Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Mar. 31, 2020 | Jun. 30, 2019 | |
Document And Entity Information | |||
Entity Registrant Name | Pure Harvest Cannabis Group, Inc. | ||
Entity Central Index Key | 0001351573 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2019 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filer | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business Flag | true | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 12,015,000 | ||
Entity Common Stock, Shares Outstanding | 30,465,330 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2019 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets | ||
Cash | $ 1,665,247 | $ 22,501 |
Accounts receivable | 1,653 | 22,802 |
Interest receivable | 8,194 | |
Inventory | 70,091 | 63,940 |
Deferred rent | 93,333 | |
Total current assets | 1,838,518 | 109,243 |
Long-term assets | ||
Machinery and equipment | 331,383 | 305,165 |
Accumulated depreciation | (287,249) | (274,615) |
Deferred rent, net of current portion | 132,223 | |
Right of use asset | 184,685 | |
Notes receivable | 2,450,000 | |
Goodwill | 141,453 | |
Other assets | 15,000 | |
Total assets | 4,806,013 | 139,793 |
Current liabilities | ||
Accounts payable | 115,126 | 104,330 |
Accrued interest | 23,890 | |
Accrued expenses | 75,131 | 36,000 |
Royalty payable | 770 | 194 |
Due to related parties | 116,667 | 19,889 |
Loans | 117,000 | |
Convertible notes payable, net of discount of $41,695 | 958,305 | |
Total current liabilities | 1,289,889 | 277,413 |
Long term liabilities | ||
Right of use liability | 133,554 | |
Total liabilities | 1,423,443 | 277,413 |
Commitments and contingencies | ||
Stockholders' deficit | ||
Preferred stock; $0.01 par value; 25,000,000 shares authorized; no shares issued and outstanding as of December 31, 2019 and 2018 | ||
Common stock, $0.01 par value; 100,000,000 shares authorized, 37,716,330 and 31,523,330 shares issued and outstanding as of December 31, 2019 and 2018, respectively | 377,164 | 315,233 |
Additional paid-in capital | 4,391,587 | (201,539) |
Accumulated deficit | (1,386,181) | (251,314) |
Total stockholders' deficit | 3,382,570 | (137,620) |
Total liabilities and stockholders' deficit | $ 4,806,013 | $ 139,793 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Notes payable, discount | $ 41,695 | |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 25,000,000 | 25,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.01 | $ .01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares, issued | 37,716,330 | 31,523,330 |
Common stock, shares outstanding | 37,716,330 | 31,523,330 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
REVENUES | ||
Royalty income | $ 38,550 | |
Cost of sales | 38,153 | |
Gross margin | 397 | |
OPERATING EXPENSES | ||
Advertising and promotion | 186,876 | |
General and administrative expenses | 802,937 | 46,169 |
Travel and entertainment | 81,816 | |
Depreciation expense | 12,634 | |
Total operating expenses | 1,084,263 | 46,169 |
Loss from operations | (1,083,866) | (46,169) |
Other income (expense): | ||
Interest expense | (26,195) | |
Other income (expense) | 9,926 | |
Bad debt expense | (34,732) | |
Total other income (expense) | (51,001) | |
Loss before provision for income taxes | (1,134,867) | (46,169) |
Provision for income taxes | ||
NET LOSS | $ (1,134,867) | $ (46,169) |
Basic and diluted net loss per common share | $ (0.03) | $ (0.01) |
Basic and diluted weighted-average number of common shares outstanding | 33,096,662 | 8,953,008 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (1,134,867) | $ (46,169) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 12,634 | |
Stock-based compensation | 133,000 | |
Amortization of debt discount | 2,305 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 21,149 | |
Interest receivable on notes receivable | (8,194) | |
Inventory | (6,151) | |
Other assets | (15,000) | |
Deferred rent | 54,444 | |
Accounts payable | 10,797 | 500 |
Accrued interest | 23,890 | |
Accrued expense | 39,131 | 36,000 |
Royalty payable | 576 | |
Right of use asset and liability | (51,131) | |
Net cash used in operating activities | (917,417) | (9,669) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Notes receivable | (2,450,000) | |
Net cash received (paid) in connection with acquisition | (55,797) | 22,501 |
Purchase of machinery and equipment | (26,218) | |
Net cash used in investing activities | (2,532,015) | 22,501 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Advances (payments) from (to) related parties, net | 96,778 | 8,542 |
Proceeds from issuance of convertible notes payable | 1,000,000 | |
Proceeds from sale of common stock | 4,045,500 | |
Payment of offering costs | (50,100) | |
Net cash provided by financing activities | 5,092,178 | 8,542 |
Change in cash and cash equivalents | 1,642,746 | 21,374 |
Cash and cash equivalents, beginning of year | 22,501 | 1,127 |
Cash and cash equivalents, end of year | 1,665,247 | 22,501 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | ||
Cash paid for income taxes | ||
Non-cash investing and financing activities: | ||
Beneficial conversion feature recorded on convertible debt | 44,000 | |
Common stock issued for conversion of notes payable | 117,000 | |
Common stock issued for business acquisitions | 85,656 | |
Common stock issued in connection with operating lease | $ 280,000 |
Statements of Stockholders' Def
Statements of Stockholders' Deficit - USD ($) | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2017 | $ 179,060 | $ (179,036) | $ (205,145) | $ (205,121) |
Balance, shares at Dec. 31, 2017 | 17,906,016 | |||
Issuance of stock for acquisition | $ 136,174 | (22,503) | 113,671 | |
Issuance of stock for acquisition, shares | 13,617,314 | |||
Net loss | (46,169) | (46,169) | ||
Balance at Dec. 31, 2018 | $ 315,234 | (201,539) | (251,314) | (137,620) |
Balance, shares at Dec. 31, 2018 | 31,523,330 | |||
Stock-based compensation | $ 2,800 | 130,200 | 133,000 | |
Stock-based compensation, shares | 280,000 | |||
Stock returned by former executives | $ (27,500) | 27,500 | ||
Stock returned by former executives, share | (2,750,000) | |||
Issuance of stock for acquisition | $ 1,720 | 83,936 | 85,656 | |
Issuance of stock for acquisition, shares | 172,000 | |||
Issuance of stock to note holders | 117,000 | 117,000 | ||
Issuance of stock to note holders, shares | ||||
Issuance of stock for lease | $ 4,000 | 276,000 | 280,000 | |
Issuance of stock for lease, shares | 400,000 | |||
Issuance of stock to investors | $ 80,910 | 3,964,590 | 4,045,500 | |
Issuance of stock to investors, shares | 8,091,000 | |||
Offering costs | (50,100) | (50,100) | ||
Beneficial conversion feature | 44,000 | 44,000 | ||
Net loss | (1,134,867) | (1,134,867) | ||
Balance at Dec. 31, 2019 | $ 377,164 | $ 4,391,587 | $ (1,386,181) | $ 3,382,570 |
Balance, shares at Dec. 31, 2019 | 37,716,330 |
Organization and Description of
Organization and Description of Business | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Organization and Description of Business | NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS The Company was formed as a Colorado corporation in April 2004. On December 31, 2018 the Company acquired all of the outstanding common stock of Pure Harvest Cannabis Producers, Inc., (“PHCP”) in exchange for 17,906,016 (post-split) shares of the Company’s common stock. The transaction was accounted for as a reverse acquisition. The accompanying consolidated financial statements are those of PHCP prior to December 31, 2018 and exclude the financial position, results of operations, cash flows and stockholders’ equity of the Pocket Shot Company prior to December 31, 2018. See “Reverse Acquisition” below for additional information. As a result of the acquisition of PHCP, the Company’s new business involves the acquisition and operation of licensed marijuana cultivation facilities, manufacturing facilities and dispensaries. The Company will continue to collect royalties for licensing the Company’s patent and the trademarks in connection with manufacturing and sale of Pocket Shot branded specialty alcohol beverage pouches. The Company changed its name to Pure Harvest Cannabis Group, Inc. in February 2019. On March 15, 2019, shareholders owning a majority of the Company’s outstanding shares approved the following amendments to the Company’s Articles of Incorporation: Increasing the authorized capital stock of the Company to 250,000,000 shares of common stock, $0.01 par value, and 25,000,000 shares of preferred stock, $0.01 par value. The preferred stock may be issued in one or more series as may be determined by the Company’s Board of Directors. The designations, powers, rights, preferences, qualifications, restrictions and limitations of the preferred stock shall be established from time to time by the Company’s Board of Directors; and Forward splitting the outstanding shares of the Company’s common stock on a two-for-one basis. The Company’s accounting year end is December 31. Reverse Acquisition On December 31, 2018 the Company (“The Pocket Shot Company”) acquired all of the outstanding common stock of PHCP in exchange for 17,906,016 (post-split) shares of the Company’s common stock. In addition, the shareholders of PHCP were issued warrants to purchase 17,906,016 (post-split) shares of the Company’s common stock. The warrants have an exercise price of $4.00 per share and a life of three years. The issuance of the warrants did not have an impact on the financial statements and was reflected similar to the shares issued to PHCP as discussed below. The transaction was accounted for as a reverse acquisition since: (i) the shareholders of PHCP owned the majority of the outstanding common stock of the Company after the share exchange; (ii) a majority of the directors of the Company are also directors of PHCP; and (iii) the old officers of the Company were replaced with officers designated by PHCP. Effective December 31, 2018, the Company’s stockholders’ equity was retroactively recapitalized as that of PHCP, while the stockholders’ equity of the Company was recorded as being acquired in the reverse acquisition. The Company and PHCP remain separate legal entities (with the Company as the parent of PHCP). The accompanying consolidated financial statements are those of PHCP prior to December 31, 2018 and exclude the financial position, results of operations, cash flows and stockholders’ equity of The Pocket Shot Company prior to December 31, 2018. All references to common stock, share and per share amounts have been retroactively restated to reflect as if the transaction had taken place as of the beginning of the earliest period presented. The Company’s assets and liabilities pre- reverse acquisition: Net Assets Acquired: Cash $ 22,501 Accounts receivable 22,802 Inventory 63,940 Machinery & equipment 30,550 Total Assets $ 139,793 Accounts payable and other current liabilities $ 14,765 Due to related parties 11,358 Total Liabilities $ 26,123 Net Assets Acquired $ 116,670 The following summarized unaudited consolidated pro forma information shows the results of operations of the Company had the reverse acquisition occurred on January 1, 2018: Pro-forma: 2018 Revenues $ 105,869 Net Loss $ (103,460 ) ) Net loss per common share – basic and diluted $ (0.01 ) ) The summarized consolidated pro forma results are not necessarily indicative of results which would have occurred if the reverse acquisition had been in effect for the periods presented. Further, the summarized unaudited consolidated pro forma results are not intended to be a projection of future results. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation These consolidated financial statements are presented in United States dollars and have been prepared in accordance with United States generally accepted accounting principles. Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, however, the above conditions raise substantial doubt about the Company’s ability to do so. The financial statements do not include any adjustment to reflect the possible future effect on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern. Management plans to fund future operations by raising capital and or seeking joint venture opportunities. Principles of Consolidation The Company evaluates the need to consolidate affiliates based on standards set forth in ASC 810 Consolidation (“ASC 810”). The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, PHCP and Prolific Nutrition (Note 10). All significant consolidated transactions and balances have been eliminated in consolidation. The operations of PHCP are included in the consolidated financial statement from the date of acquisition of December 31, 2018 onward. The operations of Prolific Nutrition are included in the consolidated financial statement from the date of acquisition of September 30, 2019 onward. Use of Estimates In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates. Significant estimates include estimated useful lives and potential impairment of property and equipment, estimate of fair value of share based payments and valuation of deferred tax assets. Cash and Cash Equivalents The Company considers all highly liquid temporary cash investments with an original maturity of six months or less to be cash equivalents. Accounts Receivable We record accounts receivable at net realizable value. This value includes an appropriate allowance for estimated uncollectible accounts to reflect any loss anticipated on the accounts receivable balances and is charged to other income (expense) in the combined statements of operations. We calculate this allowance based on our history of write-offs, the level of past-due accounts based on the contractual terms of the receivables, and our relationships with, and the economic status of, our customers. As of December 31, 2019 and 2018, an allowance for estimated, uncollectible accounts was determined to be unnecessary. Inventory Inventory is reported at the lower of cost or market on the first-in, first-out (FIFO) method. Our inventory is subject to obsolescence. Accordingly, quantities on hand are periodically monitored for items no longer being sold, which are written off. All inventory is stored at the manufacturer and maintained by them. Inventory consists of pouches, display and shipping boxes and no inventory is deemed obsolete. Machinery and Equipment Machinery and equipment is recorded at cost. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. When property and equipment is retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes. The Company uses other depreciation methods (generally accelerated) for tax purposes where appropriate. The estimated useful lives for significant machinery and equipment categories are five years. Impairment of Long-Lived Assets and Intangible Assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets, including intangible assets, may not be recoverable. When such events occur, the Company compares the carrying amounts of the assets to their undiscounted expected future cash flows. If the Company determines that the carrying value of the asset is not recoverable, a permanent impairment charge is recorded for the amount by which the carrying value of the long-lived asset exceeds its fair value. There were no impairments recorded during the year ended December 31, 2019. Goodwill Goodwill represents the excess of the acquisition cost of businesses over the fair value of the identifiable net assets acquired. Goodwill is not amortized, but tested for impairment, or if circumstances occur that more likely than not reduce the fair value of the reporting unit below its carrying amount. The Company performed its annual test on December 31, 2019 for which no impairments were recorded. Lease Commitments The Company determines if an arrangement is a lease at inception. This determination generally depends on whether the arrangement conveys to the Company the right to control the use of an explicitly or implicitly identified fixed asset for a period of time in exchange for consideration. Control of an underlying asset is conveyed to the Company if the Company obtains the rights to direct the use of and to obtain substantially all of the economic benefits from using the underlying asset. The Company has lease agreements which include lease and non-lease components, which the Company has elected to account for as a single lease component for all classes of underlying assets. Lease expense for variable lease components are recognized when the obligation is probable. Operating lease right of use (“ROU”) assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Operating lease payments are recognized as lease expense on a straight-line basis over the lease term. The Company primarily leases buildings (real estate) which are classified as operating leases. ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. As an implicit interest rate is not readily determinable in the Company’s leases, the incremental borrowing rate is used based on the information available at commencement date in determining the present value of lease payments. The lease term for all of the Company’s leases includes the non-cancellable period of the lease plus any additional periods covered by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor. Options for lease renewals have been excluded from the lease term (and lease liability) for the majority of the Company’s leases as the reasonably certain threshold is not met. Lease payments included in the measurement of the lease liability are comprised of fixed payments, variable payments that depend on index or rate, and amounts probable to be payable under the exercise of the Company option to purchase the underlying asset if reasonably certain. Variable lease payments not dependent on a rate or index associated with the Company’s leases are recognized when the event, activity, or circumstance in the lease agreement on which those payments are assessed as probable. Variable lease payments are presented as operating expenses in the Company’s statement of operations in the same line item as expense arising from fixed lease payments. As of December 31, 2019, management determined that there were no variable lease costs. Convertible Debt and Convertible Preferred Stock When the Company issues convertible debt or convertible preferred stock, it first evaluates the balance sheet classification of the convertible instrument in its entirety to determine whether the instrument should be classified as a liability under ASC 480, “Distinguishing Liabilities from Equity”, and second whether the conversion feature should be accounted for separately from the host instrument. A conversion feature of a convertible debt instrument or certain convertible preferred stock would be separated from the convertible instrument and classified as a derivative liability if the conversion feature, were it a standalone instrument, meets the definition of an “embedded derivative” in ASC 815, Derivatives and Hedging. Generally, characteristics that require derivative treatment include, among others, when the conversion feature is not indexed to the Company’s equity, as defined in ASC 815-40, or when it must be settled either in cash or by issuing stock that is readily convertible to cash. When a conversion feature meets the definition of an embedded derivative, it would be separated from the host instrument and classified as a derivative liability carried on the consolidated balance sheet at fair value, with any changes in its fair value recognized currently in the consolidated statements of operations. If a conversion feature does not meet the conditions to be separated and accounted for as an embedded derivative liability, the Company then determines whether the conversion feature is “beneficial”. A conversion feature would be considered beneficial if the conversion feature is “in the money” when the host instrument is issued or, under certain circumstances, later. If convertible debt contains a beneficial conversion feature (“BCF”), the amount of the amount of the proceeds allocated to the BCF reduces the balance of the convertible debt, creating a discount which is amortized over the debt’s term to interest expense in the consolidated statements of operations. When a convertible preferred stock contains a BCF, after allocating the proceeds to the BCF, the resulting discount is either amortized over the period beginning when the convertible preferred stock is issued up to the earliest date the conversion feature may be exercised, or if the convertible preferred stock is immediately exercisable, the discount is fully amortized at the date of issuance. The amortization is recorded similar to a dividend. Offering Costs The Company accounts for offering costs in accordance with FASB ASC 340, “Other Assets and Deferred Costs” Prior to the completion of an offering, offering costs will be capitalized as deferred offering costs on the balance sheet. The deferred offering costs will be charged to stockholders’ equity or as a reduction of debt upon the completion of an offering or to expense if the offering is not completed. Business Combinations The Company accounts for businesses it acquires in accordance with ASC Topic 805, “Business Combinations”, which allocates the fair value of the purchase consideration to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. The excess of the purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions. Acquisition-related expenses and transaction costs associated with business combinations are expensed as incurred. Revenue Recognition The Company records revenue under the adoption of ASC 606 by analyzing exchanges with its customers using a five-step analysis such as identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The Company’s policy is to record revenue as earned when a firm commitment, indicating sales quantity and price exists, delivery has taken place and collectability is reasonably assured. The Company records sales of finished products once the customer places the order and the product is shipped. Delivery is considered to have occurred when title and risk of loss have transferred to the customer. Provisions for discounts, returns, allowances, customer rebates and other adjustments are netted with gross sales. The Company accounts for such provisions during the same period in which the related revenues are earned. Provisions for discounts, returns, allowances, customer rebates and other adjustments are minimal and are recorded as a reduction of revenue Cost of Sales The costs associated with our royalty income are packaging, a royalty of $1.20 per case, and repair and maintenance costs of our filling machines. General and Administrative This category includes salaries and costs of legal and accounting, telephone, office supplies, product samples, insurance, registration costs, and consulting expenses. Travel and Entertainment This category includes the costs of air travel, hotels, meals and reimbursed automotive expenses. Stock-Based Compensation The Company accounts for share-based payments pursuant to ASC 718, “Stock Compensation” and, accordingly, the Company records compensation expense for share-based awards based upon an assessment of the grant date fair value for stock options and restricted stock awards using the Black-Scholes option pricing model. Share based expense paid through direct stock grants is expensed over the vesting period or upon issuance for awards with no further service requirements. Income Taxes The Company is taxed as a C-Corporation, whereby it is subject to federal and state income taxes. The Company follows ASC 740, Income Taxes for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change. Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. In addition, the calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax regulations. The Company recognizes liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. While the Company believes it has appropriate support for the positions taken on its tax returns, the Company regularly assesses the potential outcomes of examinations by tax authorities in determining the adequacy of its provision for income taxes. The Company continually assesses the likelihood and amount of potential adjustments and adjusts the income tax provision, income taxes payable and deferred taxes in the period in which the facts that give rise to a revision become known. As of December 31, 2019 and 2018, the Company’s deferred tax assets consisted entirely of net operating losses to which there is a full valuation allowance applied. In addition, as of December 31, 2019 all tax years since 2016 are open for examination for which not current examinations are in progress. Fair Value of Financial Instruments The Company applies the accounting guidance under Financial Accounting Standards Board (“FASB”) ASC 820-10, “Fair Value Measurements”, as well as certain related FASB staff positions. This guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact business and considers assumptions that marketplace participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. The guidance also establishes a fair value hierarchy for measurements of fair value as follows: ● Level 1 - quoted market prices in active markets for identical assets or liabilities. ● Level 2 - inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. ● Level 3 - unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The carrying amount of the Company’s financial instruments approximates their fair value as of December 31, 2019 and 2018, due to the short-term nature of these instruments. Net Loss per Share Net loss per common share is computed by dividing net loss by the weighted average common shares outstanding during the period as defined by Financial Accounting Standards, ASC Topic 260, “Earnings per Share”. Basic earnings per common share (“EPS”) calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding. As of December 31, 2019 and 2018, dilutive instruments consisted of convertible notes payable and warrants to purchase shares of the Company’s common stock, the effects of which to net loss are anti-dilutive. Recent Accounting Pronouncements In February 2016, the FASB issued ASU, Leases (ASC 842), which requires lessees to recognize most leases on their balance sheets as a right-of-use asset with a corresponding lease liability. Lessor accounting under the standard is substantially unchanged. Additional qualitative and quantitative disclosures are also required. The Company adopted the standard effective January 1, 2019 using the cumulative-effect adjustment transition method, which applies the provisions of the standard at the effective date without adjusting the comparative periods presented. The Company adopted the following practical expedients and elected the following accounting policies related to this standard update: ● The option to not reassess prior conclusions related to the identification, classification and accounting for initial direct costs for leases that commenced prior to January 1, 2019. ● Short-term lease accounting policy election allowing lessees to not recognize right-of-use assets and liabilities for leases with a term of 12 months or less; and ● The option to not separate lease and non-lease components for certain equipment lease asset categories such as freight car, vehicles and work equipment. ● The package of practical expedients applied to all of its leases, including (i) not reassessing whether any expired or existing contracts are or contain leases, (ii) not reassessing the lease classification for any expired or existing leases, and (iii) not reassessing initial direct costs for any existing leases. The Company has inventoried all leases where the Company is a lessee as of the initial date of application and has examined other contracts with suppliers, vendors, customers and other outside parties to identify whether such contracts contain an embedded lease as defined under the new guidance. As of December 31, 2019, the Company has one lease to which requires treatment under ASC 842. The lease was entered into during May 2019 and didn’t impact periods prior to then. The adoption of ASC 842 had a material effect on the consolidated financial statements. In addition, the Company will review for the existence of embedded leases in future agreements. See Note 9 for additional information. In June 2018, the FASB issued ASU No. 2018-07, “Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.” These amendments expand the scope of Topic 718, Compensation - Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. The ASU supersedes Subtopic 505-50, Equity - Equity-Based Payments to Non-Employees. This standard is effective for public companies for annual periods beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted as long as ASU 2014-09 has been adopted. The Company adopted the guidance on January 1, 2019. The adoption did not have a material impact on our consolidated financial statements. The Company reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 3 – RELATED PARTY TRANSACTIONS Effective January 1, 2019, the Company entered into employment agreements with its two officers. Under the terms of the agreement the combined minimum annual compensation is $350,000. During the year ended December 31, 2019, the Company accrued $188,388 in connection with these agreements and $24,715 for expenses, both of which are included in due to related parties on the accompanying consolidated balance sheet and within general and administrative expenses on the accompanying statement of operations. See Note 6 for discussion regarding common stock issued in connection with the employment agreements. On July 30, 2019, the two officers referred to above resigned as officers and directors of the Company. In connection with their resignations Mr. Lamadrid agreed to return to the Company 1,750,000 shares, and Mr. Scott agreed to return to the Company 1,200,000 shares of the Company’s common stock. These shares, upon their return to the Company, were cancelled and now represent authorized but unissued shares. Prior to the reverse acquisition, the Company entered into an agreement with Jarrold R. Bachmann, a former officer and a current shareholder, to pay royalties of $1.20 on a per case basis for sales of the Company’s product: The Pocket Shot. Amounts due as of December 31, 2019 and 2018 under the agreement were insignificant. |
Royalty Income
Royalty Income | 12 Months Ended |
Dec. 31, 2019 | |
Royalty Income | |
Royalty Income | NOTE 4 – ROYALTY INCOME Under the terms of an existing license agreement, for which was entered into prior to the reverse acquisition, the Company receives royalty income in exchange for the license to manufacture, fill and distribute the Company’s Pocket Shot product, a plastic pouch containing specialty alcohol beverages. The initial term of the agreement was for five years, expiring in 2010, with automatic renews for succeeding terms of two years each unless either party has given a written notice of its election to terminate the agreement at least one hundred, eighty calendar days prior to the end of any initial or extended term. The Licensee is required to pay the Company a royalty per case as provided in the agreement. All royalties due to the Company accrue upon the sale of the products, regardless of the time of collection by the Licensee. In addition, all of the Company’s revenues, prior to the reverse acquisition, have been historically generated from this contract. Prior to the reverse acquisition, the Company has operated in a single business segment, licensing its product to customers in the United States. |
Earnest Money Deposit
Earnest Money Deposit | 12 Months Ended |
Dec. 31, 2019 | |
Earnest Money Deposit | |
Earnest Money Deposit | NOTE 5 - EARNEST MONEY DEPOSIT In February 2019 the Company entered into an agreement to buy property located approximately 35 miles west of Denver, Colorado. As required by the agreement, the Company placed an earnest money deposit of $20,000 with an escrow agent. The deposit of $20,000 was to be applied to the purchase price at closing. The Company subsequently assigned its rights to purchase the property to an unrelated third party and then leased the property from the unrelated third party. The Company has determined it will not receive any credit for the deposit and has charged the amount to general and administrative expense. See Note 9 for additional information. |
Notes Payable
Notes Payable | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Notes Payable | NOTE 6 –NOTES PAYABLE Promissory Notes In 2017, the Company entered into three promissory notes with third parties. Total proceeds received were $117,000 for which were used for operations. The promissory notes are unsecured, payable on demand and do not incur interest. In 2019, one of the note holders and existing shareholder forgave their promissory note and transferred shares of common stock held by the shareholder to the other note holders in satisfaction of the promissory notes. The promissory notes were reclassed to additional paid-in capital due the transaction being for the behalf of the Company by the shareholder. Convertible Notes Payable During the year ended December 31, 2019, the Company issued a series of convertible notes with original principal balances of $1,000,000. The convertible notes mature at dates ranging from November 1, 2021 to December 1, 2021 and incur interest at 20% per annum. In addition, convertible notes are convertible upon issuance at a fixed price of $0.50 per common share. In connection with the issuance, the Company recorded a beneficial conversion feature of $44,000 resulting in a discount to the convertible notes. The discount is being amortized to interest expense using the straight-line method, due to the short-term nature of the convertible notes, over the term. During the year ended December 31, 2019, the Company amortized $2,305 to interest expense. The remaining discount of $41,695 is expected to be amortized in 2020 of $22,910 and 2021 of $18,795. The convertible notes include other provisions such as first right of refusal on additional capital raises, authorization of holder to incur debts senior to the convertible notes, etc. Additionally, should the holder exercise the option to exercise, a warrant to purchase an additional share of common stock for which the terms aren’t defined in the agreement. Thus, the issuance of the warrant is a contingent to which the Company hasn’t accounted for. Should warrants be ultimately issued, the Company expects to record the fair value of such as additional interest expense. |
Notes Receivable
Notes Receivable | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Notes Receivable | NOTE 7 – NOTES RECEIVABLE In May and June 2019, the Company advanced $28,593 to two unrelated individuals in connection with potential acquisitions for the Company. The amounts are to be repaid, without interest, in October 2019. As of December 31, 2019, the Company has continued collection efforts on these notes receivable but has provided an allowance of such due to the unlikelihood of closing the acquisitions or collecting on the notes receivable . In December 2019, the Company advanced $800,000 to How Smooth It Is, Inc. in connection with the potential acquisition of that entity by the Company. The note receivable is due June 1, 2020 and incurs interest at 6% per annum for sixty days and then is increased to 10% per annum thereafter. In March 2020, the Company entered into an acquisition agreement to acquire the entity for which the note receivable was used to offset a portion of the purchase price, see Note 11 for additional information. On April 9, 2020, the company submitted the required applications to the Michigan Department of Licensing and Regulatory Affairs (LARA) to be approved and pre-qualified as a Processor to be added to the HSII license. Upon approval, PHCG will become 51% owners and can participate in revenue. In December 2019, the Company advanced $1,650,000 to EdenFlo, LLC in connection with the potential acquisition of that entity by the Company. The note receivable is due June 1, 2020 and incurs interest at 6% per annum for sixty days and then is increased to 10% per annum thereafter. In addition, the note receivable is secured by all the asset of EdenFlo, LLC and the amount loaned represents the expected cash portion to be paid in connection with the acquisition. A s of the date of this filing the Company is still reviewing the Share Exchange Agreement and anticipates closing on Eden Flow by the end of April 2020 or sooner. |
Stockholders' Deficit
Stockholders' Deficit | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Stockholders' Deficit | NOTE 8 – STOCKHOLDERS’ DEFICIT Change in Articles of Incorporation On March 15, 2019, shareholders owning a majority of the Company’s outstanding shares approved the following amendments to the Company’s Articles of Incorporation: Increasing the authorized capital stock of the Company to 250,000,000 shares of common stock, $0.01 par value, and 25,000,000 shares of preferred stock, $0.01 par value. The preferred stock may be issued in one or more series as may be determined by the Company’s Board of Directors. The designations, powers, rights, preferences, qualifications, restrictions and limitations of the preferred stock shall be established from time to time by the Company’s Board of Directors; and Forward splitting the outstanding shares of the Company’s common stock on a two-for-one basis. The name change, trading symbol change (PCKK to PHCG) and forward stock split became effective in the public market on May 2, 2019 and have been retroactively reflected for all periods presented. Stock-Based Compensation In January 2019, the Company authorized the issuance of 140,000 shares of common stock to a consultant for services rendered. The Company valued the common stock at $133,000, using the closing market price of the Company’s common stock on the date of the agreement. The Company expensed the value of the common stock upon issuance as there were no additional performance criteria. Offering of Common Stock and Warrants In February 2019, the Company commenced a private offering of its common stock for up to $10 million in proceeds. The Company is offering up to 20 million shares of common stock at a purchase price of $0.50 per share. In addition, for each share purchased the investor will receive a warrant to purchase one additional share of common stock at a price of $2.00 per share. The warrants expire on December 31, 2021 or sooner at the Company’s option, if the Company’s stock trades for a price of $3.00 per share for 10 days with an average volume of 100,000 shares per day. During the year ended December 31, 2019, the Company received $4,045,500 related to the sale of 8,091,000 shares of common stock and warrants. As of December 31, 2019, all shares of common stock have been issued and thus recorded within common stock and additional paid-in capital. Additionally, in connection with the private offering the Company issued warrants to purchase 8,091,000 shares of common stock based upon the terms disclosed above. The Company incurred offering costs of $50,100 to placement agent in connection with the private offering. These offering costs have been offset against the proceeds received from the private offering. In addition, these placement agents received the option to purchase units at a $1.00 to per unit which consists of 2,000 shares of common stock and 2,000 warrants to purchase shares of common stock. The warrants have the same terms as the offering disclosed above. As of December 31, 2019, the placement agents had an option to purchase 41.50 units for which represent 83,500 shares of common stock and 83,500 warrants. An entry for the fair market value of common stock and warrants was not recorded as the entry would have been an increase and decrease to additional paid-in capital due to the common stock and warrants being issued in connection with the private offering. Reverse Acquisition See Note 1 for shares issued in connection with the reverse acquisition. Satisfaction of Promissory Notes See Note 4 for shares transferred by a shareholder in satisfaction of promissory notes. |
Lease Agreement
Lease Agreement | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Lease Agreement | NOTE 9 – LEASE AGREEMENT In May 2019, the Company entered into a lease agreement for the property referred to in Note 5. The Company intends to use this property for a marijuana retail store. The initial term of the lease is for a period of three years. The Company has an option to purchase the property at prices ranging between $1,400,000 and $1,600,000 at various dates prior to May 1, 2022. The Company issued the landlord 400,000 shares of its post-split common stock in consideration for the option to purchase the property for which was recorded as deferred rent and is being amortized to rent expense using the straight line method over the term of the lease. At inception of the lease, the Company recorded a right of use asset and liability. The Company used an effective borrowing rate of 10 percent within the calculation. The following are the expected lease payments as of December 31, 2019, including the total amount of imputed interest related: Years ending December 31,: 2020 $ 96,000 2021 96,000 2022 56,000 Total 248,000 Less: Imputed Interest (39,315 ) Total $ 208,685 |
Acquisition
Acquisition | 12 Months Ended |
Dec. 31, 2019 | |
Business Combinations [Abstract] | |
Acquisition | NOTE 10 – ACQUISITION On September 6, 2019 the Company acquired all of the outstanding membership interests in Prolific Nutrition, LLC and Gratus Living, LLC (collectively “Prolific Nutrition”) for 172,000 shares of the Company’s restricted common stock. The Company valued the shares of common stock at $85,656 based upon the closing market price of the Company’s common stock on the date of acquisition. Prolific Nutrition and Gratus Living are Colorado-based hemp/CBD companies that have developed and now market a line of CBD products directly to consumers. Prolific Nutrition and Gratus Living currently offer CBD oil tincture, CBD oil gummies, CBD oil capsules, CBD oil lotion, hemp oil and lip balm. Prolific Nutrition and Gratus Living have also developed and now market hemp extract dietary supplements, hemp extract capsules for pain and hemp extract pet treats for dogs and cats. The Company accounted for the transaction as follows: Cash $ (15,000 ) Payable on Acquisition (50,000 ) Common Stock (1,720 ) APIC (83,936 ) Cash (Acquired) 9,203 Goodwill 141,153 The purchase price for the acquisition was allocated to the fair value of the assets acquired and liabilities assumed based on the estimates of the fair values at the acquisition date, with the amount exceeding the estimated fair values being recorded as goodwill. The goodwill is not expected to be deductible for tax purposes. Prolific Nutrition’s results of operations have been included in the Company’s operating results for the period subsequent to the acquisition on September 30, 2019. Prolific Nutrition contributed revenues of approximately $3,000 during the year ended December 31, 2019. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 11 – SUBSEQUENT EVENTS On March 6, 2020, the Company borrowed $1,500,000 from an unrelated third party. The loan is evidenced by a promissory note which bears interest at 8% per year. The note is due and payable as follows: ● $500,000, together with all accrued and unpaid interest, on April 13, 2020 ● $1,000,000, together with all accrued and unpaid interest, on May 6, 2020 Accrued interest will be paid in shares of the Company’s common stock based upon a 25% discount to the ten day average closing price of the Company’s common stock immediately prior to May 6, 2020. Accrued interest will include 150,000 additional shares of the Company’s common stock and warrants to purchase 150,000 shares of the Company’s common stock. The warrants are exercisable at any time on or before January 1, 2025 at a price of $2.00 per share. The first payment of $500,000 was made on a timely basis. On April 20, 2020, the holder of the Note agreed to extend the due date for the $1,000,000 payment from May 6, 2020 to June 15, 2020. In consideration for extending the repayment date for the second amount to June 15, 2020, the Company issued to the note holder 200,000 shares of its common stock, and warrants to purchase 200,000 shares of the Company’s common stock. The warrants are exercisable at a price of $2.00 per share and expire January 1, 2025. A late payment penalty of $5,000 per day will be due if the $1,000,000 is not paid by June 15, 2020. On February 12, 2020, the Company entered into an Operating Agreement with Dr. James Rouse, MD regarding the ownership, operation, and management of Love Pharm, LLC. Love Pharm was organized to formulate, develop, manufacture, and brand hemp/CBD products for sale and distribution as well as to form a multi-channel media platform for public and patient education regarding the endocannabinoid system utilizing Dr. Rouse’s name, public image and his extensive experience and expertise in medicine and entrepreneurship. Under the Operating Agreement between the Company and Dr. Rouse, the Company owns 51% of Love Pharm and has a right of first refusal to purchase the remaining 49% of Love Pharm from Dr. Rouse. Additionally, Dr. Rouse will become the Company’s Chief Medical Advisor. Dr. Rouse will receive 100,000 shares of the Company’s common stock for services provided to the Company. As of April 20, 2020 Love Pharm had not generated any revenue. On March 12, 2020 the Company entered into an agreement to acquire fifty-one percent (51%) of the outstanding membership interests in How Smooth It Is, Inc. (“HSII”) for $1,500,000 in cash and 7,000,000 shares of the Company’s restricted common stock. HSII is a state-licensed medical marijuana processor based in Riverdale, Michigan and plans to offer a wide range of cannabis-infused products including chocolate bars, gummies, beverages, and other Pure Harvest branded products. HSII is based in a 5,800 square foot facility and has the capability of extracting, processing and manufacturing an array of products containing THC and CBD. HSII has also submitted applications for four dispensary licenses in Riverdale, White Cloud, Alma and Mount Pleasant, MI The acquisition of the 51% interest in HSII is subject to a number of conditions, including the approval of the Michigan Department of Licensing and Regulatory Affairs (LARA). HSII is in the development stage and as of March 31, 2020 had generated only limited revenue. On March 13, 2020 the Company entered into an agreement to acquire all of the outstanding membership interests in Sofa King Medicinal Wellness Products, LLC (“SKM”) for 3,000,000 shares of the Company’s common stock. The completion of the acquisition is subject to a number of conditions, including the approval of the acquisition by the Colorado Marijuana Enforcement Division (MED). SKM is a vertically integrated cannabis operator located in Dumont, CO. The Company has evaluated subsequent events through the filing date of these consolidated financial statements and has disclosed that there are no other events that are material to the financial statements to be disclosed. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation These consolidated financial statements are presented in United States dollars and have been prepared in accordance with United States generally accepted accounting principles. |
Going Concern | Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, however, the above conditions raise substantial doubt about the Company’s ability to do so. The financial statements do not include any adjustment to reflect the possible future effect on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern. Management plans to fund future operations by raising capital and or seeking joint venture opportunities. |
Principles of Consolidation | Principles of Consolidation The Company evaluates the need to consolidate affiliates based on standards set forth in ASC 810 Consolidation (“ASC 810”). The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, PHCP and Prolific Nutrition (Note 10). All significant consolidated transactions and balances have been eliminated in consolidation. The operations of PHCP are included in the consolidated financial statement from the date of acquisition of December 31, 2018 onward. The operations of Prolific Nutrition are included in the consolidated financial statement from the date of acquisition of September 30, 2019 onward. |
Use of Estimates | Use of Estimates In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates. Significant estimates include estimated useful lives and potential impairment of property and equipment, estimate of fair value of share based payments and valuation of deferred tax assets. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid temporary cash investments with an original maturity of six months or less to be cash equivalents. |
Accounts Receivable | Accounts Receivable We record accounts receivable at net realizable value. This value includes an appropriate allowance for estimated uncollectible accounts to reflect any loss anticipated on the accounts receivable balances and is charged to other income (expense) in the combined statements of operations. We calculate this allowance based on our history of write-offs, the level of past-due accounts based on the contractual terms of the receivables, and our relationships with, and the economic status of, our customers. As of December 31, 2019 and 2018, an allowance for estimated, uncollectible accounts was determined to be unnecessary. |
Inventory | Inventory Inventory is reported at the lower of cost or market on the first-in, first-out (FIFO) method. Our inventory is subject to obsolescence. Accordingly, quantities on hand are periodically monitored for items no longer being sold, which are written off. All inventory is stored at the manufacturer and maintained by them. Inventory consists of pouches, display and shipping boxes and no inventory is deemed obsolete. |
Machinery and Equipment | Machinery and Equipment Machinery and equipment is recorded at cost. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. When property and equipment is retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes. The Company uses other depreciation methods (generally accelerated) for tax purposes where appropriate. The estimated useful lives for significant machinery and equipment categories are five years. |
Impairment of Long-Lived Assets and Intangible Assets | Impairment of Long-Lived Assets and Intangible Assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets, including intangible assets, may not be recoverable. When such events occur, the Company compares the carrying amounts of the assets to their undiscounted expected future cash flows. If the Company determines that the carrying value of the asset is not recoverable, a permanent impairment charge is recorded for the amount by which the carrying value of the long-lived asset exceeds its fair value. There were no impairments recorded during the year ended December 31, 2019. |
Goodwill | Goodwill Goodwill represents the excess of the acquisition cost of businesses over the fair value of the identifiable net assets acquired. Goodwill is not amortized, but tested for impairment, or if circumstances occur that more likely than not reduce the fair value of the reporting unit below its carrying amount. The Company performed its annual test on December 31, 2019 for which no impairments were recorded. |
Lease Commitments | Lease Commitments The Company determines if an arrangement is a lease at inception. This determination generally depends on whether the arrangement conveys to the Company the right to control the use of an explicitly or implicitly identified fixed asset for a period of time in exchange for consideration. Control of an underlying asset is conveyed to the Company if the Company obtains the rights to direct the use of and to obtain substantially all of the economic benefits from using the underlying asset. The Company has lease agreements which include lease and non-lease components, which the Company has elected to account for as a single lease component for all classes of underlying assets. Lease expense for variable lease components are recognized when the obligation is probable. Operating lease right of use (“ROU”) assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Operating lease payments are recognized as lease expense on a straight-line basis over the lease term. The Company primarily leases buildings (real estate) which are classified as operating leases. ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. As an implicit interest rate is not readily determinable in the Company’s leases, the incremental borrowing rate is used based on the information available at commencement date in determining the present value of lease payments. The lease term for all of the Company’s leases includes the non-cancellable period of the lease plus any additional periods covered by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor. Options for lease renewals have been excluded from the lease term (and lease liability) for the majority of the Company’s leases as the reasonably certain threshold is not met. Lease payments included in the measurement of the lease liability are comprised of fixed payments, variable payments that depend on index or rate, and amounts probable to be payable under the exercise of the Company option to purchase the underlying asset if reasonably certain. Variable lease payments not dependent on a rate or index associated with the Company’s leases are recognized when the event, activity, or circumstance in the lease agreement on which those payments are assessed as probable. Variable lease payments are presented as operating expenses in the Company’s statement of operations in the same line item as expense arising from fixed lease payments. As of December 31, 2019, management determined that there were no variable lease costs. |
Convertible Debt and Convertible Preferred Stock | Convertible Debt and Convertible Preferred Stock When the Company issues convertible debt or convertible preferred stock, it first evaluates the balance sheet classification of the convertible instrument in its entirety to determine whether the instrument should be classified as a liability under ASC 480, “Distinguishing Liabilities from Equity”, and second whether the conversion feature should be accounted for separately from the host instrument. A conversion feature of a convertible debt instrument or certain convertible preferred stock would be separated from the convertible instrument and classified as a derivative liability if the conversion feature, were it a standalone instrument, meets the definition of an “embedded derivative” in ASC 815, Derivatives and Hedging. Generally, characteristics that require derivative treatment include, among others, when the conversion feature is not indexed to the Company’s equity, as defined in ASC 815-40, or when it must be settled either in cash or by issuing stock that is readily convertible to cash. When a conversion feature meets the definition of an embedded derivative, it would be separated from the host instrument and classified as a derivative liability carried on the consolidated balance sheet at fair value, with any changes in its fair value recognized currently in the consolidated statements of operations. If a conversion feature does not meet the conditions to be separated and accounted for as an embedded derivative liability, the Company then determines whether the conversion feature is “beneficial”. A conversion feature would be considered beneficial if the conversion feature is “in the money” when the host instrument is issued or, under certain circumstances, later. If convertible debt contains a beneficial conversion feature (“BCF”), the amount of the amount of the proceeds allocated to the BCF reduces the balance of the convertible debt, creating a discount which is amortized over the debt’s term to interest expense in the consolidated statements of operations. When a convertible preferred stock contains a BCF, after allocating the proceeds to the BCF, the resulting discount is either amortized over the period beginning when the convertible preferred stock is issued up to the earliest date the conversion feature may be exercised, or if the convertible preferred stock is immediately exercisable, the discount is fully amortized at the date of issuance. The amortization is recorded similar to a dividend. |
Offering Costs | Offering Costs The Company accounts for offering costs in accordance with FASB ASC 340, “Other Assets and Deferred Costs” Prior to the completion of an offering, offering costs will be capitalized as deferred offering costs on the balance sheet. The deferred offering costs will be charged to stockholders’ equity or as a reduction of debt upon the completion of an offering or to expense if the offering is not completed. |
Business Combinations | Business Combinations The Company accounts for businesses it acquires in accordance with ASC Topic 805, “Business Combinations”, which allocates the fair value of the purchase consideration to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. The excess of the purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions. Acquisition-related expenses and transaction costs associated with business combinations are expensed as incurred. |
Revenue Recognition | Revenue Recognition The Company records revenue under the adoption of ASC 606 by analyzing exchanges with its customers using a five-step analysis such as identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The Company’s policy is to record revenue as earned when a firm commitment, indicating sales quantity and price exists, delivery has taken place and collectability is reasonably assured. The Company records sales of finished products once the customer places the order and the product is shipped. Delivery is considered to have occurred when title and risk of loss have transferred to the customer. Provisions for discounts, returns, allowances, customer rebates and other adjustments are netted with gross sales. The Company accounts for such provisions during the same period in which the related revenues are earned. Provisions for discounts, returns, allowances, customer rebates and other adjustments are minimal and are recorded as a reduction of revenue |
Cost of Sales | Cost of Sales The costs associated with our royalty income are packaging, a royalty of $1.20 per case, and repair and maintenance costs of our filling machines. |
General and Administrative | General and Administrative This category includes salaries and costs of legal and accounting, telephone, office supplies, product samples, insurance, registration costs, and consulting expenses. |
Travel and Entertainment | Travel and Entertainment This category includes the costs of air travel, hotels, meals and reimbursed automotive expenses. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for share-based payments pursuant to ASC 718, “Stock Compensation” and, accordingly, the Company records compensation expense for share-based awards based upon an assessment of the grant date fair value for stock options and restricted stock awards using the Black-Scholes option pricing model. Share based expense paid through direct stock grants is expensed over the vesting period or upon issuance for awards with no further service requirements. |
Income Taxes | Income Taxes The Company is taxed as a C-Corporation, whereby it is subject to federal and state income taxes. The Company follows ASC 740, Income Taxes for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change. Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. In addition, the calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax regulations. The Company recognizes liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. While the Company believes it has appropriate support for the positions taken on its tax returns, the Company regularly assesses the potential outcomes of examinations by tax authorities in determining the adequacy of its provision for income taxes. The Company continually assesses the likelihood and amount of potential adjustments and adjusts the income tax provision, income taxes payable and deferred taxes in the period in which the facts that give rise to a revision become known. As of December 31, 2019 and 2018, the Company’s deferred tax assets consisted entirely of net operating losses to which there is a full valuation allowance applied. In addition, as of December 31, 2019 all tax years since 2016 are open for examination for which not current examinations are in progress. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company applies the accounting guidance under Financial Accounting Standards Board (“FASB”) ASC 820-10, “Fair Value Measurements”, as well as certain related FASB staff positions. This guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact business and considers assumptions that marketplace participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. The guidance also establishes a fair value hierarchy for measurements of fair value as follows: ● Level 1 - quoted market prices in active markets for identical assets or liabilities. ● Level 2 - inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. ● Level 3 - unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The carrying amount of the Company’s financial instruments approximates their fair value as of December 31, 2019 and 2018, due to the short-term nature of these instruments. |
Net Loss Per Share | Net Loss per Share Net loss per common share is computed by dividing net loss by the weighted average common shares outstanding during the period as defined by Financial Accounting Standards, ASC Topic 260, “Earnings per Share”. Basic earnings per common share (“EPS”) calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding. As of December 31, 2019 and 2018, dilutive instruments consisted of convertible notes payable and warrants to purchase shares of the Company’s common stock, the effects of which to net loss are anti-dilutive. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the FASB issued ASU, Leases (ASC 842), which requires lessees to recognize most leases on their balance sheets as a right-of-use asset with a corresponding lease liability. Lessor accounting under the standard is substantially unchanged. Additional qualitative and quantitative disclosures are also required. The Company adopted the standard effective January 1, 2019 using the cumulative-effect adjustment transition method, which applies the provisions of the standard at the effective date without adjusting the comparative periods presented. The Company adopted the following practical expedients and elected the following accounting policies related to this standard update: ● The option to not reassess prior conclusions related to the identification, classification and accounting for initial direct costs for leases that commenced prior to January 1, 2019. ● Short-term lease accounting policy election allowing lessees to not recognize right-of-use assets and liabilities for leases with a term of 12 months or less; and ● The option to not separate lease and non-lease components for certain equipment lease asset categories such as freight car, vehicles and work equipment. ● The package of practical expedients applied to all of its leases, including (i) not reassessing whether any expired or existing contracts are or contain leases, (ii) not reassessing the lease classification for any expired or existing leases, and (iii) not reassessing initial direct costs for any existing leases. The Company has inventoried all leases where the Company is a lessee as of the initial date of application and has examined other contracts with suppliers, vendors, customers and other outside parties to identify whether such contracts contain an embedded lease as defined under the new guidance. As of December 31, 2019, the Company has one lease to which requires treatment under ASC 842. The lease was entered into during May 2019 and didn’t impact periods prior to then. The adoption of ASC 842 had a material effect on the consolidated financial statements. In addition, the Company will review for the existence of embedded leases in future agreements. See Note 9 for additional information. In June 2018, the FASB issued ASU No. 2018-07, “Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.” These amendments expand the scope of Topic 718, Compensation - Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. The ASU supersedes Subtopic 505-50, Equity - Equity-Based Payments to Non-Employees. This standard is effective for public companies for annual periods beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted as long as ASU 2014-09 has been adopted. The Company adopted the guidance on January 1, 2019. The adoption did not have a material impact on our consolidated financial statements. The Company reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations. |
Organization and Description _2
Organization and Description of Business (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Schedule of Financial Statements Pre-reverse Acquisition Assets and Liabilities | The Company’s assets and liabilities pre- reverse acquisition: Net Assets Acquired: Cash $ 22,501 Accounts receivable 22,802 Inventory 63,940 Machinery & equipment 30,550 Total Assets $ 139,793 Accounts payable and other current liabilities $ 14,765 Due to related parties 11,358 Total Liabilities $ 26,123 Net Assets Acquired $ 116,670 |
Schedule of Pro forma Information of Reverse Acquisition | The following summarized unaudited consolidated pro forma information shows the results of operations of the Company had the reverse acquisition occurred on January 1, 2018: Pro-forma: 2018 Revenues $ 105,869 Net Loss $ (103,460 ) ) Net loss per common share – basic and diluted $ (0.01 ) ) |
Lease Agreement (Tables)
Lease Agreement (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Schedule of Expected Lease Payments | The following are the expected lease payments as of December 31, 2019, including the total amount of imputed interest related: Years ending December 31,: 2020 $ 96,000 2021 96,000 2022 56,000 Total 248,000 Less: Imputed Interest (39,315 ) Total $ 208,685 |
Acquisition (Tables)
Acquisition (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Business Combinations [Abstract] | |
Schedule of Acquisition | The Company accounted for the transaction as follows: Cash $ (15,000 ) Payable on Acquisition (50,000 ) Common Stock (1,720 ) APIC (83,936 ) Cash (Acquired) 9,203 Goodwill 141,153 |
Organization and Description _3
Organization and Description of Business (Details Narrative) - $ / shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2019 | Mar. 15, 2019 | |
Increased authorized capital stock | 250,000,000 | ||
Common stock, par value | $ .01 | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 25,000,000 | 25,000,000 | 25,000,000 |
Preferred stock, par value | $ 0.01 | $ 0.01 | $ 0.01 |
Pure Harvest Cannabis Producers, Inc [Member] | |||
Business reverse acquisition descriptions | The transaction was accounted for as a reverse acquisition since: (i) the shareholders of PHCP owned the majority of the outstanding common stock of the Company after the share exchange; (ii) a majority of the directors of the Company are also directors of PHCP; and (iii) the old officers of the Company were replaced with officers designated by PHCP. Effective December 31, 2018, the Company's stockholders' equity was retroactively recapitalized as that of PHCP, while the stockholders' equity of the Company was recorded as being acquired in the reverse acquisition. The Company and PHCP remain separate legal entities (with the Company as the parent of PHCP). The accompanying consolidated financial statements are those of PHCP prior to December 31, 2018 and exclude the financial position, results of operations, cash flows and stockholders' equity of The Pocket Shot Company prior to December 31, 2018. | ||
Pure Harvest Cannabis Producers, Inc [Member] | Warrant [Member] | |||
Number of warrants issued to purchase common stock | 17,906,016 | ||
Warrant exercise price | $ 4 | ||
Warrant term | 3 years | ||
Pure Harvest Cannabis Producers, Inc [Member] | Post-split [Member] | |||
Number of common stock shares acquired | 17,906,016 |
Organization and Description _4
Organization and Description of Business - Schedule of Financial Statements Pre-reverse Acquisition Assets and Liabilities (Details) - USD ($) | Sep. 06, 2019 | Dec. 31, 2018 |
Accounting Policies [Abstract] | ||
Cash | $ 15,000 | $ 22,501 |
Accounts receivable | 22,802 | |
Inventory | 63,940 | |
Machinery & equipment | 30,550 | |
Total Assets | 139,793 | |
Account payable and other current liabilities | $ 50,000 | 14,765 |
Due to related parties | 11,358 | |
Total Liabilities | 26,123 | |
Net Assets Acquired | $ 116,670 |
Organization and Description _5
Organization and Description of Business - Schedule of Pro forma Information of Reverse Acquisition (Details) | 12 Months Ended |
Dec. 31, 2018USD ($)$ / shares | |
Accounting Policies [Abstract] | |
Revenues | $ 105,869 |
Net Loss | $ (103,460) |
Net loss per common share - basic and diluted | $ / shares | $ (0.01) |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details Narrative) | 12 Months Ended |
Dec. 31, 2019USD ($)$ / shares | |
Accounting Policies [Abstract] | |
Property, plant and equipment, depreciation methods | straight-line method |
Estimated useful lives for machinery and equipment | 5 Years |
Impairment of long-lived assets and intangible assets | |
Impairment of goodwill | |
Cost of royalty income packing, per case | $ / shares | $ 1.20 |
Income tax likely wood percentage | The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | Jul. 30, 2019 | Jan. 02, 2019 | Dec. 31, 2019 |
Mr. Lamadrid [Member] | |||
Number of shares cancelled during period | 1,750,000 | ||
Mr. Scott [Member] | |||
Number of shares cancelled during period | 1,200,000 | ||
Employment Agreements [Member] | Two Officers [Member] | |||
Minimum annual compensation | $ 350,000 | ||
Accrued agreement compensation | $ 188,388 | ||
Accrued expenses | $ 24,715 | ||
Employment Agreements [Member] | Jarrold R. Bachmann [Member] | |||
Royalty per case | $ 1.20 |
Royalty Income (Details Narrati
Royalty Income (Details Narrative) - Royalty Agreement Terms [Member] | 12 Months Ended |
Dec. 31, 2019 | |
Royalty agreement term | 5 years |
Royalty expiring date | 2010 |
Renewal term | 2 years |
Earnest Money Deposit (Details
Earnest Money Deposit (Details Narrative) | Feb. 28, 2019USD ($) |
Earnest Money Deposit | |
Escrow agent deposit | $ 20,000 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | 12 Months Ended | ||||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2021 | Dec. 31, 2020 | |
Proceeds from issuance of notes payable | $ 1,000,000 | ||||
Amortization of interest expense | 2,305 | ||||
Interest expenses debt | 41,695 | ||||
Forecast [Member] | |||||
Interest expenses debt | $ 18,795 | $ 22,910 | |||
Three Promissory Notes [Member] | Third Parties [Member] | |||||
Proceeds from issuance of notes payable | $ 117,000 | ||||
Convertible Notes Payable [Member] | |||||
Convertible notes principal balance amount | $ 1,000,000 | ||||
Debt interest rate | 20.00% | ||||
Conversion price per share | $ 0.50 | ||||
Beneficial conversion feature | $ 44,000 | ||||
Convertible Notes Payable [Member] | Minimum [Member] | |||||
Convertible notes mature dates | Nov. 1, 2021 | ||||
Convertible Notes Payable [Member] | Maximum [Member] | |||||
Convertible notes mature dates | Dec. 1, 2021 |
Notes Receivable (Details Narra
Notes Receivable (Details Narrative) - USD ($) | 12 Months Ended | |||||
Dec. 31, 2019 | Apr. 09, 2020 | Mar. 06, 2020 | Jun. 30, 2019 | May 31, 2019 | Dec. 31, 2018 | |
Notes receivable | $ 2,450,000 | |||||
Subsequent Event [Member] | ||||||
Debt interest rate | 8.00% | |||||
Ownership interest percentage | 51.00% | |||||
How Smooth Inc [Member] | ||||||
Due to related party | $ 800,000 | |||||
Debt maturity date | Jun. 1, 2020 | |||||
Debt interest rate | 10.00% | |||||
How Smooth Inc [Member] | Sixtey Days [Member] | ||||||
Debt interest rate | 6.00% | |||||
EdenFlo, LLC [Member] | ||||||
Due to related party | $ 1,650,000 | |||||
Debt maturity date | Jun. 1, 2020 | |||||
Debt interest rate | 10.00% | |||||
EdenFlo, LLC [Member] | Sixtey Days [Member] | ||||||
Debt interest rate | 6.00% | |||||
Two Unrelated Individuals [Member] | ||||||
Notes receivable | $ 28,593 | $ 28,593 |
Stockholders' Deficit (Details
Stockholders' Deficit (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | |||
Feb. 28, 2019 | Jan. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Mar. 15, 2019 | |
Increased authorized capital stock | 250,000,000 | ||||
Common stock, par value | $ 0.01 | $ .01 | $ 0.01 | ||
Preferred stock, par value | $ 0.01 | $ 0.01 | $ 0.01 | ||
Preferred stock, shares authorized | 25,000,000 | 25,000,000 | 25,000,000 | ||
Proceeds from issuance of common stock | $ 4,045,500 | ||||
Common stock shares issued | 37,716,330 | 31,523,330 | |||
Private Offering [Member] | |||||
Proceeds from issuance of common stock | $ 10,000,000 | ||||
Number of offering shares of common stock | 20,000,000 | ||||
Sale of stock price per share | $ 0.50 | ||||
Number of warrants issued to purchase common stock | 1 | 2,000 | |||
Warrant exercise price | $ 2 | ||||
Warrant expiration date | Dec. 31, 2021 | ||||
Common stock trade price per share | $ 3 | ||||
Average volume shares per day | 100,000 | ||||
Consideration received on sale of stock | $ 4,045,500 | ||||
Sale of common stock and warrants | 8,091,000 | ||||
Number of warrants to purchase shares of common stock | 8,091,000 | ||||
Offering costs | $ 50,100 | ||||
Option to purchase unit per unit | $ 1 | ||||
Common stock shares issued | 2,000 | ||||
Consultant [Member] | |||||
Number of common stock services | 140,000 | ||||
Value of common stock shares issued for services | $ 133,000 | ||||
Placement Agent [Member] | Private Offering [Member] | |||||
Number of warrants issued to purchase common stock | 83,500 | ||||
Option to purchase unit per unit | $ 41.50 | ||||
Common stock shares issued | 83,500 |
Lease Agreement (Details Narrat
Lease Agreement (Details Narrative) | 1 Months Ended |
May 31, 2019USD ($)shares | |
Lease term | 3 years |
Number of commitment fee shares | shares | 400,000 |
Effective borrowing rate | 10.00% |
Minimum [Member] | |
Property purchase price | $ 1,400,000 |
Maximum [Member] | |
Property purchase price | $ 1,600,000 |
Lease Agreement - Schedule of E
Lease Agreement - Schedule of Expected Lease Payments (Details) | Dec. 31, 2019USD ($) |
Leases [Abstract] | |
2020 | $ 96,000 |
2021 | 96,000 |
2022 | 56,000 |
Total | 248,000 |
Less: Imputed Interest | (39,315) |
Total | $ 208,685 |
Acquisition (Details Narrative)
Acquisition (Details Narrative) - USD ($) | Sep. 06, 2019 | Dec. 31, 2019 |
Revenues | $ 3,000 | |
Prolific Nutrition [Member] | ||
Number of restricted shares issued during period | 172,000 | |
Number of restricted shares issued during period, value | $ 85,656 |
Acquisition - Schedule of Acqui
Acquisition - Schedule of Acquisition (Details) - USD ($) | Dec. 31, 2019 | Sep. 06, 2019 | Dec. 31, 2018 |
Business Combinations [Abstract] | |||
Cash | $ (15,000) | $ (22,501) | |
Payable on Acquisition | (50,000) | (14,765) | |
Common Stock | (1,720) | ||
APIC | (83,936) | ||
Cash (Acquired) | 9,203 | ||
Goodwill | $ 141,453 | $ 141,153 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) | Apr. 20, 2020USD ($)$ / sharesshares | Mar. 13, 2020shares | Mar. 12, 2020USD ($)ft²shares | Mar. 06, 2020USD ($)$ / sharesshares | Feb. 12, 2020shares | May 06, 2020USD ($) | Apr. 13, 2020USD ($) | Apr. 09, 2020 |
Scenario, Plan [Member] | ||||||||
Note payable, due amount together with accrued and unpaid interest | $ | $ 1,000,000 | |||||||
Subsequent Event [Member] | ||||||||
Borrowed from unrelated third party | $ | $ 1,500,000 | |||||||
Promissory note interest rate, percentage | 8.00% | |||||||
Note payable, due amount together with accrued and unpaid interest | $ | $ 500,000 | |||||||
Number of warrants to purchase shares of common stock | 200,000 | |||||||
Warrants exercise price per share | $ / shares | $ 2 | |||||||
Warrant expire date | Jan. 1, 2025 | |||||||
Late payment penalty due | $ | $ 5,000 | |||||||
Ownership percentage | 51.00% | |||||||
Number of shares issued to note holder for extending the repayment date | 200,000 | |||||||
Subsequent Event [Member] | How Smooth It Is, Inc. [Member] | ||||||||
Outstanding membership interests, percentage | 51.00% | |||||||
Payment to acquire membership interests | $ | $ 1,500,000 | |||||||
Number of restricted shares issued for membership interests | 7,000,000 | |||||||
Area of land | ft² | 5,800 | |||||||
Subsequent Event [Member] | Sofa King Medicinal Wellness Products, LLC [Member] | ||||||||
Number of restricted shares issued for membership interests | 3,000,000 | |||||||
Subsequent Event [Member] | Operating Agreement [Member] | ||||||||
Ownership percentage | 51.00% | |||||||
Purchase right, percentage | 49.00% | |||||||
Subsequent Event [Member] | Chief Medical Advisor [Member] | Operating Agreement [Member] | ||||||||
Number of shares issued for services provided | 100,000 | |||||||
Subsequent Event [Member] | Extended Maturity [Member] | ||||||||
Debt due date | Jun. 15, 2020 | |||||||
Subsequent Event [Member] | Extended Maturity [Member] | Note Holder [Member] | ||||||||
Accrued interest payment based upon percentage of discount | 25.00% | |||||||
Number of additional shares included in accrued interest | 150,000 | |||||||
Number of warrants to purchase shares of common stock | 150,000 | |||||||
Warrants exercise price per share | $ / shares | $ 2 | |||||||
Payment of notes payable | $ | $ 500,000 |