Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Mar. 26, 2024 | Jun. 30, 2023 | |
Cover [Abstract] | |||
Entity Registrant Name | LFTD PARTNERS INC. | ||
Entity Central Index Key | 0001391135 | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Entity Voluntary Filers | No | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well Known Seasoned Issuer | No | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Emerging Growth Company | false | ||
Entity Current Reporting Status | Yes | ||
Document Period End Date | Dec. 31, 2023 | ||
Entity Filer Category | Non-accelerated Filer | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2023 | ||
Entity Common Stock Shares Outstanding | 14,805,678 | ||
Entity Public Float | $ 13,144,657 | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Fin Stmt Error Correction Flag | false | ||
Entity File Number | 000-51230 | ||
Entity Incorporation State Country Code | NV | ||
Entity Tax Identification Number | 87-0479286 | ||
Entity Address Address Line 1 | 14155 Pine Island Drive | ||
Entity Address City Or Town | Jacksonville | ||
Entity Address State Or Province | FL | ||
Entity Address Postal Zip Code | 32224 | ||
City Area Code | 847 | ||
Icfr Auditor Attestation Flag | false | ||
Auditor Name | Fruci & Associates II, PLLC | ||
Auditor Location | Spokane, Washington | ||
Auditor Firm Id | 5525 | ||
Local Phone Number | 915-2446 | ||
Security 12g Title | Common Stock, $0.001 par value per share | ||
Trading Symbol | LIFD | ||
Entity Interactive Data Current | Yes |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Current Assets | ||
Cash and Cash Equivalents | $ 4,357,539 | $ 3,530,623 |
Prepaid Expenses | 2,509,961 | 1,668,961 |
Accounts Receivable, net of allowance of $375,417 in 2023 and $281,762 in 2022 | 3,586,176 | 2,410,327 |
Inventory | 10,174,667 | 6,023,967 |
Income Tax Receivable | 659,376 | 0 |
Current Portion of Settlement Asset and Receivables | 378,597 | 185,024 |
Other Current Assets | 2,664 | 35,047 |
Total Current Assets | 21,668,980 | 13,853,949 |
Restricted Cash | 1,000,000 | 0 |
Goodwill | 23,092,794 | 22,292,767 |
Investment in Ablis | 399,200 | 399,200 |
Investment in Bendistillery and Bend Spirits | 1,497,000 | 1,497,000 |
Net Deferred Tax Asset | 0 | 87,422 |
Fixed Assets, less accumulated depreciation of $593,531 in 2023 and $209,143 in 2022 | 2,996,387 | 1,020,255 |
Security and State Licensing Deposits and Bonds | 43,421 | 25,600 |
Finance Lease Right-of-Use Asset, net of Right-of-Use Asset Amortization of $206,008 in 2022 | 0 | 1,274,400 |
Operating Lease Right-of-Use Asset, net of Right-of-Use Asset Amortization of $266,837 in 2023 and $100,892 in 2022 | 626,869 | 496,604 |
Non-Current Portion of Settlement Asset and Receivables | 22,000 | 185,024 |
Total Assets | 51,346,651 | 41,132,221 |
Current Liabilities | ||
Finance Lease Liability | 0 | 1,357,524 |
Operating Lease Liability Current | 169,437 | 117,719 |
Deferred Revenue | 235,891 | 594,086 |
Minimum Earnout Consideration to be paid pursuant to the Oculus Merger Agreement ($200,000 in cash, and $800,000 in the form of 160,000 shares of common stock valued at $5.00 per share) | 1,000,000 | 0 |
Income Tax Payable | 0 | 77,641 |
Collab Commissions and Royalties Payable | 572,838 | 0 |
Accounts Payable and Accrued Expenses | 6,172,655 | 4,049,897 |
Accounts Payable - Related Party | 3,938 | 2,229 |
Preferred Stock Dividends Payable | 7,124 | 11,036 |
Notes Payable to Surety Bank | 506,061 | 0 |
Interest Payable to Surety Bank | 18,800 | 0 |
Total Current Liabilities | 8,686,744 | 6,210,133 |
Non-Current Liabilities | ||
Operating Lease Liability | 463,623 | 384,417 |
Net Deferred Tax Liability | 29,482 | 0 |
Notes Payable to Surety Bank Non-Current | 3,348,790 | 0 |
Total Non-Current Liabilities | 3,841,896 | 384,417 |
Total Liabilities | 12,528,640 | 6,594,549 |
Commitments and Contingencies | 0 | 0 |
Shareholders' Equity | ||
Common Stock, $0.001 par value; 100,000,000 shares authorized, and: 14,805,678 shares issued and outstanding at December 31, 2023, 14,102,578 shares issued and outstanding at December 31, 2022 | 14,806 | 14,103 |
Additional Paid-in Capital | 40,429,213 | 38,762,260 |
142,000 shares of Deferred Contingent Stock issuable upon instruction by the respective Deferred Contingent Stock Recipients at December 31, 2023; no shares of Deferred Contingent Stock issuable at December 31, 2022 | 470,730 | 0 |
Accumulated Deficit | (2,096,780) | (4,238,735) |
Total Shareholders' Equity | 38,818,011 | 34,537,671 |
Total Liabilities and Shareholders' Equity | 51,346,651 | 41,132,221 |
Series A Convertible Preferred Stock [Member] | ||
Shareholders' Equity | ||
Preferred stock value | 3 | 5 |
Series B Convertible Preferred Stock [Member] | ||
Shareholders' Equity | ||
Preferred stock value | $ 40 | $ 40 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Accounts Receivable, allowance | $ 375,417 | $ 281,762 |
Minimum Earnout Consideration in Cash | 200,000 | |
Minimum Earnout Consideration in Kind | $ 800,000 | |
Minimum Earnout Consideration in Shares | 160,000 | |
Minimum Earnout Consideration Per Share Amount | $ 5 | |
Accumulated depreciation | $ 593,531 | 209,143 |
Finance Lease Right-of-Use Asset Amortization | 206,008 | |
Operating Lease Right-of-Use Asset Amortization | $ 266,837 | $ 100,892 |
Preferred Stock, par or stated value | $ 0.001 | $ 0.001 |
Preferred Stock, shares authorized | 10,000,000 | 10,000,000 |
Common Stock, par or stated value | $ 0.001 | $ 0.001 |
Common Stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 14,805,678 | 14,102,578 |
Common Stock, shares outstanding | 14,805,678 | 14,102,578 |
Deferred Contingent Stock | $ 142,000 | |
Series A Convertible Preferred Stock [Member] | ||
Preferred Stock, par or stated value | $ 0.001 | $ 0.001 |
Preferred Stock, shares authorized | 400,000 | 400,000 |
Preferred Stock, shares issued | 2,500 | 4,500 |
Preferred Stock, shares outstanding | 2,500 | 4,500 |
Series B Convertible Preferred Stock [Member] | ||
Preferred Stock, par or stated value | $ 0.001 | $ 0.001 |
Preferred Stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred Stock, shares issued | 40,000 | 40,000 |
Preferred Stock, shares outstanding | 40,000 | 40,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | |||
Net Sales | $ 51,610,562 | $ 57,416,535 | $ 31,656,932 |
Cost of Goods Sold | 31,906,278 | 36,423,246 | 15,715,759 |
Gross Profit | 19,704,284 | 20,993,289 | 15,941,173 |
Operating Expenses: | |||
Payroll Expenses | 7,476,955 | 6,423,584 | 3,621,624 |
Deferred Contingent Stock Expense | 2,138,175 | 0 | 0 |
Company-Wide Management Bonus Pool | 233,332 | 233,336 | 1,559,334 |
Management Bonuses | 0 | 500,000 | 650,000 |
Professional Fees | 1,088,035 | 888,609 | 499,752 |
Bank Charges and Merchant Fees | 595,285 | 477,718 | 392,757 |
Advertising and Marketing | 951,266 | 662,494 | 337,044 |
Bad Debt Expense | 353,162 | 78,457 | 380,621 |
Depreciation and Amortization | 182,822 | 32,155 | 90,147 |
Collab Commission and Royalty Expense | 1,733,800 | 0 | 0 |
Other Operating Expenses | 2,541,263 | 1,884,209 | 629,012 |
Total Operating Expenses | 17,294,095 | 11,180,562 | 8,160,290 |
Income From Operations | 2,410,189 | 9,812,727 | 7,780,883 |
Other Income/(Expenses) | |||
Loss From 50% membership interest in SmplyLifted LLC (FR3SH) | 0 | 0 | (195,571) |
Impairment of Investment in SmplyLifted | 0 | 0 | (388,727) |
Income from SmplyLifted for WCJ Labor | 0 | 0 | 2,298 |
Loss on Lease Modification | 0 | 0 | (1,445) |
Interest Expense | (110,517) | (120,197) | (142,427) |
Debt Financing Expenses | (60,548) | 0 | 0 |
Dividend Income | 3,579 | 0 | 2,495 |
Warehouse Buildout Credits | 0 | 0 | 1,200 |
Penalties | (36,472) | (8,106) | (8,046) |
Gain on Forgiveness of Debt | 0 | 5,026 | 151,668 |
Settlement Income | 506,211 | 478,617 | 0 |
Loss on Disposal of Fixed Assets | 0 | (185,195) | (4,750) |
Loss on Deposits | 0 | 0 | (31,600) |
Interest Income | 44,630 | 11,110 | 1,365 |
Total Other Income/(Expenses) | 346,883 | 181,255 | (613,539) |
Income Before Provision for Income Taxes | 2,757,072 | 9,993,982 | 7,167,344 |
Provision for Income Taxes | (598,065) | (2,797,655) | (1,367,362) |
Net Income Attributable to LFTD Partners Inc. common stockholders | $ 2,159,007 | $ 7,196,327 | $ 5,799,982 |
Basic Net Income per Common Share | $ 0.15 | $ 0.51 | $ 0.50 |
Diluted Net Income per Common Share | $ 0.13 | $ 0.45 | $ 0.43 |
Weighted average number of common shares outstanding: | |||
Basic | 14,555,279 | 14,080,729 | 11,402,639 |
Diluted | 16,439,477 | 15,862,927 | 13,359,837 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) - USD ($) | Total | Preferred Stock | Treasury Stock | Additional Paid-In Capital | Deferred Contingent Stock | Accumulated Deficit | Common Stock |
Balance, shares at Dec. 31, 2020 | 166,150 | 36,000 | 6,485,236 | ||||
Balance, amount at Dec. 31, 2020 | $ 21,618,720 | $ 166 | $ (34,200) | $ 38,787,444 | $ 0 | $ (17,141,175) | $ 6,485 |
Series A Preferred Stock dividend payable | (24,855) | (24,855) | |||||
Series B Preferred Stock dividend payable | (3,316) | (3,316) | |||||
LIFD's January 8, 2021 purchase of 36,000 shares of common stock at $0.95 per share, for a total of $34,200, from an unrelated shareholder, shares | 36,000 | ||||||
LIFD's January 8, 2021 purchase of 36,000 shares of common stock at $0.95 per share, for a total of $34,200, from an unrelated shareholder, amount | (34,200) | $ (34,200) | |||||
Conversions of Series A Convertible Preferred Stock to Common Stock, shares | (32,900) | 3,290,000 | |||||
Conversions of Series A Convertible Preferred Stock to Common Stock, amount | 0 | $ (33) | (3,257) | $ 3,290 | |||
Conversions of Series B Convertible Preferred Stock to Common Stock, shares | (60,000) | 60,000 | |||||
Conversions of Series B Convertible Preferred Stock to Common Stock, amount | 0 | $ (60) | $ 60 | ||||
Net Income | 618,359 | 618,359 | |||||
Balance, shares at Mar. 31, 2021 | 73,250 | 72,000 | 9,835,236 | ||||
Balance, amount at Mar. 31, 2021 | 22,174,707 | $ 73 | $ (68,400) | 38,784,187 | 0 | (16,550,988) | $ 9,835 |
Balance, shares at Dec. 31, 2020 | 166,150 | 36,000 | 6,485,236 | ||||
Balance, amount at Dec. 31, 2020 | 21,618,720 | $ 166 | $ (34,200) | 38,787,444 | 0 | (17,141,175) | $ 6,485 |
Net Income | 5,799,982 | ||||||
Balance, shares at Dec. 31, 2021 | 45,750 | 14,027,578 | |||||
Balance, amount at Dec. 31, 2021 | 27,461,804 | $ 46 | $ 0 | 38,862,333 | 0 | (11,414,602) | $ 14,028 |
Balance, shares at Mar. 31, 2021 | 73,250 | 72,000 | 9,835,236 | ||||
Balance, amount at Mar. 31, 2021 | 22,174,707 | $ 73 | $ (68,400) | 38,784,187 | 0 | (16,550,988) | $ 9,835 |
Series A Preferred Stock dividend payable | (33,521) | (33,521) | |||||
Series B Preferred Stock dividend payable | (1,496) | (1,496) | |||||
Conversions of Series A Convertible Preferred Stock to Common Stock, shares | (27,500) | 2,750,000 | |||||
Conversions of Series A Convertible Preferred Stock to Common Stock, amount | 0 | $ (28) | (2,723) | $ 2,750 | |||
Net Income | 1,596,154 | 1,596,154 | |||||
Issuance of common stock upon exercise of warrant and per Settlement Agreement, shares | 143,092 | ||||||
Issuance of common stock upon exercise of warrant and per Settlement Agreement, amount | 7,021 | 6,878 | $ 143 | ||||
Balance, shares at Jun. 30, 2021 | 45,750 | 72,000 | 12,728,328 | ||||
Balance, amount at Jun. 30, 2021 | 23,742,866 | $ 46 | $ (68,400) | 38,788,342 | 0 | (14,989,850) | $ 12,728 |
Series A Preferred Stock dividend payable | (2,829) | (2,829) | |||||
Series B Preferred Stock dividend payable | (1,533) | (1,533) | |||||
Net Income | 2,236,179 | 2,236,179 | |||||
Cancellation of Common Stock held in treasury, shares | (72,000) | (72,000) | |||||
Cancellation of Common Stock held in treasury, amount | 0 | $ 68,400 | (68,328) | $ (72) | |||
Issuance of Common Stock Upon Exercise of Warrants and Options, shares | 1,346,250 | ||||||
Issuance of Common Stock Upon Exercise of Warrants and Options, amount | 143,439 | 142,093 | $ 1,346 | ||||
Balance, shares at Sep. 30, 2021 | 45,750 | 14,002,578 | |||||
Balance, amount at Sep. 30, 2021 | 26,118,122 | $ 46 | 0 | 38,862,107 | 0 | (12,758,033) | $ 14,002 |
Series A Preferred Stock dividend payable | (4,349) | (4,349) | |||||
Series B Preferred Stock dividend payable | (1,512) | (1,512) | |||||
Net Income | 1,349,292 | 1,349,292 | |||||
Issuance of Common Stock Upon Exercise of Warrant, shares | 25,000 | ||||||
Issuance of Common Stock Upon Exercise of Warrant, amount | 252 | 226 | $ 26 | ||||
Balance, shares at Dec. 31, 2021 | 45,750 | 14,027,578 | |||||
Balance, amount at Dec. 31, 2021 | 27,461,804 | $ 46 | 0 | 38,862,333 | 0 | (11,414,602) | $ 14,028 |
Series A Preferred Stock dividend payable | (4,253) | (4,253) | |||||
Series B Preferred Stock dividend payable | (1,476) | (1,476) | |||||
Net Income | 2,944,793 | 2,944,793 | |||||
Issuance of Common Stock Upon Exercise of Warrant, shares | 50,000 | ||||||
Issuance of Common Stock Upon Exercise of Warrant, amount | 50,000 | 49,950 | $ 50 | ||||
Repurchase and cancellation of Common Stock, shares | (100,000) | ||||||
Repurchase and cancellation of Common Stock, amount | (150,000) | (149,900) | $ (100) | ||||
Balance, shares at Mar. 31, 2022 | 45,750 | 13,977,578 | |||||
Balance, amount at Mar. 31, 2022 | 30,300,868 | $ 46 | 0 | 38,762,383 | 0 | (8,475,539) | $ 13,978 |
Balance, shares at Dec. 31, 2021 | 45,750 | 14,027,578 | |||||
Balance, amount at Dec. 31, 2021 | 27,461,804 | $ 46 | 0 | 38,862,333 | 0 | (11,414,602) | $ 14,028 |
Net Income | 7,196,327 | ||||||
Balance, shares at Dec. 31, 2022 | 44,500 | 14,102,578 | |||||
Balance, amount at Dec. 31, 2022 | 34,537,671 | $ 45 | 0 | 38,762,260 | 0 | (4,238,735) | $ 14,103 |
Balance, shares at Mar. 31, 2022 | 45,750 | 13,977,578 | |||||
Balance, amount at Mar. 31, 2022 | 30,300,868 | $ 46 | 0 | 38,762,383 | 0 | (8,475,539) | $ 13,978 |
Series A Preferred Stock dividend payable | (3,403) | (3,403) | |||||
Series B Preferred Stock dividend payable | (1,496) | (1,496) | |||||
Conversions of Series A Convertible Preferred Stock to Common Stock, shares | (1,250) | 125,000 | |||||
Conversions of Series A Convertible Preferred Stock to Common Stock, amount | 0 | $ (1) | (124) | $ 125 | |||
Net Income | 3,219,460 | 3,219,460 | |||||
Balance, shares at Jun. 30, 2022 | 44,500 | 14,102,578 | |||||
Balance, amount at Jun. 30, 2022 | 33,515,429 | $ 45 | 0 | 38,762,260 | 0 | (5,260,978) | $ 14,103 |
Series A Preferred Stock dividend payable | (3,402) | (3,402) | |||||
Series B Preferred Stock dividend payable | (1,512) | (1,512) | |||||
Net Income | 423,486 | 423,486 | |||||
Balance, shares at Sep. 30, 2022 | 44,500 | 14,102,578 | |||||
Balance, amount at Sep. 30, 2022 | 33,934,000 | $ 45 | 0 | 38,762,260 | 0 | (4,842,407) | $ 14,103 |
Series A Preferred Stock dividend payable | (3,403) | (3,403) | |||||
Series B Preferred Stock dividend payable | (1,515) | (1,515) | |||||
Net Income | 608,589 | 608,589 | |||||
Balance, shares at Dec. 31, 2022 | 44,500 | 14,102,578 | |||||
Balance, amount at Dec. 31, 2022 | 34,537,671 | $ 45 | 0 | $ 38,762,260 | $ 0 | (4,238,735) | $ 14,103 |
Series A Preferred Stock dividend payable | (3,329) | (3,329) | |||||
Series B Preferred Stock dividend payable | (1,480) | (1,480) | |||||
Net Income | $ (141,742) | (141,742) | |||||
Issuance of 410,000 of the total 645,000 shares of Deferred Contingent Stock related to the acquisition of Lifted, of which shares began being issued on February 24, 2023 upon direction by the Deferred Contingent Stock Recipients, shares | 2,138,175 | 1,358,740 | 779,025 | 410,000 | |||
Issuance of 410,000 of the total 645,000 shares of Deferred Contingent Stock related to the acquisition of Lifted, of which shares began being issued on February 24, 2023 upon direction by the Deferred Contingent Stock Recipients, amount | $ 410 | ||||||
Balance, shares at Mar. 31, 2023 | 44,500 | 14,512,578 | |||||
Balance, amount at Mar. 31, 2023 | $ 36,529,296 | $ 45 | 0 | $ 40,121,000 | $ 779,025 | (4,385,286) | $ 14,513 |
Balance, shares at Dec. 31, 2022 | 44,500 | 14,102,578 | |||||
Balance, amount at Dec. 31, 2022 | 34,537,671 | $ 45 | 0 | 38,762,260 | 0 | (4,238,735) | $ 14,103 |
Net Income | 2,159,007 | ||||||
Balance, shares at Dec. 31, 2023 | 42,500 | 14,805,678 | |||||
Balance, amount at Dec. 31, 2023 | 38,818,011 | $ 43 | 0 | 40,429,213 | 470,730 | (2,096,780) | $ 14,806 |
Balance, shares at Mar. 31, 2023 | 44,500 | 14,512,578 | |||||
Balance, amount at Mar. 31, 2023 | 36,529,296 | $ 45 | 0 | 40,121,000 | 779,025 | (4,385,286) | $ 14,513 |
Series A Preferred Stock dividend payable | (3,366) | (3,366) | |||||
Series B Preferred Stock dividend payable | (1,497) | (1,497) | |||||
Net Income | 1,659,461 | 1,659,461 | |||||
Issuance of 100 shares of common stock pursuant to the Oculus Merger Agreement, shares | 100 | ||||||
Issuance of 100 shares of common stock pursuant to the Oculus Merger Agreement, amount | 209 | 208 | $ 0 | ||||
Balance, shares at Jun. 30, 2023 | 44,500 | 14,512,678 | |||||
Balance, amount at Jun. 30, 2023 | 38,184,103 | $ 45 | 0 | 40,121,209 | 779,025 | (2,730,688) | $ 14,513 |
Series A Preferred Stock dividend payable | (2,466) | (2,466) | |||||
Series B Preferred Stock dividend payable | (1,512) | (1,512) | |||||
Net Income | 617,648 | 617,648 | |||||
Conversion of 2,000 shares of Series A Preferred Stock held by a non-affiliate into 200,000 shares of common stock, on August 4, 2023, shares | (2,000) | 200,000 | |||||
Conversion of 2,000 shares of Series A Preferred Stock held by a non-affiliate into 200,000 shares of common stock, on August 4, 2023, amount | 0 | $ (2) | (198) | $ 200 | |||
Issuance of 93,000 shares of Deferred Contingent Stock related to the acquisition of Lifted, of which shares began being issued on February 24, 2023 upon direction by the Deferred Contingent Stock Recipient, shares | 93,000 | ||||||
Issuance of 93,000 shares of Deferred Contingent Stock related to the acquisition of Lifted, of which shares began being issued on February 24, 2023 upon direction by the Deferred Contingent Stock Recipient, amount | 0 | 308,202 | (308,295) | $ 93 | |||
Balance, shares at Sep. 30, 2023 | 42,500 | 14,805,678 | |||||
Balance, amount at Sep. 30, 2023 | 38,797,773 | $ 43 | 0 | 40,429,213 | 470,730 | (2,117,018) | $ 14,806 |
Series A Preferred Stock dividend payable | (1,890) | (1,890) | |||||
Series B Preferred Stock dividend payable | (1,512) | (1,512) | |||||
Net Income | 23,640 | 23,640 | |||||
Balance, shares at Dec. 31, 2023 | 42,500 | 14,805,678 | |||||
Balance, amount at Dec. 31, 2023 | $ 38,818,011 | $ 43 | $ 0 | $ 40,429,213 | $ 470,730 | $ (2,096,780) | $ 14,806 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Cash Flows From Operating Activities | |||
Net Income | $ 2,159,007 | $ 7,196,327 | $ 5,799,982 |
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: | |||
Lifted Made's Portion of SmplyLifted's Net Loss | 0 | 0 | 195,571 |
Impairment of Investment in SmplyLifted | 0 | 0 | 388,726 |
Deferred Contingent Stock Compensation Expense | 2,138,175 | 0 | 0 |
Bad Debt Expense | 353,162 | 78,457 | 380,621 |
Depreciation and Amortization | 425,614 | 191,541 | 90,146 |
Settlement Income | (506,211) | (478,617) | 0 |
Debt Financing Expenses | 60,548 | 0 | 0 |
Gain on Forgiveness of Debt | 0 | (5,026) | (151,668) |
Loss on Disposal of Fixed Assets | 0 | 185,195 | 4,750 |
Loss on Deposits | 0 | 0 | 31,600 |
Spoiled and Written Off Inventories | 2,056,603 | 4,418,922 | 338,799 |
Sales Allowances | (316,382) | 939,496 | 0 |
Deferred Income Taxes | 116,904 | 244,129 | (331,551) |
Effect on Cash of Changes in Operating Assets and Liabilities | |||
Accounts Receivable | (1,152,101) | 33,218 | (2,429,715) |
Prepaid Expenses | (841,000) | 2,593,275 | (3,807,176) |
Dividend Receivable from Bendistillery, Inc. | 0 | 2,495 | 0 |
Income Tax Receivable and Payable | (737,018) | (1,165,332) | 1,242,974 |
Management Bonuses Payable | 0 | (941,562) | 600,001 |
Company-wide Management Bonus Pool | 0 | (1,556,055) | 1,556,055 |
Interest Receivable | 0 | 0 | 1,532 |
Inventory | (5,936,752) | (6,632,945) | (3,507,549) |
Other Current Assets | 19,292 | (39,954) | (17,975) |
Collab Commissions and Royalties Payable | 572,838 | 0 | 0 |
Trade Accounts Payable and Accrued Expenses | 2,255,650 | (507,889) | 4,033,948 |
Accounts Payable and Interest Payable to Related Parties | 1,710 | (15,647) | 92,670 |
Change in Settlement Asset | 233,450 | 0 | 0 |
Change in Right Of Use Asset | 165,945 | 944 | 230,049 |
Change in Finance & Operating Lease Liabilities | (72,311) | 76,759 | (197,450) |
Deferred Revenue | (358,195) | (1,580,307) | 1,078,273 |
Net Cash Provided by Operating Activities | 638,925 | 3,037,426 | 5,622,612 |
Cash Flows From Investing Activities | |||
Net Cash Paid as Part of the Oculus Transaction | (342,068) | 0 | 0 |
Reduction of CBD Lion Note Receivable | 0 | 0 | 15,318 |
Purchase of Headquarters Building | (1,385,225) | 0 | 0 |
Net Purchase of Fixed Assets | (789,662) | (916,119) | (368,223) |
Loans to SmplyLifted LLC | 0 | 0 | (93,750) |
Net Cash Used in Investing Activities | (2,516,955) | (916,119) | (446,655) |
Cash Flows From Financing Activities | |||
Proceeds from Surety Bank Loans | 3,910,000 | 0 | 0 |
Proceeds from Exercise of Warrants and Options | 0 | 0 | 142,023 |
Issuance of Common Stock | 0 | 50,000 | 252 |
Payments of Dividends to Series A Convertible Preferred Stockholders | (14,961) | (17,147) | (199,189) |
Payments of Dividends to Series B Convertible Preferred Stockholders | (6,000) | (6,002) | (11,844) |
Payment of Debt Financing Costs | (115,697) | 0 | 0 |
Proceeds from Borrowings Under Notes Payable to Related Party - Nick Warrender | 0 | 2,750,000 | 0 |
Repayment of Borrowings Under Notes Payable to Related Party - Nick Warrender | 0 | (2,750,000) | (3,750,000) |
Repayment of Interest Payable to Related Parties | 0 | 0 | (138,904) |
Purchase of Shares of Common Stock | 0 | (150,000) | (34,200) |
Payments on Finance Lease Liability | (68,396) | (70,267) | (20,444) |
Net Cash Provided by/(Used In) Financing Activities | 3,704,945 | (193,416) | (4,012,306) |
Net Increase in Cash | 1,826,916 | 1,927,892 | 1,163,651 |
Cash, Cash Equivalents and Restricted Cash at Beginning of Period | 3,530,623 | 1,602,731 | 439,080 |
Cash, Cash Equivalents and Restricted Cash at End of Period | 5,357,539 | 3,530,623 | 1,602,731 |
Supplemental Cash Flow Information: | |||
Cash Paid For Interest | 91,717 | 85,615 | 54,364 |
Cash Paid For Interest - Related Party | 0 | 47,851 | 138,904 |
Cash Paid For Income Taxes | 1,167,028 | 3,672,616 | 455,083 |
Non-Cash Activities: | |||
Right-of-Use assets acquired from inception of Finance Leases | 0 | 0 | 1,480,408 |
Right-of-Use assets acquired from inception of Operating Leases | 296,209 | 514,278 | 83,219 |
Conversion of Series A and Series B Preferred Stock to Common Stock | 200 | 125 | 6,100 |
Cashless exercise of Warrants | 0 | 0 | 136 |
Cancellation of Common Stock held in Treasury | 0 | 0 | 68,400 |
Reduction in bonus payable to Gerard M. Jacobs by the cost of exercising warrants | 0 | 0 | 8,439 |
Reconciliation of the Consolidated Statements of Cash Flows to the Consolidated Balance Sheets | |||
Cash and Cash Equivalents | 4,357,539 | 3,530,623 | 1,602,731 |
Restricted Cash | 1,000,000 | 0 | 0 |
Total Cash, Cash Equivalents and Restricted Cash at End of Period | $ 5,357,539 | $ 3,530,623 | $ 1,602,731 |
BASIS OF PRESENTATION AND SIGNI
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2023 | |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation – On May 18, 2021, the Company changed its name to LFTD Partners Inc. from Acquired Sales Corp. On March 15, 2022, the Company changed its stock trading symbol to LIFD. After acquiring, operating and then selling businesses involved in the defense sector, our business is currently directly or indirectly involved in the development, manufacture and/or sale or re-sale of a wide variety of branded, hemp-derived, psychoactive and alternative lifestyle products, and of products involving nicotine, tobacco and marijuana. We are primarily interested in acquiring rapidly growing, profitable companies that are also involved in the manufacture and sale of branded, hemp-derived, psychoactive and alternative lifestyle products (a “Canna-Infused Products Company”). Management of the Company is open-minded to the concept of also acquiring operating businesses and/or assets directly or indirectly involving products containing nicotine, tobacco, marijuana, distilled spirits, beer, wine, and/or real estate. In addition, management of the Company is open-minded to the concept of diversifying, by acquiring all or a portion of one or more operating businesses and/or assets that are considered to be “essential” businesses that are outside our industry and that are unlikely to be shut down by the government during pandemics such as COVID-19, or that have less regulatory risk than a Canna-Infused Products Company. Lifted Made On February 24, 2020, we acquired 100% of the ownership interests in one Canna-Infused Products Company called Lifted Liquids, Inc. d/b/a Lifted Made and d/b/a Urb Finest Flowers (www.urb.shop), Kenosha, Wisconsin (“Lifted Made” or “Lifted”). Lifted manufactures and sells hemp-derived and psychoactive products under its award-winning Urb Finest Flowers (“Urb”) brand. Products currently sold by Lifted include, for example: disposable vapes and cartridges, gummies, joints, blunts, and products containing ingredients such as kanna, muscimol, ashwagandha and kava. Bank Financing and Purchase of Headquarters Building On December 14, 2023, LFTD Partners and Lifted (together the “Borrower”), jointly borrowed a total of $3,910,000 from Surety Bank, of DeLand, Florida (“Lender”). The Lender made two five-year loans to the Borrower, as joint borrowers: (1) a working capital loan of $3,000,000 at 9.5% fixed annual interest, and (2) a $910,000 loan at 10% fixed annual interest, the net proceeds of which were used by Lifted Made to pay a portion of the $1,375,000 purchase price of Lifted Made’s main operations building located at 5511 95th Avenue in Kenosha, Wisconsin (“5511 Building”). The two loans are cross collateralized by a first lien mortgage on the 5511 Building, and by a first lien security interest in all of the other assets owned by LIFD and Lifted Made, in favor of Surety Bank. Purchase of the 5511 Building Toward the end of 2020, our Vice Chairman and Chief Operating Officer Nicholas S. Warrender (“NWarrender”), through his assigned entity 95th Holdings, LLC (“Holdings”), purchased the 5511 Building, which was immediately leased to us to conduct our expanded operations. The 5511 Building includes office, laboratory and warehouse space. As part of the lease agreement with Holdings, the parties agreed that our wholly owned subsidiary Lifted would eventually purchase the 5511 Building. The purchase price for the 5511 Building was originally subject to valuation based on a formula agreed upon by the parties. Pursuant to an agreement with NWarrender on December 30, 2021, the parties agreed to set the purchase price for the 5511 Building at $1,375,000. Prior to the Acceleration Agreement, which was entered into by the Company with NWarrender on July 5, 2022, Lifted had an obligation to complete the purchase of the 5511 Building on or before December 31, 2022. Pursuant to the Acceleration Agreement, the deadline to purchase the 5511 Building was extended by one year to December 31, 2023. Lifted purchased the 5511 Building from Holdings on December 14, 2023 for the agreed upon purchase price of $1,375,000 in cash. Improvements to and Potential Expansion of the 5511 Building Due to an extreme need for additional employee parking spots at the 5511 Building, the Company in the fourth quarter of 2022 built a parking lot at the 5511 Building for $193,216, which is accounted for as a building improvement (a capitalized fixed asset). The investment in this necessary parking lot had no impact on the $1,375,000 purchase price that Lifted had committed to pay for, and did pay for, the 5511 Building on December 14, 2023. The Company desires to have all of its operations under one roof at the 5511 Building in order to become more efficient. The Company has hired and paid an architectural and construction company (the “Construction Company”) which has created a preliminary design for expanding the 5511 Building by approximately 30,000 square feet. The Construction Company has provided a preliminary estimate that the potential expansion could cost the Company approximately $3,500,000. Neither the management nor the Board of Directors of the Company has committed to such potential expansion, but it is under active consideration. $3,000,000 Working Capital Loan Credit Agreement Pursuant to the Credit Agreement dated as of December 14, 2023 (the “Credit Agreement”), among the Borrower and the Lender, the Lender agreed to loan to the Borrower $3,000,000 (“Working Capital Loan”). The interest rate for the Working Capital Loan is a fixed annual interest rate of 9.5%. The Credit Agreement requires a Promissory Note and Security Agreement. The Credit Agreement requires a prepayment fee if the Working Capital Loan is repaid to the Lender in less than three years, in the amount of 3% of the Working Capital Loan if the loan is repaid in Year-1, 2% of the Working Capital Loan if the Working Capital Loan is repaid in Year-2, and 1% if the Working Capital Loan is repaid in Year-3. The Credit Agreement is also subject to certain negative covenants in which the Borrower agreed (subject to certain exceptions) not to, among other things: · Become subject to other liens or encumbrances; · Change ownership of Lifted Made without the consent of the Lender; · Enter into a merger, acquisition or divestiture; · Conduct stock buybacks; · Serve as a guarantor; · Wind up, liquidate or dissolve; · Enter into the purchase, sale, exchange or transfer of property; · Permit the outstanding principal balance of the Working Capital Loan to exceed 40% of the fair market value of the collateral securing the Working Capital Loan; or · Directly or indirectly issue, assume or create any additional indebtedness on the collateral. Promissory Note Pursuant to the Promissory Note dated as of December 14, 2023 (the “WC Note”), among the Borrower and the Lender, the Lender agreed to loan to the Borrower the Working Capital Loan at a fixed annual interest rate of 9.5%. The WC Note also requires a 5% late fee on outstanding unpaid payments due under the WC Note where payments are not made within 10 days of the due date. The WC Note has cross-default cross-collateralized provisions with the $910,000 Business Loan described below. Security Agreement Pursuant to a Security Agreement dated as of December 14, 2023 (“Security Agreement”), the Borrower granted to the Lender a security interest in all the Borrower’s personal property relating to its business to secure the obligations of the Borrower under the Credit Agreement. The collateral that is secured by the Security Agreement includes all the Borrower’s accounts, general intangibles, inventory, equipment, goods, deposit accounts, contractual rights, fixtures, money, insurance and commercial tort claims. If an event of default under the Credit Agreement occurs, then the Lender may exercise the Borrower’s rights in the collateral. In that event, the Lender will have all the rights of a secured party with respect to the collateral under the Uniform Commercial Code, including, among other things, the right to sell the collateral at public or private sale. Collateral Assignment Agreement Under the Collateral Assignment Agreement dated as of December 14, 2023, between the Borrower and the Lender, the Borrower assigned to the Lender, in connection with the terms of the Credit Agreement, all of Borrower’s “intellectual property”, including but not limited to, all patents, patent rights, trademarks and service marks, works, inventions, copyrights, trade names, software and computer programs, trade secrets, methods, processes, know how, drawings, and specifications. In the event of default under the Credit Agreement or WC Note, or other cross collateralized obligations, the Lender would be entitled to the foregoing intellectual property collateral to the detriment of the Borrower. Pledge Agreement Under the Pledge Agreement dated as of December 14, 2023, between the Borrower and $910,000 Loan Business Loan Agreement Pursuant to the Business Loan Agreement dated as of December 14, 2023 (the “Loan Agreement”), among the Borrower and the Lender, the Lender agreed to loan $910,000 (the “Business Loan”) to the Borrower. The Business Loan requires that Borrower shall maintain a minimum 1.50x Debt Service Coverage Ratio (DSCR) based on Borrower tax returns. The DSCR shall be tested annually, beginning with the 2023 return. The DSCR shall be calculated as EBIDA (earnings before interest, depreciation, and amortization) divided by contractual annual debt service payments. The Business Loan also requires Borrower to maintain its primary operating accounts with a $1,000,000.00 minimum deposit account balance with the Lender for the life of the Business Loan. The Business Loan also requires a Promissory Note, Mortgage and Assignment of Rents, Leases, and Security Deposits described below. Promissory Note Pursuant to the Promissory Note dated as of December 14, 2023 (the “BL Note”), among the Borrower and the Lender, the Lender agreed to loan to the Borrower the Business Loan at a fixed annual interest rate of 10%. The BL Note also requires a 5% late fee on outstanding unpaid payments due under the BL Note. The BL Note requires a mortgage on the 5511 Building, along with a first priority security interest on: all furniture, equipment, inventory, and general intangibles (including but not limited to all software and all payment intangibles); all fixtures; and all attachments, accessions, accessories, fittings, increases, tools, parts, repairs, supplies, and commingled goods. Mortgage Pursuant to the Mortgage dated as of December 14, 2023 (the “Mortgage”), among Lifted Made in favor of the Lender, in connection with the terms of the Loan Agreement and BL Note, Lifted Made agreed to a first priority mortgage on the 5511 Building (Parcel Number 08-222-32-410-104). In the event of default under the Loan Agreement or BL Note, or other cross collateralized obligations, the Lender would be entitled to the foregoing equity collateral to the detriment of the Borrower. Assignment of Rents, Leases, and Security Deposits Pursuant to the Assignment of Rents, Leases, and Security Deposits dated as of December 14, 2023 (the “Lease Assignment”), among Lifted Made in favor of the Lender, in connection with the terms of the Loan Agreement and BL Note, Lifted Made agreed to assign its rights to leases and income from the 5511 Building to Lender. In the event of default under the Loan Agreement or BL Note, or other cross collateralized obligations, the Lender would be entitled to the foregoing equity collateral to the detriment of the Borrower. Default under any of the agreements described above could have a highly detrimental, if not catastrophic impact on our company. Consolidated Balance Sheet Presentation of the Working Capital and Business Loans and Maturity Analysis The following presents the Working Capital and Business Loans in the Consolidated Balance Sheets as of December 31, 2023 and 2022: December 31, December 31, 2023 2022 Working Capital Loan $ 3,000,000 $ - Business Loan 910,000 - Total principal amount 3,910,000 - Less: Unamortized debt financing costs (55,149 ) - Less: Current portion of Surety Bank notes (506,061 ) - Non-Current portion of Surety Bank notes $ 3,348,790 $ - The following represents aggregate payments due on the Working Capital and Business Loans during each of the five years subsequent to December 31, 2023 and thereafter: Maturity Analysis: 2024 $ 876,939 2025 876,939 2026 876,939 2027 876,939 2028 1,618,429 Thereafter - Total 5,126,185 Less: interest port ion (1,216,185 ) Total principal amount $ 3,910,000 Manufacturing, Sales and Marketing Agreements During the year ended December 31, 2023 Lifted entered into Cali Sweets Agreement On January 11, 2023, Lifted entered into a Manufacturing, Sales and Marketing Agreement (“Cali Agreement”) with Cali Sweets, LLC (“Cali”). Cali is headquartered in North Hollywood, California, and currently sells products under the brand name Koko Nuggz. The Cali Agreement entitles Lifted to be the exclusive worldwide manufacturer and distributor of Cali’s disposable vape products (under the brand name Koko Puffz) and gummy products (under the brand name Koko Yummiez) (“Cali Products”). Pursuant to the Cali Agreement, Lifted manufactures, markets, and distributes certain Cali Products and brands worldwide. Lifted and Cali equally share certain production and marketing costs associated with such Cali Products on a dollar-for-dollar basis. Revenue from the sale of such Cali Products are divided on a 60/40 basis, net of any returns, discounts, or replacements, with 60% allocated to Lifted, and the remaining 40% to Cali. Under the terms of the Cali Agreement, Lifted has the right, in its discretion, to add new Cali brands and Cali Products as they are developed. Lifted can also set prices for Cali Products it supplies or unilaterally discontinue the supply of any Cali product if it no longer makes business sense to Lifted. The parties also agreed that Cali will provide social media marketing services for both Cali Products and brands, and for Lifted’s Urb branded products. The term of the Cali Agreement is five years and may be extended with the mutual consent of the parties. However, after the initial 24 months, the Cali Agreement may be terminated by either party, for any or no reason, upon providing the other party with 180 days written notice. Cali may become subject to early exit payments to Lifted if it early terminates. The exit fee formula is based on estimated profits that Lifted may have enjoyed had Cali not early terminated the relationship. Regarding the accounting for the Cali Agreement: the Company has evaluated the principal versus agent considerations in Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. The Company has considered the following facts to assess whether Lifted has control of the Cali Products that are manufactured and distributed pursuant to the Cali Agreement: · Lifted is the exclusive worldwide manufacturer and distributor of the Cali Products. To fulfill its obligations pursuant to the Cali Agreement, Lifted sources raw goods, labor, and other resources to manufacture the Cali Products at Lifted’s facilities and holds these raw goods and Cali Products in its facilities until the Cali Products are sold and shipped to customers. · Customers’ orders of Cali Products are received through Lifted’s website www.urb.shop. Lifted processes these orders, prepares the Cali Products for shipment from Lifted’s inventories, and ships the Cali Products directly to the customers. Lifted is responsible for collecting payments from customers but does not guarantee collection. · Lifted has the right, in its discretion, to add new Cali brands and Cali Products as they are developed. · Lifted can set prices for Cali Products it supplies or unilaterally discontinue the supply of any Cali product if it no longer makes business sense to Lifted. Based on these considerations, the Company concludes that Lifted is the principal relative to Cali in the Cali Agreement. Therefore, sales of Cali Products are recognized and reported by the Company on a gross basis on the Consolidated Statements of Operations, and once payment is collected from a customer from the sale of Cali Products, the Commission Payable to Cali is reported as a current liability on the Company’s Consolidated Balance Sheets, and Commission Expense is reported in the Operating Expenses section of the Consolidated Statements of Operations. Manufacturing, Sales and Marketing Agreement With Diamond Supply Co. On April 23, 2023, Lifted entered into a Manufacturing, Sales and Marketing Agreement (“Diamond Agreement”) with Diamond Supply Co. (“Diamond”), Calabasas, California. Founded in 1998, Diamond develops and sells a full range of skateboard hard and soft goods including bolts, bearings, t-shirts, hoodies, and other skateboarding and streetwear accessories. The Diamond Agreement entitles Lifted to be the exclusive worldwide manufacturer and distributor of Diamond’s disposable vapes, gummies, pre-rolled joints, and hard candies (“Diamond Products”). These Diamond Products may contain CBD, hemp, delta-8-THC, delta-10-THC, cannabis and/or cannabinoid derivatives and are to be branded under one or more of Diamond’s brands or marks. Lifted shall pay Diamond a royalty of twenty percent (20%) of Adjusted Gross Revenue (defined below) on the initial manufacturing run of each Diamond Product manufactured and sold by Lifted Made under the Diamond Agreement. The Diamond Agreement defines Adjusted Gross Revenue as revenue on the Diamond Product “less any sales taxes, actual returns, pre-approved discounts, replacements, refunds and credits for returns.” After the initial manufacturing run of a Diamond Product, Lifted shall pay Diamond a royalty of forty five percent (45%) of Adjusted Gross Revenue on subsequent manufacturing runs for that Diamond Product; however, under the terms of the Diamond Agreement, the parties will split manufacturing costs 50/50 for Diamond Products sold after each Diamond Product’s first manufacturing run. Alternatively, under the terms of the Diamond Agreement, Diamond is entitled to notify Lifted that it elects to be paid a flat 7% of Adjusted Gross Revenue on specific subsequent manufacturing runs without sharing in the manufacturing costs for that run. Diamond is also entitled to purchase Diamond Products produced under the Diamond Agreement from Lifted for direct sale on Diamond’s website and via certain other channels used by Diamond. Under the terms of the Diamond Agreement, Diamond’s cost for these Diamond Products acquired for direct sale is 30% below wholesale. Under the terms of the Diamond Agreement, the parties will work together to set prices for Diamond Products. The term of the Agreement is three years and may be extended with the mutual consent of the parties. However, the Diamond Agreement may be extended for one-year with notice by Diamond at least three months prior to the end of the 3-year term, or by mutual consent of the parties. If Lifted pays to Diamond aggregate annual royalty payments of at least $1,000,000 per year, then the Diamond Agreement shall automatically renew for an additional one-year term. Regarding the accounting for the Diamond Agreement: the Company has evaluated the principal versus agent considerations in ASC 606, Revenue from Contracts with Customers. The Company has considered the following facts to assess whether Lifted has control of the Diamond products that are manufactured and distributed pursuant to the Diamond Agreement: · Lifted is the exclusive worldwide manufacturer and distributor of the Diamond Products. To fulfill its obligations pursuant to the agreement, Lifted sources raw goods, labor, and other resources to manufacture the Diamond Products at its own facilities and holds these raw goods and Diamond Products in its facilities until the Diamond Products are sold and shipped to customers. · Customers’ orders of Diamond Products are received through Lifted’s website www.urb.shop. Customers that attempt to purchase the Diamond Products from www.diamondsupplyco.com are redirected to www.urb.shop. Lifted processes these orders, prepares the Diamond Products for shipment from Lifted’s inventories, and ships the Diamond Products directly to customers. · Lifted and Diamond agree upon the retail sales prices for the Diamond Products, and both Lifted and Diamond are to make good faith efforts to collect all payments in connection with each party’s sales of Diamond Products to all of its customers. Based on these considerations, the Company concludes that Lifted is the principal relative to Diamond in the Diamond Agreement. Therefore, sales of Diamond Products are recognized and reported by the Company on a gross basis on the Consolidated Statements of Operations, and once payment is collected from a customer from the sale of Diamond Products, the Royalty Payable to Diamond is reported as a current liability on the Company’s Consolidated Balance Sheets, and Royalty Expense is reported in the Operating Expenses section of the Consolidated Statements of Operations. Jeeter Agreement On July 17, 2023, Lifted and DreamFields Brands Inc. d/b/a Jeeter (“Jeeter”) entered a Manufacturing, Sales and Marketing Agreement dated as of July 14, 2023 (the “Jeeter Agreement”). Pursuant to the Jeeter Agreement: (1) Jeeter has appointed Lifted as its exclusive manufacturer, seller and distributor within the United States of vape, gummies and pre-rolled products containing hemp-derived cannabinoids sold under the Jeeter brand (“Jeeter Products”); (2) Jeeter and Lifted will agree upon the devices, formulation, design, packaging, run costs, and marketing of each of the Jeeter Products; (3) Jeeter and Lifted will share equally the costs of manufacturing, marketing, distributing and insuring the Jeeter Products (“Product Costs”); and (4) the revenue from all Product sales, minus applicable Product offsets and sales commissions (“Aggregate Product Revenue”), will be allocated 60% to Jeeter and 40% to Lifted. The Jeeter Agreement is for an Initial Term of two years, provided that if the completed Product sales during the first year of the Initial Term are a minimum of $48 million (the “Minimum Sales”), then the Initial Term will automatically continue until the end of the second year of the Initial Term. Jeeter and Lifted may mutually agree in writing to extend the Jeeter Agreement for Renewal Terms of at least one year each, but if not so extended then the Jeeter Agreement will automatically terminate. Jeeter may terminate the Jeeter Agreement at any time upon written notice to Lifted upon any of the following: (1) if Lifted fails to achieve the Minimum Sales during any 12 month period; (2) if there is any material change in federal legislation regarding the manufacturing, sale, use or consumption of hemp-derived delta-8-THC that in Jeeter’s sole and absolute determination has an adverse impact upon the Jeeter Agreement; or (3) if Jeeter determines in its sole and absolute discretion that the sale of Jeeter Products under the Jeeter Agreement has or is reasonably likely to have an adverse impact on Jeeter’s delta-9-THC product business. The Jeeter Agreement provides that if Aggregate Product Revenue achieves $1.5 million or more in a single month, then thereafter so long as Aggregate Product Revenue achieves $9 million or more in each six month period, Lifted shall be prohibited from directly or indirectly manufacturing, marketing, distributing, promoting or selling pre-rolled joints made from hemp or cannabis in the United States (except under the Jeeter Agreement) during the remaining term of the Jeeter Agreement. Regarding the accounting for the Jeeter Agreement: the Company has evaluated the principal versus agent considerations in ASC 606, Revenue from Contracts with Customers. The Company has considered the following facts to assess whether Lifted has control of the Jeeter Products that are manufactured and distributed pursuant to the Jeeter Agreement: · Lifted is the exclusive manufacturer, seller, and distributor of the applicable Jeeter branded products in the USA. To fulfill its obligations pursuant to the agreement, Lifted sources raw goods, labor, and other resources to manufacture the Jeeter Products at its own facilities and holds these raw goods and Jeeter Products in its facilities until the Jeeter Products are sold and shipped to customers. Initially, Lifted was manufacturing all of the Jeeter Products, but in the middle of Q3 2023 Jeeter also began manufacturing joints at its facility after being authorized by Lifted to do so. Nonetheless, Jeeter produces joints during Monday through Friday, and then ships the finished joints to Lifted’s headquarters in Kenosha on Saturday. Lifted controls the Jeeter Products until they are then sold and shipped to the customers. · Customers’ orders of Jeeter Products are received through Lifted’s website www.urb.shop. Lifted processes these orders, prepares the Jeeter Products for shipment from Lifted’s inventories, and ships the Jeeter Products directly to the customers. Lifted is responsible for collecting payments from customers but does not guarantee collection, nor the timetable of such collection. Based on these considerations, the Company concludes that Lifted is the principal relative to Jeeter in the Jeeter Agreement. Therefore, sales of Jeeter Products are recognized and reported by the Company on a gross basis on the Consolidated Statements of Operations, and once payment is collected from a customer from the sale of Jeeter Products, the Commission Payable to Jeeter is reported as a current liability on the Company’s Consolidated Balance Sheets, and Commission Expense is reported in the Operating Expenses section of the Consolidated Statements of Operations. The Jeeter Agreement was terminated effective January 1, 2024 pursuant to a Termination Agreement dated as of March 22, 2024 between Jeeter and Lifted, described in NOTE 14 – SUBSEQUENT EVENTS Mirsky Agreement On July 11, 2023, Lifted and Florence Mirsky (“Mirsky”) entered into an Agreement (the “Mirsky Agreement”). Pursuant to the Mirsky Agreement, in consideration of Mirsky’s introduction of Jeeter to Lifted, Lifted shall pay to Mirsky finder’s fees equal to 6.5% of the amount, if any, by which Lifted’s share of the Aggregate Product Revenue under the Jeeter Agreement exceeds Lifted’s share of the Product Costs under the Jeeter Agreement. Lifted Purchase of Assets of Oculus CRS, LLC, and Merger With Oculus CHS Management Corp. Asset Purchase Agreement On April 28, 2023, Lifted purchased nearly all of the assets (the “Purchased Assets”) of its hemp flower products supplier Oculus CRS, LLC, Aztec, New Mexico (“Oculus”) for $342,068, net of $26,420 cash acquired. The Purchased Assets include, but are not limited to, Oculus’ operational equipment, office equipment, raw materials, inventory, cash on hand, accounts receivable, and a contract (the “Machine Purchase Contract”) to purchase, for a total of $309,213 (the “Machine Purchase Price”), a new machine that is ready for delivery, and that when delivered and installed will be used to automate a substantial portion of the manufacturing of the hemp flower products. $99,910 of the Machine Purchase Price had already been paid by Oculus, leaving $209,303 as the remaining portion of the Machine Purchase Price (the “Machine Purchase Final Payment”). The gross Purchase Price of $368,488 purchase was paid by Lifted using cash on hand. At the closing, Oculus applied the entire Purchase Price to pay off all of Oculus’ liabilities as of the closing date (the “Oculus Liabilities”), including the Machine Purchase Final Payment. The only asset of Oculus that was not included in the Purchased Assets was Oculus’ rights as the plaintiff in a pending lawsuit filed by Oculus against a particular customer for an alleged breach of contract. Agreement and Plan of Merger Simultaneously with Lifted’s purchase of the Purchased Assets, Lifted executed an Agreement and Plan of Merger (“Oculus Merger Agreement”) with Oculus CHS Management Corp. (the “Management Corp.”), pursuant to which the Management Corp. was merged with and into Lifted, with Lifted being the surviving corporation in the merger (the “Merger”). The only assets of the Management Corp. were multi-year employment contracts with the owners/managers of Oculus, Chase and Hagan Sanchez (the “Employment Agreements”). The Merger consideration (the “Merger Consideration”) will be paid by Lifted to Chase and Hagan Sanchez in two installments. The first installment of the Merger Consideration was paid by Lifted to Chase and Hagan Sanchez at the closing of the Merger, and consisted of 100 shares of unregistered common stock of LIFD. The second installment of the Merger Consideration will be paid by Lifted to Chase and Hagan Sanchez following the first anniversary of the closing of the Merger which will be April 28, 2024. The second installment of the Oculus Merger Agreement will be calculated and paid out as follows: (1) Lifted’s CEO Nicholas S. Warrender (“NWarrender”), in consultation with LIFD’s President and CFO William C. “Jake” Jacobs (“WJacobs”), will analyze and make a written determination (the “Determination”) of the incremental pre-tax cash flow that NWarrender estimates that the hemp flower products division is generating for Lifted above and beyond the annual profits that are currently being generated for Lifted due to Lifted’s current business relationship with Oculus (the “Incremental Pre-Tax Profits”), after taking into account all relevant financial factors including but not limited to the purchase price of the Purchased Assets, the merger consideration, and all items of income, expense and investment directly and indirectly associated with Lifted’s hemp flower products division, which Determination will be final and legally binding on all of the parties; and (2) Within five days following delivery of the Determination, Lifted will pay Chase and Hagan Sanchez a second installment of Merger consideration equal to five times the Incremental Pre-Tax Profits, provided that (a) 20% of such second installment of Merger consideration shall be paid in the form of cash, (b) 80% of such second installment of Merger consideration shall be paid in the form of unregistered shares of common stock of LIFD, which unregistered shares of common stock of LIFD shall be valued at $5 per share regardless of whether LIFD’s common stock is then trading at a price that is lower or higher than $5 per share, and (c) such second installment of Merger consideration shall be subject to a minimum value of $1 million dollars (“Minimum Earnout Consideration”) and a maximum value of $6 million dollars (with the stock portion of the second installment of Merger consideration being valued at $5 per share under all circumstances). As examples, for illustrative purposes only: (a) If, according to NWarrender’s Determination, the Incremental Pre-Tax Profits of Lifted being generated by the business is $500,000, then the second installment of the Merger Consideration would be calculated as $500,000 X 5 = $2,500,000, of which ($2,500,000 X .2) = $500,000 would be in the form of cash, and the remaining $2,000,000 would be paid in the form of ($2,000,000/$5) = 400,000 newly issued shares of unregistered LIFD Common Stock; (b) If, according to NWarrender’s Determination, the Incremental Pre-Tax Profits of Lifted being generated by the business is $25,000, then the second installment of the Merger Consideration would be the Minimum Earnout Consideration of $1,000,000, of which ($1,000,000 X .2) = $200,000 would be in the form of cash, and the remaining $800,000 would be paid in the form of ($800,000/$5) = 160,000 newly issued shares of unregistered LIFD Common Stock; and (c) If, according to NWarrender’s Determination, the Incremental Pre-Tax Profits of Lifted being generated by the business is $2,000,000, then the second installment of the Merger Consideration would be the maximum of $6,000,000, of which ($6,000,000 X .2) = $1,200,000 would be in the form of cash, and the remaining $4,800,000 would be paid in the form of ($4,800,000/$5) = 960,000 newly issued shares of unregistered LIFD Common Stock. As of the day of this Annual Report on Form 10-K, the management of the Company does not expect the second installment of Merger Consideration to exceed the Minimum Earnout Consideration. Accounting for Lifted’s Purchase of Assets of Oculus C |
RECEIPT AND FORGIVENESS OF LOAN
RECEIPT AND FORGIVENESS OF LOANS UNDER THE ECONOMIC INJURY DISASTER LOAN PROGRAM AND THE PAYCHECK PROTECTION PROGRAM AND RECEIPT OF EMPLOYEE RETENTION TAX CREDITS | 12 Months Ended |
Dec. 31, 2023 | |
RECEIPT AND FORGIVENESS OF LOANS UNDER THE ECONOMIC INJURY DISASTER LOAN PROGRAM AND THE PAYCHECK PROTECTION PROGRAM AND RECEIPT OF EMPLOYEE RETENTION TAX CREDITS | |
RECEIPT AND FORGIVENESS OF LOANS UNDER THE ECONOMIC INJURY DISASTER LOAN PROGRAM AND THE PAYCHECK PROTECTION PROGRAM AND RECEIPT OF EMPLOYEE RETENTION TAX CREDITS | NOTE 2 – RECEIPT AND FORGIVENESS OF LOAN UNDER THE PAYCHECK PROTECTION PROGRAM AND RECEIPT OF EMPLOYEE RETENTION TAX CREDITS Receipt and Forgiveness of Paycheck Protection Program Loan Lifted also applied for and received a loan (the “PPP Loan”) under the Paycheck Protection Program (the “PPP”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was enacted March 27, 2020. The PPP Loan was issued by BMO Harris Bank (the “Lender”) in the aggregate principal amount of $149,622.50 and evidenced by a promissory note (the “Note”), dated April 14, 2020 issued by Lifted to the Lender. On April 20, 2021, the entire PPP Loan ($149,622) and the interest payable on the PPP Loan ($1,525) was forgiven by the SBA, and a related gain on forgiveness of debt in the amount of $151,147 was recorded. In accordance with its terms, the Note was originally scheduled to mature on April 14, 2022 and bore interest at a rate of 1.00% per annum, payable monthly commencing on November 14, 2020, following an initial deferral period as specified under the PPP. In addition, the Note could be prepaid by Lifted at any time prior to its original maturity with no prepayment penalties. Proceeds from the PPP Loan were available to Lifted to fund designated expenses, including certain payroll costs and other permitted expenses, in accordance with the PPP. Under the terms of the PPP, up to the entire amount of principal and accrued interest of the PPP Loan could be forgiven to the extent that at least 75% of the PPP Loan proceeds are used for qualifying expenses as described in the CARES Act and applicable implementing guidance issued by the SBA under the PPP. As of March 31, 2021, Lifted had an accrual of $1,443 for the interest on the PPP Loan. During the three months ended June 30, 2021, interest of $82 was accrued prior to the forgiveness of the Loan. Receipt of Employee Retention Tax Credits In August 2022, with the assistance of a third party firm, Lifted applied for Employee Retention Tax Credits (“ERC”) for certain quarters of 2020 and 2021. In the fourth quarter of 2022, gross credits of $233,534 were recovered, and Lifted paid the third party firm a commission of $58,384. The ERC is accounted for as a reduction in payroll expenses in the fourth quarter of 2022. The commission is accounted for as Professional Fees expense. |
RISKS AND UNCERTAINTIES
RISKS AND UNCERTAINTIES | 12 Months Ended |
Dec. 31, 2023 | |
RISKS AND UNCERTAINTIES | |
RISKS AND UNCERTAINTIES | NOTE 3 - RISKS AND UNCERTAINTIES Going Concern The Company’s investments in Ablis, Bendistillery and Bend Spirits made the Company a minority owner of these companies. As a minority owner, the Company is not able to recognize any portion of Ablis’, Bendistillery’s or Bend Spirits’ revenues or earnings in the Company’s financial statements. The Company monitors its investments in Ablis, Bendistillery and Bend Spirits, and from time to time will evaluate whether there has been a potential impairment of value. The regulatory risks and uncertainties associated with Lifted's cannabinoid-infused products, vaping and nicotine products industries have created significant adverse risks to the Company, which have caused substantial doubt about the Company’s ability to continue as a going concern. The Company has significant financial obligations under its loan agreements with Surety Bank, and also the Company is accruing and paying 3% annual dividends on its outstanding Series A and Series B Convertible Preferred Stock. Also, on February 14, 2022, NWarrender, GJacobs and WJacobs (together the “Parties”) and LFTD Partners, entered into an agreement (the “Amended Omnibus Agreement”) that amends in part the Agreement dated as of December 30, 2021 entered into by and among LFTD Partners Inc., the Parties, Lifted Liquids, Inc. d/b/a Lifted Made and 95th Holdings, LLC (the “Omnibus Agreement”). The Amended Omnibus Agreement (1) terminates the right for the Parties to receive bonus compensation in regard to 2021 that is in excess of the Modified 2021 Bonus Pool Amount of $1,556,055 set out in the Omnibus Agreement; (2) places a cap on the 2022 company-wide bonus pool such that the 2022 company-wide bonus pool shall not be allowed to be accrued or paid by LIFD if and to the extent that doing so would decrease LIFD’s 2022 diluted earnings per share of common stock below $0.56 per share; and (3) the $500,000 of additional bonus set out in the Omnibus Agreement, is now allocated and defined as a retention bonus of $166,667 to each of NWarrender, GJacobs and WJacobs to be paid at the end of 2022 so long as each respective executive has not earlier resigned from LFTD Partners (the “2022 Retention Bonuses”). Moreover, LFTD Partners agrees and covenants that the Chairman of the Compensation Committee is authorized to negotiate and agree on behalf of LFTD Partners in regard to a 2023 supplemental retention bonus for NWarrender, GJacobs and WJacobs (in addition to the company-wide Bonus Pool) (the “2023 Retention Bonuses”), and if and only if the amounts of the 2023 Retention Bonuses are mutually agreed upon in writing among the Chairman of the Compensation Committee, NWarrender, GJacobs and WJacobs, then one-third of the 2023 Retention Bonuses shall be paid by LFTD Partners to each of NWarrender, GJacobs and WJacobs on or before March 15, 2024, provided that such officer shall not have earlier resigned as an officer of LFTD Partners. During 2022, Lifted for the first time hired an outside laboratory to conduct research and development on a potential new, non-hemp-derived, synthetic psychedelic product (the “New Psychedelic Product”) for a total of $19,800. Such research and development of the New Psychedelic Product has been put on indefinite hold. Lifted has recently successfully purchased from third parties a natural equivalent of the New Psychedelic Product. No guarantee or assurance can be given that in the future Lifted will be able to purchase more of this natural equivalent of the New Psychedelic Product, or a synthesized version thereof. In addition, factors that could materially affect future operating results include, but are not limited to, changes to laws and regulations, especially any future changes to the so-called “Farm Bill” at the federal level, any new rule proposed by the federal Drug Enforcement Administration that might attempt to classify certain hemp-derived products as controlled substances, and any other federal or state laws and regulations related to hemp-derived cannabinoids, nicotine or tobacco products, kratom, psychoactive products and/or vaping. The company is also subject to vendor concentration risk, customer concentration risk, customer credit risk, and counterparty risk. The Company maintains levels of cash bank accounts that typically exceed federally insured limits. The Company has not experienced any losses in such accounts and it believes that it is not exposed to any significant credit risk on cash. No assurance or guarantee whatsoever can be given that the net income of the Company’s wholly-owned subsidiary Lifted will be sufficient to allow the Company to pay all of its operating expenses, its financial obligations under its loan agreements with Surety Bank, the dividends accruing and being paid on the Company’s preferred stock, any accrued company-wide management bonus pool, and the 2023 Retention Bonuses. As a result of all of the foregoing described factors, there is substantial doubt that the Company will be able to continue as a going concern. Bankruptcy of the Company at some point in the future is a possibility. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company currently has one revenue-generating subsidiary, Lifted. If and to the extent that the revenue generated by Lifted is not adequate to pay the Company’s operating expenses, the Company's financial obligations under its loan agreements with Surety Bank, and the dividends accruing on its preferred stock, then Company management plans to sustain the Company as a going concern by taking the following actions: (1) acquiring and/or developing additional profitable businesses that will create positive income from operations; and/or (2) completing private placements of the Company’s common stock and/or preferred stock. Management believes that by taking these actions, the Company will be provided with sufficient future operations and cash flow to continue as a going concern. However, there can be no assurances or guarantees whatsoever that the Company will be successful in consummating such actions on acceptable terms, if at all. Moreover, any such actions can be expected to result in substantial dilution to the existing shareholders of the Company. Customer Concentration Risk Vendor Dependence The loss of Lifted’s relationships with these customers and vendors could have a material adverse effect on Lifted’s business. |
THE COMPANYS INVESTMENTS
THE COMPANYS INVESTMENTS | 12 Months Ended |
Dec. 31, 2023 | |
THE COMPANYS INVESTMENTS | |
THE COMPANY'S INVESTMENTS | NOTE 4 – THE COMPANY’S INVESTMENTS The Company’s Investment in Lifted Made At December 31, 2023, the Company performed its annual goodwill impairment assessment on the goodwill recognized as part of the acquisition of Lifted, and determined that no impairment was necessary. The Company’s Investments in Ablis, Bendistillery and Bend Spirits On April 30, 2019, the Company purchased 4.99% of the common stock of each of Ablis Holding Company, Bendistillery Inc., and Bend Spirits, Inc. for an aggregate purchase price of $1,896,200. On January 24, 2024, the management of LFTD Partners had a video conference with the officers of Ablis, Bendistillery and Bend Spirits. During this meeting, the management of those companies discussed the performance of Ablis, Bendistillery and Bend Spirits during the year ended December 31, 2023. Based upon the financial and non-financial information that was shared with LFTD Partners during that conference call, and based upon the unaudited 2023 financial statements of those companies that were shared with LFTD Partners subsequent to that conference call, the management of LFTD Partners believes that no impairment of the value of Bendistillery, Bend Spirits or Ablis is warranted at this point in time. The Company’s Investment in SmplyLifted LLC During February 24, 2020 through December 31, 2020, the Company recognized a loss of $4,429 from its 50% membership interest in SmplyLifted, and wrote down the value of its investment in SmplyLifted to $195,571. During the year ended December 31, 2021, the Company recognized a loss of $195,571 from its 50% membership interest in SmplyLifted. At December 31, 2021, Lifted Made wrote off its receivables from SmplyLifted, and its loans to SmplyLifted, which totaled $388,727. On February 9, 2022, Lifted Made signed an Agreement to sell its 50% membership interest in SmplyLifted LLC to Corner Vapory LLC, an affiliate of NWarrender, CEO of Lifted, for $1, plus ninety-nine percent (99%) of any and all payments and other consideration received or owed to Corner Vapory LLC in regard to SmplyLifted’s existing inventory of FR3SH brand tobacco-free nicotine pouches. Lifted had the option to re-purchase the 50% membership interest in SmplyLifted LLC from Corner Vapory LLC for $1,000 in cash at any time on or before December 31, 2032. However, Lifted never exercised this option, and SmplyLifted was dissolved on November 28, 2022, due to insolvency. |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 12 Months Ended |
Dec. 31, 2023 | |
PROPERTY AND EQUIPMENT, NET | |
PROPERTY AND EQUIPMENT, NET | NOTE 5 – PROPERTY AND EQUIPMENT, NET Property and Equipment consist of the following: Asset Class December 31, 2023 December 31, 2022 Building $ 805,545 $ - Land $ 430,754 $ - Machinery & Equipment $ 1,473,609 $ 664,606 Furniture & Fixtures $ 107,509 $ 92,934 Computer Equipment $ 18,979 $ 7,312 Building & Leasehold Improvements $ 581,394 $ 379,499 Vehicles $ 117,047 $ 75,047 Trade Show Booths $ 55,081 $ 10,000 Sub-total: $ 3,589,918 $ 1,229,398 Less: accumulated depreciation $ (593,531 ) $ (209,143 ) $ 2,996,387 $ 1,020,255 The useful lives of the Company’s property and equipment by asset class are as follows: Asset Class Estimated Useful Life Building 39 years Land Indefinite Machinery & Equipment 60 months Building Improvements 60 months Leasehold Improvements The shorter of the length of the lease or 60 months Trade Show Booths 36 months Vehicles 60 months Computer Equipment 60 months Furniture & Fixtures 60 months In the Consolidated Statements of Operations, depreciation expense is consolidated with amortization expense. After allocating the annual depreciation of machinery and equipment of $218,882 as overhead to finished goods, depreciation expense of $166,330 was recognized during the year ended December 31, 2023. After allocating the annual depreciation of machinery and equipment of $68,411 as overhead to finished goods, depreciation expense of $75,471 was recognized during the year ended December 31, 2022. After allocating the annual depreciation of machinery and equipment of $19,562 as overhead to finished goods, depreciation expense of $65,651 was recognized during the year ended December 31, 2021. |
NOTES RECEIVABLE
NOTES RECEIVABLE | 12 Months Ended |
Dec. 31, 2023 | |
NOTES RECEIVABLE | |
NOTES RECEIVABLE | NOTE 6 – NOTES RECEIVABLE SmplyLifted LLC At December 31, 2021, the Company had made interest-free loans to SmplyLifted LLC totaling $387,500, used primarily for the purchase of inventory. As of December 31, 2021, imputed interest receivable on the loans totaled $580. As described above, at December 31, 2021, these notes and related interest receivable were written off. The William Noyes Webster Foundation, Inc. The Foundation, a non-profit Massachusetts corporation, has received a provisional registration from the Commonwealth of Massachusetts to own and operate a medical marijuana cultivation facility in Plymouth, Massachusetts, and a medical marijuana dispensary in Dennis, Massachusetts. Jane W. Heatley (“Heatley”) is the founder and a member of the board of directors of the Foundation. Teaming Agreement Promissory Note Between April and July 2015, the Company loaned an additional $135,350 to the Foundation, evidenced by the Note and secured by the Security Agreement. Following such additional loans, the principal of the loan from the Company to the Foundation, evidenced by the Note and secured by the Security Agreement, is now $737,850. The principal balance outstanding under the Note bore interest at the rate of 12.5% per annum, compounded monthly. It was contemplated that the first payment of accrued interest by the Foundation under the Note would be made as soon after the Foundation commences operations of the Plymouth Cultivation Facility and the Dennis Dispensary as the Foundation’s cash flows shall reasonably permit, but in any event no later than one year after the Foundation commences operations. The principal of the Note would be payable in eight consecutive equal quarterly installments, commencing on the last day of the calendar quarter in which the Foundation commences operations. Principal on the Note and related accrued interest would be considered past due if the aforementioned payments were not received by their due dates. Uncollectable Note and Interest Receivable |
INTANGIBLE ASSETS, NET
INTANGIBLE ASSETS, NET | 12 Months Ended |
Dec. 31, 2023 | |
INTANGIBLE ASSETS, NET | |
INTANGIBLE ASSETS, NET | NOTE 7 – INTANGIBLE ASSETS, NET Website The cost of developing Lifted’s website, www.urb.shop, which was previously www.LiftedMade.com, was amortized over 32 months. No amortization related to the website was recognized during the year ended December 31, 2023, since the website intangible asset was fully amortized as of December 31, 2022. In comparison, $1,386 and $1,668 in amortization related to the website was recognized during the years ended December 31, 2022 and 2021, respectively. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2023 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 8 – RELATED PARTY TRANSACTIONS Sublease of Space Located at 2701-09 West Fulton PH, Chicago, Illinois 60612 On July 6, 2022, Lifted entered into a sublease for office space in Chicago, Illinois located at 2701-09 West Fulton PH, Chicago, Illinois 60612. The sublease costs $3,000 per month, plus supplemental lease related charges such as real estate taxes and common expenses of the property that we anticipate will be commercially typical costs. The sublease was retroactively effective as of June 1, 2022 and for a five-month term that ended on October 31, 2022. The purpose of the sublease is to make available office space for the members of Lifted’s sales team who live in Chicago. These salespeople were spending significant time in their cars commuting from Chicago to Kenosha. The sublessor is one of our affiliates, Bill McLaughlin, Lifted’s Chief Strategy Officer. The sublease is structured so that Mr. McLaughlin's lease payment obligations to the landlord are passed on to Lifted on a dollar-for-dollar basis, such that Mr. McLaughlin does not realize a cashflow profit or loss from the sublease. The sublease is currently operating on a month-to-month basis. Since the term is less than twelve months, this lease is not recorded on the Consolidated Balance Sheet, and lease expense is recognized on a straight-line basis over the lease term. Robert T. Warrender II In January 2022, Lifted hired Mr. Robert T. Warrender II, NWarrender’s father, as an employee. Mr. Warrender is also a Director of LFTD Partners Inc. During the year ended December 31, 2023, a salary of $60,000 was paid to Mr. Warrender. As of December 31, 2023, $3,938 in expense reimbursements were owed to Mr. Warrender. In comparison, during the year ended December 31, 2022, $55,385 in wages were paid to Mr. Warrender. As of December 31, 2022, $2,229 in expense reimbursements were owed to Mr. Warrender. Through the second quarter of 2022, Lifted shared a shipping account with a company formerly operated by Mr. Warrender. Lifted did this in an effort to reduce shipping costs, as the shipper gave a price discount based on volume. Lifted reimbursed Mr. Warrender’s company for the cost of shipping. During the year ended December 31, 2022, Mr. Warrender’s company refunded Lifted a net amount of $7,377. During the year ended December 31, 2022, also, Lifted bought a manual fork lift from Mr. Warrender’s company for a price that we believe reflected its fair market value. During the year ended December 31, 2021, Lifted reimbursed Robert T. Warrender II $220,708 in shipping costs. Robert T. Warrender III Mr. Robert T. Warrender III is NWarrender’s brother, and Director Mr. Robert T. Warrender II’s son. From January 9, 2023 until July 1, 2023, Mr. Warrender worked for Lifted as an employee in sales; previously, Mr. Warrender operated as an independent contractor of Lifted. During the year ended December 31, 2023, $21,102 in compensation was paid to Mr. Warrender. In comparison, during the years ended December 31, 2022 and 2021, $54,384 and $69,177, respectively, in compensation was paid to Mr. Warrender. Vincent J. Mesolella During each of quarter of 2023 and 2022, Lead Outside Director Vincent J. Mesolella received a $4,000 quarterly director fee. During the quarter ended March 31, 2022, Mr. Mesolella was also paid $40,000 of the Modified 2021 Bonus Pool Amount. There were no director fees paid to Mr. Mesolella during the year ended December 31, 2021. Joshua A. Bloom During each quarter of 2023 and 2022, Dr. Bloom, Director, was paid a $4,000 director fee. During the quarter ended March 31, 2022, Dr. Bloom was paid $20,000 of the Modified 2021 Bonus Pool Amount. There were no director fees paid to Dr. Bloom during the year ended December 31, 2021. Richard E. Morrissy During each quarter of 2023 and 2022, Mr. Morrissy, Director, was paid a $4,000 director fee. There were no director fees paid to Mr. Morrissy during the year ended December 31, 2021. James S. Jacobs During each quarter of 2023 and 2022, Dr. James S. Jacobs, Director, was paid a $4,000 director fee. There were no director fees paid to Dr. Jacobs during the year ended December 31, 2021. Kevin J. Rocio During each quarter of 2023 and 2022, Mr. Rocio, Director, was paid a $4,000 director fee. There were no director fees paid to Mr. Rocio during the year ended December 31, 2021. Gerard M. Jacobs The Compensation Agreement contemplated an aggregate of $350,000 being paid by the Company to GJacobs and WJacobs upon the closing of the Company’s acquisition of Lifted and an aggregate of $350,000 being paid by the Company to GJacobs and WJacobs upon December 1, 2020, but such payments were not timely made, and pursuant to the Amendment No. 1 such aggregate of $700,000 of compensation was deferred and made due and payable by the Company to GJacobs and WJacobs together with interest accrued at the rate of 2% annually commencing January 1, 2021, upon demand by GJacobs and WJacobs, and through the date of the Omnibus Agreement only $58,439 of such deferred compensation had been paid to GJacobs (the remaining unpaid deferred compensation together with accrued interest is hereby referred to as the “Deferred Compensation”). Pursuant to the Omnibus Agreement, the Deferred Compensation was paid by the Company to GJacobs and WJacobs in January 2022. During the quarter ended March 31, 2022, GJacobs was also paid $143,713 of the Modified 2021 Bonus Pool Amount. On April 29, 2021, the Company paid GJacobs a portion ($50,000) of the bonus payable to GJacobs in regard to the closing of the acquisition of Lifted. On August 30, 2021, GJacobs exercised, for an aggregate purchase price of $1, his right to purchase a warrant to purchase an aggregate of 750,000 shares of unregistered common stock of the Company at an exercise price of $0.01 per share, which warrant he immediately exercised. GJacobs also exercised his right to purchase an aggregate of 31,250 shares of unregistered common stock of the Company at an exercise price of $0.03 per share under separate warrants. GJacobs also demanded immediate payment of $8,439 of the bonuses which are currently due and payable by the Company to GJacobs, and GJacobs allocated and applied such $8,439 to pay for the aggregate cost of purchasing and exercising the above warrants. As of December 31, 2021, there was total interest of $9,269 payable to GJacobs related to the Deferred Compensation. William C. “Jake” Jacobs As described above, the Compensation Agreement contemplated an aggregate of $350,000 being paid by the Company to GJacobs and WJacobs upon the closing of the Company’s acquisition of Lifted and an aggregate of $350,000 being paid by the Company to GJacobs and WJacobs upon December 1, 2020, but such payments were not timely made, and pursuant to the Amendment No. 1 such aggregate of $700,000 of compensation was deferred and made due and payable by the Company to GJacobs and WJacobs together with interest accrued at the rate of 2% annually commencing January 1, 2021, upon demand by GJacobs and WJacobs, and through the date of the Omnibus Agreement only $58,439 of such deferred compensation had been paid to GJacobs (the remaining unpaid deferred compensation together with accrued interest is hereby referred to as the “Deferred Compensation”). Pursuant to the Omnibus Agreement, the Deferred Compensation was paid by the Company to GJacobs and WJacobs in January 2022. Moreover, pursuant to the Omnibus Agreement and simultaneously with such payment of the Deferred Compensation as set out above, the Company paid WJacobs a bonus of $300,000 in January 2022. During the quarter ended March 31, 2022, WJacobs was also paid $152,341 of the Modified 2021 Bonus Pool Amount. At the closing of the acquisition of Lifted, 645,000 shares of unregistered common stock of the Company were designated as contingent deferred compensation (the “Deferred Contingent Stock”) to certain persons specified by NWarrender in a schedule delivered by him to the Company at the closing of the Merger (the “Deferred Contingent Stock Recipients”). Now that certain conditions and requirements have been met, starting on February 24, 2023, the Deferred Contingent Stock has begun to be issued to certain Deferred Contingent Stock Recipients who have instructed the Company to issue to them their respective, earned Deferred Contingent Stock. As of December 31, 2023, 503,000 shares of Deferred Contingent Stock have been issued to certain Deferred Contingent Stock Recipients, including 200,000 shares of Deferred Contingent Stock to WJacobs. Nicholas S. Warrender On February 24, 2020 we closed on the acquisition of 100% of the ownership of CBD-infused products maker Warrender Enterprise Inc. d/b/a Lifted Made (formerly d/b/a Lifted Liquids) of Zion, Illinois (the “Merger”), for consideration of (1) $3,750,000 in cash, (2) $3,750,000 in the form of a secured promissory note accruing interest of 2% per year (the “$3.75M Note”), (3) 3,900,455 shares of unregistered common stock of the Company (the “Stock Consideration”), (4) 645,000 shares of unregistered common stock of the Company that constitute deferred contingent compensation to be issued and delivered to certain persons specified by NWarrender in a schedule delivered by NWarrender to the Company at the closing of the Merger (the “Deferred Contingent Stock”), and (5) warrants to purchase an aggregate of 1,820,000 shares of unregistered common stock of the Company at an exercise price of $5.00 per share that will be issued and delivered to certain persons specified by NWarrender in a schedule delivered by NWarrender to the Company at the closing of the Merger (the “Warrants”). On December 30, 2021, LIFD repaid all principal and interest due under the $3.75M Note between NWarrender and LIFD dated February 24, 2020 that was a portion of the Merger Consideration paid by LIFD to NWarrender under the Merger Agreement. Pursuant to the terms of that promissory note, the unpaid balance of the note accrued interest at the rate of 2% per annum. On December 30, 2021, NWarrender kept $1,000,000 of the repayment, plus accrued interest, and on January 3, 2022, reloaned $2,750,000 back to LIFD at the rate of 2.5% (the “$2.75M Note”). Prior to July 25, 2022, the $2.75M Note payable jointly by the Company and Lifted to NWarrender was secured by a perfected first lien security interest (the “Security Interest”) that encumbered all of the assets of the Company and Lifted. The Company was obligated to pay off the principal of the $2.75M Note in five semi-annual payments to NWarrender of $458,333 and a sixth and final semi-annual payment to NWarrender of $458,335, in each case plus accrued interest, starting on June 30, 2022. On June 7, 2022, LFTD Partners prepaid $916,666 of the principal of the $2.75M Note, and $29,384 of related accrued interest through that date, which left $1,833,334 remaining principal on the $2.75M Note. On July 5, 2022, we entered into an agreement (“Acceleration Agreement”) with NWarrender. Under the terms of the Acceleration Agreement, we were obligated to repay the remaining principal balance as follows: $1,374,999 on or before December 31, 2022, and $458,335 on or before December 31, 2024. Then, on July 8, 2022, we prepaid $916,666, along with accrued interest, and then, on July 25, 2022, we prepaid the remaining principal balance of $916,668 and accrued interest in full, and all collateral securing the $2.75M Note was released. Bonus During the quarter ended March 31, 2022, NWarrender was also paid $680,000 of the Modified 2021 Bonus Pool Amount. Purchase of Headquarters Building Toward the end of 2020, NWarrender, through his assigned entity 95th Holdings, LLC ("Holdings"), purchased a building located at 5511 95th Avenue, Kenosha, Wisconsin (“5511 Building”) that was immediately leased to us to conduct our expanded operations. The 5511 Building includes office, laboratory and warehouse space. As part of the lease agreement with Holdings, the parties agreed that our wholly owned subsidiary Lifted would eventually purchase the 5511 Building. The purchase price for the 5511 Building was originally subject to variation based on a formula agreed upon by the parties. Pursuant to the Omnibus Agreement with NWarrender on December 30, 2021, Lifted was obligated to purchase the 5511 Building from Landlord on or before December 31, 2022 for a fixed purchase price of $1,375,000. Prior to the Acceleration Agreement, Lifted had an obligation to complete the purchase of the 5511 Building on or before December 31, 2022. Pursuant to an Acceleration Agreement, the deadline to purchase the 5511 Building was extended by one year to December 31, 2023. In addition, the Acceleration Agreement contains a provision that if we raised $5,000,000 of debt or equity capital, then Lifted or our designee shall purchase the 5511 Building from Holdings at the agreed upon $1,375,000 purchase price within two days. On December 14, 2023, LFTD Partners and Lifted (together the “Borrower”), jointly borrowed a total of $3,910,000 from Surety Bank, of DeLand, Florida (“Lender”), and simultaneously Lifted purchased the 5511 Building from Holdings for $1,375,000 as previously agreed upon. The Lender made two five-year loans to the Borrower, as joint borrowers: (1) a working capital loan of $3,000,000 at 9.5% fixed annual interest, and (2) a $910,000 loan at 10% fixed annual interest, the net proceeds of which were used by Lifted to pay a portion of the $1,375,000 purchase price of the 5511 Building. The two loans are cross collateralized by a first lien mortgage on the 5511 Building, and by a first lien security interest in all of the other assets owned by LIFD and Lifted, in favor of Surety Bank. Prior to Lifted’s purchase of the 5511 Building, from June 1, 2018 through June 1, 2021, Lifted rented 3,300 square feet of space located in Zion, Illinois, for manufacturing, warehousing and office space. From June 1, 2021 through November 2021, Lifted leased such space on a month-to-month basis. From May 2020 until April 1, 2021, Lifted also temporarily used additional space located adjacent to its rented space in Zion, Illinois, and made payments in lieu of rent therefore. Lifted’s rented space in Zion, Illinois, was not adequate in light of various issues including zoning uncertainties, lack of air conditioning, and small size. As such, on December 18, 2020, Lifted as tenant entered into a Lease Agreement (the “Lease) with Holdings (“Landlord”) for office, laboratory and warehouse space in the 5511 Building. The lease commencement date was January 1, 2021, and lease termination date was January 1, 2026. Lifted constructed improvements including a clean room, and gradually moved into the 5511 Building over the course of the first quarter of 2021. Under the terms of the “triple-net” Lease, starting on January 1, 2021, Lifted leased approximately 11,238 square feet at the 5511 Building at $6.13 per square foot per year in base rent ($68,888.94 in 2021), which was subject to a 2% increase in base rent each year, plus certain operating expenses and taxes. The Lease was to continue until midnight on the fifth Rent Schedule Date Base Monthly Rent January 1, 2021 – December 31, 2021 $ 5,740.75 January 1, 2022 – December 31, 2022 $ 5,855.57 January 1, 2023 – December 31, 2023 $ 5,972.68 January 1, 2024 – December 31, 2024 $ 6,092.13 January 1, 2025 – December 31, 2025 $ 6,213.97 Under the terms of the Lease, the tenant, Lifted, had the option to purchase the property at any time prior to December 31, 2025, and in any event, Lifted had been obligated to purchase the 5511 Building on or before that date. Pursuant to the Lease, in all cases Lifted’s purchase price for the 5511 Building was to be in an amount equal to the greater of: (1) the fair market value of the 5511 Building at the time Lifted purchases the 5511 Building; or (2) any remaining principal balance of any purchase-money mortgage for the 5511 Building existing at the time of the closing of Lifted’s purchase, plus the corresponding amount identified in the Additional Purchase Price Schedule attached as Exhibit B to the Lease, which was an additional amount ranging between $300,000 and $375,000 based on the number of years that had passed between the commencement of the Lease and the purchase of the 5511 Building by Lifted. Landlord was an entity owned by NWarrender, the Company’s Vice Chairman and COO, the CEO of Lifted, and the largest stockholder of the Company as beneficial owner of 3,900,455 common stock shares. Due to the potential conflict of interest, the terms and conditions of the Lease were negotiated on behalf of Lifted by Mr. Vincent J. Mesolella, the Lead Outside Director of the Company. Landlord and Lifted were represented by their own independent legal counsel in connection with the Lease. Under the terms of the Lease, NWarrender was able to benefit through his entity Holdings by receiving rent and by eventually selling the 5511 Building to Lifted. Payment of an Aggregate of $500,000 in Bonuses to GJacobs, WJacobs and NWarrender The Amended Compensation Agreement provides that an aggregate of $350,000 shall be paid by the Company to GJacobs and WJacobs on December 1, 2021, but had not yet been paid (the “December 1, 2021 Compensation”). Pursuant to the Omnibus Agreement, the December 1, 2021 Compensation was terminated, but provided that if GJacobs and WJacobs have not resigned as officers of the Company on or before December 31, 2022, an aggregate of $500,000 in bonuses shall be paid by the Company to GJacobs and WJacobs. This aggregate of $500,000 in bonuses to GJacobs and WJacobs is in addition to the $300,000 bonus payable to WJacobs described in the preceding section. On February 14, 2022, pursuant to the Amended Omnibus Agreement, this $500,000 was recharacterized as a retention bonus and allocated among NWarrender, GJacobs and WJacobs wherein each received $166,666, respectively, on December 30, 2022. SmplyLifted LLC During the quarter ended September 30, 2022, SMPLSTC, one of Lifted’s partners in SmplyLifted, wrote a check to Lifted for $19,992 on behalf of SmplyLifted LLC, to cover two third-party accounting-related invoices of SmplyLifted. SMPLSTC’s check was short of the total of the two invoices by $146. Lifted paid the remaining $146 that SmplyLifted owed one of the third party accounting firms and wrote off the corresponding receivable from SmplyLifted, due to the lack of collectability from SmplyLifted because of SmplyLifted’s insolvency. Corner Vapory LLC NWarrender is a 50% owner in Corner Vapory LLC. Corner Vapory LLC owns a vape shop (called Corner Vapory), and Canna Vita, a CBD shop, both located in Kenosha, Wisconsin. The other owners of Corner Vapory LLC consist of Lifted’s Director of Operations and his wife. Lifted did not sell any products to Corner Vapory LLC during the year ended December 31, 2023. During the year ended December 31, 2022, Corner Vapory LLC purchased $42,384 worth of products from Lifted, and Lifted did not report any receivable from Corner Vapory as of December 31, 2022. Lifted did write off its receivable of $17,260 from Corner Vapory as of September 30, 2022. In comparison, during the year ended December 31, 2021, Corner Vapory LLC purchased $45,599 worth of products from Lifted, and Lifted recorded a receivable of $22,000 from Corner Vapory LLC as of December 31, 2021. |
SHAREHOLDERS EQUITY
SHAREHOLDERS EQUITY | 12 Months Ended |
Dec. 31, 2023 | |
SHAREHOLDERS EQUITY | |
SHAREHOLDERS' EQUITY | NOTE 9 – SHAREHOLDERS’ EQUITY Issuance of Series A Convertible Preferred Stock The Company has authorized 400,000 shares of its Series A Convertible Preferred Stock. Each share of Series A Convertible Preferred Stock may be converted into 100 shares of common stock. The Series A Convertible Preferred Stock accrues and pays dividends at the rate of 3% annually. The accrued Series A Convertible Preferred Stock dividends are cumulative. The Series A Convertible Preferred Stock dividends shall cease to accrue at such time as the Company’s Common Stock has closed at $3.00 per share or higher for 20 consecutive trading days after the first date that the Series A Registration Statement is effective, and there have been, on average, at least 25,000 shares traded on each of those 20 consecutive trading days. The Series A Convertible Preferred Stock have no voting rights. The holders of the Series A Convertible Preferred Stock shall have voluntary conversion rights. Shares of Series A Convertible Preferred Stock are subject to mandatory conversion (in the discretion of the Company) at such time as the Company’s common stock has closed at $5.00 per share or higher for 20 consecutive trading days after the first date that the Series A Registration Statement is effective, and there have been, on average, at least 50,000 shares traded on each of those 20 consecutive trading days. Between February 27, 2019 and May 13, 2019, the Company accepted subscriptions from accredited investors to purchase 66,150 shares of newly issued Series A Preferred Stock for an aggregate purchase price of $6,615,000 in cash. These 66,150 shares of Series A Preferred Stock are convertible at the option of the holders into 6,615,000 shares of newly issued common stock of the Company, or $1.00 per share of common stock of the Company. The Series A Preferred Stock will receive an annual 3% dividend, and will be subject to mandatory conversion, under terms and conditions set forth in the Certificate of Designation of the Series A Preferred Stock. On August 2, 2019, the Company filed a Form S-1 Registration Statement covering the shares of newly issued common stock of the Company into which the Series A Convertible Preferred Stock can be converted. On July 6, 2020, the Company filed with the SEC an amended Registration Statement on Form S-1/A covering 30% of the common stock shares into which the Series A Preferred Stock may be converted. On December 10, 2020, the Company filed with the SEC a second amended Registration Statement on Form S-1/A covering 30% of the common stock shares into which the Series A Preferred Stock may be converted. On June 2, 2021, the Company filed with the SEC a third amended Registration Statement on Form S-1/A covering 30% of the common stock shares into which the Series A Preferred Stock may be converted. On July 2, 2021, the Company filed with the SEC a fourth amended Registration Statement on Form S-1/A covering 30% of the common stock shares into which the Series A Preferred Stock may be converted. On July 26, 2021, the Company filed with the SEC a fifth amended Registration Statement on Form S-1/A covering 30% of the common stock shares into which the Series A Preferred Stock may be converted. On August 19, 2021, the Company filed with the SEC a sixth amended Registration Statement on Form S-1/A covering 30% of the common stock shares into which the Series A Preferred Stock may be converted. The Registration Statement was approved and deemed effective by the SEC on August 26, 2021. As of December 31, 2023, 63,650 shares of Series A Preferred Stock have been converted into a total of 6,365,000 shares of common stock of the Company, which leaves 2,500 shares of Series A Preferred Stock currently outstanding, convertible into 250,000 shares of common stock of the Company. As of December 31, 2023 and December 31, 2022, the Company has accrued a liability of $5,328 and $9,240, respectively, as dividends payable to holders of the Series A Convertible Preferred Stock. The Company fully intends on paying the annual dividends to the holders of the Series A Convertible Preferred Stock. During the years ended December 31, 2023 and 2022, $14,963 and $17,147, respectively, of cash dividends were paid to the Series A Convertible Preferred Stock holders. All of the issuances of securities described above were restricted share issuances and deemed to be exempt from registration in reliance on Rule 506 of Regulation D and/or Section 4(2) of the Securities Act as transactions by an issuer not involving a public offering. Each investor represented that they were accredited investors, as defined in Rule 501 of Regulation D and, there was no general solicitation or general advertising used to market the securities. We made available to each investor disclosure of all aspects of our business, including providing the investor with press releases, access to our auditors, and other financial, business, and corporate information. All securities issued were restricted with an appropriate restrictive legend on certificates for notes and warrants issued stating that the securities (and underlying shares) have not been registered under the Securities Act and cannot be sold or otherwise transferred without an effective registration or an exemption therefrom. Issuance of Series B Convertible Preferred Stock The Company has authorized 5,000,000 shares of its Series B Convertible Preferred Stock. Each share of Series B Convertible Preferred Stock may be converted into one share of common stock. The Series B Convertible Preferred Stock accrues and pays dividends at the rate of 3% annually. The accrued Series B Convertible Preferred Stock dividends are cumulative. The Series B Convertible Preferred Stock dividends shall cease to accrue at such time as the Company’s Common Stock has closed at $7.00 per share or higher for 20 consecutive trading days after the first date that the Series B Registration Statement is effective, and there have been, on average, at least 25,000 shares traded on each of those 20 consecutive trading days. The Series B Convertible Preferred Stock have no voting rights. The holders of the Series B Convertible Preferred Stock shall have voluntary conversion rights. Shares of Series B Convertible Preferred Stock are subject to mandatory conversion (in the discretion of the Company) at such time as the Company’s common stock has closed at $9.00 per share or higher for 20 consecutive trading days after the first date that the Series B Registration Statement is effective, and there have been, on average, at least 50,000 shares traded on each of those 20 consecutive trading days. Between July 24, 2019 and December 5, 2019, the Company accepted subscriptions from accredited investors to purchase 100,000 shares of newly issued Series B Preferred Stock for an aggregate purchase price of $500,000 in cash. These 100,000 shares of Series B Preferred Stock are convertible at the option of the holder into 100,000 shares of newly issued common stock of the Company. The Series B Preferred Stock will receive an annual 3% dividend, and will be subject to mandatory conversion, under terms and conditions set forth in the Certificate of Designation of the Series B Preferred Stock. On August 2, 2019, the Company filed a Form S-1 Registration Statement covering the shares of newly issued common stock of the Company into which the Series B Convertible Preferred Stock can be converted. On July 6, 2020, the Company filed with the SEC an amended Registration Statement on Form S-1/A covering 30% of the common stock shares into which the Series B Preferred Stock may be converted. On December 10, 2020, the Company filed with the SEC a second amended Registration Statement on Form S-1/A covering 30% of the common stock shares into which the Series B Preferred Stock may be converted. On June 2, 2021, the Company filed with the SEC a third amended Registration Statement on Form S-1/A covering 30% of the common stock shares into which the Series B Preferred Stock may be converted. On July 2, 2021, the Company filed with the SEC a fourth amended Registration Statement on Form S-1/A covering 30% of the common stock shares into which the Series B Preferred Stock may be converted. On July 26, 2021, the Company filed with the SEC a fifth amended Registration Statement on Form S-1/A covering 30% of the common stock shares into which the Series B Preferred Stock may be converted. On August 19, 2021, the Company filed with the SEC a sixth amended Registration Statement on Form S-1/A covering 30% of the common stock shares into which the Series B Preferred Stock may be converted. The Registration Statement was approved and deemed effective by the SEC on August 26, 2021. As of December 31, 2023, 60,000 shares of Series B Preferred Stock have been converted into a total of 60,000 shares of common stock of the Company, which leaves 40,000 shares of Series B Preferred Stock currently outstanding, convertible into 40,000 shares of common stock of the Company. As of December 31, 2023 and December 31, 2022, the Company has accrued a liability of $1,796 and $1,796, respectively as dividends payable to holders of the Series B Convertible Preferred Stock. The Company fully intends on paying the annual dividends to the holders of the Series B Convertible Preferred Stock, and as such, the Company has accrued the liability on the Series B Convertible Preferred Stock. During the years ended December 31, 2023 and 2022, a total of $6,000 and $6,000, respectively, of cash dividends were paid to the Series B Convertible Preferred Stock holders. All of the issuances of securities described above were restricted share issuances and deemed to be exempt from registration in reliance on Rule 506 of Regulation D and/or Section 4(2) of the Securities Act as transactions by an issuer not involving a public offering. Each investor represented that they were accredited investors, as defined in Rule 501 of Regulation D and, there was no general solicitation or general advertising used to market the securities. We made available to each investor disclosure of all aspects of our business, including providing the investor with press releases, access to our auditors, and other financial, business, and corporate information. All securities issued were restricted with an appropriate restrictive legend on certificates for notes and warrants issued stating that the securities (and underlying shares) have not been registered under the Securities Act and cannot be sold or otherwise transferred without an effective registration or an exemption therefrom. Share-Based Compensation At the closing of acquisition of Lifted, 645,000 shares of unregistered common stock of the Company were designated as contingent deferred compensation (the “Deferred Contingent Stock”) to certain persons specified by NWarrender in a schedule delivered by him to the Company at the closing of the Merger (the “Deferred Contingent Stock Recipients”). Now that certain conditions and requirements have been met, starting on February 24, 2023, the Deferred Contingent stock has begun to be issued to certain Deferred Contingent Stock Recipients who have instructed the Company to issue to them their respective, earned Deferred Contingent Stock. Due to the lack of marketability of the Company’s common stock, LFTD Partners hired a third-party valuation firm (the “Valuation Firm”) to calculate discount rates to apply to the value of the Deferred Contingent Stock for both financial reporting and tax purposes. The Valuation Firm used the Finnerty Protective Put Model to determine the discount rates to apply to the Deferred Contingent Stock in order to value it, for both financial reporting and tax reporting purposes. The Finnerty model is variant of the protective put method that estimates the discount based on the average price over the restriction period rather than based on the final price. The Valuation Firm’s report indicated that, for financial reporting purposes, a 22% discount for lack of marketability should be used when valuing all 645,000 shares of Deferred Contingent Stock, as of February 24, 2023. Assumptions used in the model for financial reporting purposes include: that no dividends on common stock will be paid, that the expected volatility is based on the historical volatility of the trading of LIFD’s common stock, and that there is a 0.5 year term based on the six-month holding period due to Rule 144. As of February 24, 2023, total stock compensation expense of $2,138,175 related to the 645,000 shares of Deferred Contingent Stock was recognized. The Valuation Firm’s report also indicated that, for tax reporting purposes, discounts ranging from 23% to 31% for lack of marketability and blockage should be used when valuing the 410,000 shares of Deferred Contingent Stock that were issued during the first quarter of 2023. In the Finnerty Protective Put model for each unique block of issued stock, the Valuation Firm has assumed a minimum term of six months, equal to the minimum time to sell the subject shares due to their restricted nature; and a maximum term equal to the amount of time it would take for the market to absorb the additional shares based upon an assumed additional volume of 7.5%. The Valuation Firm also assumed that no dividends on common stock will be paid, and that the expected volatility is based on the historical volatility of the trading of LIFD’s common stock. No shares of Deferred Contingent Stock were issued during the second quarter of 2023. On September 21, 2023, 93,000 shares of Deferred Contingent Stock were issued. A different valuation firm (“Second Valuation Firm”) was engaged to estimate the discount for lack of marketability and blockage applicable to the fair market value of these 93,000 shares of Deferred Contingent Stock for tax reporting purposes. The Second Valuation Firm used the Finnerty Protective Put Model to determine the discount rate to apply to the Deferred Contingent Stock in order to value it for tax reporting purposes. In the Finnerty Protective Put model, the Second Valuation Firm has assumed a minimum term of six months, equal to the minimum time to sell the subject shares due to their restricted nature; and a maximum term equal to the amount of time it would take for the market to absorb the additional shares based upon an assumed additional volume of 20% and 7.5%. The Second Valuation Firm also assumed that no dividends on common stock will be paid, expected volatility based on observed volatility of the trading of LIFD’s common stock, and risk-free rate based on the yield on U.S. Treasury bonds. The Second Valuation Firm’s report indicated that, for tax reporting purposes, a 27% discount should be used when valuing the 93,000 shares of Deferred Contingent Stock that were issued on September 21, 2023. As of December 31, 2023, 503,000 shares of Deferred Contingent Stock have been issued to certain Deferred Contingent Stock Recipients, including 200,000 shares of Deferred Contingent Stock to WJacobs. In comparison, no share-based compensation expense was recognized during the year ended December 31, 2022. The following is a summary of share-based compensation, stock option and warrant activity as of December 31, 2023 and changes during the year then ended: Weighted-Average Aggregate Weighted-Average Remaining Contractual Intrinsic Shares Exercise Price Term (Years) Value Exercisable Options, Warrants, Rights to Purchase Warrants to Purchase Common Stock and Financing Warrants Outstanding, December 31, 2022 2,882,198 $ 3.55 2.05 $ 370,331 Q1 2023 vesting of contingent warrants issued in connection with the acquisition of Lifted Made 705,000 Q2 2023 vesting of contingent warrants issued in connection with the acquisition of Lifted Made 25,000 Exercisable Options, Warrants, Rights to Purchase Warrants to Purchase Common Stock and Financing Warrants Outstanding, December 31, 2023 3,612,198 $ 3.85 1.07 $ 357,008 Outstanding Options, Warrants, Rights to Purchase Warrants to Purchase Common Stock and Financing Warrants, December 31, 2023 3,612,198 $ 3.85 1.07 $ 357,008 |
CONTINGENT CONTRACTUAL OBLIGATI
CONTINGENT CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS | 12 Months Ended |
Dec. 31, 2023 | |
CONTINGENT CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS | |
CONTINGENT CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS | NOTE 10 – CONTINGENT CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS Lease of Building Located at 5511 95th Ave, Kenosha, Wisconsin 53144 On December 18, 2020, Lifted as tenant entered into a Lease Agreement (the “Lease) with 95th Holdings, LLC (“Landlord”) for office, laboratory and warehouse space in a building located at 5511 95 th Landlord is an entity owned directly or indirectly by NWarrender, the Company’s Vice Chairman and COO, the CEO of Lifted, and the largest stockholder of the Company as the beneficial owner of 3,900,455 shares of common stock of the Company. Due to the potential conflict of interest, the terms and conditions of the Lease were negotiated on behalf of Lifted by Vincent J. Mesolella, the Lead Outside Director of the Company. Landlord and Lifted were represented by their own independent legal counsel in connection with the Lease. Under the terms of the Lease, NWarrender is able to benefit through his ownership of Landlord by Landlord’s receiving rent and eventually selling the Premises to Lifted. Lifted constructed improvements to the Premises including a clean room, and gradually moved into the Premises over the course of the first quarter of 2021. Under the terms of the “triple-net” Lease, starting on January 1, 2021, Lifted leased approximately 11,238 square feet at the Premises at $6.13 per square foot per year in base rent ($68,888.94 in 2021), which was subject to a 2% increase in base rent each year, plus certain operating expenses and taxes. The Lease was to continue until midnight on the fifth Rent Schedule Date Base Monthly Rent January 1, 2021 – December 31, 2021 $ 5,740.75 January 1, 2022 – December 31, 2022 $ 5,855.57 January 1, 2023 – December 31, 2023 $ 5,972.68 January 1, 2024 – December 31, 2024 $ 6,092.13 January 1, 2025 – December 31, 2025 $ 6,213.97 Under the terms of the Omnibus Agreement, Lifted was obligated to purchase the Premises from Landlord on or before December 31, 2022 for a fixed purchase price of $1,375,000. As a result, as of December 31, 2021, the Company modified its methodology for accounting of this finance lease (the “Modification Date”), such that the only liability recognized as of December 31, 2021 was a current (within one year) liability, and there was no long-term liability recognized. An immaterial loss on lease modification of $1,446 was also recognized as of the Modification Date. The Finance Lease Right-of-Use Asset value was reduced to reflect the fixed purchase price agreed to under the Omnibus Agreement. Pursuant to the Acceleration Agreement, Lifted’s obligation to purchase the Premises from Landlord was delayed to on or before December 31, 2023. Prior to the signing of the Acceleration Agreement, the Finance Lease Right-of-Use Asset was to be amortized over its useful life (39 years) on a prospective basis from the Modification Date. That is, the Finance Lease Right-of-Use Asset was previously amortized over the lease term, but given mandatory purchase by December 31, 2022, the Finance Lease Right-of-Use Asset will be amortized over 39 years starting on the Modification Date. As a result of the signing of the Acceleration Agreement, the accounting for the Finance Lease Right-of-Use Asset will be adjusted accordingly. Lifted purchased the Premises from Landlord on December 14, 2023, for $1,375,000 in cash as previously agreed upon, and as a result, the Company derecognized the Finance Lease Right-of-Use Asset and recognized the Premises as Land and Building on the Consolidated Balance Sheet. For more information, refer to the section “Purchase of Headquarters Building” above. Lease of Space Located at 8920 58th Place, Suite 850, Kenosha, Wisconsin 53144 On September 23, 2021, Lifted entered into a lease agreement with TI Investors of Kenosha LLC, (“TI”) for office and warehouse space located at 8920 58th Place, Suite 850, Kenosha, WI 53144 (the “58 th th th The term of the 58 th th th th Under the terms of the 58 th Rent Schedule Date Base Monthly Rent 10/01/2021 – 09/30/2022 $ 2,395.84 10/01/2022 – 09/30/2023 $ 2,467.72 10/01/2023 – 09/30/2024 $ 2,541.75 The 58 th th th Second Amendment to the Second 58 th Lease of Space Located at 8910 58th Place, Suites 600 and 700, Kenosha, Wisconsin 53144 NOTE 14 – SUBSEQUENT EVENTS Lease of Space Located at 8910 58th Place, Suites 600 and 700, Kenosha, Wisconsin 53144 On November 17, 2021, Lifted entered into a lease agreement with TI for office and warehouse space located at 8910 58th Place, Suites 600 & 700, Kenosha, WI 53144 (the “Second 58 th th th The term of the Second 58 th th th th Under the terms of the Second 58 th Rent Schedule Date Base Monthly Rent 01/01/2022 – 12/31/2022 $ 4,000.00 01/01/2023 – 12/31/2023 $ 4,120.00 01/01/2024 – 12/31/2024 $ 4,243.60 01/01/2025 – 12/31/2025 $ 4,370.91 01/01/2026 – 12/31/2026 $ 4,502.34 Lifted is also responsible for paying its proportionate share of real estate taxes and other operating costs. First Amendment to the Second 58 th On February 23, 2022, the Second 58 th th th Second Amendment to the Second 58 th As described in NOTE 14 – SUBSEQUENT EVENTS On March 25, 2024, the Second 58 th th Effective as of April 1, 2024 (the “Expansion Date”), the Second 58 th th th The Expansion Area will be used for office, manufacturing and warehouse space. Under the Second Amendment to the Second 58 th th Commencing on February 1, 2027, the base monthly rent for Suites 600 and 700 of the Second 58 th Suites 600 and 700 Date Base Monthly Rent February 1, 2027 – January 31, 2028 $ 4,637.41 February 1, 2028 – January 31, 2029 $ 4,776.53 February 1, 2029 – May 31, 2029 $ 4,919.83 Commencing on the Expansion Date, the base monthly rent for the Expansion Area (Suite 100) is as follows: Suite 100 Date Base Monthly Rent April 1, 2024 – May 31, 2024 $ 0.00 June 1, 2024 – March 31, 2025 $ 16,770.83 April 1, 2025 – March 31, 2026 $ 17,273.96 April 1, 2026 – March 31, 2027 $ 17,792.18 April 1, 2027 – March 31, 2028 $ 18,325.94 April 1, 2028 – March 31, 2029 $ 18,875.72 April 1, 2029 – May 31, 2029 $ 19,441.99 Under the Second Amendment to the Second 58 th th th th The effectiveness of the Second Amendment to the Second 58 th (i) the Lease Termination Agreement dated March 18, 2024, by and between Ladi and Lifted for Lifted’s leased space located at 8920 58th Place, Suite 850, Kenosha, Wisconsin 53144 (the “8920 Suite 850 Termination Agreement”), (ii) the Lease Termination Agreement dated March 18, 2024, by and between Ladi and Lifted for Lifted’s leased space located at 9560 58th Place, Suite 360, Kenosha, Wisconsin 53144 (the “the 9560 Suite 360 Termination Agreement”), and (iii) the Lease Termination Agreement dated March 18, 2024, by and between Ladi and a third party that currently leases the space located at 8910 58th Place, Suite 100, Kenosha, Wisconsin 53144 (the “8910 Suite 100 Termination Agreement”). These contingencies were met on or about March 27, 2024. Lease of Space Located at 9560 58th Place, Suite 360, Kenosha, Wisconsin 53144 On May 31, 2022, Lifted entered into another lease agreement with TI for office and warehouse space located at 9560 58th Place, Suite 360, Kenosha, WI 53144 (the “Third 58 th th th The term of the Third 58 th th th Under the terms of the Third 58 th Rent Schedule Date Base Monthly Rent 07/01/2022 – 06/30/2023 $ 5,493.25 07/01/2023 – 06/30/2024 $ 5,630.58 07/01/2024 – 06/30/2025 $ 5,771.35 07/01/2025 – 06/30/2026 $ 5,915.63 07/01/2026 – 06/30/2027 $ 6,063.52 The Third 58th Lease will be cancelled in conjunction with Lifted entering into the Second Amendment to the Second 58th Lease (defined above) on March 25, 2024. The terms and conditions of the Second Amendment to the Second 58th Lease are described above in the section “Second Amendment to the Second 58th Lease” under “ Lease of Space Located at 8910 58th Place, Suites 600 and 700, Kenosha, Wisconsin 53144 NOTE 14 – SUBSEQUENT EVENTS Sublease of Space Located at 2701-09 West Fulton PH, Chicago, Illinois 60612 On July 6, 2022, Lifted entered into a sublease for office space in Chicago, Illinois located at 2701-09 West Fulton PH, Chicago, Illinois 60612. The sublease costs $3,000 per month, plus supplemental lease related charges such as real estate taxes and common expenses of the property that we anticipate will be commercially typical costs. The sublease was retroactively effective as of June 1, 2022 and for a five-month term that ended on October 31, 2022. The purpose of the sublease is to make available office space for the members of Lifted’s sales team who live in Chicago. The sublessor is one of our affiliates, Bill McLaughlin, Lifted’s Chief Strategy Officer. The sublease is structured so that Mr. McLaughlin's lease payment obligations to the landlord are passed on to Lifted on a dollar-for-dollar basis, such that Mr. McLaughlin does not realize a cashflow profit or loss from the sublease. The sublease is currently operating on a month-to-month basis. Since the term is less than twelve months, this lease is not recorded on the Consolidated Balance Sheet, and lease expense is recognized on a straight-line basis over the lease term. Lease of Space Located at 5732 95th Avenue, Suites 100, 200 and 300, Kenosha, Wisconsin 53144 On November 28, 2022, Lifted entered into a lease agreement with Ladi for commercial space located at 5732 95th Avenue, Suite 200 and 300, Kenosha, WI 53144 (the “5732 Lease”). The 5732 Lease is used for Lifted’s gummy manufacturing operations. The 5732 Lease commenced on February 1, 2023. The initial term of the 5732 Lease extends approximately five years (sixty-one months) from February 1, 2023 to February 29, 2028, unless extended or earlier terminated in accordance with the 5732 Lease. While extensions are not prohibited, Lifted does not have the right to unilaterally elect to extend the term of the 5732 Lease for an additional term. Under the terms of the 5732 Lease, Lifted leases approximately 4,657 square feet of space. Lifted was not required to pay any base square foot charge during February 2023. Lifted is responsible for paying its proportionate share of real estate taxes and other operating costs. Base monthly rent under the 5732 Lease is as follows: Rent Schedule Date Base Monthly Rent February 1, 2023 – February 28, 2023 $ 0.00 March 1, 2023 – February 29, 2024 $ 3,395.73 March 1, 2024 – February 28, 2025 $ 3,531.56 March 1, 2025 – February 28, 2026 $ 3,672.82 March 1, 2026 – February 28, 2027 $ 3,819.73 March 1, 2027 – February 29, 2028 $ 3,972.52 First Amendment to the 5732 Lease Effective April 1, 2023 (the “Expansion Date”), the 5732 Lease was amended (the "First Amendment to the 5732 Lease”) to expand the square footage of the leased space to include an additional 2,668 square feet of space located at 5732 95 th Commencing on the Expansion Date, the base monthly rent for the Expansion Area is: Date Base Monthly Rent April 1, 2023 – January 31, 2024 $ 1,945.42 February 1, 2024 – January 31, 2025 $ 2,023.23 February 1, 2025 – January 31, 2026 $ 2,104.16 February 1, 2026 – January 31, 2027 $ 2,188.33 February 1, 2027 – January 31, 2028 $ 2,275.86 February 1, 2028 – February 29, 2028 $ 2,366.90 Lifted is also responsible for paying its proportionate share of real estate taxes and other operating costs. The 5732 Lease and the First Amendment to the 5732 Lease are accounted for as a single operating lease. Lease of Space Located at 16178 US Hwy 550, Aztec, San Juan County, New Mexico Pursuant to the terms of the Oculus Merger Agreement, upon the closing of the Merger, Lifted assumed Oculus’ lease of office and operational space in Aztec, New Mexico. The leased premises include a shop building of approximately 4,800 square feet and adjacent fenced parking area located at 16178 US Hwy 550, Aztec, San Juan County, New Mexico. The term of this lease was one year, commencing on December 1, 2022 and ending on November 30, 2023, continuing month-to-month thereafter until terminated. The base lease payment is $3,850 per month. All monthly payments are due and payable in advance on the first day of each month. Lifted is also required to pay taxes, insurance and certain maintenance costs of the leased premises. Since the term was less than twelve months, this lease was not recorded on the Consolidated Balance Sheet, and lease expense is being recognized on a straight-line basis over the lease term. Third Party Facilities From time to time, the Company maintains inventory at third party facilities around the USA. Balance Sheet Classification of Operating Lease Assets and Liabilities Asset Balance Sheet Line December 31, 2023 Operating Lease Right-of-Use Asset, net of Right-of-Use Asset Amortization of $266,837 in 2023 Non-Current Assets $ 626,869 Liability Balance Sheet Line December 31, 2023 Operating Lease Liabilities Current Liabilities $ 169,437 Non-Current Liabilities $ 463,623 Lease Costs The table below summarizes the components of lease costs for the following periods: For the Years Ended December 31, Lease Cost: 2023 2022 2021 Finance lease expense: Amortization of Right-of-Use Assets $ 41,226 $ 46,273 $ 49,347 Interest on lease liabilities 85,873 70,507 52,825 Operating lease expense 210,626 $ 115,239 $ 15,405 Total $ 337,725 $ 232,019 $ 117,577 Weighted Average Discount Rate In calculating the right-of-use assets and liabilities, the Company uses a discount rate based on a published range of conventional commercial mortgage interest rates corresponding to the life of each lease. The Company uses the higher end of the range due to the Company’s limited credit history. The Company’s weighted average discount rate for all its right-of-use liabilities as of the end of the reported period is 6.99%. Maturity Analysis The following table is the maturity analysis of the Company’s operating and finance leases as of the reported period end. Maturity Analysis as of December 31, 2023 Finance Operating 2024 $ - $ 208,519 2025 - 191,533 2026 - 197,622 2027 - 110,969 2028 - 12,588 Thereafter - - Total - 721,231 Less: Present value discount - (88,171 ) Lease liability $ - $ 633,060 Allocation of a Portion of Lease Expense to Finished Goods As described in NOTE 1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES Potential Issuance of Warrants to Purchase Shares of Common Stock of the Company The Compensation Committee of the Company’s Board of Directors may, from time to time, recommend that certain warrants to purchase shares of common stock of the Company should be issued to new or current members of the Company’s Board of Directors, to officers and employees of the Company and its subsidiaries, or to members of any advisory board or consultants to the Company. Bonus to Lifted’s Chief Strategy Officer Lifted’s Chief Strategy Officer (the “CSO”) hired on July 1, 2021 has developed and implemented certain important strategies which have assisted Lifted’s efforts to increase its production, fulfillment and sales capabilities. The CSO’s two-year agreement with Lifted entitled the CSO to be paid an annual salary of $180,000 plus a bonus equal to 5% of total net sales for Lifted in excess of $6,000,000 per quarter. The Company recognized bonus expense related to the bonus earned by the CSO of $526,535 in the fourth quarter of 2023, and at December 31, 2023 and 2022, the bonus payable to the CSO was $688,068 and $265,694, respectively. This bonus is accrued in the Accounts Payable and Accrued Expenses liability account on the Consolidated Balance Sheets. Company-Wide Management Bonus Pool Please refer to NOTE 12 – COMPANY-WIDE MANAGEMENT BONUS POOL Payment of Brokers’ Fees Related to the Sale of Preferred Stock The Company has committed to pay brokers’ fees in regard to the capital being raised for the Company by such brokers in the Company’s private placements of preferred stock, such fee to consist of warrants to purchase unregistered shares of common stock of the Company at an exercise price equal to the conversion price per share of such preferred stock, exercisable at any time during a five year period; the number of such shares will be calculated as six percent of the aggregate capital raised by such brokers in the private placement of preferred stock divided by the conversion price per share of such preferred stock. Other Contingent Contractual Obligations and Commercial Commitments For other contingent contractual obligations and commercial commitments, please refer to NOTE 8 – RELATED PARTY TRANSACTIONS |
LEGAL PROCEEDINGS
LEGAL PROCEEDINGS | 12 Months Ended |
Dec. 31, 2023 | |
LEGAL PROCEEDINGS | |
LEGAL PROCEEDINGS | NOTE 11 – LEGAL PROCEEDINGS The Company Lifted currently is involved in two pending lawsuits, as the defendant: (1) Jessie Hooks v. Lifted Made, URB Cannabis, Barry Hollingsworth, Gerard Jacobs, Nicholas Warrender, and Pharmlabs, LLC (2) Loree Perry, Individually and on Behalf of All Others Similarly Situated v. Sheikhani Group, et al Lifted currently is involved in one pending lawsuit, as the plaintiff: (1) Lifted Liquids, Inc. v. Asad Awawdeh and Habib Cash and Carry SD, Inc. – On November 13, 2023, Lifted received a letter dated November 6, 2023 from the State of Wisconsin Department of Workforce Development (“Department”). The letter stated that the Department had dismissed the case Lifted Liquids, Inc. v. Brian Koff, ERD Case No.: CR202301774; EEOC Case No: 26G202301223 On November 9, 2023, Lifted entered into a settlement agreement that was mutually acceptable to the parties which has resolved the following lawsuit: Lifted Liquids, Inc. v. Girish GPO, Inc., Girish Ray, and the Law Offices of Saul Roffe. On October 9, 2023, Lifted entered into a settlement agreement that was mutually acceptable to the parties which has resolved the following lawsuit: Lifted Liquids, Inc. v. DEV Distribution, LLC On May 25, 2023, Lifted entered into a settlement agreement that was mutually acceptable to the parties which has resolved the following lawsuit: Martha, Edgar v. Lifted Liquids. On February 1, 2022, Lifted entered into a settlement agreement that was mutually acceptable to the parties which has resolved the following lawsuit: Lifted Liquids, Inc. v. Monkey Bones Distribution LLC (United States Circuit Court for Kenosha County of the State of Wisconsin; Civil Case No. 2021 CV 001196). In December 2021, Lifted sued distributor Monkey Bones Distribution, LLC (“Monkey Bones”) for breach of contract for its failure to pay funds due under the agreement between the parties. In February 2022, the parties settled the litigation and agreed to mutual releases and dismissal of the lawsuit in exchange for $36,100.28 paid by Monkey Bones to Lifted Liquids and 15,000 custom gray scale empty disposable devices delivered to Monkey Bones by Lifted. The parties performed the settlement agreement and the matter was dismissed on February 3, 2022. |
COMPANY-WIDE MANAGEMENT BONUS P
COMPANY-WIDE MANAGEMENT BONUS POOL | 12 Months Ended |
Dec. 31, 2023 | |
COMPANY-WIDE MANAGEMENT BONUS POOL | |
COMPANY-WIDE MANAGEMENT BONUS POOL | NOTE 12 – COMPANY-WIDE MANAGEMENT BONUS POOL Pursuant to the employment agreements entered into between the Company and its three principal executives GJacobs, WJacobs and NWarrender For each fiscal year during the Employment Term, the Executive shall be eligible to be considered for an annual bonus (the “Annual Bonus”) as part of a Company-wide management bonus pool arrangement. During the fourth quarter of each year, the Chairman of the Compensation Committee of the Board (the “Compensation Committee”) shall recommend in writing a consolidated earnings before interest, taxes, depreciation and amortization (“EBITDA”) target (each, a “Target”) for the following year (the “Target Year”), which Target must be approved in writing by each of the following for as long as he remains employed by the Company: GJacobs, WJacobs, and NWarrender (collectively, and with respect to each for only as long as he is an employee of the Company, the “Executive Management Group”). If the Chairman of the Compensation Committee does not recommend in writing a Target for a Target Year that is approved in writing by all of the members of the Executive Management Group prior to the commencement of the Target Year, then the Target for the Target Year shall be equal to the actual consolidated EBITDA of the Company and its subsidiaries during the then-current year (i.e., the year preceding the Target Year) as certified in writing by the Company’s outside firm of independent certified public accountants. If the actual consolidated EBITDA of the Company and its subsidiaries during the Target Year as certified in writing by the Company’s outside firm of independent certified public accountants exceeds the Target (the amount by which the actual consolidated EBITDA of the Company and its subsidiaries during the Target Year as certified in writing by the Company’s outside firm of independent certified public accountants exceeds the Target, the “Excess Amount”), then cash equal to 33% of the Excess Amount shall be set aside by the Company as a cash management bonus pool (the “Bonus Pool”), and the amount of the Bonus Pool shall be allocated and paid out by the Company as bonuses or fees to the officers of the Company and its subsidiaries (and potentially, to directors or third parties who have significantly helped the Company and its subsidiaries during the Target Year), with the amount to be paid to each payee, including the amount of any Annual Bonus to be paid to the Executive, to be determined by unanimous written agreement of the Executive Management Group, in their sole discretion. The Executive expressly agrees and acknowledges that the amount of the Annual Bonus (if any) allocated and paid to the Executive as so determined by unanimous written agreement of the Executive Management Group shall be final, non-appealable, and binding upon the Executive, regardless of whether the Executive receives any Annual Bonus, and regardless of whether any Annual Bonus received by the Executive is higher or lower than any other person’s bonus, under any and all circumstances whatsoever. The Company shall pay the Executive the Annual Bonus, if any, no later than March 15 th Pursuant to the Amended Omnibus Agreement, the 2022 company-wide bonus pool shall not be allowed to be accrued or paid by LIFD if and to the extent that doing so would decrease LIFD’s 2022 diluted earnings per share of common stock below $0.56 per share. As of September 30, 2022, the Company did not meet the diluted earnings per share of common stock requirement of $0.42 per share ($0.56 x 3/4), and as a result, the Company eliminated the company-wide bonus pool accrual of $2,121,532, which had been accrued through June 30, 2022. During the fourth quarter of 2022 and the first quarter of 2023, the Company did pay bonuses totaling $466,668 to certain members of the management team of Lifted; however, none of this $466,668 went to GJacobs, WJacobs or NWarrender, and it is accounted for as Company-Wide Management Bonus Pool expense on the Consolidated Statements of Operations. This $466,668 will be deducted from future company-wide bonus pools on a dollar-for-dollar basis. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2023 | |
INCOME TAXES | |
INCOME TAXES | NOTE 13 – INCOME TAXES On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act reduced the U.S. federal statutory tax rate, broadened the corporate tax base through the elimination or reduction of deductions, exclusions, and credits, limited the ability of U.S. corporations to deduct interest expense, and transitioned to a territorial tax system which allows for the repatriation of foreign earnings to the U.S. with a 100% federal dividends received deduction prospectively. In addition, the Tax Act required a one-time transitional tax on foreign cash equivalents and previously unremitted earnings. Several of the new provisions enacted as part of the Tax Act require clarification and guidance from the U.S. Internal Revenue Service (“IRS”) and Treasury Department. These or other changes in U.S. tax laws could impact our profits, effective tax rate, and cash flows. Significant components on the Company’s income tax provision (benefit) for continuing operations is as follows: For the Years Ended December 31, 2023 2022 2021 Current Domestic-Federal $ 547,506 $ 1,787,793 $ 1,080,572 Domestic-State (117,495 ) 719,490 618,341 Franchise taxes 51,150 46,243 - Foreign - - - 481,161 2,553,526 1,698,913 Deferred Domestic-Federal 90,482 190,517 (257,461 ) Domestic-State 26,422 53,612 (74,090 ) Foreign - - - 116,904 244,129 (331,551 ) Total Provision for Income Taxes $ 598,065 $ 2,797,655 $ 1,367,362 The Company currently believes that all significant filing positions are highly certain and that all of its significant income tax filing positions and deductions would be sustained upon audit. Therefore, the Company has no significant reserves for uncertain tax positions and no adjustments to such reserves were required by US GAAP. The Company’s policy is to recognize accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes. The Company’s tax returns are subject to examination for the years ended December 31, 2018 through 2023. A reconciliation of the amount of tax provision (benefit) computed using the U.S. federal statutory income tax rate to the provision for income taxes on continuing operations is as follows: For the Years Ended December 31, 2023 2022 2021 Domestic-Federal $ 568,244 $ 2,098,733 $ 1,505,142 State taxes, net of federal benefit 143,498 641,946 433,140 Non-deductible expenses 145,095 (1,291 ) 7,529 Franchise taxes 51,150 46,243 - Revision of prior years' provision to return filing (316,097 ) (2,938 ) (20,979 ) Change in estimated future income tax rates 116,289 (39,355 ) (609,673 ) Change in valuation allowance (112,536 ) 40,465 52,203 Other 2,423 13,851 - Total Provision for Income Taxes $ 598,065 $ 2,797,655 $ 1,367,362 Deferred tax assets and liabilities as of December 31, 2023 and 2022 were as follows: December 31, December 31, 2023 2022 Deferred Tax Assets: Stock-based compensation $ 2,766,156 $ 2,754,875 Sales Allowances 167,051 256,650 Spoiled and Written-Off Inventory 9,839 - Accrued Related Party Expenses 1,036 612 Allowance for Doubtful Accounts 98,746 77,269 Lease Liabilities 4,918 23,060 Less: Valuation allowance for stock-based compensation (2,642,339 ) (2,754,875 ) Total Deferred Tax Assets 405,407 357,591 Deferred Tax Liabilities: Depreciation & Amortization (425,536 ) (270,169 ) Goodwill (9,353 ) - Total Deferred Tax Liabilities (434,889 ) (270,169 ) Net Deferred Tax Assets/(Liabilities) $ (29,482 ) $ 87,422 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2023 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 14 – SUBSEQUENT EVENTS Management of the Company has evaluated the events that have occurred through the date of the filing of this Annual Report on Form 10-K and has noted the following subsequent events for disclosure purposes: Termination of Jeeter Agreement The Jeeter Agreement was terminated effective January 1, 2024 pursuant to a Termination Agreement dated as of March 22, 2024 between Jeeter and Lifted. Pursuant to such Termination Agreement, among other things: Jeeter is obligated to pay Lifted $150,000 upon the signing of such Termination Agreement, and an additional $150,000 within 15 days following the signing of such Termination Agreement; and Jeeter shall arrange and pay for the shipment from Lifted to Jeeter of certain raw goods and finished goods associated with Jeeter branded products that are in Lifted's possession on the date of the signing of such Termination Agreement. Manufacturing, Sales and Marketing Agreement With Subsidiary of a Large Publicly Traded US Marijuana Company On or about January 23, 2024, Lifted entered into a Manufacturing, Sales and Marketing Agreement effective as of January 20, 2024 (“Agreement”) with a wholly owned subsidiary of a large, publicly traded US marijuana company that designs and sells hemp-derived vape and gummy products. The Agreement is similar in many respects to the other manufacturing, sales and marketing agreements entered into by Lifted in 2023. Our management does not believe that any of the relationships with the other collaborating companies have had a significant impact on our revenues as no sales under any of the agreements have increased Lifted’s revenues by more than 5%. There is no assurance that this new Agreement, with this new counterparty, will have a greater impact on our revenues than the relationships with the others; however, it may. Services to be Provided by Lifted Made Under the terms of the new Agreement with this new counterparty, the parties (“Parties”) have agreed that Lifted will serve as the exclusive manufacturer and distributor of certain 2018 Farm Bill compliant hemp-derived vape products and gummy products in the formulations and to the specifications mutually agreed upon by the Parties (the “Products”). The territory for the sale of the Products is limited to the United States of America (“Territory”). In addition to serving as exclusive manufacturer and distributor of the Products, Lifted will be responsible to sell the Products to customers (“Customers”), and to collect all payments from such Customers for the Products in the Territory during the Term (the “Services”). Lifted, in its capacity as the exclusive manufacturer and distributor of the Products in the Territory during the Term, shall be an independent contractor and not an agent, representative or employee of the other party. As part of the Services, Lifted shall create a distribution and sub-distribution network for the sale of Products to Customers within the Territory. Neither Party shall have any right or power to represent or bind the other Party with respect to any third party. Term The term of the Agreement is eighteen (18) months from the effective date, renewable upon mutual written agreement of the Parties. Marketing Under the terms of the Agreement, the other party shall be primarily responsible for marketing the Products and shall pay the costs of such marketing. Lifted Made shall reasonably cooperate in advertising and marketing programs for the Products and shall reasonably cooperate in implementing sales, promotional and merchandising programs for the Products. All promotional discounts shall be subject to the mutual agreement of the Parties. Quality Under the terms of the Agreement, Lifted is required to use its best efforts to source materials for production of the Products at the lowest cost, provided such Products shall conform to quality standards consistent with industry standards for such products. Lifted Made is required to ensure the Products fall within certain predefined limits of heavy metals, microbial impurities, mycotoxins, residual pesticides, residual solvents and processing chemicals, as well as additional quality standards communicated to Lifted Made. Any Products failing such quality standards may be rejected. Lifted is also required to manufacture the Products and be responsible for all safety testing and approvals in conformity with the standards and legal requirements applicable to the manufacturing, distribution and sale of any Products and ensuring that all governmentally required reporting (including but not limited to PACT Act reporting) is accurately and timely made, and that all applicable excise taxes and sales taxes (collectively, “Excise and Sales Taxes”) are paid. In the event of any defects in the Products, Lifted shall, at its sole cost and expense, either (i) refund the cost of such Product or (ii) replace the Product, such election to be at the other party’s sole discretion. Under the terms of the Agreement, all elements of the design, manufacturing, quality, advertising and promotion of the Products shall be mutually agreed upon and approved by the Parties, and Lifted shall submit to the other for approval: (i) any relevant schematic designs, (ii) pre-production samples, (iii) production samples, and (iv) such other specific items as are requested by the other party in its reasonable discretion from time to time for approval, and at all times prior to production and prior to being offered for sale. Products not approved by both Parties to the Agreement shall not go on to the next stage of production and shall not be offered for sale or sold by Lifted Made. Prices Under the terms of the Agreement, the Parties have agreed to work together in good faith to determine the sales prices to Customers for the Products and such prices shall be subject to the Parties’ mutual agreement. The Parties have agreed to work together to enact lawful and appropriate pricing strategies, including MSRP and maximum sale prices. Lifted shall make good faith efforts to collect all payments in connection with sales of all Products. Customers Under the terms of the Agreement, the Parties have agreed to work together in good faith to determine the Customers to which Lifted is selling the Products, subject to Lifted’s reasonable discretion, provided that the Parties shall regularly evaluate sales targets, accounts receivable, bad debt, and other reasonable factors to determine which Customers to direct Product to, and the other party shall have the right, in its reasonable discretion, to reject and direct Lifted to stop selling to a Customer in the event it deems necessary upon advanced notice to Lifted. Forecasting Under the terms of the Agreement, the Parties have agreed to meet monthly to review Products, discuss predicted order volumes, review pricing to Customers, plan marketing and sales efforts, discuss expansion into other states within the Territory, and evaluate additional potential Customers. The Parties shall also use such meetings to agree upon the quantities of raw materials, ingredients and supplies to produce the Products. Purchase Orders Under the terms of the Agreement, the other party shall initiate all Purchase Orders. Lifted has the right, in its sole discretion, to accept or reject any Purchase Order. Lifted may accept any Purchase Order by confirming the order via written confirmation and written invoice sent by an authorized agent of Lifted Made, including estimated completion date of the Products contemplated by such Purchase Order. Excess Demand Under the terms of the Agreement, in the event the Parties reasonably determine, after good faith discussions, that Lifted cannot accept the volume of Purchase Orders and anticipated demand for the future production of Products at any point during the Term of this Agreement (or in the event Lifted rejects a Purchase Order), the Agreement’s exclusivity shall be automatically waived by Lifted, but only to the extent of such excess demand as reasonably determined by the Parties after good faith discussions. In such a case, the other party shall have the right to work with any manufacturer, in its sole discretion, to meet such excess demand expectations. Costs of Purchase Order Under the terms of the Agreement, upon Lifted’s acceptance of a Purchase Order, Lifted is entitled to invoice the other party for 50% of the costs of the Purchase Orders with net 15-day terms. Lifted may only use the 50% down payment for placing orders for materials and production costs, including lab testing, associated with the accepted Purchase Order and for no other purpose. Once the Products are completed and are ready for shipment to Customers, Lifted is entitled to invoice the other party for the remaining 50% of the costs of the Purchase Orders with net 15-day terms. Cost Recovery and Royalty Under the terms of the Agreement, once sales of the Products begin, Lifted is required to use all revenue from the sale of the Products (less returns, discounts, refunds, etc.) (“Adjusted Gross Revenue”) to reimburse the other party until the other party has been fully repaid the cost of the Purchase Order. Thereafter, the Parties shall divide the remaining Adjusted Gross Revenue 60/40, with 40% of that Adjusted Gross Revenue going to Lifted Made (the “Royalty”). Warranty Under the terms of the Agreement, Lifted represents and warrants (i) that the Products, packaging and labels to be used in the Territory shall comply with all applicable laws, rules and regulations in those US states where sales of such Products are legal; (ii) that the Products shall comply with all federal, state or local laws and regulations relating to the Products’ quality, dosage, labeling, identity, quantity, or packaging; (iii) that the Products will not be adulterated or misbranded within the meaning of any applicable federal or state law or regulation, and will contain all necessary warnings, disclosures or instructions, in each case, pursuant to all applicable laws, rules and regulations; (iv) all third parties Lifted Made engages in connection with the manufacturing, distribution and sale of the Product (e.g., sub-distributors) adhere to all applicable laws, rules and regulations, including without limitation those regarding the importation, child and/or oppressive labor, and the regulation of controlled substances and 2018 Farm Bill; and (v) all Products shall be free from defects in material and workmanship and fit for their intended purpose. Indemnification Under the terms of the Agreement, Lifted Made agreed to indemnify the other party for (i) harm, injury, damage or loss arising out of or in connection with the Services, production and manufacture, distribution and/or sale of the Products (including by any third parties engaged by Lifted Made (e.g., sub-distributors)); (ii) harm, injury, damage or loss arising out of or in connection with the use of the Products by any Customer or end-user, to the extent such harm, injury, damage or loss results from a defect in the Products; (iii) any uncured material breach by Lifted Made of any provision hereof; (iv) any violation of any applicable law or government regulation by Lifted Made or any third party engaged by Lifted Made in connection with the Products; and (v) any recall or withdrawal of a Product in accordance with this Agreement. Notwithstanding the forgoing, Lifted Made shall have no indemnification obligation hereunder pursuant to clauses (i), (ii) or (iii) above if such recall, withdrawal or defect arises out of or relates to any misuse, mishandling, or improper storage of, or damage caused to, the Products by anyone other than Lifted Made or its manufacturers/producers, Customers, or any third party engaged by Lifted Made in connection with the Products. Insurance During the Term of the Agreement, each Party, at its own expense, is required to procure and maintain in full force and effect its own insurance policy or policies against any loss, liability, product liability, personal injury, death, or property damage, and shall provide certificates of insurance evidencing such coverage to the other Party promptly upon request. Such coverage shall include (1) Comprehensive Commercial General Liability Insurance with limits of $1,000,000 per occurrence and $2,000,000 in aggregate; (2) Worker’s Compensation Insurance in limits required by applicable law; and (3) Product Liability Insurance with minimum limits of $1,000,000 per occurrence and $2,000,000 in aggregate. GL and Product Liability policies shall name the other Party as an additionally insured party. Termination At any time during the Term of the Agreement, either party has the option, but not the obligation, to terminate this Agreement at any time, effective upon written notice, in the event the other Party has defaulted on any of its obligations under this Agreement and such default is not cured within thirty (30) days after receipt of written notice specifying the default. Complaints Filed Against Lifted Lifted currently is involved in two pending lawsuits, as the defendant: (1) Jessie Hooks v. Lifted Made, URB Cannabis, Barry Hollingsworth, Gerard Jacobs, Nicholas Warrender, and Pharmlabs, LLC (2) Loree Perry, Individually and on Behalf of All Others Similarly Situated v. Sheikhani Group, et al Lease of Space Located at 789 Tech Center Drive, Unit C, Durango, Colorado 81301 On February 27, 2024, Lifted entered into a lease agreement with CR Properties, LLC, (“CR”) for office, manufacturing and warehouse space located at 789 Tech Center Drive, Unit C, Durango, Colorado 81301 (the “789 Tech The initial term of the 789 Tech Lease commenced on March 1, 2024, and will end on February 28, 2025 (“Initial Term”). After the Initial Term, Lifted and CR may renegotiate the lease. Under the terms of the 789 Tech Lease, Lifted leases a total of approximately 2,205 square feet of space. During the Initial Term, Lifted shall pay CR base annual rent of $30,000, payable in equal monthly installments of $2,500. In addition, as part of the 789 Tech Lease, Lifted paid CR a $5,000 security deposit. In addition to the base monthly rent, Lifted is also responsible for paying its proportionate share of real estate taxes and other operating costs. Since the Initial Term is twelve months, this lease is not recorded on the Consolidated Balance Sheet, and lease expense is recognized on a straight-line basis over the lease term. Second Amendment to the Lease of 8910 58th Place, Suites 600 and 700, Kenosha, Wisconsin 53144 On March 25, 2024, the Second 58 th th Effective as of April 1, 2024 (the “Expansion Date”), the Second 58 th th th The Expansion Area will be used for office, manufacturing and warehouse space. Under the Second Amendment to the Second 58 th th Commencing on February 1, 2027, the base monthly rent for Suites 600 and 700 of the Second 58 th Suites 600 and 700 Date Base Monthly Rent February 1, 2027 – January 31, 2028 $ 4,637.41 February 1, 2028 – January 31, 2029 $ 4,776.53 February 1, 2029 – May 31, 2029 $ 4,919.83 Commencing on the Expansion Date, the base monthly rent for the Expansion Area (Suite 100) is as follows: Suite 100 Date Base Monthly Rent April 1, 2024 – May 31, 2024 $ 0.00 June 1, 2024 – March 31, 2025 $ 16,770.83 April 1, 2025 – March 31, 2026 $ 17,273.96 April 1, 2026 – March 31, 2027 $ 17,792.18 April 1, 2027 – March 31, 2028 $ 18,325.94 April 1, 2028 – March 31, 2029 $ 18,875.72 April 1, 2029 – May 31, 2029 $ 19,441.99 Under the Second Amendment to the Second 58 th th th th The effectiveness of the Second Amendment to the Second 58 th (i) the Lease Termination Agreement dated March 18, 2024, by and between Ladi and Lifted for Lifted’s leased space located at 8920 58th Place, Suite 850, Kenosha, Wisconsin 53144 (the “8920 Suite 850 Termination Agreement”), (ii) the Lease Termination Agreement dated March 18, 2024, by and between Ladi and Lifted for Lifted’s leased space located at 9560 58th Place, Suite 360, Kenosha, Wisconsin 53144 (the “the 9560 Suite 360 Termination Agreement”), and (iii) the Lease Termination Agreement dated March 18, 2024, by and between Ladi and a third party that currently leases the space located at 8910 58th Place, Suite 100, Kenosha, Wisconsin 53144 (the “8910 Suite 100 Termination Agreement”). These contingencies were met on or about March 27, 2024. |
BASIS OF PRESENTATION AND SIG_2
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2023 | |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | Basis of Presentation – On May 18, 2021, the Company changed its name to LFTD Partners Inc. from Acquired Sales Corp. On March 15, 2022, the Company changed its stock trading symbol to LIFD. After acquiring, operating and then selling businesses involved in the defense sector, our business is currently directly or indirectly involved in the development, manufacture and/or sale or re-sale of a wide variety of branded, hemp-derived, psychoactive and alternative lifestyle products, and of products involving nicotine, tobacco and marijuana. We are primarily interested in acquiring rapidly growing, profitable companies that are also involved in the manufacture and sale of branded, hemp-derived, psychoactive and alternative lifestyle products (a “Canna-Infused Products Company”). Management of the Company is open-minded to the concept of also acquiring operating businesses and/or assets directly or indirectly involving products containing nicotine, tobacco, marijuana, distilled spirits, beer, wine, and/or real estate. In addition, management of the Company is open-minded to the concept of diversifying, by acquiring all or a portion of one or more operating businesses and/or assets that are considered to be “essential” businesses that are outside our industry and that are unlikely to be shut down by the government during pandemics such as COVID-19, or that have less regulatory risk than a Canna-Infused Products Company. Lifted Made On February 24, 2020, we acquired 100% of the ownership interests in one Canna-Infused Products Company called Lifted Liquids, Inc. d/b/a Lifted Made and d/b/a Urb Finest Flowers (www.urb.shop), Kenosha, Wisconsin (“Lifted Made” or “Lifted”). Lifted manufactures and sells hemp-derived and psychoactive products under its award-winning Urb Finest Flowers (“Urb”) brand. Products currently sold by Lifted include, for example: disposable vapes and cartridges, gummies, joints, blunts, and products containing ingredients such as kanna, muscimol, ashwagandha and kava. Bank Financing and Purchase of Headquarters Building On December 14, 2023, LFTD Partners and Lifted (together the “Borrower”), jointly borrowed a total of $3,910,000 from Surety Bank, of DeLand, Florida (“Lender”). The Lender made two five-year loans to the Borrower, as joint borrowers: (1) a working capital loan of $3,000,000 at 9.5% fixed annual interest, and (2) a $910,000 loan at 10% fixed annual interest, the net proceeds of which were used by Lifted Made to pay a portion of the $1,375,000 purchase price of Lifted Made’s main operations building located at 5511 95th Avenue in Kenosha, Wisconsin (“5511 Building”). The two loans are cross collateralized by a first lien mortgage on the 5511 Building, and by a first lien security interest in all of the other assets owned by LIFD and Lifted Made, in favor of Surety Bank. Purchase of the 5511 Building Toward the end of 2020, our Vice Chairman and Chief Operating Officer Nicholas S. Warrender (“NWarrender”), through his assigned entity 95th Holdings, LLC (“Holdings”), purchased the 5511 Building, which was immediately leased to us to conduct our expanded operations. The 5511 Building includes office, laboratory and warehouse space. As part of the lease agreement with Holdings, the parties agreed that our wholly owned subsidiary Lifted would eventually purchase the 5511 Building. The purchase price for the 5511 Building was originally subject to valuation based on a formula agreed upon by the parties. Pursuant to an agreement with NWarrender on December 30, 2021, the parties agreed to set the purchase price for the 5511 Building at $1,375,000. Prior to the Acceleration Agreement, which was entered into by the Company with NWarrender on July 5, 2022, Lifted had an obligation to complete the purchase of the 5511 Building on or before December 31, 2022. Pursuant to the Acceleration Agreement, the deadline to purchase the 5511 Building was extended by one year to December 31, 2023. Lifted purchased the 5511 Building from Holdings on December 14, 2023 for the agreed upon purchase price of $1,375,000 in cash. Improvements to and Potential Expansion of the 5511 Building Due to an extreme need for additional employee parking spots at the 5511 Building, the Company in the fourth quarter of 2022 built a parking lot at the 5511 Building for $193,216, which is accounted for as a building improvement (a capitalized fixed asset). The investment in this necessary parking lot had no impact on the $1,375,000 purchase price that Lifted had committed to pay for, and did pay for, the 5511 Building on December 14, 2023. The Company desires to have all of its operations under one roof at the 5511 Building in order to become more efficient. The Company has hired and paid an architectural and construction company (the “Construction Company”) which has created a preliminary design for expanding the 5511 Building by approximately 30,000 square feet. The Construction Company has provided a preliminary estimate that the potential expansion could cost the Company approximately $3,500,000. Neither the management nor the Board of Directors of the Company has committed to such potential expansion, but it is under active consideration. $3,000,000 Working Capital Loan Credit Agreement Pursuant to the Credit Agreement dated as of December 14, 2023 (the “Credit Agreement”), among the Borrower and the Lender, the Lender agreed to loan to the Borrower $3,000,000 (“Working Capital Loan”). The interest rate for the Working Capital Loan is a fixed annual interest rate of 9.5%. The Credit Agreement requires a Promissory Note and Security Agreement. The Credit Agreement requires a prepayment fee if the Working Capital Loan is repaid to the Lender in less than three years, in the amount of 3% of the Working Capital Loan if the loan is repaid in Year-1, 2% of the Working Capital Loan if the Working Capital Loan is repaid in Year-2, and 1% if the Working Capital Loan is repaid in Year-3. The Credit Agreement is also subject to certain negative covenants in which the Borrower agreed (subject to certain exceptions) not to, among other things: · Become subject to other liens or encumbrances; · Change ownership of Lifted Made without the consent of the Lender; · Enter into a merger, acquisition or divestiture; · Conduct stock buybacks; · Serve as a guarantor; · Wind up, liquidate or dissolve; · Enter into the purchase, sale, exchange or transfer of property; · Permit the outstanding principal balance of the Working Capital Loan to exceed 40% of the fair market value of the collateral securing the Working Capital Loan; or · Directly or indirectly issue, assume or create any additional indebtedness on the collateral. Promissory Note Pursuant to the Promissory Note dated as of December 14, 2023 (the “WC Note”), among the Borrower and the Lender, the Lender agreed to loan to the Borrower the Working Capital Loan at a fixed annual interest rate of 9.5%. The WC Note also requires a 5% late fee on outstanding unpaid payments due under the WC Note where payments are not made within 10 days of the due date. The WC Note has cross-default cross-collateralized provisions with the $910,000 Business Loan described below. Security Agreement Pursuant to a Security Agreement dated as of December 14, 2023 (“Security Agreement”), the Borrower granted to the Lender a security interest in all the Borrower’s personal property relating to its business to secure the obligations of the Borrower under the Credit Agreement. The collateral that is secured by the Security Agreement includes all the Borrower’s accounts, general intangibles, inventory, equipment, goods, deposit accounts, contractual rights, fixtures, money, insurance and commercial tort claims. If an event of default under the Credit Agreement occurs, then the Lender may exercise the Borrower’s rights in the collateral. In that event, the Lender will have all the rights of a secured party with respect to the collateral under the Uniform Commercial Code, including, among other things, the right to sell the collateral at public or private sale. Collateral Assignment Agreement Under the Collateral Assignment Agreement dated as of December 14, 2023, between the Borrower and the Lender, the Borrower assigned to the Lender, in connection with the terms of the Credit Agreement, all of Borrower’s “intellectual property”, including but not limited to, all patents, patent rights, trademarks and service marks, works, inventions, copyrights, trade names, software and computer programs, trade secrets, methods, processes, know how, drawings, and specifications. In the event of default under the Credit Agreement or WC Note, or other cross collateralized obligations, the Lender would be entitled to the foregoing intellectual property collateral to the detriment of the Borrower. Pledge Agreement Under the Pledge Agreement dated as of December 14, 2023, between the Borrower and $910,000 Loan Business Loan Agreement Pursuant to the Business Loan Agreement dated as of December 14, 2023 (the “Loan Agreement”), among the Borrower and the Lender, the Lender agreed to loan $910,000 (the “Business Loan”) to the Borrower. The Business Loan requires that Borrower shall maintain a minimum 1.50x Debt Service Coverage Ratio (DSCR) based on Borrower tax returns. The DSCR shall be tested annually, beginning with the 2023 return. The DSCR shall be calculated as EBIDA (earnings before interest, depreciation, and amortization) divided by contractual annual debt service payments. The Business Loan also requires Borrower to maintain its primary operating accounts with a $1,000,000.00 minimum deposit account balance with the Lender for the life of the Business Loan. The Business Loan also requires a Promissory Note, Mortgage and Assignment of Rents, Leases, and Security Deposits described below. Promissory Note Pursuant to the Promissory Note dated as of December 14, 2023 (the “BL Note”), among the Borrower and the Lender, the Lender agreed to loan to the Borrower the Business Loan at a fixed annual interest rate of 10%. The BL Note also requires a 5% late fee on outstanding unpaid payments due under the BL Note. The BL Note requires a mortgage on the 5511 Building, along with a first priority security interest on: all furniture, equipment, inventory, and general intangibles (including but not limited to all software and all payment intangibles); all fixtures; and all attachments, accessions, accessories, fittings, increases, tools, parts, repairs, supplies, and commingled goods. Mortgage Pursuant to the Mortgage dated as of December 14, 2023 (the “Mortgage”), among Lifted Made in favor of the Lender, in connection with the terms of the Loan Agreement and BL Note, Lifted Made agreed to a first priority mortgage on the 5511 Building (Parcel Number 08-222-32-410-104). In the event of default under the Loan Agreement or BL Note, or other cross collateralized obligations, the Lender would be entitled to the foregoing equity collateral to the detriment of the Borrower. Assignment of Rents, Leases, and Security Deposits Pursuant to the Assignment of Rents, Leases, and Security Deposits dated as of December 14, 2023 (the “Lease Assignment”), among Lifted Made in favor of the Lender, in connection with the terms of the Loan Agreement and BL Note, Lifted Made agreed to assign its rights to leases and income from the 5511 Building to Lender. In the event of default under the Loan Agreement or BL Note, or other cross collateralized obligations, the Lender would be entitled to the foregoing equity collateral to the detriment of the Borrower. Default under any of the agreements described above could have a highly detrimental, if not catastrophic impact on our company. Consolidated Balance Sheet Presentation of the Working Capital and Business Loans and Maturity Analysis The following presents the Working Capital and Business Loans in the Consolidated Balance Sheets as of December 31, 2023 and 2022: December 31, December 31, 2023 2022 Working Capital Loan $ 3,000,000 $ - Business Loan 910,000 - Total principal amount 3,910,000 - Less: Unamortized debt financing costs (55,149 ) - Less: Current portion of Surety Bank notes (506,061 ) - Non-Current portion of Surety Bank notes $ 3,348,790 $ - The following represents aggregate payments due on the Working Capital and Business Loans during each of the five years subsequent to December 31, 2023 and thereafter: Maturity Analysis: 2024 $ 876,939 2025 876,939 2026 876,939 2027 876,939 2028 1,618,429 Thereafter - Total 5,126,185 Less: interest port ion (1,216,185 ) Total principal amount $ 3,910,000 Manufacturing, Sales and Marketing Agreements During the year ended December 31, 2023 Lifted entered into Cali Sweets Agreement On January 11, 2023, Lifted entered into a Manufacturing, Sales and Marketing Agreement (“Cali Agreement”) with Cali Sweets, LLC (“Cali”). Cali is headquartered in North Hollywood, California, and currently sells products under the brand name Koko Nuggz. The Cali Agreement entitles Lifted to be the exclusive worldwide manufacturer and distributor of Cali’s disposable vape products (under the brand name Koko Puffz) and gummy products (under the brand name Koko Yummiez) (“Cali Products”). Pursuant to the Cali Agreement, Lifted manufactures, markets, and distributes certain Cali Products and brands worldwide. Lifted and Cali equally share certain production and marketing costs associated with such Cali Products on a dollar-for-dollar basis. Revenue from the sale of such Cali Products are divided on a 60/40 basis, net of any returns, discounts, or replacements, with 60% allocated to Lifted, and the remaining 40% to Cali. Under the terms of the Cali Agreement, Lifted has the right, in its discretion, to add new Cali brands and Cali Products as they are developed. Lifted can also set prices for Cali Products it supplies or unilaterally discontinue the supply of any Cali product if it no longer makes business sense to Lifted. The parties also agreed that Cali will provide social media marketing services for both Cali Products and brands, and for Lifted’s Urb branded products. The term of the Cali Agreement is five years and may be extended with the mutual consent of the parties. However, after the initial 24 months, the Cali Agreement may be terminated by either party, for any or no reason, upon providing the other party with 180 days written notice. Cali may become subject to early exit payments to Lifted if it early terminates. The exit fee formula is based on estimated profits that Lifted may have enjoyed had Cali not early terminated the relationship. Regarding the accounting for the Cali Agreement: the Company has evaluated the principal versus agent considerations in Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. The Company has considered the following facts to assess whether Lifted has control of the Cali Products that are manufactured and distributed pursuant to the Cali Agreement: · Lifted is the exclusive worldwide manufacturer and distributor of the Cali Products. To fulfill its obligations pursuant to the Cali Agreement, Lifted sources raw goods, labor, and other resources to manufacture the Cali Products at Lifted’s facilities and holds these raw goods and Cali Products in its facilities until the Cali Products are sold and shipped to customers. · Customers’ orders of Cali Products are received through Lifted’s website www.urb.shop. Lifted processes these orders, prepares the Cali Products for shipment from Lifted’s inventories, and ships the Cali Products directly to the customers. Lifted is responsible for collecting payments from customers but does not guarantee collection. · Lifted has the right, in its discretion, to add new Cali brands and Cali Products as they are developed. · Lifted can set prices for Cali Products it supplies or unilaterally discontinue the supply of any Cali product if it no longer makes business sense to Lifted. Based on these considerations, the Company concludes that Lifted is the principal relative to Cali in the Cali Agreement. Therefore, sales of Cali Products are recognized and reported by the Company on a gross basis on the Consolidated Statements of Operations, and once payment is collected from a customer from the sale of Cali Products, the Commission Payable to Cali is reported as a current liability on the Company’s Consolidated Balance Sheets, and Commission Expense is reported in the Operating Expenses section of the Consolidated Statements of Operations. Manufacturing, Sales and Marketing Agreement With Diamond Supply Co. On April 23, 2023, Lifted entered into a Manufacturing, Sales and Marketing Agreement (“Diamond Agreement”) with Diamond Supply Co. (“Diamond”), Calabasas, California. Founded in 1998, Diamond develops and sells a full range of skateboard hard and soft goods including bolts, bearings, t-shirts, hoodies, and other skateboarding and streetwear accessories. The Diamond Agreement entitles Lifted to be the exclusive worldwide manufacturer and distributor of Diamond’s disposable vapes, gummies, pre-rolled joints, and hard candies (“Diamond Products”). These Diamond Products may contain CBD, hemp, delta-8-THC, delta-10-THC, cannabis and/or cannabinoid derivatives and are to be branded under one or more of Diamond’s brands or marks. Lifted shall pay Diamond a royalty of twenty percent (20%) of Adjusted Gross Revenue (defined below) on the initial manufacturing run of each Diamond Product manufactured and sold by Lifted Made under the Diamond Agreement. The Diamond Agreement defines Adjusted Gross Revenue as revenue on the Diamond Product “less any sales taxes, actual returns, pre-approved discounts, replacements, refunds and credits for returns.” After the initial manufacturing run of a Diamond Product, Lifted shall pay Diamond a royalty of forty five percent (45%) of Adjusted Gross Revenue on subsequent manufacturing runs for that Diamond Product; however, under the terms of the Diamond Agreement, the parties will split manufacturing costs 50/50 for Diamond Products sold after each Diamond Product’s first manufacturing run. Alternatively, under the terms of the Diamond Agreement, Diamond is entitled to notify Lifted that it elects to be paid a flat 7% of Adjusted Gross Revenue on specific subsequent manufacturing runs without sharing in the manufacturing costs for that run. Diamond is also entitled to purchase Diamond Products produced under the Diamond Agreement from Lifted for direct sale on Diamond’s website and via certain other channels used by Diamond. Under the terms of the Diamond Agreement, Diamond’s cost for these Diamond Products acquired for direct sale is 30% below wholesale. Under the terms of the Diamond Agreement, the parties will work together to set prices for Diamond Products. The term of the Agreement is three years and may be extended with the mutual consent of the parties. However, the Diamond Agreement may be extended for one-year with notice by Diamond at least three months prior to the end of the 3-year term, or by mutual consent of the parties. If Lifted pays to Diamond aggregate annual royalty payments of at least $1,000,000 per year, then the Diamond Agreement shall automatically renew for an additional one-year term. Regarding the accounting for the Diamond Agreement: the Company has evaluated the principal versus agent considerations in ASC 606, Revenue from Contracts with Customers. The Company has considered the following facts to assess whether Lifted has control of the Diamond products that are manufactured and distributed pursuant to the Diamond Agreement: · Lifted is the exclusive worldwide manufacturer and distributor of the Diamond Products. To fulfill its obligations pursuant to the agreement, Lifted sources raw goods, labor, and other resources to manufacture the Diamond Products at its own facilities and holds these raw goods and Diamond Products in its facilities until the Diamond Products are sold and shipped to customers. · Customers’ orders of Diamond Products are received through Lifted’s website www.urb.shop. Customers that attempt to purchase the Diamond Products from www.diamondsupplyco.com are redirected to www.urb.shop. Lifted processes these orders, prepares the Diamond Products for shipment from Lifted’s inventories, and ships the Diamond Products directly to customers. · Lifted and Diamond agree upon the retail sales prices for the Diamond Products, and both Lifted and Diamond are to make good faith efforts to collect all payments in connection with each party’s sales of Diamond Products to all of its customers. Based on these considerations, the Company concludes that Lifted is the principal relative to Diamond in the Diamond Agreement. Therefore, sales of Diamond Products are recognized and reported by the Company on a gross basis on the Consolidated Statements of Operations, and once payment is collected from a customer from the sale of Diamond Products, the Royalty Payable to Diamond is reported as a current liability on the Company’s Consolidated Balance Sheets, and Royalty Expense is reported in the Operating Expenses section of the Consolidated Statements of Operations. Jeeter Agreement On July 17, 2023, Lifted and DreamFields Brands Inc. d/b/a Jeeter (“Jeeter”) entered a Manufacturing, Sales and Marketing Agreement dated as of July 14, 2023 (the “Jeeter Agreement”). Pursuant to the Jeeter Agreement: (1) Jeeter has appointed Lifted as its exclusive manufacturer, seller and distributor within the United States of vape, gummies and pre-rolled products containing hemp-derived cannabinoids sold under the Jeeter brand (“Jeeter Products”); (2) Jeeter and Lifted will agree upon the devices, formulation, design, packaging, run costs, and marketing of each of the Jeeter Products; (3) Jeeter and Lifted will share equally the costs of manufacturing, marketing, distributing and insuring the Jeeter Products (“Product Costs”); and (4) the revenue from all Product sales, minus applicable Product offsets and sales commissions (“Aggregate Product Revenue”), will be allocated 60% to Jeeter and 40% to Lifted. The Jeeter Agreement is for an Initial Term of two years, provided that if the completed Product sales during the first year of the Initial Term are a minimum of $48 million (the “Minimum Sales”), then the Initial Term will automatically continue until the end of the second year of the Initial Term. Jeeter and Lifted may mutually agree in writing to extend the Jeeter Agreement for Renewal Terms of at least one year each, but if not so extended then the Jeeter Agreement will automatically terminate. Jeeter may terminate the Jeeter Agreement at any time upon written notice to Lifted upon any of the following: (1) if Lifted fails to achieve the Minimum Sales during any 12 month period; (2) if there is any material change in federal legislation regarding the manufacturing, sale, use or consumption of hemp-derived delta-8-THC that in Jeeter’s sole and absolute determination has an adverse impact upon the Jeeter Agreement; or (3) if Jeeter determines in its sole and absolute discretion that the sale of Jeeter Products under the Jeeter Agreement has or is reasonably likely to have an adverse impact on Jeeter’s delta-9-THC product business. The Jeeter Agreement provides that if Aggregate Product Revenue achieves $1.5 million or more in a single month, then thereafter so long as Aggregate Product Revenue achieves $9 million or more in each six month period, Lifted shall be prohibited from directly or indirectly manufacturing, marketing, distributing, promoting or selling pre-rolled joints made from hemp or cannabis in the United States (except under the Jeeter Agreement) during the remaining term of the Jeeter Agreement. Regarding the accounting for the Jeeter Agreement: the Company has evaluated the principal versus agent considerations in ASC 606, Revenue from Contracts with Customers. The Company has considered the following facts to assess whether Lifted has control of the Jeeter Products that are manufactured and distributed pursuant to the Jeeter Agreement: · Lifted is the exclusive manufacturer, seller, and distributor of the applicable Jeeter branded products in the USA. To fulfill its obligations pursuant to the agreement, Lifted sources raw goods, labor, and other resources to manufacture the Jeeter Products at its own facilities and holds these raw goods and Jeeter Products in its facilities until the Jeeter Products are sold and shipped to customers. Initially, Lifted was manufacturing all of the Jeeter Products, but in the middle of Q3 2023 Jeeter also began manufacturing joints at its facility after being authorized by Lifted to do so. Nonetheless, Jeeter produces joints during Monday through Friday, and then ships the finished joints to Lifted’s headquarters in Kenosha on Saturday. Lifted controls the Jeeter Products until they are then sold and shipped to the customers. · Customers’ orders of Jeeter Products are received through Lifted’s website www.urb.shop. Lifted processes these orders, prepares the Jeeter Products for shipment from Lifted’s inventories, and ships the Jeeter Products directly to the customers. Lifted is responsible for collecting payments from customers but does not guarantee collection, nor the timetable of such collection. Based on these considerations, the Company concludes that Lifted is the principal relative to Jeeter in the Jeeter Agreement. Therefore, sales of Jeeter Products are recognized and reported by the Company on a gross basis on the Consolidated Statements of Operations, and once payment is collected from a customer from the sale of Jeeter Products, the Commission Payable to Jeeter is reported as a current liability on the Company’s Consolidated Balance Sheets, and Commission Expense is reported in the Operating Expenses section of the Consolidated Statements of Operations. The Jeeter Agreement was terminated effective January 1, 2024 pursuant to a Termination Agreement dated as of March 22, 2024 between Jeeter and Lifted, described in NOTE 14 – SUBSEQUENT EVENTS Mirsky Agreement On July 11, 2023, Lifted and Florence Mirsky (“Mirsky”) entered into an Agreement (the “Mirsky Agreement”). Pursuant to the Mirsky Agreement, in consideration of Mirsky’s introduction of Jeeter to Lifted, Lifted shall pay to Mirsky finder’s fees equal to 6.5% of the amount, if any, by which Lifted’s share of the Aggregate Product Revenue under the Jeeter Agreement exceeds Lifted’s share of the Product Costs under the Jeeter Agreement. Lifted Purchase of Assets of Oculus CRS, LLC, and Merger With Oculus CHS Management Corp. Asset Purchase Agreement On April 28, 2023, Lifted purchased nearly all of the assets (the “Purchased Assets”) of its hemp flower products supplier Oculus CRS, LLC, Aztec, New Mexico (“Oculus”) for $342,068, net of $26,420 cash acquired. The Purchased Assets include, but are not limited to, Oculus’ operational equipment, office equipment, raw materials, inventory, cash on hand, accounts receivable, and a contract (the “Machine Purchase Contract”) to purchase, for a total of $309,213 (the “Machine Purchase Price”), a new machine that is ready for delivery, and that when delivered and installed will be used to automate a substantial portion of the manufacturing of the hemp flower products. $99,910 of the Machine Purchase Price had already been paid by Oculus, leaving $209,303 as the remaining portion of the Machine Purchase Price (the “Machine Purchase Final Payment”). The gross Purchase Price of $368,488 purchase was paid by Lifted using cash on hand. At the closing, Oculus applied the entire Purchase Price to pay off all of Oculus’ liabilities as of the closing date (the “Oculus Liabilities”), including the Machine Purchase Final Payment. The only asset of Oculus that was not included in the Purchased Assets was Oculus’ rights as the plaintiff in a pending lawsuit filed by Oculus against a particular customer for an alleged breach of contract. Agreement and Plan of Merger Simultaneously with Lifted’s purchase of the Purchased Assets, Lifted executed an Agreement and Plan of Merger (“Oculus Merger Agreement”) with Oculus CHS Management Corp. (the “Management Corp.”), pursuant to which the Management Corp. was merged with and into Lifted, with Lifted being the surviving corporation in the merger (the “Merger”). The only assets of the Management Corp. were multi-year employment contracts with the owners/managers of Oculus, Chase and Hagan Sanchez (the “Employment Agreements”). The Merger consideration (the “Merger Consideration”) will be paid by Lifted to Chase and Hagan Sanchez in two installments. The first installment of the Merger Consideration was paid by Lifted to Chase and Hagan Sanchez at the closing of the Merger, and consisted of 100 shares of unregistered common stock of LIFD. The second installment of the Merger Consideration will be paid by Lifted to Chase and Hagan Sanchez following the first anniversary of the closing of the Merger which will be April 28, 2024. The second installment of the Oculus Merger Agreement will be calculated and paid out as follows: (1) Lifted’s CEO Nicholas S. Warrender (“NWarrender”), in consultation with LIFD’s President and CFO William C. “Jake” Jacobs (“WJacobs”), will analyze and make a written determination (the “Determination”) of the incremental pre-tax cash flow that NWarrender estimates that the hemp flower products division is generating for Lifted above and beyond the annual profits that are currently being generated for Lifted due to Lifted’s current business relationship with Oculus (the “Incremental Pre-Tax Profits”), after taking into account all relevant financial factors including but not limited to the purchase price of the Purchased Assets, the merger consideration, and all items of income, expense and investment directly and indirectly associated with Lifted’s hemp flower products division, which Determination will be final and legally binding on all of the parties; and (2) Within five days following delivery of the Determination, Lifted will pay Chase and Hagan Sanchez a second installment of Merger consideration equal to five times the Incremental Pre-Tax Profits, provided that (a) 20% of such second installment of Merger consideration shall be paid in the form of cash, (b) 80% of such second installment of Merger consideration shall be paid in the form of unregistered shares of common stock of LIFD, which unregistered shares of common stock of LIFD shall be valued at $5 per share regardless of whether LIFD’s common stock is then trading at a price that is lower or higher than $5 per share, and (c) such second installment of Merger consideration shall be subject to a minimum value of $1 million dollars (“Minimum Earnout Consideration”) and a maximum value of $6 million dollars (with the stock portion of the second installment of Merger consideration being valued at $5 per share under all circumstances). As examples, for illustrative purposes only: (a) If, according to NWarrender’s Determination, the Incremental Pre-Tax Profits of Lifted being generated by the business is $500,000, then the second installment of the Merger Consideration would be calculated as $500,000 X 5 = $2,500,000, of which ($2,500,000 X .2) = $500,000 would be in the form of cash, and the remaining $2,000,000 would be paid in the form of ($2,000,000/$5) = 400,000 newly issued shares of unregistered LIFD Common Stock; (b) If, according to NWarrender’s Determination, the Incremental Pre-Tax Profits of Lifted being generated by the business is $25,000, then the second installment of the Merger Consideration would be the Minimum Earnout Consideration of $1,000,000, of which ($1,000,000 X .2) = $200,000 would be in the form of cash, and the remaining $800,000 would be paid in the form of ($800,000/$5) = 160,000 newly issued shares of unregistered LIFD Common Stock; and (c) If, according to NWarrender’s Determination, the Incremental Pre-Tax Profits of Lifted being generated by the business is $2,000,000, then the second installment of the Merger Consideration would be the maximum of $6,000,000, of which ($6,000,000 X .2) = $1,200,000 would be in the form of cash, and the remaining $4,800,000 would be paid in the form of ($4,800,000/$5) = 960,000 newly issued shares of unregistered LIFD Common Stock. As of the day of this Annual Report on Form 10-K, the management of the Company does not expect the second installment of Merger Consideration to exceed the Minimum Earnout Consideration. Accounting for Lifted’s Purchase of Assets of Oculus CRS, LLC, and Merger With Oculus CHS Management Corp. Consideration |
Other Business Information | Other Business Information ITEM 1. BUSINESS |
Consolidated Financial Statements | Consolidated Financial Statements |
Use of Estimates | Use of Estimates |
Cash and Cash Equivalents | Cash and Cash Equivalents |
Restricted Cash | Restricted Cash |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Accounting Standards Codification (“ASC”) 820 defines fair value, establishes a framework for measuring fair value under US GAAP and enhances disclosures about fair value measurements. Fair value is defined under ASC 820 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. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair-value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value as follows: Level 1 – Level 2 – Level 3 – Accounting for Investments The Company’s Investment in Lifted Made The financial statements of LFTD Partners are consolidated with Lifted’s, since Lifted is a wholly owned subsidiary of LFTD Partners. The Company’s Investments in Ablis, Bendistillery and Bend Spirits The Company’s investments in Ablis Holding Company, Bendistillery Inc. and Bend Spirits, Inc. are recorded at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The Company owns less than 20% of the equity ownership of each of these entities and has no substantial influence over the management of the businesses. In accordance with US GAAP, the Company does not consolidate its financial statements with those of Ablis Holding Company, Bendistillery Inc. and Bend Spirits, Inc. At each reporting period, the Company makes a qualitative assessment considering impairment indicators to evaluate whether its investments are impaired. Factors that the Company would consider indicators of impairment include: (1) a significant deterioration in the earnings performance, credit rating, asset quality, or business prospects of the investee, (2) a significant adverse change in the regulatory, economic, or technological environment of the investee, (3) a significant adverse change in the general market condition of either the geographical area or the industry in which the investee operates, (4) a bona fide offer to purchase, an offer by the investee to sell, or a completed auction process for the same or similar investment for an amount less than the carrying amount of that investment, and (5) factors that raise significant concerns about the investee’s ability to continue as a going concern, such as negative cash flows from operations, working capital deficiencies, or noncompliance with statutory capital requirements or debt covenants, if any. The qualitative assessments at the end of first, second and third quarters are done via conference calls with the management teams of Ablis, Bendistillery and Bend Spirits. The qualitative assessment at the end of the fourth quarter relating to these entities also includes review of their respective financial statements that have been reviewed by a third-party accounting firm. At that time, the Company performs an annual impairment assessment. The reviewed financial statements of these companies are not audited, and the Company is not active in the management of these companies, and except for these companies’ quarterly meetings with the management of the Company, the Company’s assessment of these companies is inherently limited to infrequent and relatively brief conversations with officers of these companies and to reviews of those reviewed financial statements. The Company’s Investment in SmplyLifted On September 22, 2020, LFTD Partners Inc. and Lifted Made and privately-held SMPLSTC, Costa Mesa, CA formed an equally-owned new entity called SmplyLifted LLC, which sold tobacco-free nicotine pouches in several flavors and nicotine strengths under the brand name FR3SH (www.GETFR3SH.com). Lifted had a 50% membership interest in SmplyLifted LLC. The other 50% of SmplyLifted is owned by SMPLSTC LLC and its principals, who are located in Costa Mesa, California. Under US GAAP, the Company used the equity method to account for its 50% membership interest in SmplyLifted. Under the equity method of accounting, the Company recorded its share (50%) of SmplyLifted’s earnings (or losses) as income (or losses) on the Consolidated Statements of Operations. The Company recorded its initial investment in SmplyLifted, which was $200,000, as an asset at historical cost. Under the equity method, the investment’s value was periodically adjusted to reflect the changes in value due to Lifted’s share in SmplyLifted’s income or losses. |
Prepaid Expenses | Prepaid Expenses |
Accounts Receivable | Accounts Receivable The Company evaluates the collectability of its trade accounts receivable based on a number of factors. Management of the Company reviews and discusses all outstanding customer trade balances as of reporting period end. In circumstances where the Company becomes aware of a specific customer’s inability to meet its financial obligations to the Company, a specific reserve for bad debts is estimated and recorded (the “Allowance for Doubtful Accounts”), which reduces the recognized receivable to the estimated amount the Company believes will ultimately be collected. Management also considers industry-specific factors which may impact customers’ ability to meet their financial obligations to the Company. In addition to specific customer identification of potential bad debts, management takes into consideration Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments – Credit Losses, which is codified as Accounting Standards Codification Topic 326, adds to US GAAP the current expected credit loss model (“CECL Model”), which is a measurement model based on expected losses rather than incurred losses. Under the CECL Model, an entity recognizes its estimate of expected losses as an allowance. The Company has considered the applicable guidance in ASU 2016-13. Key aspects of the CECL Model include the following: 1. The CECL Model applies to financing receivables measured at amortized cost, which includes trade accounts receivable. 2. An entity will recognize an allowance for credit losses that results in the financial statements reflecting the net amount expected to be collected from the financial asset. 3. The allowance represents the portion of the amortized cost basis that an entity does not expect to collect due to credit over the asset’s contractual life, considering past events, current conditions and reasonable and supportable forecasts of future economic conditions. In performing its CECL Model analysis, management calculates the ratio of write offs to sales made to wholesalers and distributors for the trailing three-year period (the “Bad Debt Loss Rate”). The Bad Debt Loss Rate is then multiplied by sales made to wholesalers and distributors during the trailing twelve months (the “Bad Debt Calc”). The Bad Debt Calc is compared to the total accounts receivable that is older than 90 days as of reported period end; for conservatism, whichever is larger is considered the Allowance for Doubtful Accounts as of reported period end. The Company’s position is that the Company’s conservative approach toward the treatment of Allowance for Doubtful Accounts provides sufficient coverage in relation to potential credit losses from outstanding invoice write-offs. Allowance for Doubtful Accounts of $375,417 and $281,762 were reported at December 31, 2023 and 2022, respectively. Prior to the implementation of the CECL Model analysis, as of December 31, 2021, the Company implemented a new policy regarding the Allowance for Doubtful Accounts, which is that all accounts receivable older than 90 days at quarter end are accrued for in Allowance for Doubtful Accounts. |
Inventory | Inventory December 31, 2023 December 31, 2022 Raw Goods $ 4,962,652 $ 3,407,196 Finished Goods $ 5,212,015 $ 2,616,771 Total Inventory $ 10,174,667 $ 6,023,967 The process of determining obsolete or spoiled inventory involves: 1) Identifying raw goods that would no longer be used in the manufacture of finished goods; 2) Identifying expired raw goods; 3) Identifying finished goods that would no longer be sold or that are slow moving; 4) Identifying finished goods that are expired; and 5) Valuing and expensing raw and finished goods that would no longer be sold. Monthly overhead costs such as payments for rent, utilities, insurance, and indirect labor are allocated to finished goods based on the estimated percentage cost toward the finished goods. Depreciation expense related to certain machinery and equipment is also allocated to finished goods. At December 31, 2023, $338,582 of overhead costs incurred during the fourth quarter were allocated to finished goods. In comparison, at December 31, 2022, $127,485 of overhead costs incurred during the fourth quarter were allocated to finished goods. During the year ended December 31, 2023, $2,056,603 of obsolete and spoiled inventory was written off. In comparison, $4,418,922 and $338,799 of obsolete and spoiled inventory was written off during the years ended December 31, 2022 and 2021, respectively. Of the $4,418,922 of obsolete and spoiled inventory that was written off during the year ended December 31, 2022, $2,313,902 of it related to certain 2 mL disposable vapes written off during the third quarter of 2022 due to clogging issues (the “Clogged Vapes”). Management believes that the clogging was caused by the summer heat wave (the third hottest summer on record in the USA). The heat caused the oil in the Clogged Vapes to lose viscosity, so more oil solidified in the coils as they were brought to room temperature. Because these Clogged Vapes did not have preheat or variable voltage settings, the oil could not be unclogged from the coils. Management discontinued the sale of the Clogged Vapes during the third quarter. Lifted’s 2 mL disposable vapes have been superseded by 3 mL disposable vapes that do have preheat and variable voltage settings, so management expects that this write off of Clogged Vapes should be a one-time occurrence. On December 30, 2022, Lifted was able to reach an agreement for the forgiveness of $630,000 of payables owed to its third-party disposable vape device manufacturer. The agreement also includes credits to Lifted against future purchases from the device manufacturer totaling $370,047. The credit is to be provided by the manufacturer at the rate of $46,255.87 per quarter beginning with the first quarter of 2023 and continuing for the next six consecutive quarters, with a final quarterly credit of $46,255.91 for the fourth quarter of 2024. The agreement is a result of the vape manufacturer agreeing to share a portion of the Company’s prior $2,313,902 write-off of certain 2 mL disposable vapes that were written off due to clogging issues. The payable forgiveness resulted in a net $485,496 improvement to the cost of goods sold and accrued liabilities sections of the Company’s consolidated statements of operations as of December 30, 2022. The $370,047 in credits had been booked as an asset as of December 30, 2022 and recognized as other income amortized quarterly at the rate of $46,256 per quarter beginning with the first quarter of 2023 and continuing for the next six consecutive quarters, with a final quarterly credit of $46,255 for the fourth quarter of 2024. However, based on the analysis of credits applied to Venom bills in 2023, Lifted received $33,427 more credits than was expected/agreed to per the agreement ($185,024 per year for 2023 and 2024); as such, Lifted’s revised credit going into 2024 was $151,597, and this is amortized quarterly at the rate of $37,899 per quarter. |
Fixed Assets | Fixed Assets Management regularly reviews property and equipment and other long-lived assets for possible impairment. This review occurs annually, or more frequently if events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. If there is an indication of impairment, management then prepares an estimate of future cash flows (undiscounted and without interest charges) expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. The fair value is estimated using the present value of the future cash flows discounted at a rate commensurate with management’s estimates of the business risks. Preparation of estimated expected future cash flows is inherently subjective and is based on management’s best estimate of assumptions concerning expected future conditions. Long-lived assets held for sale are recorded at the lower of their carrying amount or fair value less cost to sell. |
Security Deposit | Security Deposits The Company has paid security deposits for its leased facilities located at 8920 58 th th th th As part of Lifted’s acquisition of the assets of Oculus, Lifted has assumed Oculus’ lease of office and operational space in Aztec, New Mexico, and the security deposit that had been previously paid by Oculus to the landlord of the leased space in Aztec, New Mexico. The Company has paid security deposits for utilities to various vendors. |
State Licensing Deposits | State Licensing Deposits |
Revenue | Revenue Typically, the Company’s revenue is recognized when it satisfies a single performance obligation by transferring control of its products to a customer. Control is generally transferred when the Company’s products are either shipped or delivered based on the terms contained within the underlying contracts or agreements. If the shipping terms on a sale are FOB destination, the revenue is deferred until the product reaches its destination. The Company excludes from revenues all taxes assessed by a governmental authority that are imposed on the sale of its products and collected from customers. Discounts and rebates provided to customers are recorded as a reduction to gross sales. An allowance for sales is recorded for estimated future discounts/refunds related to returns of products sold prior to the reporting period end. Described below are some of the reasons why a customer may want to return an ordered item, and how the Company responds in each situation: 1) The ordered item breaks, melts, or separates in transit to the customer. In this case, the Company will replace the broken, melted or separated item at no cost to the customer. 2) The Company sent the wrong item to the customer. In this case, the Company will allow the customer to keep, at no cost to the customer, the item that was mistakenly sent to the customer. The Company will also send the correct product to the customer, at no cost to the customer. 3) The customer ordered the wrong product. In this case, the customer, at his/her own expense, must mail the mistakenly ordered product back to the Company, and the Company will mail the correct product to the customer. 4) The ordered item is recalled. In a situation where product is recalled, the Company will offer a replacement, credit, or refund. An allowance for sales reduces net sales on the Consolidated Statements of Operations, and also reduces accounts receivable on the Consolidated Balance Sheets. Sales allowances of $635,098 and $939,496 were reported at December 31, 2023 and 2022, respectively. Management believes that an adequate allowance for sales has been made for discounts/refunds as of period end. Disaggregation of Revenue The Company has considered providing disaggregation of revenue by information regularly reviewed by the chief operating decision maker for evaluating the financial performance of operating segments, such as type of good, geographical region, market or type of customer, type of contract, contract duration, timing of transfer of goods, and sales channels. Due to the rapidly evolving nature of our industry, the Company is constantly launching new products to stay ahead of trends, finding new sales channels, initiating new distribution networks and modifying the prices of its products. Shown below are tables showing the approximate disaggregation of historical revenue: For the Years Ended December 31, Location of Sale 2023 2022 2021 Inside of USA $ 51,576,029 100% $ 56,842,370 99% $ 31,625,275 99.9% Outside of USA 34,533 0.07% 574,165 1% 3,166 0.01% Net Sales $ 51,610,562 100% $ 57,416,535 100% $ 31,656,932 100% For the Years Ended December 31, Type of sale 2023 2022 2021 Net sales of raw goods to customers $ 180,743 0% $ 40,518 0% $ 476,211 2% Net sales of products to private label clients $ 1,500,344 3% $ 975,199 2% $ 3,246,420 10% Net sales of products to wholesalers $ 10,730,095 21% $ 7,503,530 13% $ 4,586,306 15% Net sales of products to distributors $ 36,724,597 71% $ 45,522,229 79% $ 21,661,464 68% Net sales of products to end consumers $ 2,474,784 5% $ 3,375,059 6% $ 1,686,531 5% Net Sales $ 51,610,562 100% $ 57,416,535 100% $ 31,656,932 100% For the Years Ended December 31, Hemp vs Non-Hemp Product Sales 2023 2022 2021 Net sales of hemp products $ 48,064,790 93 % $ 55,694,039 97 % $ 31,340,363 99 % Net sales of non-hemp products 3,545,772 7 % 1,722,496 3 % 316,569 1 % Net Sales $ 51,610,562 100 % $ 57,416,535 100 % $ 31,656,932 100 % For the Years Ended December 31, Product Type 2023 2022 2021 Vapes $ 27,048,471 52% $ 29,143,143 51% $ 14,316,912 45% Edibles 15,125,799 29% 15,810,094 28% $ 7,421,833 23% Flower 5,193,884 10% 4,865,629 8% $ 1,824,049 6% Cartridges 4,135,941 8% 7,471,666 13% $ 6,047,096 19% Other 106,467 0% 126,003 0% $ 2,047,042 6% Net Sales $ 51,610,562 100% $ 57,416,535 100% $ 31,656,932 100% |
Deferred Revenue | Deferred Revenue Amounts received from a customer before the purchased product is shipped to the customer are treated as deferred revenue. If cash is not received, an accounts receivable is recognized for the invoiced order, but revenue is not recognized until the order is fully shipped. Accounts receivable include amounts associated with partially shipped orders, for which the unshipped portion is a contract asset. Contract assets represent invoiced but unfulfilled performance obligations. At December 31, 2021, total deferred revenue was $2,174,393, all of which was recognized as revenue in 2022. At December 31, 2022, total deferred revenue was $594,086, all of which was recognized as revenue in 2023. At December 31, 2023, total deferred revenue was $235,891, all of which is expected to be recognized as revenue in 2024. The table shown below represents the composition of deferred revenue between contract assets (invoiced but unfulfilled performance obligations) and deposits from customers from unfulfilled orders as of December 31, 2023 and December 31, 2022. December 31, 2023 December 31, 2022 Contract Assets (invoiced but unfulfilled performance obligations) $ 131,304 $ 224,141 Deposits from customers for unfulfilled orders $ 104,586 $ 369,945 Total Deferred Revenue $ 235,891 $ 594,086 |
Cost of Goods Sold | Cost of Goods Sold Cost of goods sold amounted to $31,906,278, $36,423,246 and $15,715,759 during the years ended December 31, 2023, 2022, and 2021, respectively. $2,056,603, $4,418,922 and $338,799 of cost of goods sold relates to spoiled and obsolete inventory written off during the years ended December 31, 2023, 2022 and 2021, respectively. |
Operating Expenses | Operating Expenses Total operating expenses increased to $17,294,095 for the year ended December 31, 2023, up from $11,180,562 for the year ended December 31, 2022, and up from $8,160,290 for the year ended December 31, 2021. The primary driver for this increase in operating expenses was that during the first quarter of 2023, the Company recognized a net loss after ten straight quarters of profitability, solely because of the impact of a one-time, non-cash stock compensation expense of $2,138,175, which, for the year ended December 31, 2023, was $1,666,155 on an after-tax basis. At the closing of the acquisition of Lifted in February 2020, 645,000 shares of unregistered common stock of the Company were designated as contingent deferred compensation (the “Deferred Contingent Stock”) to certain persons specified by NWarrender in a schedule delivered by him to the Company (the “Deferred Contingent Stock Recipients”), as an employee retention incentive. Now that certain conditions and requirements have been met, the Deferred Contingent Stock vested on February 24, 2023, and on this date, in accordance with US GAAP, the Company expensed the value of the vested Deferred Contingent Stock. This one-time, non-cash charge reduced net income for the year ended December 31, 2023 from $3,825,162 to $2,159,007. But for this charge, our Company would have reported a basic and fully diluted EPS of $0.26 and $0.23, respectively, for the year ended December 31, 2023. Also driving the increase in operating expenses from 2022 to 2023 was the reporting of commissions and royalties expenses related to the collaborations with third parties, which amounted to $1,733,800 in 2023. These collaborations were not in place in 2022 The primary driver of the increase in operating expenses from 2021 to 2022 was increased payroll expenses (payroll expenses increased $2,801,960), due to the hiring of more employees and independent contractors, and the bonuses paid to Lifted’s Chief Strategy Officer. |
Income Taxes | Income Taxes |
Basic and Diluted Earnings (Loss) Per Common Share | Basic and Diluted Earnings (Loss) Per Common Share For the Years Ended December 31, 2023 2022 2021 Net Income $ 2,159,007 $ 7,196,327 $ 5,799,982 Weighted average number of common shares outstanding: Basic 14,555,279 14,080,729 11,402,639 Diluted 16,439,477 15,862,927 13,359,837 Basic Net Income per Common Share $ 0.15 $ 0.51 $ 0.50 Diluted Net Income per Common Share $ 0.13 $ 0.45 $ 0.43 As of December 31, 2023, in addition to our outstanding common stock, we have issued (a) options to purchase 1,076,698 shares of common stock at $2.00 per share, (b) warrants to purchase 155,500 shares of common stock at $1.00 per share, (c) rights to purchase warrants to purchase 100,000 shares of common stock at $1.85 per share, and (d) warrants to purchase 2,280,000 shares of common stock at $5.00 per share, all of which are vested. At December 31, 2023, the Company had 2,500 shares of Series A Preferred Stock outstanding convertible into 250,000 shares of common stock; these are included in the diluted earnings calculation. At December 31, 2023, the Company had 40,000 shares of Series B Preferred Stock outstanding convertible into 40,000 shares of common stock; these are not included in the diluted earnings calculation because the exercise price ($5.00/share) was higher than the stock closing price at December 31, 2023 ($2.14/share). There were also 142,000 shares of issuable Deferred Contingent Stock included in the December 31, 2023 diluted EPS calculation. Also included in the December 31, 2023 diluted EPS calculation was the minimum number of shares of common stock (160,000) that will eventually be issued pursuant to the Oculus Merger Agreement. In comparison, as of December 31, 2022, in addition to our outstanding common stock, we have issued (a) options to purchase 1,076,698 shares of common stock at $2.00 per share, (b) warrants to purchase 155,500 shares of common stock at $1.00 per share, (c) rights to purchase warrants to purchase 100,000 shares of common stock at $1.85 per share, and (d) warrants to purchase 2,295,000 shares of common stock at $5.00 per share. Regarding the aforementioned warrants to purchase 2,295,000 shares of our common stock at an exercise price of $5.00 per share as of December 31, 2022: of the total, warrants to purchase 1,550,000 shares of our common stock are vested, while the remaining warrants to purchase 745,000 shares of our common stock are not vested and are subject to certain conditions and requirements. At December 31, 2022, the Company had Series A Preferred Stock outstanding convertible into 450,000 shares of common stock; these are included in the diluted earnings calculation. Also at December 31, 2022, the Company had Series B Preferred Stock outstanding convertible into 40,000 shares of common stock; these are not included in the diluted earnings calculation because the exercise price ($5.00/share) was higher than the stock closing price at December 31, 2022 ($2.15/share). |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Accounts Receivable On December 14, 2023, the FASB issued a final standard on improvements to income tax disclosures, ASU 2023-09, Improvements to Income Tax Disclosures. The standard requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. For public business entities, the new requirements will be effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact, if any, that the updated standard will have on the consolidated financial statements. On November 27, 2023, the FASB issued ASU 2023-07-Segment Reporting. The new guidance was issued primarily to provide financial statement users with more disaggregated expense information about a public entity’s reportable segments. The guidance is effective for calendar year public entities in 2024 year-end financial statements, and should be adopted retrospectively unless impracticable. The Company is currently evaluating the impact, if any, that the updated standard will have on the consolidated financial statements. |
Advertising and Marketing Expenses | Advertising and Marketing Expenses |
Off Balance Sheet Arrangements | Off-Balance Sheet Arrangements |
Reclassifications | Reclassifications |
Business Combinations and Consolidated Results of Operations and Outlook | Business Combinations and Consolidated Results of Operations and Outlook Business Combinations and Reorganizations When the Company acquires a business, we allocate the purchase price to the assets acquired and liabilities assumed in the transaction at their respective estimated fair values. We record any premium over the fair value of net assets acquired as goodwill. The allocation of the purchase price involves judgments and estimates both in characterizing the assets and in determining their fair value. We use all available information to make these fair value determinations and engage independent valuation specialists to assist in the fair value determination of the acquired long-lived assets. |
Accounting for Operating and Finance Lease Right-of-Use Assets | Accounting for Operating and Finance Lease Right-of-Use Assets |
Accounting for Goodwill | Accounting for Goodwill Goodwill is not amortized but is subject to annual impairment testing unless circumstances dictate more frequent assessments. The Company performs an annual impairment assessment for goodwill during the fourth quarter of each year and more frequently whenever events or changes in circumstances indicate that the fair value of the asset may be less than the carrying amount. Goodwill impairment testing is a two-step process performed at the reporting unit level. Step one compares the fair value of the reporting unit to its carrying amount. The fair value of the reporting unit is determined by using the income approach. Under the income approach, the Company determines fair value based on estimated future cash flows of the reporting unit, which are discounted to the present value using discount factors that consider the timing and risk of cash flows and other factors. For the discount rate, the Company considered the current market interest rates, including the interest rates on the Company’s recently closed loans from Surety Bank, the Company’s risk relative to the overall market, the Company’s size and industry and other Company-specific risks. Other significant assumptions used in the income approach include the terminal value, growth rates, future capital expenditures and changes in future working capital requirements. If the fair value of the reporting unit is greater than its carrying amount, there is no impairment. If the reporting unit’s carrying amount exceeds its fair value, then the second step must be completed to measure the amount of impairment, if any. Step two calculates the implied fair value of goodwill by deducting the fair value of all tangible and intangible net assets of the reporting unit from the fair value of the reporting unit as calculated in step one. In this step, the fair value of the reporting unit is allocated to all of the reporting unit’s assets and liabilities in a hypothetical purchase price allocation as if the reporting unit had been acquired on that date. If the carrying amount of goodwill exceeds the implied fair value of goodwill, an impairment loss is recognized in an amount equal to the excess. Determining the fair value of a reporting unit is judgmental in nature and requires the use of significant estimates and assumptions, including revenue growth rates, strategic plans, and future market conditions, among others. There can be no assurance that the Company’s estimates and assumptions made for purposes of the goodwill impairment testing will prove to be accurate predictions of the future. Changes in assumptions and estimates could cause the Company to perform an impairment test prior to scheduled annual impairment tests. |
BASIS OF PRESENTATION AND SIG_3
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of Working Capital and Business Loans | December 31, December 31, 2023 2022 Working Capital Loan $ 3,000,000 $ - Business Loan 910,000 - Total principal amount 3,910,000 - Less: Unamortized debt financing costs (55,149 ) - Less: Current portion of Surety Bank notes (506,061 ) - Non-Current portion of Surety Bank notes $ 3,348,790 $ - |
Schedule of payments due on the Working Capital | Maturity Analysis: 2024 $ 876,939 2025 876,939 2026 876,939 2027 876,939 2028 1,618,429 Thereafter - Total 5,126,185 Less: interest port ion (1,216,185 ) Total principal amount $ 3,910,000 |
Schedule of Asset Purchase Agreement | Consideration Paid Pursuant to the Asset Purchase Agreement Cash used to pay off Oculus' liabilities at the closing $ 368,488 Consideration Paid Pursuant to the Oculus Merger Agreement First Installment of Merger Consideration 100 shares of common stock of LIFD issued at the closing of the Merger to Chase and Hagan Sanchez $ 209 Second Installment of Merger Consideration Value of Minimum Earnout Consideration to be paid in cash $ 200,000 Value of Minimum Earnout Consideration to be paid in shares of common stock of LIFD (160,000 shares of common stock valued at $5.00 per share) $ 800,000 Total Consideration $ 1,368,697 Assets Acquired: Cash $ 26,420 Accounts receivable $ 60,528 Inventory $ 147,431 Fixed Assets $ 329,559 Security and Utility Deposits $ 4,732 Goodwill $ 800,027 Total Assets Acquired $ 1,368,697 Total Liabilities Assumed $ - Net Assets Acquired $ 1,368,697 |
Schedule of inventory | December 31, 2023 December 31, 2022 Raw Goods $ 4,962,652 $ 3,407,196 Finished Goods $ 5,212,015 $ 2,616,771 Total Inventory $ 10,174,667 $ 6,023,967 |
Schedule of historical revenue | For the Years Ended December 31, Location of Sale 2023 2022 2021 Inside of USA $ 51,576,029 100% $ 56,842,370 99% $ 31,625,275 99.9% Outside of USA 34,533 0.07% 574,165 1% 3,166 0.01% Net Sales $ 51,610,562 100% $ 57,416,535 100% $ 31,656,932 100% For the Years Ended December 31, Hemp vs Non-Hemp Product Sales 2023 2022 2021 Net sales of hemp products $ 48,064,790 93 % $ 55,694,039 97 % $ 31,340,363 99 % Net sales of non-hemp products 3,545,772 7 % 1,722,496 3 % 316,569 1 % Net Sales $ 51,610,562 100 % $ 57,416,535 100 % $ 31,656,932 100 % |
Schedule of deferred revenue | December 31, 2023 December 31, 2022 Contract Assets (invoiced but unfulfilled performance obligations) $ 131,304 $ 224,141 Deposits from customers for unfulfilled orders $ 104,586 $ 369,945 Total Deferred Revenue $ 235,891 $ 594,086 |
Schedule of Earnings Per Share, Basic and Diluted | For the Years Ended December 31, 2023 2022 2021 Net Income $ 2,159,007 $ 7,196,327 $ 5,799,982 Weighted average number of common shares outstanding: Basic 14,555,279 14,080,729 11,402,639 Diluted 16,439,477 15,862,927 13,359,837 Basic Net Income per Common Share $ 0.15 $ 0.51 $ 0.50 Diluted Net Income per Common Share $ 0.13 $ 0.45 $ 0.43 |
PROPERTY AND EQUIPMENT NET (Tab
PROPERTY AND EQUIPMENT NET (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
PROPERTY AND EQUIPMENT, NET | |
Schedule of Property and Equipment | Asset Class December 31, 2023 December 31, 2022 Building $ 805,545 $ - Land $ 430,754 $ - Machinery & Equipment $ 1,473,609 $ 664,606 Furniture & Fixtures $ 107,509 $ 92,934 Computer Equipment $ 18,979 $ 7,312 Building & Leasehold Improvements $ 581,394 $ 379,499 Vehicles $ 117,047 $ 75,047 Trade Show Booths $ 55,081 $ 10,000 Sub-total: $ 3,589,918 $ 1,229,398 Less: accumulated depreciation $ (593,531 ) $ (209,143 ) $ 2,996,387 $ 1,020,255 |
Schedule of Estimated useful lives | Asset Class Estimated Useful Life Building 39 years Land Indefinite Machinery & Equipment 60 months Building Improvements 60 months Leasehold Improvements The shorter of the length of the lease or 60 months Trade Show Booths 36 months Vehicles 60 months Computer Equipment 60 months Furniture & Fixtures 60 months |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
RELATED PARTY TRANSACTIONS | |
Schedule of Rent | Date Base Monthly Rent January 1, 2021 – December 31, 2021 $ 5,740.75 January 1, 2022 – December 31, 2022 $ 5,855.57 January 1, 2023 – December 31, 2023 $ 5,972.68 January 1, 2024 – December 31, 2024 $ 6,092.13 January 1, 2025 – December 31, 2025 $ 6,213.97 |
SHAREHOLDERS EQUITY (Tables)
SHAREHOLDERS EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
SHAREHOLDERS EQUITY | |
Schedule of Share-based Compensation, Stock Options and Warrant Activity | Weighted-Average Aggregate Weighted-Average Remaining Contractual Intrinsic Shares Exercise Price Term (Years) Value Exercisable Options, Warrants, Rights to Purchase Warrants to Purchase Common Stock and Financing Warrants Outstanding, December 31, 2022 2,882,198 $ 3.55 2.05 $ 370,331 Q1 2023 vesting of contingent warrants issued in connection with the acquisition of Lifted Made 705,000 Q2 2023 vesting of contingent warrants issued in connection with the acquisition of Lifted Made 25,000 Exercisable Options, Warrants, Rights to Purchase Warrants to Purchase Common Stock and Financing Warrants Outstanding, December 31, 2023 3,612,198 $ 3.85 1.07 $ 357,008 Outstanding Options, Warrants, Rights to Purchase Warrants to Purchase Common Stock and Financing Warrants, December 31, 2023 3,612,198 $ 3.85 1.07 $ 357,008 |
CONTINGENT CONTRACTUAL OBLIGA_2
CONTINGENT CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Rent Schedule | Date Base Monthly Rent January 1, 2021 – December 31, 2021 $ 5,740.75 January 1, 2022 – December 31, 2022 $ 5,855.57 January 1, 2023 – December 31, 2023 $ 5,972.68 January 1, 2024 – December 31, 2024 $ 6,092.13 January 1, 2025 – December 31, 2025 $ 6,213.97 Date Base Monthly Rent 10/01/2021 – 09/30/2022 $ 2,395.84 10/01/2022 – 09/30/2023 $ 2,467.72 10/01/2023 – 09/30/2024 $ 2,541.75 Date Base Monthly Rent 01/01/2022 – 12/31/2022 $ 4,000.00 01/01/2023 – 12/31/2023 $ 4,120.00 01/01/2024 – 12/31/2024 $ 4,243.60 01/01/2025 – 12/31/2025 $ 4,370.91 01/01/2026 – 12/31/2026 $ 4,502.34 Date Base Monthly Rent 07/01/2022 – 06/30/2023 $ 5,493.25 07/01/2023 – 06/30/2024 $ 5,630.58 07/01/2024 – 06/30/2025 $ 5,771.35 07/01/2025 – 06/30/2026 $ 5,915.63 07/01/2026 – 06/30/2027 $ 6,063.52 Date Base Monthly Rent February 1, 2023 – February 28, 2023 $ 0.00 March 1, 2023 – February 29, 2024 $ 3,395.73 March 1, 2024 – February 28, 2025 $ 3,531.56 March 1, 2025 – February 28, 2026 $ 3,672.82 March 1, 2026 – February 28, 2027 $ 3,819.73 March 1, 2027 – February 29, 2028 $ 3,972.52 Date Base Monthly Rent April 1, 2023 – January 31, 2024 $ 1,945.42 February 1, 2024 – January 31, 2025 $ 2,023.23 February 1, 2025 – January 31, 2026 $ 2,104.16 February 1, 2026 – January 31, 2027 $ 2,188.33 February 1, 2027 – January 31, 2028 $ 2,275.86 February 1, 2028 – February 29, 2028 $ 2,366.90 |
Schedule of Base Monthly for the Expansion Area | Suite 100 Date Base Monthly Rent April 1, 2024 – May 31, 2024 $ 0.00 June 1, 2024 – March 31, 2025 $ 16,770.83 April 1, 2025 – March 31, 2026 $ 17,273.96 April 1, 2026 – March 31, 2027 $ 17,792.18 April 1, 2027 – March 31, 2028 $ 18,325.94 April 1, 2028 – March 31, 2029 $ 18,875.72 April 1, 2029 – May 31, 2029 $ 19,441.99 |
Schedule of base monthly rent for exclusive of the Expansion Area is extended | Suites 600 and 700 Date Base Monthly Rent February 1, 2027 – January 31, 2028 $ 4,637.41 February 1, 2028 – January 31, 2029 $ 4,776.53 February 1, 2029 – May 31, 2029 $ 4,919.83 |
Schedule of Operating Lease Assets and Liabilities | Asset Balance Sheet Line December 31, 2023 Operating Lease Right-of-Use Asset, net of Right-of-Use Asset Amortization of $266,837 in 2023 Non-Current Assets $ 626,869 Liability Balance Sheet Line December 31, 2023 Operating Lease Liabilities Current Liabilities $ 169,437 Non-Current Liabilities $ 463,623 |
Schedule of lease cost | For the Years Ended December 31, Lease Cost: 2023 2022 2021 Finance lease expense: Amortization of Right-of-Use Assets $ 41,226 $ 46,273 $ 49,347 Interest on lease liabilities 85,873 70,507 52,825 Operating lease expense 210,626 $ 115,239 $ 15,405 Total $ 337,725 $ 232,019 $ 117,577 |
Schedule of lease liability | Maturity Analysis as of December 31, 2023 Finance Operating 2024 $ - $ 208,519 2025 - 191,533 2026 - 197,622 2027 - 110,969 2028 - 12,588 Thereafter - - Total - 721,231 Less: Present value discount - (88,171 ) Lease liability $ - $ 633,060 |
Suites 600 and 700 of the Second 58th Lease | |
Schedule of Base Monthly for the Expansion Area | Suites 600 and 700 Date Base Monthly Rent February 1, 2027 – January 31, 2028 $ 4,637.41 February 1, 2028 – January 31, 2029 $ 4,776.53 February 1, 2029 – May 31, 2029 $ 4,919.83 |
Schedule of base monthly rent for exclusive of the Expansion Area is extended | Suite 100 Date Base Monthly Rent April 1, 2024 – May 31, 2024 $ 0.00 June 1, 2024 – March 31, 2025 $ 16,770.83 April 1, 2025 – March 31, 2026 $ 17,273.96 April 1, 2026 – March 31, 2027 $ 17,792.18 April 1, 2027 – March 31, 2028 $ 18,325.94 April 1, 2028 – March 31, 2029 $ 18,875.72 April 1, 2029 – May 31, 2029 $ 19,441.99 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
INCOME TAXES | |
Schedule of Provision for income taxes | For the Years Ended December 31, 2023 2022 2021 Current Domestic-Federal $ 547,506 $ 1,787,793 $ 1,080,572 Domestic-State (117,495 ) 719,490 618,341 Franchise taxes 51,150 46,243 - Foreign - - - 481,161 2,553,526 1,698,913 Deferred Domestic-Federal 90,482 190,517 (257,461 ) Domestic-State 26,422 53,612 (74,090 ) Foreign - - - 116,904 244,129 (331,551 ) Total Provision for Income Taxes $ 598,065 $ 2,797,655 $ 1,367,362 |
Schedule of Effective Income Tax Rate Reconciliation | For the Years Ended December 31, 2023 2022 2021 Domestic-Federal $ 568,244 $ 2,098,733 $ 1,505,142 State taxes, net of federal benefit 143,498 641,946 433,140 Non-deductible expenses 145,095 (1,291 ) 7,529 Franchise taxes 51,150 46,243 - Revision of prior years' provision to return filing (316,097 ) (2,938 ) (20,979 ) Change in estimated future income tax rates 116,289 (39,355 ) (609,673 ) Change in valuation allowance (112,536 ) 40,465 52,203 Other 2,423 13,851 - Total Provision for Income Taxes $ 598,065 $ 2,797,655 $ 1,367,362 |
Schedule of Deferred Tax Assets and Liabilities | December 31, December 31, 2023 2022 Deferred Tax Assets: Stock-based compensation $ 2,766,156 $ 2,754,875 Sales Allowances 167,051 256,650 Spoiled and Written-Off Inventory 9,839 - Accrued Related Party Expenses 1,036 612 Allowance for Doubtful Accounts 98,746 77,269 Lease Liabilities 4,918 23,060 Less: Valuation allowance for stock-based compensation (2,642,339 ) (2,754,875 ) Total Deferred Tax Assets 405,407 357,591 Deferred Tax Liabilities: Depreciation & Amortization (425,536 ) (270,169 ) Goodwill (9,353 ) - Total Deferred Tax Liabilities (434,889 ) (270,169 ) Net Deferred Tax Assets/(Liabilities) $ (29,482 ) $ 87,422 |
SUBSEQUENT EVENTS (Tables)
SUBSEQUENT EVENTS (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
SUBSEQUENT EVENTS | |
Schedule of base monthly rent for exclusive of the Expansion Area is extended | Suites 600 and 700 Date Base Monthly Rent February 1, 2027 – January 31, 2028 $ 4,637.41 February 1, 2028 – January 31, 2029 $ 4,776.53 February 1, 2029 – May 31, 2029 $ 4,919.83 |
Schedule of Base Monthly for the Expansion Area | Suite 100 Date Base Monthly Rent April 1, 2024 – May 31, 2024 $ 0.00 June 1, 2024 – March 31, 2025 $ 16,770.83 April 1, 2025 – March 31, 2026 $ 17,273.96 April 1, 2026 – March 31, 2027 $ 17,792.18 April 1, 2027 – March 31, 2028 $ 18,325.94 April 1, 2028 – March 31, 2029 $ 18,875.72 April 1, 2029 – May 31, 2029 $ 19,441.99 |
BASIS OF PRESENTATION AND SIG_4
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | ||
Working Capital Loan | $ 3,000,000 | $ 0 |
Business Loans | 910,000 | 0 |
Total principal amount | 3,910,000 | 0 |
Unamortized debt financing costs | (55,149) | 0 |
Current portion of Surety Bank notes | 506,061 | 0 |
Non-Current portion of Surety Bank notes | $ 3,348,790 | $ 0 |
BASIS OF PRESENTATION AND SIG_5
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | ||
2024 | $ 876,939 | |
2025 | 876,939 | |
2026 | 876,939 | |
2027 | 876,939 | |
2028 | 1,618,429 | |
Thereafter | 0 | |
Total | 5,126,185 | |
interest port ion | (1,216,185) | |
Total principal amount | $ 3,910,000 | $ 0 |
BASIS OF PRESENTATION AND SIG_6
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details 2) | Dec. 31, 2023 USD ($) |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | |
Cash used to pay off Oculus' liabilties at the closing | $ 368,488 |
100 shares of common stock of LIFD issued at the closing of the Merger to Chase and Hagan Sanchez | 209 |
Value of minimum consideration to be paid in cash | 200,000 |
Value of minimum consideration to be paid in shares of common stock of LIFD (160,000 shares of common stock valued at $5.00 per share) | 800,000 |
Total Consideration | 1,368,697 |
Cash | 26,420 |
Accounts receivable | 60,528 |
Inventory | 147,431 |
Fixed Assets | 329,559 |
Security and Utility Deposits | 4,732 |
Goodwill | 800,027 |
Total Assets Acquired | 1,368,697 |
Total Liabilities Assumed | 0 |
Net Assets Acquired | $ 1,368,697 |
BASIS OF PRESENTATION AND SIG_7
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details 3) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | ||
Raw Goods | $ 4,962,652 | $ 3,407,196 |
Finished Goods | 5,212,015 | 2,616,771 |
Total Inventory | $ 10,174,667 | $ 6,023,967 |
BASIS OF PRESENTATION AND SIG_8
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details 4) - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Net sales | $ 51,610,562 | $ 57,416,535 | $ 31,656,932 |
Percentage of net sales | 100% | 100% | 100% |
Inside of USA [Member] | |||
Net sales | $ 51,576,029 | $ 56,842,370 | $ 31,625,275 |
Percentage of net sales | 100% | 99% | 99.90% |
Outside of USA [Member] | |||
Net sales | $ 34,533 | $ 574,165 | $ 3,166 |
Percentage of net sales | 0.07% | 1% | 0.01% |
BASIS OF PRESENTATION AND SIG_9
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details 5) - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Net sales | $ 51,610,562 | $ 57,416,535 | $ 31,656,932 |
Percentage of net sales | 100% | 100% | 100% |
Customer [Member] | |||
Net sales | $ 180,743 | $ 40,518 | $ 476,211 |
Percentage of net sales | 0% | 0% | 2% |
Private Label Clients [Member] | |||
Net sales | $ 1,500,344 | $ 975,199 | $ 3,246,420 |
Percentage of net sales | 3% | 2% | 10% |
Wholesalers [Member] | |||
Net sales | $ 10,730,095 | $ 7,503,530 | $ 4,586,306 |
Percentage of net sales | 21% | 13% | 15% |
Distributors [Member] | |||
Net sales | $ 36,724,597 | $ 45,522,229 | $ 21,661,464 |
Percentage of net sales | 71% | 79% | 68% |
End Consumers [Member] | |||
Net sales | $ 2,474,784 | $ 3,375,059 | $ 1,686,531 |
Percentage of net sales | 5% | 6% | 5% |
BASIS OF PRESENTATION AND SI_10
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details 6) - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Net sales | $ 51,610,562 | $ 57,416,535 | $ 31,656,932 |
Percentage of net sales | 100% | 100% | 100% |
Hemp Products [Member] | |||
Net sales | $ 48,064,790 | $ 55,694,039 | $ 31,340,363 |
Percentage of net sales | 93% | 97% | 99% |
Non-Hemp Products [Member] | |||
Net sales | $ 3,545,772 | $ 1,722,496 | $ 316,569 |
Percentage of net sales | 7% | 3% | 1% |
BASIS OF PRESENTATION AND SI_11
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details 7) - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Net sales | $ 51,610,562 | $ 57,416,535 | $ 31,656,932 |
Percentage of net sales | 100% | 100% | 100% |
Vapes [Member] | |||
Net sales | $ 27,048,471 | $ 29,143,143 | $ 14,316,912 |
Percentage of net sales | 52% | 51% | 45% |
Edibles [Member] | |||
Net sales | $ 15,125,799 | $ 15,810,094 | $ 7,421,833 |
Percentage of net sales | 29% | 28% | 23% |
Flower [Member] | |||
Net sales | $ 5,193,884 | $ 4,865,629 | $ 1,824,049 |
Percentage of net sales | 10% | 8% | 6% |
Cartridges [Member] | |||
Net sales | $ 4,135,941 | $ 7,471,666 | $ 6,047,096 |
Percentage of net sales | 8% | 13% | 19% |
Apparel and Accessories [Member] | |||
Net sales | $ 106,467 | $ 126,003 | $ 2,047,042 |
Percentage of net sales | 0% | 0% | 6% |
BASIS OF PRESENTATION AND SI_12
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details 8) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | ||
Contract Assets (invoiced but unfulfilled performance obligations) | $ 131,304 | $ 224,141 |
Deposits from customers for unfulfilled orders | 104,586 | 369,945 |
Total Deferred Revenue | $ 235,891 | $ 594,086 |
BASIS OF PRESENTATION AND SI_13
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details 9) - USD ($) | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2023 | Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | |||||||||||||||
Net Income | $ 23,640 | $ 617,648 | $ 1,659,461 | $ (141,742) | $ 608,589 | $ 423,486 | $ 3,219,460 | $ 2,944,793 | $ 1,349,292 | $ 2,236,179 | $ 1,596,154 | $ 618,359 | $ 2,159,007 | $ 7,196,327 | $ 5,799,982 |
Weighted average number of basic share outstanding | 14,555,279 | 14,080,729 | 11,402,639 | ||||||||||||
Weighted average number of diluted shares outstanding | 16,439,477 | 15,862,927 | 13,359,837 | ||||||||||||
Basic Net Income per Common Share | $ 0.15 | $ 0.51 | $ 0.50 | ||||||||||||
Diluted Net Income per Common Share | $ 0.13 | $ 0.45 | $ 0.43 |
BASIS OF PRESENTATION AND SI_14
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | ||||||||
Dec. 14, 2023 | Jul. 11, 2023 | Apr. 02, 2023 | Feb. 24, 2020 | Apr. 30, 2019 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Apr. 28, 2023 | Dec. 30, 2022 | |
FDIC limit | $ 250,000 | |||||||||
Net Income | 3,825,162 | $ 2,159,007 | ||||||||
Allowances for bad debts | 375,417 | 281,762 | ||||||||
Sales allowance | 635,098 | 939,496 | ||||||||
Accounts receivable | 3,586,176 | 2,410,327 | ||||||||
Fixed Assets capitalized | 2,500 | 2,500 | ||||||||
Cost of goods sold | 31,906,278 | 36,423,246 | $ 15,715,759 | |||||||
Cost of goods sold of inventry write down | 2,056,603 | 4,418,922 | 338,799 | |||||||
Cost of goods and accrued liabilities | 485,496 | |||||||||
Other income amortized amount per quarter | 46,256 | |||||||||
Amount booked for assets | $ 370,047 | |||||||||
Collab Commission and Royalty Expense | 1,733,800 | 0 | 0 | |||||||
Inventory write down | $ 2,056,603 | $ 4,418,922 | 338,799 | |||||||
Description of quarterly amortized amount | Lifted received $33,427 more credits than was expected/agreed to per the agreement ($185,024 per year for 2023 and 2024); as such, Lifted’s revised credit going into 2024 was $151,597, and this is amortized quarterly at the rate of $37,899 per quarter | |||||||||
Description of agreement for the forgiveness of payables | On December 30, 2022, Lifted was able to reach an agreement for the forgiveness of $630,000 of payables owed to its third-party disposable vape device manufacturer. The agreement also includes credits to Lifted against future purchases from the device manufacturer totaling $370,047. The credit is to be provided by the manufacturer at the rate of $46,255.87 per quarter beginning with the first quarter of 2023 and continuing for the next six consecutive quarters, with a final quarterly credit of $46,255.91 for the fourth quarter of 2024. The agreement is a result of the vape manufacturer agreeing to share a portion of the Company’s prior $2,313,902 write-off of certain 2 mL disposable vapes that were written off due to clogging issues | |||||||||
Deposit balance | $ 1,000,000 | $ 1,000,000 | ||||||||
Deferred Revenue | 235,891 | 594,086 | 2,174,393 | |||||||
Total Operating Expenses | 17,294,095 | 11,180,562 | 8,160,290 | |||||||
Payroll expenses | 2,801,960 | |||||||||
Advertising and Marketing Expenses | 951,266 | 662,494 | 337,044 | |||||||
Finished goods | $ 338,582 | 127,485 | ||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 100,000 | |||||||||
Unregistered common stock | 100 | |||||||||
Working capital loan | $ 3,000,000 | 0 | ||||||||
Description of Loans to the Brrower | Merger consideration equal to five times the Incremental Pre-Tax Profits, provided that (a) 20% of such second installment of Merger consideration shall be paid in the form of cash, (b) 80% of such second installment of Merger consideration shall be paid in the form of unregistered shares of common stock of LIFD, which unregistered shares of common stock of LIFD shall be valued at $5 per share regardless of whether LIFD’s common stock is then trading at a price that is lower or higher than $5 per share, and (c) such second installment of Merger consideration shall be subject to a minimum value of $1 million dollars (“Minimum Earnout Consideration”) and a maximum value of $6 million dollars (with the stock portion of the second installment of Merger consideration being valued at $5 per share under all circumstances) | |||||||||
Net sales | $ 51,610,562 | $ 57,416,535 | $ 31,656,932 | |||||||
Description of Agreement term | The term of the Agreement is eighteen (18) months from the effective date, renewable upon mutual written agreement of the Parties | |||||||||
Description of Commercial General Liability Insurance | Such coverage shall include (1) Comprehensive Commercial General Liability Insurance with limits of $1,000,000 per occurrence and $2,000,000 in aggregate; (2) Worker’s Compensation Insurance in limits required by applicable law; and (3) Product Liability Insurance with minimum limits of $1,000,000 per occurrence and $2,000,000 in aggregate. GL and Product Liability policies shall name the other Party as an additionally insured party | |||||||||
Promissory Note [Member] | ||||||||||
Annual interest rate | 9.50% | |||||||||
Descriptions of late fee | The WC Note also requires a 5% late fee on outstanding unpaid payments due under the WC Note where payments are not made within 10 days of the due date | |||||||||
Business loan | $ 910,000 | |||||||||
Business Loan Agreement [Member] | ||||||||||
Business loan | $ 910,000 | |||||||||
Promissory Note One [Member] | ||||||||||
Annual interest rate | 10% | |||||||||
Descriptions of late fee | The BL Note also requires a 5% late fee on outstanding unpaid payments due under the BL Note | |||||||||
Series B Convertible Preferred Stock [Member] | ||||||||||
Preferred Stock, shares outstanding | 40,000 | 40,000 | ||||||||
Convertible shares | 40,000 | |||||||||
Description of Calculation of diluted earnings exercise prices | the exercise price ($5.00/share) was higher than the stock closing price at December 31, 2023 ($2.14/share). There were also 142,000 shares of issuable Deferred Contingent Stock | |||||||||
Series A Preferred Stock | ||||||||||
Preferred Stock, shares outstanding | 2,500 | |||||||||
Convertible shares | 250,000 | |||||||||
Vice Chairman and Chief Operating Officer [Member] | Building [Member] | ||||||||||
Purchase price in cash | $ 1,375,000 | |||||||||
Building improvement | $ 193,216 | |||||||||
Description of parking lot | The investment in this necessary parking lot had no impact on the $1,375,000 purchase price | |||||||||
Preliminary estimate potential expansion approximately | $ 3,500,000 | |||||||||
Vice Chairman and Chief Operating Officer Nicholas S. Warrender [Member] | Building [Member] | ||||||||||
Building improvement | 1,375,000 | |||||||||
Canna Infused Products Co [Member] | ||||||||||
Interest Entity Ownership percentage | 100% | |||||||||
Surety Bank of DeLand [Member] | ||||||||||
Cash Borrowed | $ 3,910,000 | |||||||||
Description of Loans to the Brrower | The Lender made two five-year loans to the Borrower, as joint borrowers: (1) a working capital loan of $3,000,000 at 9.5% fixed annual interest, and (2) a $910,000 loan at 10% fixed annual interest, the net proceeds of which were used by Lifted Made to pay a portion of the $1,375,000 purchase price | |||||||||
2 ML Disposal Vapes [Member] | ||||||||||
Inventory write down | $ 2,313,902 | $ 4,418,922 | ||||||||
Credit Agreement [Member] | ||||||||||
Working capital loan | $ 3,000,000 | |||||||||
Annual interest rate | 9.50% | |||||||||
Description of credit agreement | Working Capital Loan is repaid to the Lender in less than three years, in the amount of 3% of the Working Capital Loan if the loan is repaid in Year-1, 2% of the Working Capital Loan if the Working Capital Loan is repaid in Year-2, and 1% if the Working Capital Loan is repaid in Year-3 | |||||||||
NWarrender's Determination | ||||||||||
Description of agreement for the Incremental Pre-Tax Profits | Incremental Pre-Tax Profits of Lifted being generated by the business is $500,000, then the second installment of the Merger Consideration would be calculated as $500,000 X 5 = $2,500,000, of which ($2,500,000 X .2) = $500,000 would be in the form of cash, and the remaining $2,000,000 would be paid in the form of ($2,000,000/$5) = 400,000 newly issued shares | |||||||||
Salary | $ 150,000 | |||||||||
Aggregate amount | $ 50,000 | |||||||||
NWarrender's Determination One [Member] | ||||||||||
Description of agreement for the Incremental Pre-Tax Profits | Incremental Pre-Tax Profits of Lifted being generated by the business is $25,000, then the second installment of the Merger Consideration would be the Minimum Earnout Consideration of $1,000,000, of which ($1,000,000 X .2) = $200,000 would be in the form of cash, and the remaining $800,000 would be paid in the form of ($800,000/$5) = 160,000 newly issued shares | |||||||||
NWarrender's Determination Two [Member] | ||||||||||
Description of agreement for the Incremental Pre-Tax Profits | Incremental Pre-Tax Profits of Lifted being generated by the business is $2,000,000, then the second installment of the Merger Consideration would be the maximum of $6,000,000, of which ($6,000,000 X .2) = $1,200,000 would be in the form of cash, and the remaining $4,800,000 would be paid in the form of ($4,800,000/$5) = 960,000 newly issued shares | |||||||||
Ablis, Bendistillery and Bend Spirits | ||||||||||
Acquisition Percentage | 4.99% | |||||||||
Warrant Three [Member] | ||||||||||
Exercise price | $ 5 | $ 5 | ||||||||
Unvested warrants | 745,000 | |||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 2,295,000 | |||||||||
Warrants vested | 2,280,000 | 1,550,000 | ||||||||
Warrant Two [Member] | ||||||||||
Exercise price | $ 1.85 | $ 5 | ||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 100,000 | 2,295,000 | ||||||||
Stock Option | ||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 1,076,698 | 1,076,698 | ||||||||
Share price | $ 2 | $ 2 | ||||||||
Warrants vested | 155,500 | 155,500 | ||||||||
Manufacturing, Sales and Marketing | ||||||||||
Net sales | $ 5,728,663 | |||||||||
Annual royalty payments | $ 1,000,000 | |||||||||
Business term | 3 years | |||||||||
Asset Purchase Agreement [Member] | ||||||||||
Purchase price in cash | $ 342,068 | |||||||||
Machinery purchase | 309,213 | |||||||||
Cash Borrowed | 26,420 | |||||||||
Payment for machinery | 99,910 | |||||||||
Final payment for Assets | 209,303 | |||||||||
Cash on hand | $ 368,488 | |||||||||
Employment Agreements | ||||||||||
Salary | 100,000 | |||||||||
Lease Agreement | ||||||||||
Lease payments | $ 3,850 | |||||||||
Description of space for building of shop | The leased premises includes a shop building of approximately 4,800 square feet | |||||||||
Jeeter Agreement | ||||||||||
Product Sales | $ 48,000,000 | |||||||||
Aggregate Product Revenue | 1,500,000 | |||||||||
Aggregate Product Revenues | $ 9,000,000 | |||||||||
Extrax NM Agreement | ||||||||||
Business term | 60 years | |||||||||
Product Sales | $ 10,000,000,000,000 | |||||||||
Mirsky Agreement | ||||||||||
Finder's fees | 6.50% | |||||||||
CECL Model | ||||||||||
Allowances for bad debts | $ 375,417 | $ 281,762 | ||||||||
Oculus Merger Agreement [Member] | ||||||||||
Convertible Preferred Stock, Shares Reserved for Future Issuance | 450,000 | |||||||||
Stock issued for cash , Shares | 40,000 | |||||||||
Exercise price | $ 1 | $ 5 | ||||||||
Closing price | $ 2.15 | |||||||||
Lease payments | $ 3,850 |
RECEIPT AND FORGIVENESS OF LO_2
RECEIPT AND FORGIVENESS OF LOAN UNDER THE PAYCHECK PROTECTION PROGRAM AND RECEIPT OF EMPLOYEE RETENTION TAX CREDITS (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||
Mar. 27, 2020 | Dec. 31, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Mar. 31, 2021 | |
Employee retention tax credit gross | $ 233,534 | |||||
Professional fees expense | $ 58,384 | $ 1,088,035 | $ 888,609 | $ 499,752 | ||
BMO Harris Bank [Member] | ||||||
Principal amount | $ 149,622 | |||||
Ppp loan | (149,622) | |||||
Interest payable on ppp loan | (1,525) | |||||
Gain on forgiveness | $ 151,147 | |||||
Maturity date | Apr. 14, 2022 | |||||
Interest rate | 1% | |||||
Accrued interest | $ 1,443 | |||||
Forgiveness of the loan | $ 82 |
RISKS AND UNCERTAINTIES (Detail
RISKS AND UNCERTAINTIES (Details Narrative) - USD ($) | 12 Months Ended | |||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Feb. 14, 2022 | |
Accumulated deficit | $ (2,096,780) | $ (4,238,735) | ||
Annual dividend percentage | 3% | |||
Research and development | $ 19,800 | |||
Accrued Bonus | $ 166,667 | $ 1,556,055 | ||
Diluted earnings per share of common stock | $ 0.56 | |||
Additional bonus | $ 500,000 | |||
Concentration risk, percentage | 25% | 31% | 28% | |
Five Vendors [Member] | Purchase [Member] | ||||
Concentration risk, percentage | 54% | 73% | ||
Five Vendors [Member] | Supplies [Member] | ||||
Concentration risk, percentage | 54% |
THE COMPANYS INVESTMENTS (Detai
THE COMPANYS INVESTMENTS (Details Narrative) - USD ($) | 10 Months Ended | ||||
Dec. 31, 2020 | Dec. 31, 2023 | Feb. 09, 2022 | Dec. 31, 2021 | Apr. 30, 2019 | |
Bendistillery [Member] | |||||
Ownership Interests | 4.99% | ||||
Purchse Price | $ 1,896,200 | ||||
SmplyLifted LLC | |||||
Investment | $ 195,571 | $ 195,571 | |||
Ownership Interests | 50% | 50% | 50% | 50% | |
Receivables | $ 388,727 | ||||
Lifted Amount For Agreement | $ 1 | ||||
Payment Percentage | 99% | ||||
Cash | $ 1,000 | ||||
Loss recognized | $ 4,429 |
PROPERTY AND EQUIPMENT NET (Det
PROPERTY AND EQUIPMENT NET (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Gross Property And Equipment | $ 3,589,918 | $ 1,229,398 |
Less: Accumulated Depreciation | (593,531) | (209,143) |
Net Property And Equipment | 2,996,387 | 1,020,255 |
Building & Leasehold Improvements [Member] | ||
Gross Property And Equipment | 581,394 | 379,499 |
Land [Member] | ||
Gross Property And Equipment | 430,754 | 0 |
Building [Member] | ||
Gross Property And Equipment | 805,545 | 0 |
Machinery and Equipment [Member] | ||
Gross Property And Equipment | 1,473,609 | 664,606 |
Trade Show Booth [Member] | ||
Gross Property And Equipment | 55,081 | 10,000 |
Vehicles [Member] | ||
Gross Property And Equipment | 117,047 | 75,047 |
Computer Equipment [Member] | ||
Gross Property And Equipment | 18,979 | 7,312 |
Furniture and Fixtures [Member] | ||
Gross Property And Equipment | $ 107,509 | $ 92,934 |
PROPERTY AND EQUIPMENT NET (D_2
PROPERTY AND EQUIPMENT NET (Details 1) | 12 Months Ended |
Dec. 31, 2023 | |
Land [Member] | |
Estimated Useful Life | Indefinite |
Building [Member] | |
Estimated Useful Life | 39 years |
Machinery and Equipment [Member] | |
Estimated Useful Life | 60 years |
Trade Show Booth [Member] | |
Estimated Useful Life | 36 years |
Vehicles [Member] | |
Estimated Useful Life | 60 years |
Computer Equipment [Member] | |
Estimated Useful Life | 60 years |
Furniture and Fixtures [Member] | |
Estimated Useful Life | 60 years |
Building Improvements [Member] | |
Estimated Useful Life | 60 years |
Leasehold Improvements [Member] | |
Estimated Useful Life | The shorter of the length of the lease or 60 months |
PROPERTY AND EQUIPMENT NET (D_3
PROPERTY AND EQUIPMENT NET (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Depreciation Expense | $ 218,882 | $ 68,411 | $ 19,562 |
Machinery and Equipment [Member] | |||
Depreciation Expense | $ 166,330 | $ 75,471 | $ 65,651 |
NOTES RECEIVABLE (Details Narra
NOTES RECEIVABLE (Details Narrative) - USD ($) | 1 Months Ended | 4 Months Ended | 12 Months Ended | |||||
Sep. 01, 2015 | Jul. 31, 2014 | Jul. 31, 2015 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2015 | Jul. 14, 2014 | |
Loan to SmplyLifted LLC | $ 387,500 | |||||||
Imputed interest receivable | 580 | |||||||
Bad debt expense | $ 353,162 | $ 78,457 | $ 380,621 | |||||
Secured Promissory Note | William Noyes Webster Foundation Inc | ||||||||
Debt instrument, face amount | $ 1,500,000 | |||||||
Advances | $ 600,000 | |||||||
Note receivable payment | 602,500 | $ 135,350 | ||||||
Note receivable | $ 737,850 | |||||||
Debt instrument, interest rate, stated percentage | 12.50% | |||||||
Bad debt expense | $ 737,850 | |||||||
Secured Promissory Note | William Noyes Webster Foundation Inc | Unfunded Portion of Note | ||||||||
Debt instrument, face amount | $ 897,500 | |||||||
Secured Promissory Note | William Noyes Webster Foundation Inc | Payment To Consultant | ||||||||
Advances | $ 2,500 | |||||||
Interest receivable [1] | William Noyes Webster Foundation Inc | ||||||||
Bad debt expense | $ 97,427 |
INTANGIBLE ASSETS NET (Details
INTANGIBLE ASSETS NET (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
INTANGIBLE ASSETS, NET | |||
Amortization expenses | $ 1,386 | $ 1,668 | |
Finite-Lived Intangible Asset, Useful Life | 32 months |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
RELATED PARTY TRANSACTIONS | |
Base Monthly Rent of Building Year 2021 | $ 5,740 |
Base Monthly Rent of Building Year 2022 | 5,855 |
Base Monthly Rent of Building Year 2023 | 5,972 |
Base Monthly Rent of Building Year 2024 | 6,092 |
Base Monthly Rent of Building Year 2025 | $ 6,213 |
RELATED PARTY TRANSACTIONS (D_2
RELATED PARTY TRANSACTIONS (Details Narrative) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||||||||||||||||
Dec. 14, 2023 USD ($) | Jun. 07, 2022 USD ($) | Jan. 03, 2022 USD ($) | Feb. 24, 2020 USD ($) $ / shares shares | Dec. 31, 2023 USD ($) $ / shares | Sep. 30, 2023 USD ($) | Jun. 30, 2023 USD ($) | Mar. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) ft² $ / shares | Sep. 30, 2022 USD ($) | Jun. 30, 2022 USD ($) | Mar. 31, 2022 USD ($) | Dec. 31, 2023 USD ($) $ / shares $ / bbl shares | Dec. 31, 2022 USD ($) ft² $ / shares | Dec. 31, 2021 USD ($) | Jul. 25, 2022 USD ($) | Feb. 14, 2022 USD ($) | Jan. 01, 2022 USD ($) | Aug. 30, 2021 USD ($) $ / shares shares | Jun. 01, 2021 ft² | Apr. 29, 2021 USD ($) | Jan. 01, 2021 USD ($) | Dec. 31, 2020 USD ($) | Dec. 01, 2020 USD ($) | |
Sublease costs | $ 3,000 | |||||||||||||||||||||||
Description of omnibus agreement | an aggregate of $500,000 in bonuses shall be paid by the Company to GJacobs and WJacobs. This aggregate of $500,000 in bonuses to GJacobs and WJacobs is in addition to the $300,000 bonus payable to WJacobs described in the preceding section. On February 14, 2022, pursuant to the Amended Omnibus Agreement, this $500,000 was recharacterized as a retention bonus and allocated among NWarrender, GJacobs and WJacobs wherein each received $166,666, respectively | |||||||||||||||||||||||
Bonus Payable | $ 166,667 | $ 166,667 | $ 1,556,055 | |||||||||||||||||||||
Exercise price | $ / shares | $ 3.85 | $ 3.55 | $ 3.85 | $ 3.55 | ||||||||||||||||||||
Vincent J Mesolella | ||||||||||||||||||||||||
Payment for commission | $ 40,000 | |||||||||||||||||||||||
Director fees received | $ 4,000 | $ 4,000 | $ 4,000 | $ 4,000 | $ 4,000 | $ 40,000 | $ 4,000 | 4,000 | ||||||||||||||||
Joshua A Bloom | ||||||||||||||||||||||||
Payment for commission | 20,000 | |||||||||||||||||||||||
Director fees received | 4,000 | 4,000 | 4,000 | 4,000 | 4,000 | 4,000 | 4,000 | 4,000 | ||||||||||||||||
Richard E. Morrissy | ||||||||||||||||||||||||
Director fees received | 4,000 | 4,000 | 4,000 | 4,000 | 4,000 | 4,000 | 4,000 | 4,000 | ||||||||||||||||
James S. Jacobs | ||||||||||||||||||||||||
Director fees received | 4,000 | 4,000 | 4,000 | 4,000 | 4,000 | 4,000 | 4,000 | 4,000 | ||||||||||||||||
Kevin J. Rocio | ||||||||||||||||||||||||
Director fees received | 4,000 | $ 4,000 | $ 4,000 | $ 4,000 | 4,000 | 4,000 | $ 4,000 | 4,000 | ||||||||||||||||
Gerard M. Jacobs | ||||||||||||||||||||||||
Payment for commission | 143,713 | |||||||||||||||||||||||
Prepaid consulting fee | $ 350,000 | |||||||||||||||||||||||
Deferred compensation | $ 58,439 | 700,000 | ||||||||||||||||||||||
Warrant purchase | shares | 750,000 | |||||||||||||||||||||||
Shares price | $ / shares | $ 0.01 | |||||||||||||||||||||||
Unregistered common stock | shares | 31,250 | |||||||||||||||||||||||
Exercise price | $ / shares | $ 0.03 | |||||||||||||||||||||||
Bonus Payable | $ 8,439 | $ (50,000) | $ 350,000 | |||||||||||||||||||||
Payment of aggregate cost | $ 9,269 | |||||||||||||||||||||||
Bonuses due amount | $ 8,439 | |||||||||||||||||||||||
Interest payable | 9,269 | |||||||||||||||||||||||
Robert T Warrender III [Member] | ||||||||||||||||||||||||
Payment for commission | $ 21,102 | $ 54,384 | 69,177 | |||||||||||||||||||||
Corner Vapory | ||||||||||||||||||||||||
Purchase | 42,384 | 45,599 | ||||||||||||||||||||||
Write off receivable amount | $ 17,260 | |||||||||||||||||||||||
Receivable | 22,000 | |||||||||||||||||||||||
William C Jacobs | ||||||||||||||||||||||||
Payment for commission | 152,341 | |||||||||||||||||||||||
Prepaid consulting fee | 350,000 | |||||||||||||||||||||||
Deferred compensation | $ 58,439 | $ 700,000 | ||||||||||||||||||||||
Accrued interest Rate | 2% | |||||||||||||||||||||||
Bonus Payable | $ 300,000 | |||||||||||||||||||||||
Robert T Warrender II [Member] | ||||||||||||||||||||||||
Wages Paid | 60,000 | 55,385 | ||||||||||||||||||||||
Refunded lifted a net amount | 7,377 | |||||||||||||||||||||||
Reimbursements expense | 3,938 | 2,229 | 3,938 | 2,229 | ||||||||||||||||||||
Reimbursements of shipping cost | 220,708 | |||||||||||||||||||||||
SmplyLifted LLC | ||||||||||||||||||||||||
Payment on behalf of the related party | 19,992 | |||||||||||||||||||||||
Invoices for related party | 146 | |||||||||||||||||||||||
RemainingPaymentForInvoices | 146 | |||||||||||||||||||||||
NWarrender [Member] | ||||||||||||||||||||||||
Payment for commission | $ 680,000 | |||||||||||||||||||||||
Principal amount | $ 2,750,000 | |||||||||||||||||||||||
Promissory note pay off principal | $ 2,750,000 | |||||||||||||||||||||||
Promissory note payable | $ 2,750,000 | |||||||||||||||||||||||
Five semi annual payments | $ 458,333 | $ 458,333 | ||||||||||||||||||||||
Final semi-annual payment | $ 458,335 | $ 458,335 | ||||||||||||||||||||||
Accrued interest payable | 29,384 | |||||||||||||||||||||||
Prepayment of promissory note | 916,666 | |||||||||||||||||||||||
Remaining amount | 1,833,334,000,000 | |||||||||||||||||||||||
Remaining principal balance | 1,374,999,000,000 | |||||||||||||||||||||||
NWarrender [Member] | July 8, 2022 [Member] | ||||||||||||||||||||||||
Prepayment of promissory note | 916,666 | |||||||||||||||||||||||
NWarrender [Member] | December 31 2024 [Member] | ||||||||||||||||||||||||
Remaining principal balance | 458,335,000,000 | |||||||||||||||||||||||
NWarrender [Member] | July 25 2022 [Member] | ||||||||||||||||||||||||
Repayment of promissory note | 916,668 | |||||||||||||||||||||||
Collateral security | $ 2,750,000 | |||||||||||||||||||||||
Warrender Enterprise | ||||||||||||||||||||||||
Cash consideration | $ 3,750,000 | |||||||||||||||||||||||
Stock consideration | shares | 3,900,455 | |||||||||||||||||||||||
Warrants issued | shares | 1,820,000 | |||||||||||||||||||||||
Exercise price | $ / shares | $ 5 | |||||||||||||||||||||||
LIFD rate of percent | 2.50% | |||||||||||||||||||||||
Re-loan | $ 2,750,000 | |||||||||||||||||||||||
Warrender Enterprise | Secured Promissory Note | ||||||||||||||||||||||||
Cash consideration | $ 3,750,000 | |||||||||||||||||||||||
Warrender Enterprise | Unregistered common stock | ||||||||||||||||||||||||
Stock consideration | shares | 645,000 | |||||||||||||||||||||||
Purchase Of Five Five One One Building [Member] | ||||||||||||||||||||||||
Lease duration description | The lease commencement date was January 1, 2021, and lease termination date was January 1, 2026 | |||||||||||||||||||||||
Purchase price | $ 68,888 | |||||||||||||||||||||||
Rented space | ft² | 11,238 | 11,238 | 3,300 | |||||||||||||||||||||
Rented space per foot | $ / bbl | 6.13 | |||||||||||||||||||||||
Increase in base rent | 2% | |||||||||||||||||||||||
Beneficial common stock | shares | 3,900,455 | |||||||||||||||||||||||
Purchase of Headquarters Building [Member] | ||||||||||||||||||||||||
Acceleration agreement description | the Acceleration Agreement contains a provision that if we raised $5,000,000 of debt or equity capital, then Lifted or our designee shall purchase the 5511 Building from Holdings at the agreed upon $1,375,000 purchase price within two days | |||||||||||||||||||||||
Purchase property | $ 1,375,000 | |||||||||||||||||||||||
Purchase of Headquarters Building [Member] | Surety Bank of DeLand [Member] | ||||||||||||||||||||||||
Amount borrowed | $ 3,910,000 | |||||||||||||||||||||||
Loan description | Lender made two five-year loans to the Borrower, as joint borrowers: (1) a working capital loan of $3,000,000 at 9.5% fixed annual interest, and (2) a $910,000 loan at 10% fixed annual interest, the net proceeds of which were used by Lifted to pay a portion of the $1,375,000 purchase price of the 5511 Building. The two loans are cross collateralized by a first lien mortgage on the 5511 Building |
SHAREHOLDERS EQUITY (Details)
SHAREHOLDERS EQUITY (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
SHAREHOLDERS EQUITY | ||
Q1 2023 vesting of contingent warrants issued in connection with the acquisition of Lifted Made | 705,000 | |
Q2 2023 vesting of contingent warrants issued in connection with the acquisition of Lifted Made | 25,000 | |
Exercisable Options, Warrants, Rights to Purchase Warrants to Purchase Common Stock and Financing Warrants Outstanding, Ending | 3,612,198 | 2,882,198 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price | $ 3.85 | $ 3.55 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term | 1 year 25 days | 2 years 18 days |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 3,612,198 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price | $ 3.85 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term | 1 year 25 days | |
Exercisable Options, Warrants, Rights to Purchase Warrants to Purchase Common Stock and Financing Warrants Outstanding, Beginning | 2,882,198 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value | $ 357,008 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value | $ 357,008 | $ 370,331 |
SHAREHOLDERS EQUITY (Details Na
SHAREHOLDERS EQUITY (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 4 Months Ended | 12 Months Ended | ||
Sep. 21, 2023 | Feb. 24, 2023 | May 13, 2019 | Dec. 05, 2019 | Dec. 31, 2023 | Dec. 31, 2022 | |
Deferred Contingent Stock | 503,000 | |||||
Annual dividend percentage | 3% | |||||
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 | ||||
First valuation firm [Member] | ||||||
Deferred Contingent Stock | 645,000 | 410,000 | ||||
Discount rate for lack of marketability | 22% | |||||
Expected volatility term | 6 months | |||||
Stock compensation expense | $ 2,138,175 | |||||
First valuation firm [Member] | Minimum [Member] | ||||||
Discount rate for lack of marketability | 23% | |||||
First valuation firm [Member] | Maximum [Member] | ||||||
Discount rate for lack of marketability | 31% | |||||
Second valuation firm [Member] | ||||||
Deferred Contingent Stock | 93,000 | 93,000 | ||||
Discount rate for lack of marketability | 27% | |||||
Series A Preferred Stock | ||||||
Preferred Stock, Shares Authorized | 400,000 | |||||
Preferred Stock, Voting Rights | Each share of Series A Convertible Preferred Stock may be converted into 100 shares of common stock. The Series A Convertible Preferred Stock accrues and pays dividends at the rate of 3% annually. The accrued Series A Convertible Preferred Stock dividends are cumulative. The Series A Convertible Preferred Stock dividends shall cease to accrue at such time as the Company’s Common Stock has closed at $3.00 per share or higher for 20 consecutive trading days | |||||
Preferred Stock Terms Of Conversion | As of December 31, 2023, 63,650 shares of Series A Preferred Stock have been converted into a total of 6,365,000 shares of common stock of the Company, which leaves 2,500 shares of Series A Preferred Stock currently outstanding, convertible into 250,000 shares of common stock of the Company | |||||
Accrued Liability | $ 5,328 | $ 9,240 | ||||
Dividends, Cash | $ 14,963 | 17,147 | ||||
Series B Preferred Stock | ||||||
Preferred Stock, Shares Authorized | 5,000,000 | |||||
Preferred Stock, Voting Rights | Each share of Series B Convertible Preferred Stock may be converted into one share of common stock. The Series B Convertible Preferred Stock accrues and pays dividends at the rate of 3% annually. The accrued Series B Convertible Preferred Stock dividends are cumulative. The Series B Convertible Preferred Stock dividends shall cease to accrue at such time as the Company’s Common Stock has closed at $7.00 per share or higher for 20 consecutive trading days | |||||
Preferred Stock Terms Of Conversion | As of December 31, 2023, 60,000 shares of Series B Preferred Stock have been converted into a total of 60,000 shares of common stock of the Company, which leaves 40,000 shares of Series B Preferred Stock currently outstanding, convertible into 40,000 shares of common stock of the Company | |||||
Accrued Liability | $ 1,796 | 1,796 | ||||
Dividends, Cash | $ 6,000 | $ 6,000 | ||||
Accredited Investors | Series A Preferred Stock | ||||||
Stock Issued During Period, Shares, New Issues | 66,150 | |||||
Stock Issued During Period, Value, New Issues | $ 6,615,000 | |||||
Number Of Preffered Stock Converted Into Common Stock | 66,150 | |||||
Convertible Preferred Stock, Shares Reserved for Future Issuance | 6,615,000 | |||||
Debt Instrument, Convertible, Conversion Price | $ 1 | |||||
Annual dividend percentage | 3% | |||||
Accredited Investors | Series B Preferred Stock | ||||||
Stock Issued During Period, Shares, New Issues | 100,000 | |||||
Stock Issued During Period, Value, New Issues | $ 500,000 | |||||
Number Of Preffered Stock Converted Into Common Stock | 100,000 | |||||
Convertible Preferred Stock, Shares Reserved for Future Issuance | 100,000 | |||||
Annual dividend percentage | 3% | |||||
WJacobs [Member] | ||||||
Deferred Contingent Stock | 200,000 |
CONTINGENT CONTRACTUAL OBLIGA_3
CONTINGENT CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS (Details) | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
CONTINGENT CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS | |
Base monthly rent of premises, year 2021 | $ 5,740 |
Base monthly rent of premises, year 2022 | 5,855 |
Base monthly rent of premises, year 2023 | 5,972 |
Base monthly rent of premises, year 2024 | 6,092 |
Base monthly rent of premises, year 2025 | $ 6,213 |
CONTINGENT CONTRACTUAL OBLIGA_4
CONTINGENT CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS (Details 1) - Lease of space 5,000 square feet [Member] | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
Base monthly rent of lease space, year 2022 | $ 2,395 |
Base monthly rent of lease space, year 2023 | 2,467 |
Base monthly rent of lease space, year 2024 | $ 2,541 |
CONTINGENT CONTRACTUAL OBLIGA_5
CONTINGENT CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS (Details 2) - Lease of Space 8,000 square feet | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
Base monthly rent of lease space, year 2022 | $ 4,000 |
Base monthly rent of lease space, year 2023 | 4,120 |
Base monthly rent of lease space, year 2024 | 4,243 |
Base monthly rent of lease space, year 2025 | 4,370 |
Base monthly rent of lease space, year 2026 | $ 4,502 |
CONTINGENT CONTRACTUAL OBLIGA_6
CONTINGENT CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS (Details 3) - Suites 600 and 700 of the Second 58th Lease | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
February 1, 2027 - January 31, 2028 | |
Base monthly rent | $ 4,637 |
February 1, 2028 - January 31, 2029 | |
Base monthly rent | 4,776 |
February 1, 2029 - May 31, 2029 | |
Base monthly rent | $ 4,919 |
CONTINGENT CONTRACTUAL OBLIGA_7
CONTINGENT CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS (Details 4) - Suite 100 | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
April 1, 2024 - May 31, 2024 | |
Base monthly rent | $ 0 |
June 1, 2024 - March 31, 2025 | |
Base monthly rent | 16,770 |
April 1, 2025 - March 31, 2026 | |
Base monthly rent | 17,273 |
April, 1, 2026 - March 31, 2027 | |
Base monthly rent | 17,792 |
April 1, 2027 - March 31, 2028 | |
Base monthly rent | 18,325 |
April 1, 2028 - March 31, 2029 | |
Base monthly rent | 18,875 |
April 1, 2029 - May 31, 2029 | |
Base monthly rent | $ 19,441 |
CONTINGENT CONTRACTUAL OBLIGA_8
CONTINGENT CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS (Details 5) - Lease of space 6,132 square feet [Member] | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
Base monthly rent of lease space, year 2023 | $ 5,493 |
Base monthly rent of lease space, year 2024 | 5,630 |
Base monthly rent of lease space, year 2025 | 5,771 |
Base monthly rent of lease space, year 2026 | 5,915 |
Base monthly rent of lease space, year 2027 | $ 6,063 |
CONTINGENT CONTRACTUAL OBLIGA_9
CONTINGENT CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS (Details 6) - Lease of Space 4,657 sq feet | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
Base monthly rent of lease space, year 2023 | $ 0 |
Base monthly rent of lease space, year 2024 | 3,395 |
Base monthly rent of lease space, year 2025 | 3,531 |
Base monthly rent of lease space, year 2026 | 3,672 |
Base monthly rent of lease space, year 2027 | 3,819 |
Base monthly rent of lease space, year 2028 | $ 3,972 |
CONTINGENT CONTRACTUAL OBLIG_10
CONTINGENT CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS (Details 7) - Lease Expansion Area Amendment [Member] | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
Base monthly rent of lease space, year 2023 | $ 1,945 |
Base monthly rent of lease space, year 2024 | 2,023 |
Base monthly rent of lease space, year 2025 | 2,104 |
Base monthly rent of lease space, year 2026 | 2,188 |
Base monthly rent of lease space, year 2027 | 2,275 |
Base monthly rent of lease space for year 2028 | $ 2,366 |
CONTINGENT CONTRACTUAL OBLIG_11
CONTINGENT CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS (Details 8) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
CONTINGENT CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS | ||
Operating Lease Right Of Use Asset | $ 626,869 | $ 496,604 |
Operating Lease Liability Current | 169,437 | 117,719 |
Operating Lease Liability Noncurrent | $ 463,623 | $ 384,417 |
CONTINGENT CONTRACTUAL OBLIG_12
CONTINGENT CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS (Details 9) - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
CONTINGENT CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS | |||
Amortization of Right of Use Assets | $ 41,226 | $ 46,273 | $ 49,347 |
Interest on lease liabilities | 85,873 | 70,507 | 52,825 |
Operating Lease Expense | 210,626 | 115,239 | 15,405 |
Total Finance Lease Expense | $ 337,725 | $ 232,019 | $ 117,577 |
CONTINGENT CONTRACTUAL OBLIG_13
CONTINGENT CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS (Details 10) | Sep. 30, 2023 USD ($) |
CONTINGENT CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS | |
2023 | $ 0 |
2024 | 0 |
2025 | 0 |
2026 | 0 |
2027 | 0 |
Thereafter | 0 |
Total finance lease liability | 0 |
Less: Present value discount | 0 |
Finance Lease Liability | 0 |
2023 | 208,519 |
2024 | 191,533 |
2025 | 197,622 |
2026 | 110,969 |
2027 | 12,588 |
Thereafter | 0 |
Total operating lease liability | 721,231 |
Less: Present value discount | (88,171) |
Operating Lease Liability | $ 633,060 |
CONTINGENT CONTRACTUAL OBLIG_14
CONTINGENT CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS (Details Narrative) | 12 Months Ended | ||||||||||
Dec. 14, 2023 USD ($) | Jul. 06, 2022 USD ($) | Dec. 31, 2023 USD ($) ft² shares | Dec. 31, 2022 USD ($) | May 31, 2022 $ / bbl | Feb. 14, 2022 USD ($) | Jan. 01, 2022 $ / bbl | Dec. 31, 2021 USD ($) | Oct. 01, 2021 $ / bbl | Jul. 01, 2021 USD ($) | Jan. 01, 2021 USD ($) $ / bbl | |
Shares Of Common Stock | shares | 3,900,455 | ||||||||||
Premises Rent, Per Square | $ / bbl | 10.75 | 6 | 5.75 | 6.13 | |||||||
Base Rent, Amount | $ 68,888 | ||||||||||
Increase In Base Rent (percentage) | 3% | 2% | |||||||||
Sublease cost | $ 3,000 | ||||||||||
Purchase of obligation | $ 1,375,000 | ||||||||||
Immaterial Loss On Lease Modification | $ 1,446 | ||||||||||
Lease term period | 39 years | ||||||||||
Purchase premises | $ 1,375,000 | ||||||||||
Bonus Payable | $ 166,667 | $ 1,556,055 | |||||||||
Second 58th Lease | |||||||||||
Lease area | ft² | 31,000 | ||||||||||
Additional lease area | ft² | 23,000 | ||||||||||
Additional security deposit | $ 27,741 | ||||||||||
Total security deposit paid | 34,141 | ||||||||||
Chief Strategy Officer [Member] | |||||||||||
Bonus Equal | 5% | ||||||||||
Bonus Payable | 688,068 | $ 265,694 | |||||||||
Net Sales | $ 6,000,000 | ||||||||||
Salary | $ 180,000 | ||||||||||
Oculus Merger Agreement [Member] | |||||||||||
Lease payments per month | $ 3,850 |
LEGAL PROCEEDINGS (Details Narr
LEGAL PROCEEDINGS (Details Narrative) | 12 Months Ended |
Dec. 31, 2023 USD ($) integer | |
Law Suit Lifted Liquids Inc DEV Distribution [Member] | |
Description related to lawsuit | vendor who had failed to deliver certain products that Lifted had purchased for $263,938. Dev filed a counterclaim alleging breach of contract. In October 2023, the parties settled the litigation and agreed to mutual releases and dismissal of the lawsuit in exchange for Dev paying $230,000.00 and providing certain equipment and product |
Martha, Edgar v. Lifted Liquids [Member] | |
Description related to lawsuit | the parties settled the litigation and agreed to mutual releases and dismissal of the lawsuit in exchange for $5,000 paid by Lifted to Mr. Martha |
Saul Roffe [Member] | |
Settlement Cost | $ 30,000 |
Amount receive against default judgment against law Offices | 30,000 |
Payment against Girish GPO | $ 34,000 |
Lifted Liquids | integer | 15,000 |
Damage Recover | $ 14,569 |
Awawdeh And Habib [Member] | |
Settlement Cost | 98,000 |
Lifted Liquids, Inc. [Member] | |
Agreement releases and dismissal | $ 36,100 |
COMPANY WIDE MANAGEMENT BONUS P
COMPANY WIDE MANAGEMENT BONUS POOL (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
COMPANY-WIDE MANAGEMENT BONUS POOL | ||||
Annual Bonus | $ 466,668 | $ 466,668 | ||
Eliminated Accrual Bonus | $ 2,121,532 | |||
Diluted earnings per share | $ 0.42 | $ 0.56 | $ 0.56 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Current | |||
Domestic-federal | $ 547,506 | $ 1,787,793 | $ 1,080,572 |
Domestic-state | 117,495 | 719,490 | 618,341 |
Texas Franchise Tax | 51,150 | 46,243 | 0 |
Foreign | 0 | 0 | 0 |
Total | 481,161 | 2,553,526 | 1,698,913 |
Deferred | |||
Domestic-federal | 90,482 | 190,517 | (257,461) |
Domestic-state | 26,422 | 53,612 | (74,090) |
Foreign | 0 | 0 | 0 |
Total | 116,904 | 244,129 | (331,551) |
Total Provision (benefit) For Income Taxes | $ 598,065 | $ 2,797,655 | $ 1,367,362 |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
INCOME TAXES | |||
Domestic Federal | $ 568,244 | $ 2,098,733 | $ 1,505,142 |
State taxes, net of federal benefit | 143,498 | 641,946 | 433,140 |
Non-deductible Expenses | 145,095 | (1,291) | 7,529 |
Texas franchise tax | 51,150 | 46,243 | 0 |
Revision of prior years' deferred tax assets | (316,097) | (2,938) | (20,979) |
Change In Estimated Future Income Tax Rates | 116,289 | (39,355) | (609,673) |
Change In Valuation Allowance | (112,536) | 40,465 | 52,203 |
Other | 2,423 | 13,851 | 0 |
Total Provision (benefit) For Income Tax | $ 598,065 | $ 2,797,655 | $ 1,367,362 |
INCOME TAXES (Details 2)
INCOME TAXES (Details 2) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Deferred Tax Assets | ||
Stock-based Compensation | $ 2,766,156 | $ 2,754,875 |
Sales allowances | 167,051 | 256,650 |
Spoiled and Written-Off Inventory | 9,839 | 0 |
Accrued Related Party Expenses | 1,036 | 612 |
Allowance For Doubtful Accounts | 98,746 | 77,269 |
Lease Liabilities | 4,918 | 23,060 |
Less: Valuation allowance for stock-based compensation | (2,642,339) | (2,754,875) |
Total Deferred Tax Assets | 405,407 | 357,591 |
Deferred Tax Liabilities: | ||
Depreciation & Amortization | (425,536) | (270,169) |
Goodwill | (9,353) | 0 |
Total Deferred Tax Liabilities | (434,889) | (270,169) |
Net Deferred Tax (Liabilities) Assets | $ (29,482) | $ 87,422 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) | 1 Months Ended |
Dec. 22, 2017 | |
INCOME TAXES | |
Federal Dividends | 100% |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - Suites 600 and 700 of the Second 58th Lease | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
February 1, 2027 - January 31, 2028 | |
Base monthly rent | $ 4,637 |
February 1, 2028 - January 31, 2029 | |
Base monthly rent | 4,776 |
February 1, 2029 - May 31, 2029 | |
Base monthly rent | $ 4,919 |
SUBSEQUENT EVENTS (Details 1)
SUBSEQUENT EVENTS (Details 1) - Suite 100 | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
April 1, 2024 - May 31, 2024 | |
Base monthly rent | $ 0 |
June 1, 2024 - March 31, 2025 | |
Base monthly rent | 16,770 |
April 1, 2025 - March 31, 2026 | |
Base monthly rent | 17,273 |
April, 1, 2026 - March 31, 2027 | |
Base monthly rent | 17,792 |
April 1, 2027 - March 31, 2028 | |
Base monthly rent | 18,325 |
April 1, 2028 - March 31, 2029 | |
Base monthly rent | 18,875 |
April 1, 2029 - May 31, 2029 | |
Base monthly rent | $ 19,441 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) | 1 Months Ended | 12 Months Ended | |
Jan. 23, 2024 | Feb. 28, 2025 USD ($) | Dec. 31, 2023 USD ($) ft² | |
Description of termination of jeeter agreement | pursuant to a Termination Agreement dated as of March 22, 2024 between Jeeter and Lifted. Pursuant to such Termination Agreement, among other things: Jeeter is obligated to pay Lifted $150,000 upon the signing of such Termination Agreement, and an additional $150,000 within 15 days | ||
Second 58th Lease | |||
Total security deposit paid | $ 34,141 | ||
Additional security deposit | $ 27,741 | ||
Additional lease area | ft² | 23,000 | ||
Lease area | ft² | 31,000 | ||
Lease Of Space In Durango Member | |||
Annual rent | $ 30,000 | ||
Equal monthly installment | 2,500 | ||
Security deposit | $ 5,000 | ||
Subsequent Event [Member] | |||
Term of agreement | 18 months | ||
Description of cost recovery and royalty | the Parties shall divide the remaining Adjusted Gross Revenue 60/40, with 40% of that Adjusted Gross Revenue going to Lifted Made (the “Royalty”). | ||
Description of insurance coverage | (1) Comprehensive Commercial General Liability Insurance with limits of $1,000,000 per occurrence and $2,000,000 in aggregate; (2) Worker’s Compensation Insurance in limits required by applicable law; and (3) Product Liability Insurance with minimum limits of $1,000,000 per occurrence and $2,000,000 in aggregate |