due in full. The notes are secured by specific assets of the Company. $ 135,777 $ 118,627 Note Payable which requires monthly payments of $639, including interest at 3.4% per annum until April 1, 2025, when the balance is due in full. The note is secured by specific assets of the Company. 31,930 66,080 In May 2020, the Company received a loan in the amount of $803,994 under the Payroll Protection Program (“PPP Loan”). The loan accrues interest at a rate of 1% and has an original maturity date of two years which can be extended to five years by mutual agreement of the Company and SBA. (A) 803,994 803,994 In September 2020, the Company received a loan in the amount of $159,900 from the Small Business Administration as an Economic Injury Disaster Loan (“EIDL”). The loan accrues interest at the rate of 3.75% and has an original maturity date of 30 years. (B) 159,900 159,900 In February 2021, the Company received a loan in the amount of $803,994 under the Payroll Protection Program (“PPP Loan”). The loan accrues interest at a rate of 1% and has an original maturity date of five years. (C) 803,994 - 1,935,595 1,148,601 Less Current Portion (1,675,984 ) (870,074 ) Long-Term Debt - net of current portion $ 259,611 $ 278,527 Future principal payments for the next 5 years are as follows for the years ended December 31: March 31, 2021 $ 25,499 2022 67,996 2023 874,747 2024 836,807 2025 24,494 Thereafter 106,052 $ 1,935,595 (A) In May 2020, the Company received a loan in the amount of $803,994 under the Payroll Protection Program (“PPP Loan”). The loan accrues interest at a rate of 1% and has an original maturity date of two years which can be extended to five years by mutual agreement of the Company and SBA. The PPP loan contains customary events of default relating to, among other things, payment defaults and breaches of representations and warranties. Under the terms of the loan, a portion or all of the loan is forgivable to the extent the loan proceeds are used to fund qualifying payroll, rent and utilities during a designated twenty-four week period. Payments are deferred until the SBA determines the amount to be forgiven. The Company utilized the proceeds of the PPP loan in a manner which should enable qualification as a forgivable loan. However, no assurance can be provided that all or any portion of the PPP loan will be forgiven. The balance on this PPP loan was $803,994 as of March 31, 2021 and has been classified as a short-term liability in notes payable. (B) In September 2020, the Company received a loan in the amount of $159,900 from the Small Business Administration as an Economic Injury Disaster Loan (“EIDL”). The loan accrues interest at the rate of 3.75% and has an original maturity date of 30 years. Up to $10,000 of the EIDL can be forgiven as long as such funds were utilized to provide working capital. The residual amount of the loan is payable under the above terms. The first payment due is deferred two years. The entirety of the loan as of March 31, 2021 has been classified as a long-term liability in notes payable. (C) In February 2021, the Company received a loan in the amount of $803,994 under the Payroll Protection Program (“PPP Loan”). The loan accrues interest at a rate of 1% and has an original maturity date of five years. The PPP loan contains customary events of default relating to, among other things, payment defaults and breaches of representations and warranties. Under the terms of the loan, a portion or all of the loan is forgivable to the extent the loan proceeds are used to fund qualifying payroll, rent and utilities during a designated twenty-four week period. Payments are deferred until the SBA determines the amount to be forgiven. The Company intends to utilize the proceeds of the PPP loan in a manner which should enable qualification as a forgivable loan. However, no assurance can be provided that all or any portion of the PPP loan will be forgiven. The balance on this PPP loan was $803,994 as of March 31, 2021 and has been classified as a short-term liability in notes payable. |
Convertible Debt
Convertible Debt | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE DEBT | NOTE 6: CONVERTIBLE DEBT In March 2020, the Company secured a $200,000 loan from a single investor, evidenced by a one-year convertible promissory note (the “Convertible Note”). The Convertible Note bears interest at the rate of ten percent (10%) per annum, which accrues and is payable together with principal at maturity. The note matures on the first anniversary of the original issuance date or such earlier date on which this Note becomes due in accordance with its terms. Principal and accrued interest under the Convertible Note may, at the option of the holder, be converted in its entirety into shares of our common stock at a conversion price of $0.40 per share, subject to adjustment for stock splits, stock dividends and similar recapitalization transactions. The Company determined that there was a beneficial conversion feature of $95,000 relating to this note which is being amortized over the life of the note, using the using the effective interest method. The note is presented net of a discount of $0 as of March 31, 2021 and $23,750 as of December 31, 2020 on the accompanying balance sheet with amortization to interest expense of $23,750 for the period ended March 31, 2021. As of March 31, 2021, $21,556 of interest has been accrued. As of March 31, 2021, the Company is in default on the Convertible Note which was due on March 6, 2021. See Note 13: Subsequent Events, |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | NOTE 7: STOCK-BASED COMPENSATION The Company approved its 2017 Stock Incentive Plan on September 27, 2017 (the “Incentive Plan”) which authorizes the Company to grant or issue non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units and other equity awards up to a total of 6,927,747 shares. Under the terms of the Incentive Plan, awards may be granted to our employees, directors or consultants. Awards issued under the Incentive Plan vest as determined at the time of grant by the Board of Directors or any of the Committees appointed under the Incentive Plan. The Company’s outstanding stock options typically have a 10-year term. Outstanding non-qualified stock options granted to employees and consultants vest on a case by case basis. Outstanding incentive stock options issued to employees typically vest over a three-year period. The incentive stock options granted vest based solely upon continued employment (“time-based”). The Company’s time-based share awards that vest in their entirety at the end of three-year periods, time-based share awards where 33.3% of the award vests on each of the three anniversary dates. Outstanding incentive stock options issued to executives typically vest partially upon grant date, with the residual vesting over the subsequent 6 or 12 months. Stock based compensation expense was as follows in the three month periods ended March 31, 2021 and March 31, 2020: Three months Ended 2021 2020 Total Stock-based Compensation Expense $ 53,412 $ 472,726 Stock option activity was as follows in the period ended March 31, 2021: Stock Weighted-Average Weighted-Average Outstanding at December 31, 2020 4,193,751 Granted - - - Exercised - - - Forfeited/Cancelled (18,750 ) $ 1.51 - Outstanding at March 31, 2021 4,175,001 $ 1.14 8.16 Vested at March 31, 2021 3,903,343 $ 1.14 7.99 Exercisable at March 31, 2021 3,903,343 $ 1.14 7.99 Valuation Assumptions Risk-free interest rate 0.36% – 1.79 % Expected dividend yield 0 % Expected stock price volatility 213% to 227 % Expected life of stock options (in years) 10 Stock option activity was as follows in the period ended March 31, 2020: Stock Weighted-Average Weighted-Average Outstanding at December 31, 2019 4,318,750 $ 1.14 8.91 Granted - $ - - Exercised - - - Forfeited/Cancelled - $ - - Outstanding at March 31, 2020 4,318,750 1.14 8.66 Vested at March 31, 2020 3,154,407 $ 1.14 8.48 Exercisable at March 31, 2020 3,154,407 $ 1.14 8.48 Valuation Assumptions Risk-free interest rate 2.14% – 2.94 % Expected dividend yield 0 % Expected stock price volatility 105% to 108 % Expected life of stock options (in years) 10 |
Leases
Leases | 3 Months Ended |
Mar. 31, 2021 | |
Leases [Abstract] | |
LEASES | NOTE 8: LEASES The Company recognized the following related to leases in its Balance Sheet: March 31, December 31, 2021 2020 unaudited Right of Use Lease Liabilities Current Portion $ 86,253 $ 240,324 Long-term Portion 97,737 730,164 $ 183,990 $ 970,488 On June 22, 2018, the Company entered into a sublease agreement with EDSA Inc. for the lease of the Company’s principal executive offices in Fort Lauderdale, Florida. The lease went into effect as of July 1, 2018 with a term of three years expiring August 31, 2021. The lease contains annual escalators and charges Florida sales tax. Total amortization expense related to the lease was $20,152 and $20,152 for the three month period ending March 31, 2021 and March 31, 2020, respectively. On December 2, 2019, the Company entered into a 61 month lease with Majestic Commercenter Phase 9, LLC. (Majestic”), for warehousing, distribution and related administration office in Aurora, Colorado. The lease allows for an abated first month of rent. The lease contains annual escalators in addition to other periodic payments pertaining to taxes, utilities, insurance and common area costs. Total amortization expense related to the lease was $0 and $9,286 for the three month periods ending March 31, 2021 and March 31, 2020, respectively. On February 10, 2021, the Company entered into a conditional lease termination agreement with Majestic pursuant to which the Company terminated the lease with Majestic (“Termination Agreement”). Pursuant to the terms of the Termination Agreement, Veritas Farms made one payment of $125,000 on February 23, 2021. The final amount of $125,000 was paid to Majestic by April 30, 2021, upon which both parties were released from all further obligations to each other. The net expense on the termination of the lease was $244,840. The extra-ordinatry expense was reported as Other Expenses, Loss on Lease Termination - Aurora. On February 11, 2021, the Company entered into a 3 year lease with Cheyenne Avenue Holdings, LLC for warehouse and distribution facilities. The lease contains annual escalators. Total amoritzation expense related to the lease was $4,711 and $0 for the three month periods ending March 31, 2021 and March 31, 2020 respectively. As of March 31, 2021, and December 31, 2020, operating leases have no minimum rental commitments. |
Common Stock
Common Stock | 3 Months Ended |
Mar. 31, 2021 | |
Stockholders' Equity Note [Abstract] | |
COMMON STOCK | NOTE 9: COMMON STOCK In September 2019, the Company commenced a $4.0 million private offering of up to 8,000,000 Units (which may be increased by the Company up to 12,000,000 Units) at a price of $0.50 per Unit. Each Unit consists of (a) two shares of common stock; and (b) one warrant, entitling the holder to purchase one share of our common stock at an exercise price of $0.50 at any time through August 31, 2025. As of December 31, 2020, the Company sold 2,080,000 Units in the private offering for gross proceeds of $1,040,000 with offering costs of $154,965 resulting in net proceeds of $885,035. As of March 31, 2021, the Company sold an additional 200,000 Units for gross proceeds of $100,000 with offering costs of $13,105 resulting in net proceeds of $86,895. The Company also entered into a registration rights agreement with the investors which states, among other things, that the Company shall use commercially reasonable efforts to prepare and file with the SEC a registration statement covering, among other things, the resale of all or such portion of the registrable securities that are not then registered on an effective registration statement. In March of 2020, the Company issued 153,279 shares of common stock in accordance with a cashless exercise of warrants. |
Concentrations
Concentrations | 3 Months Ended |
Mar. 31, 2021 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATIONS | NOTE 10: CONCENTRATIONS The Company had no single customer in the three months ended March 31, 2021 that accounted for more than 10% of sales. For the three months ended March 31, 2020, one customer accounted for 14% of sales. The Company had two customers at March 31, 2021 accounting for 47% and 23% of accounts receivable. At December 31, 2020, the Company had two customers accounting for 43% and 17% of accounts receivable. |
Related Party
Related Party | 3 Months Ended |
Mar. 31, 2021 | |
Related Party Transactions [Abstract] | |
RELATED PARTY | NOTE 11: RELATED PARTY A law firm owned by the brother of Alexander M. Salgado, our Chief Executive Officer, rendered legal services to the Company. The firm incurred expenses in aggregate of $13,825 and $57,500 for such services during the three month periods ended March 31, 2021 and March 31, 2020, respectively. The Company issued stock incentives to various directors and employees. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2021 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 12: SUBSEQUENT EVENTS On May 11, 2021 (the “ Effective Date SPA Purchaser Series A Preferred Shares Series B Preferred Shares Preferred Shares Units Change in Control The Series A Preferred Shares have a stated value of $1.00 per share. Each Series A Preferred Share is convertible into Common Stock at the option of the holder thereof at a conversion rate of $0.05 per share of Common Stock. The conversion rate is subject to adjustment in the event of stock splits, stock dividends, other recapitalizations and similar events, as well as in the event of issuance by the Company of shares of Common Stock or securities exercisable for, convertible into or exchangeable for Common Stock at an effective price per share less than the conversion rate then in effect (other than certain customary exceptions). In respect of rights to the payment of dividends and the distribution of assets in the event of any liquidation, dissolution or winding-up of the Company, the Series A Preferred Shares rank (a) junior to the Company’s Series B Shares; and (b) senior to (i) the Company’s common stock, par value $0.001 per share (the “ Common Stock Junior Stock Accruing Dividends ) provided however provided The Series B Preferred Shares have a stated value of $1.00 per share. Each Series A Preferred Share is convertible into Common Stock at the option of the holder thereof at a conversion rate of $0.20 per share of Common Stock. The conversion rate is subject to adjustment in the event of stock splits, stock dividends, other recapitalizations and similar events, as well as in the event of issuance by the Company of shares of Common Stock or securities exercisable for, convertible into or exchangeable for Common Stock at an effective price per share less than the conversion rate then in effect (other than certain customary exceptions). In respect of rights to the payment of dividends and the distribution of assets in the event of any liquidation, dissolution or winding-up of the Company, the Series B Preferred Shares rank senior to the (a) Series A Preferred Shares; (b) the Company’s Common Stock and any other class or series of Junior Stock. From and after the date of the issuance of Series B Preferred Shares, dividends at the rate per annum of 8%, compounded annually, accrue daily on the Stated Value (the “ Accruing Dividends ) provided however provided Pursuant to the SPA, the Purchaser and the Company agreed to fix the number of members of the board of directors of the Company at five (5), three of whom shall be designated by the Purchaser and two of whom shall be “ independent On May 14, 2021, the single investor signed a six-month extension to the $200,000 Convertible Note. The note will become due in September 2021. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Nature of Business | Nature of Business Veritas Farms, Inc. (formerly known as SanSal Wellness Holdings, Inc.) (the “Company” or “Veritas Farms TM |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the United States Securities and Exchange Commission (the “SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of March 31, 2021 and March 31, 2020, and the results of operations and cash flows for the periods presented. The results of operations for the three months ending March 31, 2021, are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in the Form 10-K for the year ended December 31, 2020, filed with the SEC on April 20, 2021. |
Principles of Consolidation | Principles of Consolidation The accompanying condensed consolidated financial statements reflect the accounts of Veritas Farms, Inc. and the company’s wholly owned subsidiary 271 Lake Davis Holdings, LLC, a Delaware limited liability company (“271 Lake Davis”). All significant inter-company accounts and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from these estimates. |
Fair Value Measurement | Fair Value Measurement The Company has adopted the provisions of Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements. The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The carrying amounts of the Company’s short and long-term credit obligations approximate fair value because the effective yields on these obligations, which include contractual interest rates taken together with other features such as concurrent issuances of warrants and/or embedded conversion options, are comparable to rates of returns for instruments of similar credit risk. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value: Level 1 – quoted prices in active markets for identical assets or liabilities Level 2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable Level 3 – inputs that are unobservable (for example cash flow modeling inputs based on assumptions) The Company does not have any assets or liabilities measured at fair value on a recurring basis. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. At times, cash and cash equivalents may be in excess of FDIC insurance limits. As of March 31, 2021 and December 31, 2020, the Company had no cash equivalents. |
Revenue Recognition | Revenue Recognition Under ASC 606, Revenue from Contracts with Customers (“ASC 606”), the Company recognizes revenues when its customer obtains control of promised goods or services, in an amount that reflects the consideration which it expects to receive in exchange for those goods. The Company recognizes revenues following the five-step model prescribed under Accounting Standards Update (“ASU”) 2014-09: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) we satisfy the performance obligation. Revenues from product sales are recognized when the customer obtains control of the Company’s product, which occurs at a point in time, typically upon delivery to the customer. The Company expenses incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that it would have recognized is one year or less or the amount is immaterial. |
Cost of Goods Sold | Cost of Goods Sold Hemp Cultivation and Production Cost of goods sold includes the costs directly attributable to production of inventory such as cultivation costs, extraction costs, packaging costs, security, and allocated overhead. Overhead expenses include allocations of rent, administrative salaries, utilities, and related costs. |
Inventories | Inventories Inventories consist of growing and processed plants and oils and are valued at the lower of cost or net realizable value. In evaluating whether inventories are stated at lower of cost or net realizable value, management considers such factors as inventories in hand, estimated time to sell such inventories and current market conditions. Write-offs for inventory obsolescence are recorded when, in the opinion of management, the value of specific inventory items has been impaired. |
Property, Plant and Equipment | Property, Plant and Equipment Purchase of property, plant and equipment are recorded at cost. Improvements and replacements of property, plant and equipment are capitalized. Maintenance and repairs that do not improve or extend the lives of property and equipment are charged to expense as incurred. When assets are sold or retired, their cost and related accumulated depreciation are removed from the accounts and any gain or loss is reported in the Consolidated Statements of Operations |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The carrying value of long-lived assets are reviewed when facts and circumstances suggest that the assets may be impaired or that the amortization period may need to be changed. The Company considers internal and external factors relating to each asset, including cash flows, local market developments, industry trends and other publicly available information. If these factors and the projected undiscounted cash flows of the Company over the remaining amortization period indicate that the asset will not be recoverable, the carrying value will be adjusted to the fair market value. The Company has determined that no impairment exists at March 31, 2021 and December 31, 2020. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for share-based payments in accordance with ASC Topic 718, “Compensation - Stock Compensation,” which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on the grant date fair value of the award. In accordance with ASC 718-10-30-9, “Measurement Objective – Fair Value at Grant Date,” the Company estimates the fair value of the award using the Black-Scholes option pricing model for valuation of the share-based payments. The Company believes this model provides the best estimate of fair value due to its ability to incorporate inputs that change over time, such as volatility and interest rates, and to allow for actual exercise behavior of option holders. The simplified method is used to determine compensation expense since historical option exercise experience is limited relative to the number of options issued. The compensation cost is recognized ratably using the straight-line method over the expected vesting period. The Company accounts for stock-based compensation to other than employees in the same manner in which it accounts for stock-based compensation for employees. |
Income Taxes | Income Taxes The Company accounts for income taxes under ASC 740, Income Taxes (“ASC 740”). Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. In accordance with ASC Topic 740 management evaluated the Company’s tax positions and concluded that the Company had taken no uncertain tax positions that require adjustment to the financial statements to comply with the provisions of this guidance. The Company is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. Income tax benefits are recognized for income tax positions taken or expected to be taken in a tax return, only when it is determined that the income tax position will more-likely than-not be sustained upon examination by taxing authorities. The Company has analyzed tax positions taken for filings with the Internal Revenue Service and all tax jurisdictions where it operates. The Company believes that income tax filing positions will be sustained upon examination and does not anticipate any adjustments that would result in a material adverse effect on the Company’s financial condition, results of operations or cash flows. Accordingly, the Company has not recorded any reserves, or related accruals for interest and penalties for uncertain income tax positions at March 31, 2021 and December 31, 2020. |
Lease | Leases The Company has one leased building in Fort Lauderdale, Florida that is classified as operating lease right-of use (“ROU”) assets and operating lease liabilities in the Company’s consolidated balance sheet. ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date for leases exceeding 12 months. Minimum lease payments include only the fixed lease component of the agreement. Operating lease expense is recognized on a straight-line basis over the lease term and is included in cost of Selling, General and Administrative expenses. ASC Topic 842, Leases (“ASC 842”) was effective for us beginning January 1, 2019. The Company elected the available practical expedients on adoption. The adoption had a material impact on our consolidated balance sheets but did not have a material impact on our consolidated income statements. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases. Finance leases are not material to the Company and were not impacted by the adoption of ASC 842, as operating lease liabilities and the corresponding assets were already recorded in the balance sheet under the previous guidance, ASC Topic 840, Leases. |
Related Party Transactions | Related Party Transactions The Company follows ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions. Pursuant to ASC 850-10-20, related parties include: a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests. The consolidated financial statements shall include disclosures of related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which statements of operation are presented, and such other information deemed necessary for an understanding of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for which statements of operations are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d) amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement. |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | March 31, December 31, 2021 2020 Inventory Work In Progress $ 4,174,062 $ 4,202,811 Finished Goods 1,154,403 1,232,944 Other 459,873 456,228 Inventory $ 5,788,338 $ 5,891,983 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Estimated March 31, December 31, Life 2021 2020 PROPERTY AND EQUIPMENT Land and Land Improvements - $ 398,126 $ 398,126 Building and Improvements 39 1,553,722 1,553,722 Greenhouse 39 965,388 965,388 Fencing and Irrigation 15 203,793 203,793 Machinery and Equipment 7 2,480,474 2,480,474 Furniture and Fixtures 7 236,344 236,344 Computer Equipment 5 20,053 20,053 Vehicles 5 120,206 120,206 $ 5,978,106 $ 5,978,106 Less Accumulated Depreciation (1,612,153 ) (1,483,736 ) Property and Equipment $ 4,365,953 $ 4,494,370 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Long-term Debt, Unclassified [Abstract] | |
ScheduleOfDebtTableTextBlock | March 31, December 31, 2021 2020 Notes Payable which require monthly payments of $3,058, $555, and $1,415, including interest at 5.16% per annum until December 1, 2022, May 1, 2023, and August 1, 2024, when the balances are due in full. The notes are secured by specific assets of the Company. $ 135,777 $ 118,627 Note Payable which requires monthly payments of $639, including interest at 3.4% per annum until April 1, 2025, when the balance is due in full. The note is secured by specific assets of the Company. 31,930 66,080 In May 2020, the Company received a loan in the amount of $803,994 under the Payroll Protection Program (“PPP Loan”). The loan accrues interest at a rate of 1% and has an original maturity date of two years which can be extended to five years by mutual agreement of the Company and SBA. (A) 803,994 803,994 In September 2020, the Company received a loan in the amount of $159,900 from the Small Business Administration as an Economic Injury Disaster Loan (“EIDL”). The loan accrues interest at the rate of 3.75% and has an original maturity date of 30 years. (B) 159,900 159,900 In February 2021, the Company received a loan in the amount of $803,994 under the Payroll Protection Program (“PPP Loan”). The loan accrues interest at a rate of 1% and has an original maturity date of five years. (C) 803,994 - 1,935,595 1,148,601 Less Current Portion (1,675,984 ) (870,074 ) Long-Term Debt - net of current portion $ 259,611 $ 278,527 |
Schedule of future principal payments | March 31, 2021 $ 25,499 2022 67,996 2023 874,747 2024 836,807 2025 24,494 Thereafter 106,052 $ 1,935,595 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of stock-based compensation expense | Three months Ended 2021 2020 Total Stock-based Compensation Expense $ 53,412 $ 472,726 |
Schedule of stock option | Stock Weighted-Average Weighted-Average Outstanding at December 31, 2020 4,193,751 Granted - - - Exercised - - - Forfeited/Cancelled (18,750 ) $ 1.51 - Outstanding at March 31, 2021 4,175,001 $ 1.14 8.16 Vested at March 31, 2021 3,903,343 $ 1.14 7.99 Exercisable at March 31, 2021 3,903,343 $ 1.14 7.99 Stock Weighted-Average Weighted-Average Outstanding at December 31, 2019 4,318,750 $ 1.14 8.91 Granted - $ - - Exercised - - - Forfeited/Cancelled - $ - - Outstanding at March 31, 2020 4,318,750 1.14 8.66 Vested at March 31, 2020 3,154,407 $ 1.14 8.48 Exercisable at March 31, 2020 3,154,407 $ 1.14 8.48 |
Schedule of black scholes valuation model | Valuation Assumptions Risk-free interest rate 0.36% – 1.79 % Expected dividend yield 0 % Expected stock price volatility 213% to 227 % Expected life of stock options (in years) 10 Valuation Assumptions Risk-free interest rate 2.14% – 2.94 % Expected dividend yield 0 % Expected stock price volatility 105% to 108 % Expected life of stock options (in years) 10 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Leases [Abstract] | |
Schedule of lease related to leases in its balance sheet | March 31, December 31, 2021 2020 unaudited Right of Use Lease Liabilities Current Portion $ 86,253 $ 240,324 Long-term Portion 97,737 730,164 $ 183,990 $ 970,488 |
Nature of Business and Summar_2
Nature of Business and Summary of Significant Accounting Policies (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Accounting Policies [Abstract] | ||
Cash equivalents | $ 0 | $ 0 |
Going Concern (Details)
Going Concern (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Accumulated deficit | $ (27,821,806) | $ (26,667,147) | |
Net loss | $ (1,154,659) | $ (2,325,269) |
Inventories (Details) - Schedul
Inventories (Details) - Schedule of inventories - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Schedule of inventories [Abstract] | ||
Work In Progress | $ 4,174,062 | $ 4,202,811 |
Finished Goods | 1,154,403 | 1,232,944 |
Other | 459,873 | 456,228 |
Inventory | $ 5,788,338 | $ 5,891,983 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 128,942 | $ 101,174 |
Property and Equipment (Detai_2
Property and Equipment (Details) - Schedule of Property and Equipment - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 5,978,106 | $ 5,978,106 |
Less Accumulated Depreciation | (1,612,153) | (1,483,736) |
Property and Equipment | $ 4,365,953 | 4,494,370 |
Land and Land Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Life | ||
Property and equipment, gross | $ 398,126 | 398,126 |
Building and Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Life | 39 years | |
Property and equipment, gross | $ 1,553,722 | 1,553,722 |
Greenhouse [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Life | 39 years | |
Property and equipment, gross | $ 965,388 | 965,388 |
Fencing and Irrigation [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Life | 15 years | |
Property and equipment, gross | $ 203,793 | 203,793 |
Machinery and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Life | 7 years | |
Property and equipment, gross | $ 2,480,474 | 2,480,474 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Life | 7 years | |
Property and equipment, gross | $ 236,344 | 236,344 |
Computer Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Life | 5 years | |
Property and equipment, gross | $ 20,053 | 20,053 |
Vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Life | 5 years | |
Property and equipment, gross | $ 120,206 | $ 120,206 |
Long-Term Debt (Details)
Long-Term Debt (Details) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Feb. 28, 2021 | Sep. 30, 2020 | May 30, 2020 | Mar. 31, 2021 | |
Long-Term Debt (Details) [Line Items] | ||||
PPP loan | $ 803,994 | |||
PPP Loan [Member] | ||||
Long-Term Debt (Details) [Line Items] | ||||
Loan amount received | $ 803,994 | $ 803,994 | 803,994 | |
Accrues interest rate | 1.00% | 1.00% | ||
Maturity date | 2 years | |||
EIDL [Member] | ||||
Long-Term Debt (Details) [Line Items] | ||||
Loan amount received | $ 159,900 | $ 10,000 | ||
Accrues interest rate | 3.75% | |||
Maturity date | 30 years |
Long-Term Debt (Details) - Sche
Long-Term Debt (Details) - Schedule of long-term debt - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Long-Term Debt (Details) - Schedule of long-term debt [Line Items] | ||
Long-term debt | $ 1,935,595 | $ 1,148,601 |
Less Current Portion | (1,675,984) | (870,074) |
Long-Term Debt - net of current portion | 259,611 | 278,527 |
Notes Payable [Member] | ||
Long-Term Debt (Details) - Schedule of long-term debt [Line Items] | ||
Long-term debt | 135,777 | 118,627 |
Notes Payable One [Member] | ||
Long-Term Debt (Details) - Schedule of long-term debt [Line Items] | ||
Long-term debt | 31,930 | 66,080 |
PPP Loan [Member] | ||
Long-Term Debt (Details) - Schedule of long-term debt [Line Items] | ||
Long-term debt | 803,994 | 803,994 |
EIDL [Member] | ||
Long-Term Debt (Details) - Schedule of long-term debt [Line Items] | ||
Long-term debt | 159,900 | $ 159,900 |
PPP Loan One [Member] | ||
Long-Term Debt (Details) - Schedule of long-term debt [Line Items] | ||
Long-term debt | $ 803,994 |
Long-Term Debt (Details) - Sc_2
Long-Term Debt (Details) - Schedule of long-term debt (Parentheticals) | 3 Months Ended |
Mar. 31, 2021USD ($) | |
Notes Payable [Member] | |
Long-Term Debt (Details) - Schedule of long-term debt (Parentheticals) [Line Items] | |
Monthly Payments | $ 3,058 |
Debt interest rate, percentage | 5.16% |
Maturity term | Dec. 1, 2022 |
Notes Payable One [Member] | |
Long-Term Debt (Details) - Schedule of long-term debt (Parentheticals) [Line Items] | |
Monthly Payments | $ 1,415 |
Notes Payable Two [Member] | |
Long-Term Debt (Details) - Schedule of long-term debt (Parentheticals) [Line Items] | |
Monthly Payments | 555 |
Notes Payable Three [Member] | |
Long-Term Debt (Details) - Schedule of long-term debt (Parentheticals) [Line Items] | |
Monthly Payments | $ 639 |
Debt interest rate, percentage | 3.40% |
Maturity term | Apr. 1, 2025 |
PPP Loan [Member] | |
Long-Term Debt (Details) - Schedule of long-term debt (Parentheticals) [Line Items] | |
Loan amount received | $ 803,994 |
Accrues interest rate | 1.00% |
EIDL [Member] | |
Long-Term Debt (Details) - Schedule of long-term debt (Parentheticals) [Line Items] | |
Loan amount received | $ 159,900 |
Accrues interest rate | 3.75% |
PPP Loan One [Member] | |
Long-Term Debt (Details) - Schedule of long-term debt (Parentheticals) [Line Items] | |
Loan amount received | $ 803,994 |
Accrues interest rate | 1.00% |
Long-Term Debt (Details) - Sc_3
Long-Term Debt (Details) - Schedule of future principal payments | Mar. 31, 2021USD ($) |
Schedule of future principal payments [Abstract] | |
2021 | $ 25,499 |
2022 | 67,996 |
2023 | 874,747 |
2024 | 836,807 |
2025 | 24,494 |
Thereafter | 106,052 |
Total | $ 1,935,595 |
Convertible Debt (Details)
Convertible Debt (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 | |
Convertible Debt (Details) [Line Items] | |||
Convertible promissory note | 10.00% | ||
Common stock at a conversion price (in Dollars per share) | $ 0.40 | ||
Amount of beneficial conversion feature | $ 95,000 | ||
Discount on note on accompanying balance sheet | 0 | $ 23,750 | |
Amortization to interest expense | 23,750 | ||
Accrued interest | $ 21,556 | ||
Investor [Member] | |||
Convertible Debt (Details) [Line Items] | |||
Convertible debt | $ 200,000 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) | 3 Months Ended |
Mar. 31, 2021shares | |
Disclosure Text Block Supplement [Abstract] | |
Total incentive | 6,927,747 |
Stock options term | 10 years |
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights | vest in their entirety at the end of three-year periods, time-based share awards where 33.3% of the award vests on each of the three anniversary dates. Outstanding incentive stock options issued to executives typically vest partially upon grant date, with the residual vesting over the subsequent 6 or 12 months. |
Stock-Based Compensation (Det_2
Stock-Based Compensation (Details) - Schedule of stock-based compensation expense - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Schedule of stock-based compensation expense [Abstract] | ||
Total Stock-based Compensation Expense | $ 53,412 | $ 472,726 |
Stock-Based Compensation (Det_3
Stock-Based Compensation (Details) - Schedule of stock option - $ / shares | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Schedule of stock option [Abstract] | ||
Stock Options Outstanding | 4,193,751 | 4,318,750 |
Weighted-Average Exercise Outstanding (in Dollars per share) | $ 1.14 | |
Weighted-Average Remaining Outstanding | 8 years 332 days | |
Stock Options Granted | ||
Stock Options Exercised | ||
Stock Options Forfeited/Cancelled | (18,750) | |
Weighted-Average Exercise Forfeited/Cancelled (in Dollars per share) | $ 1.51 | |
Stock Options Outstanding | 4,175,001 | 4,318,750 |
Weighted-Average Exercise Outstanding (in Dollars per share) | $ 1.14 | $ 1.14 |
Weighted-Average Remaining Outstanding | 8 years 58 days | 8 years 240 days |
Stock Options Vested | 3,903,343 | 3,154,407 |
Weighted-Average Exercise Vested (in Dollars per share) | $ 1.14 | $ 1.14 |
Weighted-Average Remaining Vested | 7 years 361 days | 8 years 175 days |
Stock Options Exercisable | 3,903,343 | 3,154,407 |
Weighted-Average Exercise Exercisable (in Dollars per share) | $ 1.14 | $ 1.14 |
Weighted-Average Remaining Exercisable | 7 years 361 days | 8 years 175 days |
Stock-Based Compensation (Det_4
Stock-Based Compensation (Details) - Schedule of black scholes valuation model | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Stock-Based Compensation (Details) - Schedule of black scholes valuation model [Line Items] | ||
Expected dividend yield | 0.00% | 0.00% |
Expected life of stock options (in years) | 10 years | 10 years |
Minimum [Member] | ||
Stock-Based Compensation (Details) - Schedule of black scholes valuation model [Line Items] | ||
Risk-free interest rate | 0.36% | 2.14% |
Expected stock price volatility | 213.00% | 105.00% |
Maximum [Member] | ||
Stock-Based Compensation (Details) - Schedule of black scholes valuation model [Line Items] | ||
Risk-free interest rate | 1.79% | 2.94% |
Expected stock price volatility | 227.00% | 108.00% |
Leases (Details)
Leases (Details) - USD ($) | Feb. 11, 2021 | Apr. 30, 2021 | Feb. 23, 2021 | Mar. 31, 2021 | Mar. 31, 2020 |
Leases (Details) [Line Items] | |||||
Net extra-ordinary expense | $ 244,840 | ||||
Depreciation expense related | 4,711 | $ 0 | |||
ESDA Inc Florida Corporation [Member] | |||||
Leases (Details) [Line Items] | |||||
Total amortization expense | 20,152 | $ 20,152 | |||
Majestic Realty Co [Member] | |||||
Leases (Details) [Line Items] | |||||
Lease agreement | 61 months | ||||
Depreciation expense related to lease | $ 0 | $ 9,286 | |||
Cheyenne Avenue Holdings, LLC [Member] | |||||
Leases (Details) [Line Items] | |||||
Lease term, description | the Company entered into a 3 year lease with Cheyenne Avenue Holdings, LLC for warehouse and distribution facilities. The lease contains annual escalators. The Company analyzed the classification of the lease under ASC 842, and as it did not meet any of the criteria for a financing lease it has been classified as an operating lease. The Company determined the Right of Use asset and Lease liability values at inception calculated at the present value of all future lease payments for the lease term, using an incremental borrowing rate of 5%. The Lease Liability will be expensed each month, on a straight-line basis, over the life of the lease. | ||||
Delaware Limited Liability Company [Member] | |||||
Leases (Details) [Line Items] | |||||
Termination agreement payment | $ 125,000 | ||||
Delaware Limited Liability Company [Member] | Subsequent Event [Member] | |||||
Leases (Details) [Line Items] | |||||
Termination agreement payment | $ 125,000 |
Leases (Details) - Schedule of
Leases (Details) - Schedule of lease related to leases in its balance sheet - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Schedule of lease related to leases in its balance sheet [Abstract] | ||
Current Portion | $ 86,253 | $ 240,324 |
Long-term Portion | 97,737 | 730,164 |
Operating lease, liability | $ 183,990 | $ 970,488 |
Common Stock (Details)
Common Stock (Details) - USD ($) | 1 Months Ended | 3 Months Ended | |
Mar. 31, 2020 | Sep. 30, 2019 | Mar. 31, 2021 | |
Stockholders' Equity Note [Abstract] | |||
Warrants Description | the Company commenced a $4.0 million private offering of up to 8,000,000 Units (which may be increased by the Company up to 12,000,000 Units) at a price of $0.50 per Unit. Each Unit consists of (a) two shares of common stock; and (b) one warrant, entitling the holder to purchase one share of our common stock at an exercise price of $0.50 at any time through August 31, 2025. As of December 31, 2020, the Company sold 2,080,000 Units in the private offering for gross proceeds of $1,040,000 with offering costs of $154,965 resulting in net proceeds of $885,035. | ||
Sale of Stock (in Shares) | 200,000 | ||
Gross Proceeds | $ 100,000 | ||
Offering costs | 13,105 | ||
Net Proceeds | $ 86,895 | ||
Common stock issued (in Shares) | 153,279 |
Concentrations (Details)
Concentrations (Details) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Revenue Benchmark [Member] | |||
Concentrations (Details) [Line Items] | |||
Concentration risk, percentage | 10.00% | ||
Number of customer | 1 | 2 | |
One Customer [Member] | Revenue Benchmark [Member] | |||
Concentrations (Details) [Line Items] | |||
Concentration risk, percentage | 14.00% | ||
One Customer [Member] | Accounts Receivable [Member] | |||
Concentrations (Details) [Line Items] | |||
Concentration risk, percentage | 43.00% | ||
Two Customer [Member] | |||
Concentrations (Details) [Line Items] | |||
Number of customer | 2 | ||
Two Customer [Member] | Accounts Receivable [Member] | |||
Concentrations (Details) [Line Items] | |||
Concentration risk, percentage | 23.00% | 17.00% | |
First Customer [Member] | Accounts Receivable [Member] | |||
Concentrations (Details) [Line Items] | |||
Concentration risk, percentage | 47.00% |
Related Party (Details)
Related Party (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Related Party Transactions [Abstract] | ||
Incurred expenses | $ 13,825 | $ 57,500 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | May 14, 2021 | May 11, 2021 | Feb. 10, 2021 | Mar. 31, 2021 |
Subsequent Events (Details) [Line Items] | ||||
Termination agreement, description | On May 11, 2021 (the “Effective Date”), the Company entered into a Securities Purchase Agreement (the “SPA”) with The Cornelis F. Wit Revocable Living Trust, of which Cornelis F. Wit is trustee (the “Purchaser”), an existing shareholder, pursuant to which the Company contemporaneously sold to the Purchaser an aggregate of (a) 2,000,000 shares of its Series A Convertible Preferred Stock (the “Series A Preferred Shares”); and (b) 1,000,000 shares of its Series B Convertible Preferred Stock (the “Series B Preferred Shares,” and together with the Series A Preferred Shares, collectively, the “Preferred Shares”) in exchange for (i) the payment of $2,000,000 (including $302,500 principal plus accrued but unpaid interest in bridge financing provided by the Purchaser to the Company during April 2021); and (ii) the surrender by the purchaser to the Company of 2,000,000 units (the “Units”), each Unit consisting of two shares of common stock and one warrant to purchase an additional share of common stock in accordance with the terms of the subscription agreements for the purchase of the Units entered into by the Purchaser and the Company in September and October 2020. | |||
Unpaid accrued interest | $ 21,556 | |||
Subsequent Event [Member] | ||||
Subsequent Events (Details) [Line Items] | ||||
Exchange of payment | $ 2,000,000 | |||
Unpaid accrued interest | $ 302,500 | |||
Unites issued | 2,000,000 | |||
Voting power | 88.00% | |||
Single Investor [Member] | Subsequent Event [Member] | ||||
Subsequent Events (Details) [Line Items] | ||||
Convertible note | $200,000 | |||
Series A Preferred Stock [Member] | Subsequent Event [Member] | ||||
Subsequent Events (Details) [Line Items] | ||||
Aggregate shares | 2,000,000 | |||
Preferred shares stated value | $ 1 | |||
Preferred shares conversion rate of common stock | $0.05 | |||
Common stock par value | $ 0.001 | |||
Preferred stock, dividend rate | 8.00% | |||
Series B Preferred Stock [Member] | Subsequent Event [Member] | ||||
Subsequent Events (Details) [Line Items] | ||||
Aggregate shares | 1,000,000 | |||
Preferred shares stated value | $ 1 | |||
Preferred shares conversion rate of common stock | $0.20 | |||
Preferred stock, dividend rate | 8.00% |