Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2021 | May 11, 2021 | |
Cover [Abstract] | ||
Entity Registrant Name | Generation Alpha, Inc. | |
Entity Central Index Key | 0001398137 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2021 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 60,029,830 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2021 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Current Assets | ||
Cash | $ 345,000 | $ 372,000 |
Accounts receivable, net of allowance for doubtful accounts and returns of $10,000 and $12,000, respectively | 114,000 | 54,000 |
Inventories, net of reserves of $45,000 and $30,000, respectively | 99,000 | 133,000 |
Prepaid expenses and other current assets | 3,000 | 54,000 |
Total Current Assets | 561,000 | 613,000 |
Property and equipment, net | 44,000 | 15,000 |
Right of use asset, net | 225,000 | 63,000 |
Other assets | 21,000 | 11,000 |
Total Assets | 851,000 | 702,000 |
Current Liabilities | ||
Accounts payable and accrued expenses | 1,597,000 | 1,649,000 |
Legal obligations payable | 448,000 | 448,000 |
Lease payable, current portion | 380,000 | 440,000 |
Contract obligations - past due | 820,000 | 816,000 |
Notes payable - related parties - past due | 790,000 | 790,000 |
Convertible notes payable to related party (including $2,125,000 and $1,775,000 that are past due, respectively), net of discount of $37,000 and $220,000, respectively | 2,238,000 | 2,055,000 |
Accrued interest to related parties | 590,000 | 531,000 |
Loans payable | 11,000 | |
Total Current Liabilities | 6,863,000 | 6,740,000 |
Lease payable, net of current portion | 411,000 | 182,000 |
Loans payable | 355,000 | 355,000 |
Derivative liabilities | 3,598,000 | 2,161,000 |
Total Liabilities | 11,227,000 | 9,438,000 |
Commitments and Contingencies | ||
Shareholders' Deficit | ||
Preferred stock, no par value, 20,000,000 shares authorized; no shares issued and outstanding at March 31, 2021 and December 31, 2020 | ||
Common stock, $0.001 par value, 100,000,000 shares authorized; 60,029,830 and 59,557,830 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively | 59,000 | 59,000 |
Additional paid-in-capital | 32,409,000 | 32,186,000 |
Accumulated deficit | (42,844,000) | (40,981,000) |
Total Shareholders' Deficit | (10,376,000) | (8,736,000) |
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT | $ 851,000 | $ 702,000 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 10,000 | $ 12,000 |
Inventories, net of allowance | 45,000 | 30,000 |
Convertible notes payable to related party past due | 2,125,000 | 1,775,000 |
Convertible note payable related party discount, current | $ 37,000 | $ 220,000 |
Preferred stock, no par value | ||
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 60,029,830 | 59,557,830 |
Common stock, shares outstanding | 60,029,830 | 59,557,830 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | ||
Income Statement [Abstract] | |||
Sales | $ 454,000 | $ 307,000 | |
Cost of goods sold | 227,000 | 195,000 | |
Gross profit | 227,000 | 112,000 | |
Operating expenses | |||
Selling, general and administrative expenses | 266,000 | 361,000 | |
Research and development | 26,000 | 25,000 | |
Impairment of right of use asset | 82,000 | ||
Total operating expenses | 292,000 | 468,000 | |
Loss from operations | (65,000) | (356,000) | |
Other expenses | |||
Financing costs | [1] | (15,000) | |
Loss on settlement of trade vendor payable | (106,000) | ||
Gain on extinguishment of debt | 2,000 | ||
Change in fair value of derivative liability | (1,437,000) | (942,000) | |
Interest expense | [2] | (257,000) | (325,000) |
Total other expenses | (1,798,000) | (1,282,000) | |
Net loss | $ (1,863,000) | $ (1,638,000) | |
BASIC AND DILUTED LOSS PER SHARE | $ (0.03) | $ (0.03) | |
WEIGHTED - AVERAGE COMMON SHARES OUTSTANDING BASIC AND DILUTED | 59,557,830 | 48,715,236 | |
[1] | Included in financing costs are these amounts from a related party | ||
[2] | Included in interest expense are these amounts from related parties |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Operations (Unaudited) (Parenthetical) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Income Statement [Abstract] | ||
Financing costs to related party | $ 15,000 | |
Interest expense to related parties | $ 249,000 | $ 207,000 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Shareholders' Deficit (Unaudited) - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2019 | $ 47,000 | $ 31,739,000 | $ (40,410,000) | $ (8,624,000) |
Balance, shares at Dec. 31, 2019 | 46,820,564 | |||
Common shares issued on conversion of accrued interest on note payable | $ 2,000 | 27,000 | 29,000 | |
Common shares issued on conversion of accrued interest on note payable, shares | 2,287,066 | |||
Fair value of common stock issued to directors | $ 2,000 | 21,000 | 23,000 | |
Fair value of common stock issued to directors, shares | 2,166,667 | |||
Fair value of vested stock options | 21,000 | 21,000 | ||
Net loss | (1,638,000) | (1,638,000) | ||
Balance at Mar. 31, 2020 | $ 51,000 | 31,808,000 | (42,048,000) | (10,189,000) |
Balance, shares at Mar. 31, 2020 | 51,274,297 | |||
Balance at Dec. 31, 2020 | $ 59,000 | 32,186,000 | (40,981,000) | (8,736,000) |
Balance, shares at Dec. 31, 2020 | 59,557,830 | |||
Fair value of common stock issued to directors | 20,000 | 20,000 | ||
Fair value of common stock issued to directors, shares | 472,000 | |||
Fair value of warrants issued in settlement of trade vendor payable | 191,000 | 191,000 | ||
Fair value of vested stock options | 12,000 | 12,000 | ||
Net loss | (1,863,000) | (1,863,000) | ||
Balance at Mar. 31, 2021 | $ 59,000 | $ 32,409,000 | $ (42,844,000) | $ (10,376,000) |
Balance, shares at Mar. 31, 2021 | 60,029,830 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | ||
Cash Flows from Operating Activities | |||
Net loss | $ (1,863,000) | $ (1,638,000) | |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities | |||
Provision for allowance for doubtful accounts and sales returns | (2,000) | (65,000) | |
Provision for inventory reserves | 15,000 | 10,000 | |
Depreciation | 3,000 | 2,000 | |
Amortization of right of use asset | 11,000 | 6,000 | |
Impairment of right of use asset | 82,000 | ||
Imputed interest contract obligation | 4,000 | 4,000 | |
Amortization of discount on convertible notes payable | 183,000 | 146,000 | |
Fair value of vested stock options | 12,000 | 21,000 | |
Fair value of common stock issued to directors | 20,000 | 23,000 | |
Financing costs | [1] | 15,000 | |
Loss on settlement of trade vendor payable | 106,000 | ||
Gain on settlement of a debt | (2,000) | ||
Change in the fair value of derivative liability | 1,437,000 | 942,000 | |
(Increase) Decrease in: | |||
Accounts receivable | (58,000) | (16,000) | |
Legal settlements payable | 142,000 | ||
Inventories | 19,000 | 77,000 | |
Prepaid expenses and other | 51,000 | 15,000 | |
Other assets | (10,000) | (1,000) | |
(Decrease) Increase in: | |||
Accounts payable and accrued expenses | 33,000 | 182,000 | |
Lease payable | (4,000) | (4,000) | |
Accrued interest to related parties | 59,000 | 44,000 | |
Net cash provided by (used in) operating activities | 14,000 | (13,000) | |
Cash Flows from Investing Activities | |||
Purchase of property and equipment | (32,000) | ||
Net cash used in investing activities | (32,000) | ||
Cash Flows from Financing Activities | |||
Proceeds from convertible notes payable related party, net of fees | 125,000 | ||
Payments on loans payable | (9,000) | (23,000) | |
Net cash (used in) provided by financing activities | (9,000) | 102,000 | |
Net increase (decrease) in cash | (27,000) | 89,000 | |
Cash beginning of period | 372,000 | 104,000 | |
Cash end of period | 345,000 | 193,000 | |
Interest paid | 13,000 | 13,000 | |
Taxes paid | |||
Non-Cash Financing Activities | |||
Recording of right to use asset and lease liability | 173,000 | 89,000 | |
Warrants issued on settlement of trade vendor payable | 191,000 | ||
Conversion of accrued interest to related parties for common stock | 29,000 | ||
Derivative liability recorded as a valuation discount | $ 140,000 | ||
[1] | Included in financing costs are these amounts from a related party |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Organization and Summary of Significant Accounting Policies | NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES History and Organization Generation Alpha, Inc. (the “Company”) was originally incorporated under the laws of the State of Nevada on March 2, 2007 as Cinjet, Inc. (“Cinjet”). Effective September 1, 2015, Cinjet changed its corporate name to Solis Tek Inc. (“Solis Tek”). Effective September 25, 2018, Solis Tek changed its corporate name to Generation Alpha, Inc. Effective September 25, 2018, Generation Alpha, Inc. (f/k/a Solis Tek Inc.) (the “Company”) entered into an agreement and plan of merger (the “Merger Agreement”), whereby a wholly-owned subsidiary of the Company (the “Merger Sub”) was merged into the Company (the “Merger”). Upon consummation of the Merger, the separate existence of Merger Sub ceased. On June 23, 2015, the Company entered into an Agreement of Merger and Plan of Reorganization (the “Agreement”) with Solis Tek Inc., a California corporation (“STI”), and CJA Acquisition Corp., a California corporation and a wholly owned subsidiary of the Company (“Merger Sub”), providing for the merger of Merger Sub with and into STI (the “Merger”), with STI surviving the Merger as a wholly-owned subsidiary of the Company. The Merger was accounted for as a recapitalization of the Company with STI being deemed the accounting acquirer. Overview of Business The Company is a vertically integrated technology innovator, developer, manufacturer, and distributor focused on bringing products and solutions to commercial and retail cannabis growers in both the medical and adult use recreational space in legal markets across the U.S. The Company’s lighting and nutrient customers include retail stores, distributors and commercial growers in the United States and abroad. COVID-19 Considerations During the three months ended March 31, 2021, the COVID-19 pandemic did not have a material net impact on our operating results. In the future, the pandemic may cause reduced demand for our products if, for example, the pandemic results in a recessionary economic environment which negatively effects the consumers who purchase our products. The Company has not observed any material impairments of its assets or a significant change in the fair value of its assets due to the COVID-19 pandemic. Our ability to operate without significant negative operational impact from the COVID-19 pandemic will in part depend on our ability to protect our employees and our supply chain. The Company has endeavored to follow the recommended actions of government and health authorities to protect our employees. Since the onset of the COVID-19 pandemic, we maintained the consistency of our operations. However, the uncertainty resulting from the pandemic could result in an unforeseen disruption to our workforce and supply chain (for example an inability of a key supplier or transportation supplier to source and transport materials) that could negatively impact our operations. Going Concern The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying consolidated financial statements, during the three months ended March 31, 2021, the Company incurred a net loss of $1,863,000 and had a shareholders’ deficit of $10,376,000 as of March 31, 2021. In addition, $2,915,000 of notes payable to related parties, $590,000 of accrued interest to related parties, and $820,000 of contract obligations are past due. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date of the financial statements being issued. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to raise additional funds and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. At March 31, 2021, the Company had cash on hand in the amount of $345,000. Management estimates that the current funds on hand will be sufficient to continue operations through December 31, 2021. The continuation of the Company as a going concern is dependent upon its ability to obtain necessary debt or equity financing to continue operations until it begins generating positive cash flow. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing or cause substantial dilution for our stockholders, in case or equity financing. Basis of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries: STI; Solis Tek East, Corporation (“STE”), an entity incorporated under the laws of the State of New Jersey, Zelda Horticulture, Inc. (“Zelda”), an entity incorporated under the laws of the State of California, and YLK Partners NV, LLC (“YLK”), Generation Alpha Brands, Inc., Trilogy Dispensaries, Inc., Extracting Point, LLC (“Extracting Point”), and GrowPro Solutions, Inc., all entities formed under the laws of Nevada. Intercompany transactions and balances have been eliminated in consolidation. Use of Estimates The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the financial statement date, and reported amounts of revenue and expenses during the reporting period. Significant estimates are used in valuing our allowances for doubtful accounts, reserves for inventory obsolescence, valuing derivative liabilities, valuing equity instruments issued for services, and valuation allowance for deferred tax assets, among others. Actual results could differ from these estimates. Revenue Recognition The Company recognizes revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 606, Revenue from Contracts with Customers Under this guidance, revenue is recognized when control of promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company reviews its sales transactions to identify contractual rights, performance obligations, and transaction prices, including the allocation of prices to separate performance obligations, if applicable. Revenue and cost of sales are recognized once products are delivered to the customer’s control and performance obligations are satisfied. All products sold by the Company are distinct individual products and consist of advanced energy efficient indoor horticulture lighting, plant nutrient products, and ancillary equipment. The products are offered for sale as finished goods only, and there are no performance obligations required post-shipment for customers to derive the expected value from them. Contracts with customers contain no incentives or discounts that could cause revenue to be allocated or adjusted over time. The Company does not offer a general right of return on any of its sales and considers all sales as final. The Company generally provides a three-year warranty on its ballasts. However, the Company does not maintain a warranty reserve as the Company is able to chargeback its vendors for all warranty claims. As of March 31, 2021 and December 31, 2020, the Company determined that no reserves for returned product were necessary. In the following table, revenue is disaggregated by major product line for three months ended March 31, 2021: Sales Channels Lighting Plant Nutrients and Fertilizers Total Hydroponic resellers/retail $ 142,000 $ 312,000 $ 454,000 Direct to consumer/online - - - Total $ 142,000 $ 312,000 $ 454,000 In the following table, revenue is disaggregated by major product line for three months ended March 31, 2020: Sales Channels Lighting Plant Nutrients and Fertilizers Total Hydroponic resellers/retail $ 127,000 $ 175,000 $ 302,000 Direct to consumer/online 5,000 - 5,000 Total $ 132,000 $ 175,000 $ 307,000 Accounts Receivable Accounts receivable are recorded net of an allowance for expected losses. The Company evaluates the collectability of its trade accounts receivable based on a number of factors. 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, which reduces the recognized receivable to the estimated amount the Company believes will ultimately be collected. In addition to specific customer identification of potential bad debts, bad debt charges are recorded based on the Company’s historical losses and an overall assessment of past due trade accounts receivable outstanding. The allowance for doubtful accounts and returns is established through a provision reducing the carrying value of receivables. At March 31, 2021 and December 31, 2020, the allowance for doubtful accounts was $10,000 and $12,000, respectively. Inventories Inventories are stated at the lower of cost or net realizable value. Cost is computed on a first-in, first-out basis. The Company’s inventories consist almost entirely of finished goods as of March 31, 2021 and December 31, 2020. The Company provides inventory reserves based on excess and obsolete inventories determined primarily by future demand forecasts. The write down amount is measured as the difference between the cost of the inventory and net realizable value based on upon assumptions about future demand and charged to the provision for inventory write down, which is a component of cost of sales. At the point of the loss recognition, a new, lower cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. At March 31, 2021 and December 31, 2020, the reserve for excess and obsolete inventory was $45,000 and $30,000, respectively. Derivative Financial Instruments The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. Research and Development Research and development costs are expensed in the period incurred. The costs primarily consist of personnel and supplies. Shipping and Handling Costs The Company’s shipping and handling costs relating to inbound freight are reported as cost of goods sold in the consolidated Statements of Operations, while shipping and handling costs relating to outbound freight are reported as selling, general and administrative expenses in the consolidated Statements of Operations. The Company classifies amounts billed to customers for shipping fees as revenues. Fair Value Measurements The Company determines the fair value of its assets and liabilities based on the exchange price in U.S. dollars 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 maximize the use of observable inputs and minimize the use of unobservable inputs. The Company uses a fair value hierarchy with three levels of inputs, of which the first two are considered observable and the last unobservable, to measure fair value: ● Level 1 — Quoted prices in active markets for identical assets or liabilities. ● Level 2 — Inputs, other than Level 1, that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. ● Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The carrying amounts of financial instruments such as cash, accounts receivable, inventories, and accounts payable and accrued liabilities, approximate the related fair values due to the short-term maturities of these instruments. The carrying values of notes payable approximate their fair values due to the fact that the interest rates on these obligations are based on prevailing market interest rates. The fair value of the derivative liabilities of $3,598,000 and $2,161,000 at March 31, 2021 and December 31, 2020, respectively, was valued using Level 2 inputs. Loss per Share Calculations Basic earnings per share are computed by dividing net income (loss) available to common shareholders by the weighted-average number of common shares available. Diluted earnings per share is computed by dividing the net income applicable to common stock holders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued using the treasury stock method. Potential common shares are excluded from the computation when their effect is antidilutive. The dilutive effect of potentially dilutive securities is reflected in diluted net income per share if the exercise prices were lower than the average fair market value of common shares during the reporting period. For the three months ended March 31, 2021, options to acquire 10,262,627 shares of common stock, warrants to acquire 32,283,140 shares of common stock, and 70,033,903 shares to be issued upon conversion of our convertible notes have been excluded from the calculation of weighted average common shares, as their effect would have been anti-dilutive. For the three months ended March 31, 2020, options to acquire 4,433,300 shares of common stock, warrants to acquire 21,283,140 shares of common stock, and 267,089,041 shares to be issued upon conversion of our convertible notes have been excluded from the calculation of weighted average common shares, as their effect would have been anti-dilutive. Concentration Risks Cash includes cash on hand and cash in banks and are reported as “Cash” in the consolidated balance sheets. At March 31, 2021 and December 31, 2020, cash includes cash on hand of $255,000 and $289,000, respectively, and cash in banks of $90,000 and $83,000, respectively. The balance of cash on hand is not insured by the Federal Deposit Insurance Corporation. The balance of cash in banks is insured by the Federal Deposit Insurance Corporation for up to $250,000. The Company operates in markets that are highly competitive and rapidly changing. Significant technological changes, shifting customer needs, the emergence of competitive products or services with new capabilities, and other factors could negatively impact the Company’s operating results. State and federal government laws could have a material adverse impact on the Company’s future revenues and results of operations. The Company’s products require specific components that currently are available from a limited number of sources. The Company purchases some of its key products and components from single vendors. During the three months ended March 31, 2021 and 2020, its ballasts, lamps, and reflectors, which comprised the clear majority of the Company’s purchases during those periods, were each only purchased from one separate vendor. The Company performs a regular review of customer activity and associated credit risks and does not require collateral or other arrangements. One customer accounted for 12% of the Company’s revenue for the three months ended March 31, 2021, and one customer accounted for 30% of the Company’s revenue for the three months ended March 31, 2020. Shipments to customers outside the United States comprised less than 5% of our sales for the three months ended March 31, 2021 and 2020, respectively. As of March 31, 2021, three customers accounted for 33%, 24%, and 12% of the Company’s trade accounts receivable balance, and as of December 31, 2020, three customers accounted for 37%, 23%, and 15% of the Company’s trade accounts receivable balance. Segment Reporting The Company operates in one segment for the manufacture and distribution of its products. In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief operating decision maker has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities in: economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes. Since the Company operates in one segment, all financial information required by “Segment Reporting” can be found in the accompanying consolidated financial statements. Recently Issued Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments In August 2020, the FASB issued ASU No. 2020-06 (“ASU 2020-06”) “ Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40 Other recent accounting pronouncements issued by the FASB, its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements. |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | NOTE 2 - PROPERTY AND EQUIPMENT Property and equipment consist of the following at March 31, 2021 and December 31, 2020: March 31, 2021 December 31, 2020 Machinery and equipment $ 81,000 $ 67,000 Computer equipment 11,000 11,000 Furniture and fixtures 48,000 40,000 Leasehold improvements 10,000 - 150,000 118,000 Less: accumulated depreciation (106,000 ) (103,000 ) Property and equipment, net $ 44,000 $ 15,000 Depreciation expense for the three months ended March 31, 2021 and 2020 was $3,000 and $2,000, respectively. |
Contract Obligation Acquired fr
Contract Obligation Acquired from Related Parties | 3 Months Ended |
Mar. 31, 2021 | |
Contract Obligation Acquired From Related Parties | |
Contract Obligation Acquired from Related Parties | NOTE 3 – CONTRACT OBLIGATION ACQUIRED FROM RELATED PARTIES In May 2018, the Company entered into an acquisition agreement with the members, which in the aggregate, owned 100% of the membership interests in YLK, a related party. The major asset of YLK is a Cultivation Management Services Agreement (the “Management Agreement”) with an Arizona licensee that was entered into on January 5, 2018. During the year ended December 31, 2019, the Company determined the acquired assets were fully impaired, and recorded an impairment charge of $1,139,000 accordingly. The Company has a continuing obligation under the Management Agreement of $816,000 (net of discount of $34,000) as of December 31, 2020. As of March 31, 2021, the remaining Management Agreement obligation was $820,000 (net of discount of $30,000) and is reflected as a current liability in the accompanying consolidated balance sheet. As of March 31, 2021, the Company is past due on its installment payments obligations under the Management Agreement. |
Notes Payable to Related Partie
Notes Payable to Related Parties - Past Due | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Notes Payable to Related Parties - Past Due | NOTE 4 – NOTES PAYABLE TO RELATED PARTIES – PAST DUE Notes payable to related parties consists of the following at March 31, 2021 and December 31, 2020: March 31, 2020 December 31, 2020 Notes payable to officers/shareholders – past due (a) 600,000 600,000 Notes payable to related party – past due (b) 150,000 150,000 Notes payable to related parties – past due (c) 40,000 40,000 Total $ 790,000 $ 790,000 a. On May 9, 2016, the Company entered into note payable agreements with Alan Lien and Alvin Hao, each a former officer and director, to borrow $300,000 under each individual note. Pursuant to the terms of each of these agreements, the Company borrowed $300,000 from each of Alan Lien and Alvin Hao. The notes accrue interest at a rate of 8% per annum, are unsecured and were due on or before May 31, 2018. The loans are currently past due. A total of $600,000 was due on the combined notes at March 31, 2021 and December 31, 2020. b. On May 8, 2019, the Company entered into a note agreement with the sister of Alvin Hao, a former officer and director, to borrow $150,000. The loan accrues interest at 8% per annum (12% on default), is unsecured and is due on November 8, 2019. The note is currently past due. A total of $150,000 was due on the loans as of March 31, 2021 and December 31, 2020. c. The Company entered into note agreements with the parents of Alan Lien, the Company’s Chief Executive Officer and one of its directors. The loans accrue interest at 10% per annum, are unsecured and were due on or before December 31, 2016. The loans are currently past due. A total of $40,000 was due on the loans as of March 31, 2021 and December 31, 2020. At December 31, 2020, accrued interest on the notes payable to related parties was $187,000. During the three months ended March 31, 2021, the Company added $17,000 of additional accrued interest, and made interest payments of $7,000, leaving an accrued interest on the notes payable to related parties balance of $197,000 at March 31, 2021. |
Lease Payable
Lease Payable | 3 Months Ended |
Mar. 31, 2021 | |
Leases [Abstract] | |
Lease Payable | NOTE 5 – LEASE PAYABLE The Company leases its executive offices and warehouse space. The Company analyzes all leases at inception to determine if a right-of-use (“ROU”) asset and lease liability should be recognized. Leases with an initial term of 12 months or less are not included on the condensed consolidated balance sheets. The ROU asset and lease liability is measured at the present value of future lease payments as of the lease commencement date. The Company accounts for the lease and non-lease components of its leases as a single lease component. Rent expense is recognized on a straight-line basis over the lease term. In 2019, we occupied a 17,640 square foot facility located at 853 Sandhill Avenue, Carson, California under a five-year lease with an independent party ending on June 30, 2023, pursuant to which we paid $15,000 per month in rental charges. On December 31, 2019, we abandoned our Carson, California lease. The Company remains obligated under its Carson, California lease, until such time the landlord releases us from our lease agreement. During the three-months ended March 31, 2020, management determined it no longer had access to the Carson, California facility, and recorded an impairment charge for the remaining ROU asset balance of $82,000. As of the date of this report, the Company has not been released from the lease agreement, and no lease payments were made during the three months ended March 31, 2021. The remaining balance of the lease obligation was $556,000 at both March 31, 2021 and December 31, 2020. On January 1, 2020, the Company relocated its principal executive offices and warehouse to 1689-A Arrow Rt., Upland, California, 91786. The Upland, California lease is for a 2,974 square foot facility under a three-year lease with an independent party ending on January 31, 2023, pursuant to which the Company pays $2,800 per month in rental charges. The operating lease ROU asset balance related to the Upland, California operating lease was $63,000 as of December 31, 2020. During the three months ended March 31, 2021, the Company reflected amortization of the ROU assets of $7,000 related to its Upland, California operating lease, resulting in an ROU asset balance of $56,000 as of March 31, 2021. On January 11, 2021, the Company opened a regional sales and distribution office at Windolph Plaza Center, 1020 NW 6 th As of December 31, 2020, liabilities recorded under operating leases were $622,000. During the three months ended March 31, 2021, the Company added $173,000 in lease liabilities related to its Florida operating lease, and made lease payments of $4,000 towards its operating lease liability. As of March 31, 2021, liabilities under operating leases amounted to $791,000, of which $380,000 were reflected as current due. The lease agreements above have a weighted average remaining lease term of 2.85 years as of March 31, 2021, and the weighted average discount rate for operating leases is 10%. Rent expense during the three months ended March 31, 2021 and 2020 was $18,000 and $6,000, respectively. Maturities of the Company’s lease liabilities are as follows: Year Ending Operating Leases Remainder of 2021 $ 446,000 2022 265,000 2023 142,000 2024 49,000 2025 44,000 Thereafter 11,000 Total lease payments 957,000 Less: Imputed interest (166,000 ) Total operating lease liability 791,000 Current portion (380,000 ) $ 411,000 |
Legal Obligation Payable
Legal Obligation Payable | 3 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Obligation Payable | NOTE 6 – LEGAL OBLIGATION PAYABLE Effective June 25, 2018, Matthew Geschke (the “Plaintiff”) filed a breach of contract case against the Company in the San Diego Superior Court of San Diego, California. The Plaintiff claimed damages for breach of an employment contract when the Company terminated the Plaintiff’s employment agreement on February 22, 2018. On June 26, 2020, the Plaintiff was awarded a default judgment against the Company in the amount of $448,000. No payments have been made, leaving $448,000 owed at March 31, 2021 and December 31, 2020. |
Loans Payable
Loans Payable | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Loans Payable | NOTE 7 – LOANS PAYABLE Notes payable consists of the following at March 31, 2021 and December 31, 2020: March 31, 2021 December 31, 2020 Notes payable to Celtic Bank – past due (a) $ - $ 11,000 SBA Paycheck Protection Program loan (b) 205,000 205,000 SBA Economic Injury Disaster Loan (c) 150,000 150,000 Total loans payable 355,000 366,000 Loans payable, current portion - (11,000 ) Loans payable, net of current portion $ 355,000 $ 355,000 a) On May 21, 2019, the Company entered into a loan agreement with Celtic Bank in the principal amount of $150,000 with interest at 40.44% per annum and due on May 21, 2020. The loan was guaranteed by Alvin Hao, a former officer of the Company. A total of $11,000 was owed on the loan as of December 31, 2020. During the three months ended March 31, 2021, the Company entered into a settlement agreement with Celtic Bank, whereas the Company agreed to make a reduced payment in full of $9,000, and recorded a gain on extinguishment of debt of $2,000, as reflected in the condensed consolidated statements of income during the three months ended March 31, 2021. b) On May 7, 2020, the Company was granted a loan (the “PPP loan”) from Wells Fargo Bank in the aggregate amount of $205,000, pursuant to the Paycheck Protection Program (the “PPP”) under the CARES Act. The PPP loan agreement is dated May 8, 2020, matures on May 7, 2022, bears interest at a rate of 1% per annum, with the first six months of interest deferred, and is unsecured and guaranteed by the U.S. Small Business Administration (“SBA”). The loan term may be extended to May 7, 2025, if mutually agreed to by the Company and lender. The Company applied ASC 470, Debt, to account for the PPP loan. The PPP loan may be prepaid at any time prior to maturity with no prepayment penalties. Funds from the PPP loan may only be used for qualifying expenses as described in the CARES Act, including qualifying payroll costs, qualifying group health care benefits, qualifying rent and debt obligations, and qualifying utilities. The Company intends to use the entire loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the loan may be forgiven if they are used for qualifying expenses. The Company intends to apply for forgiveness of the PPP loan with respect to these qualifying expenses, however, it cannot assure that such forgiveness of any portion of the PPP loan will occur. As for the potential loan forgiveness, once the PPP loan is, in part or wholly, forgiven and a legal release is received, the liability would be reduced by the amount forgiven and a gain on extinguishment would be recorded. The terms of the PPP loan provide for customary events of default including, among other things, payment defaults, breach of representations and warranties, and insolvency events. The Company was in compliance with the terms of the PPP loan as of March 31, 2021. A total of $205,000 was due on the PPP loan as of March 31, 2021 and December 31, 2020. c) On June 7, 2020, the Company obtained an Economic Injury Disaster Loan (“EIDL”) from the SBA in the amount of $150,000. Interest on the loan is at the rate of 3.75% per year, and all loan payments are deferred for twenty four months, at which time the balance is payable in monthly installments of $731 over a 30-year term. The loan is secured by all the Company’s assets. The Company was in compliance with the terms of the EIDL as of March 31, 2021. A total of $150,000 was due on the EIDL loan as of March 31, 2021 and December 31, 2020. |
Convertible Secured Note Payabl
Convertible Secured Note Payable to Related Party | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Convertible Secured Note Payable to Related Party | NOTE 8 – CONVERTIBLE SECURED NOTE PAYABLE TO RELATED PARTY Secured notes payable to related party consists of the following as of March 31, 2021 and December 31, 2020: March 31, 2021 December 31, 2020 YA II PN, Ltd. $ 2,275,000 $ 2,275,000 Less debt discount (37,000 ) (220,000 ) Secured note payable, net $ 2,238,000 $ 2,055,000 On May 10, 2018 and October 29, 2019, the Company issued convertible secured debentures (“Notes”) to YA II PN Ltd. (“YA II PN”) in the principal amounts of $1,500,000 and $275,000, respectively, with interest rates of 8% and 10%, respectively, which matured in June 2020 and April 2020, respectively. The notes are currently past due. The Company is in discussion with YA II PN to extend the maturity date of the Notes. The Notes provide a conversion right, in which the principal amount of the Note, together with any accrued but unpaid interest, could be converted into the Company’s common stock at a conversion price at 75% of the lowest volume weighted average price (VWAP) of the Company’s Common Stock during the 10 trading days immediately preceding the conversion date. In 2019, the Company entered into an amendment agreements with YA II, PN, which amended the secured promissory note in the principal face amount of $1.5 million issued on May 10, 2018. The Company calculated the fair market value of the secured note payable before and after the modifications and recorded the difference of $962,000 as a debt extinguishment cost in 2019. As part of the issuance of the Notes, the Company also granted YA II PN 5-year warrants, which were modified, to purchase a total of 13,000,000 shares of the Company at an exercise price of $0.05 per share, with expiration dates ranging from May 2024 to December 2024. 7,500,000 warrants granted as part of the Note issuances were also modified to ultimately change the exercise price from $0.50 per share (1,000,000 warrants), $0.75 per share (2,250,000 warrants), $1.00 per share (2,250,000 warrants) and $1.25 per share (2,000,000 warrants) to $0.05 per share for all four warrants. Furthermore, the amendments removed the Company’s right of redemption and right to compel exercise on certain Warrants. The Company calculated the fair market value of the warrants before and after the modifications above and recorded the difference of $194,000 as a financing cost in 2019. On February 13, 2020, the Company issued a note (the “2020 Note”) to YAII PN in the amount of $150,000. The 2020 Note bears interest at a rate of 10% per annum (15% on default) and has a maturity date of August 10, 2021. The Company received net proceeds of $125,000, net of closing costs of $25,000. The 2020 Note is secured by all the assets of the Company and its subsidiaries. The 2020 Note provides a conversion right, in which any portion of the principal amount of the 2020 Note, together with any accrued but unpaid interest, may be converted into the Company’s common stock at a conversion price equal to 75% of the lowest VWAP of the Company’s common stock during the ten (10) trading days immediately preceding the date of conversion, subject to adjustment. As such, the Company determined that the conversion feature created a derivative with a fair value of $109,000 at the date of issuance. The Company also granted YA II PN 5-year warrants with a fair value of $66,000, to purchase a total of 3,000,000 shares of the Company at an exercise price of $0.05 per common share. The aggregate amount of the closing costs, and the fair value of the derivative liability, was $177,000, of which $150,000 was recorded as a valuation discount on the 2020 Note to be amortized over the life of the 2020 Note, and $27,000 was recorded as a financing cost. On September 23, 2020, the Company issued a note (the “September 2020 Note”) to YAII PN in the amount of $350,000. The September 2020 Note bears interest at a rate of 10% per annum (15% on default) and has a maturity date of March 23, 2021. The Company received net proceeds of $340,000, net of closing costs of $10,000. The September 2020 Note is secured by all the assets of the Company and its subsidiaries. The September 2020 Note provides a conversion right, in which any portion of the principal amount of the September 2020 Note, together with any accrued but unpaid interest, may be converted into the Company’s common stock at a conversion price equal to 75% of the lowest VWAP of the Company’s common stock during the ten (10) trading days immediately preceding the date of conversion, subject to adjustment. As such, the Company determined that the conversion feature created a derivative with a fair value of $322,000 at the date of issuance. The Company also granted YA II PN 5-year warrants with a fair value of $68,000, to purchase a total of 7,000,000 shares of the Company at an exercise price of $0.05 per common share. The aggregate amount of the closing costs, and the fair value of the warrants and derivative liability, was $389,000, of which $350,000 was recorded as a valuation discount on the September 2020 Note to be amortized over the life of the September 2020 Note, and $39,000 was recorded as a financing cost. The remaining unamortized balance of the valuation discount was $220,000 at December 31, 2020. During the three months ended March 31, 2021, amortization of valuation discount was $183,000 and was recorded as an interest cost, leaving a $37,000 remaining unamortized balance of the valuation discount at March 31, 2021. At December 31, 2020, accrued interest on the convertible secured notes payable to related parties of $344,000 was included in accrued interest to related parties on the consolidated balance sheet. During the three months ended March 31, 2021, the Company added $49,000 of additional accrued interest, leaving an accrued interest to related parties balance of $393,000 at March 31, 2021. As of March 31, 2021, 70,033,933 shares of common stock were potentially issuable under the conversion terms of the convertible secured notes. |
Derivative Liability
Derivative Liability | 3 Months Ended |
Mar. 31, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Liability | NOTE 9 – DERIVATIVE LIABILITY The FASB has issued authoritative guidance whereby instruments which do not have fixed settlement provisions are deemed to be derivative instruments. The conversion prices and the exercise prices of the warrants described in Note 8 were not a fixed amount because they were either subject to an adjustment based on the occurrence of future offerings or events or they were variable. Since the number of shares is not explicitly limited, the Company is unable to conclude that enough authorized and unissued shares are available to settle the conversion option. In accordance with the FASB authoritative guidance, the conversion features have been characterized as derivative liabilities to be re-measured at the end of every reporting period with the change in value reported in the statement of operations. As of March 31, 2021 and December 31, 2020, the derivative liabilities were valued using a Black-Scholes Merton pricing model with the following assumptions: March 31, 2021 Issued During 2021 December 31, 2020 Exercise Price $ 0.033 $ - $ 0.05 Stock Price $ 0.048 $ - $ 0.013 Risk-free interest rate 0.07 % - % 0.09 % Expected volatility 299 % - % 268-278 % Expected life (in years) 1.0 - 0.25-0.62 Expected dividend yield 0 % - % 0 % Fair Value: Conversion Feature $ 3,598,000 $ - $ 2,161,000 The risk-free interest rate was based on rates established by the Federal Reserve Bank. The Company uses the historical volatility of its common stock to estimate the future volatility for its common stock. The expected life of the conversion feature of the notes was based on the remaining term of the notes. The expected dividend yield was based on the fact that the Company has not customarily paid dividends in the past and does not expect to pay dividends in the future. The following table sets forth a summary of the changes in the estimated fair value of our embedded derivative during the three months ended March 31, 2021 and 2020: Three Months Ended March 31, 2021 March 31, 2020 Fair value at beginning of period $ 2,161,000 $ 1,332,000 Recognition of derivative liabilities upon initial valuation - 140,000 Extinguishment of derivative liabilities - - Net change in the fair value of derivative liabilities 1,437,000 942,000 Fair value at end of period $ 3,598,000 $ 2,414,000 |
Shareholders' Equity
Shareholders' Equity | 3 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
Shareholders' Equity | NOTE 10 – SHAREHOLDERS’ EQUITY Common Shares Issued to Directors The Company appointed certain directors and issued shares as part of their director compensation agreements. During the three months ended March 31, 2021, the Company issued an aggregate of 472,000 shares of common stock, with a fair value of $20,000 at date of grant. During the three months ended March 31, 2020, the Company issued an aggregate of 2,166,667 shares of common stock, with a fair value of $23,000 at date of grant. The issued shares were recognized as compensation cost. Common Shares Issued on Conversion of Convertible Note Payable During the three months ended March 31, 2020, the Company was notified by YA II PN (see Note 8) in writing of their election to convert $29,000 of interest accrued into 2,287,066 shares of the Company’s common at $0.0127 per share. Summary of Stock Options A summary of stock options for the three months ended March 31, 2021, is as follows: Weighted Number Average of Exercise Options Price Balance outstanding, December 31, 2020 10,002,210 0.077 Options granted 260,417 0.048 Options exercised - - Options expired or forfeited - - Balance outstanding, March 31, 2021 10,262,627 $ 0.76 Balance exercisable, March 31, 2021 10,262,627 $ 0.76 On January 1, 2021, the Company entered into a new five-year employment agreement with Tiffany Davis as the Company’s Chief Executive Officer. Ms. Davis is entitled to receive stock options of $12,500 of shares per quarter at the then closing market price on the last trading day at the end of each calendar quarter, which expire five years from the date of issuance. Accordingly, during the three months ended March 31, 2021, Davis was granted a total of 260,417 stock options, with the fair value determined to be $12,000, and was recorded to stock-based compensation expense during the three months ended March 31, 2021. The fair value of options on the date of grant was estimated using the Black-Scholes option pricing model with the following weighted average assumptions: stock price of $0.048, risk-free interest rate of 0.35%, expected volatility of 248%, and an expected life of 3.0 years. Information relating to outstanding options at March 31, 2021, summarized by exercise price, is as follows: Outstanding Exercisable Exercise Price Per Share Shares Life (Years) Weighted Average Exercise Price Shares Weighted Average Exercise Price $ 0.01-0.05 9,162,627 4.29 $ 0.015 9,162,627 $ 0.015 $ 0.46 100,000 2.70 $ 0.46 100,000 $ 0.46 $ 0.60 1,000,000 1.86 $ 0.60 1,000,000 $ 0.60 10,262,627 2.34 $ 0.077 10,262,627 $ 0.077 As of December 31, 2020, the Company has no outstanding unvested options with future compensation costs. In addition, there will be future compensation related to the options to be awarded to Ms. Davis under her employment agreement discussed above. The weighted-average remaining contractual life of options outstanding and exercisable at March 31, 2021 was 2.34 years. Both the outstanding and exercisable stock options had an intrinsic value of $302,000 at March 31, 2021. Summary of Warrants A summary of warrants for the year ended March 31, 2021, is as follows: Weighted Number Average of Exercise Warrants Price Balance outstanding, December 31, 2020 28,283,140 0.05 Warrants granted 4,000,000 0.001 Warrants exercised - - Warrants expired or forfeited - - Balance outstanding, March 31, 2021 32,283,140 $ 0.05 Balance exercisable, March 31, 2021 32,283,140 $ 0.05 Information relating to outstanding warrants at March 31, 2021, summarized by exercise price, is as follows: Outstanding Exercisable Exercise Price Per Share Shares Life (Years) Weighted Average Exercise Price Shares Weighted Average Exercise Price $ 0.001 4,000,000 5.00 $ 0.01 4,000,000 $ 0.01 $ 0.01 5,000,000 2.11 $ 0.01 5,000,000 $ 0.01 $ 0.05 23,000,000 3.41 $ 0.05 23,000,000 $ 0.05 $ 1.10 283,140 1.56 $ 1.10 283,140 $ 1.10 32,283,140 3.39 $ 0.05 32,283,140 $ 0.05 During the three months ended March 31, 2021, the Company issued five-year warrants with a fair value of $191,000 to purchase 4,000,000 shares of common stock at an exercise price of $0.001 as part of a settlement agreement regarding a trade vendor payable (see Note 11). The fair value of warrants on the date of grant was estimated using the Black-Scholes option pricing model with the following weighted average assumptions: stock price of $0.048, risk-free interest rate of 0.35%, expected volatility of 248%, and an expected life of 3.0 years. The weighted-average remaining contractual life of warrants outstanding and exercisable at December 31, 2020 was 3.39 years. Both the outstanding and exercisable warrants had an intrinsic value of $378,000 at March 31, 2021. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 11 – COMMITMENTS AND CONTINGENCIES On March 30, 2021, the Company entered into a Settlement Agreement and Release (“Agreement”) with Sichenzia Ross Ference LLP (“SRF”), for services that were performed for the Company. The Company owed SRF $160,000, of which the Company agreed to pay SRF the sum total $75,000. The $75,000 is payable in fifteen monthly installments, commencing on March 31, 2021, and with the last installment payment due no later than May 31, 2022. As an alternative to the Settlement Payment, the Company shall have the option to pay to SRF: a. An initial installment payment of $5,000 on or before March 31, 2021, $5,000 on or before April 30, 2021, and a lump sum payment of $40,000 on or before June 7, 2021, for a total payments of $50,000; or b. An initial installment payment of $5,000 on or before March 31, 2021, $5,000 on or before April 30, 2021, $5,000 on or before May 31, 2021, $5,000 on or before June 30, 2021, $5,000 on or before July 30, 2021 and a lump sum payment of $50,000 on or before August 6, 2021 for a total payments of $75,000. As further consideration of the full and final settlement of these matters, the Company issued to SRF, a cashless five-year warrant to purchase 4,000,000 shares of common stock of the Company at an exercise price per share equal to $0.001 per share and a fair value of $191,000 on the date granted. The total settlement amount was $266,000, made up the $75,000 reduced payable to SFR, plus the fair value of the warrants of $191,000, which was more than the original trade vendor balance owed of $160,000. The difference of $106,000 was recorded as a loss on settlement of trade vendor payable on the accompanying condensed consolidated statements of operations for the three months ended March 31, 2021. Technology License Agreement The Company entered into a Technology License Agreement with a third-party vendor for consulting services. Under the agreement, the Company will pay the vendor a minimum consulting amount of $100,000 per year, plus a royalty of 7% of all net sales of the vendor’s products above $1,429,000 per calendar year. For the three months ended March 31, 2021 and 2020, $25,000 was recorded as research and development expense under the agreement on the Condensed Consolidated Statements of Operations related to the minimum annual fee. For the three months ended March 31, 2021 and 2020, no royalty was recorded as cost of goods sold on the Consolidated Statements of Operations. A total of $364,000 and $339,000 was owed under the amended agreement at March 31, 2021 and December 30, 2020, respectively. |
Organization and Summary of S_2
Organization and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
History and Organization | History and Organization Generation Alpha, Inc. (the “Company”) was originally incorporated under the laws of the State of Nevada on March 2, 2007 as Cinjet, Inc. (“Cinjet”). Effective September 1, 2015, Cinjet changed its corporate name to Solis Tek Inc. (“Solis Tek”). Effective September 25, 2018, Solis Tek changed its corporate name to Generation Alpha, Inc. Effective September 25, 2018, Generation Alpha, Inc. (f/k/a Solis Tek Inc.) (the “Company”) entered into an agreement and plan of merger (the “Merger Agreement”), whereby a wholly-owned subsidiary of the Company (the “Merger Sub”) was merged into the Company (the “Merger”). Upon consummation of the Merger, the separate existence of Merger Sub ceased. On June 23, 2015, the Company entered into an Agreement of Merger and Plan of Reorganization (the “Agreement”) with Solis Tek Inc., a California corporation (“STI”), and CJA Acquisition Corp., a California corporation and a wholly owned subsidiary of the Company (“Merger Sub”), providing for the merger of Merger Sub with and into STI (the “Merger”), with STI surviving the Merger as a wholly-owned subsidiary of the Company. The Merger was accounted for as a recapitalization of the Company with STI being deemed the accounting acquirer. |
Overview of Business | Overview of Business The Company is a vertically integrated technology innovator, developer, manufacturer, and distributor focused on bringing products and solutions to commercial and retail cannabis growers in both the medical and adult use recreational space in legal markets across the U.S. The Company’s lighting and nutrient customers include retail stores, distributors and commercial growers in the United States and abroad. |
COVID-19 Considerations | COVID-19 Considerations During the three months ended March 31, 2021, the COVID-19 pandemic did not have a material net impact on our operating results. In the future, the pandemic may cause reduced demand for our products if, for example, the pandemic results in a recessionary economic environment which negatively effects the consumers who purchase our products. The Company has not observed any material impairments of its assets or a significant change in the fair value of its assets due to the COVID-19 pandemic. Our ability to operate without significant negative operational impact from the COVID-19 pandemic will in part depend on our ability to protect our employees and our supply chain. The Company has endeavored to follow the recommended actions of government and health authorities to protect our employees. Since the onset of the COVID-19 pandemic, we maintained the consistency of our operations. However, the uncertainty resulting from the pandemic could result in an unforeseen disruption to our workforce and supply chain (for example an inability of a key supplier or transportation supplier to source and transport materials) that could negatively impact our operations. |
Going Concern | Going Concern The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying consolidated financial statements, during the three months ended March 31, 2021, the Company incurred a net loss of $1,863,000 and had a shareholders’ deficit of $10,376,000 as of March 31, 2021. In addition, $2,915,000 of notes payable to related parties, $590,000 of accrued interest to related parties, and $820,000 of contract obligations are past due. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date of the financial statements being issued. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to raise additional funds and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. At March 31, 2021, the Company had cash on hand in the amount of $345,000. Management estimates that the current funds on hand will be sufficient to continue operations through December 31, 2021. The continuation of the Company as a going concern is dependent upon its ability to obtain necessary debt or equity financing to continue operations until it begins generating positive cash flow. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing or cause substantial dilution for our stockholders, in case or equity financing. |
Basis of Consolidation | Basis of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries: STI; Solis Tek East, Corporation (“STE”), an entity incorporated under the laws of the State of New Jersey, Zelda Horticulture, Inc. (“Zelda”), an entity incorporated under the laws of the State of California, and YLK Partners NV, LLC (“YLK”), Generation Alpha Brands, Inc., Trilogy Dispensaries, Inc., Extracting Point, LLC (“Extracting Point”), and GrowPro Solutions, Inc., all entities formed under the laws of Nevada. Intercompany transactions and balances have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the financial statement date, and reported amounts of revenue and expenses during the reporting period. Significant estimates are used in valuing our allowances for doubtful accounts, reserves for inventory obsolescence, valuing derivative liabilities, valuing equity instruments issued for services, and valuation allowance for deferred tax assets, among others. Actual results could differ from these estimates. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 606, Revenue from Contracts with Customers Under this guidance, revenue is recognized when control of promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company reviews its sales transactions to identify contractual rights, performance obligations, and transaction prices, including the allocation of prices to separate performance obligations, if applicable. Revenue and cost of sales are recognized once products are delivered to the customer’s control and performance obligations are satisfied. All products sold by the Company are distinct individual products and consist of advanced energy efficient indoor horticulture lighting, plant nutrient products, and ancillary equipment. The products are offered for sale as finished goods only, and there are no performance obligations required post-shipment for customers to derive the expected value from them. Contracts with customers contain no incentives or discounts that could cause revenue to be allocated or adjusted over time. The Company does not offer a general right of return on any of its sales and considers all sales as final. The Company generally provides a three-year warranty on its ballasts. However, the Company does not maintain a warranty reserve as the Company is able to chargeback its vendors for all warranty claims. As of March 31, 2021 and December 31, 2020, the Company determined that no reserves for returned product were necessary. In the following table, revenue is disaggregated by major product line for three months ended March 31, 2021: Sales Channels Lighting Plant Nutrients and Fertilizers Total Hydroponic resellers/retail $ 142,000 $ 312,000 $ 454,000 Direct to consumer/online - - - Total $ 142,000 $ 312,000 $ 454,000 In the following table, revenue is disaggregated by major product line for three months ended March 31, 2020: Sales Channels Lighting Plant Nutrients and Fertilizers Total Hydroponic resellers/retail $ 127,000 $ 175,000 $ 302,000 Direct to consumer/online 5,000 - 5,000 Total $ 132,000 $ 175,000 $ 307,000 |
Accounts Receivable | Accounts Receivable Accounts receivable are recorded net of an allowance for expected losses. The Company evaluates the collectability of its trade accounts receivable based on a number of factors. 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, which reduces the recognized receivable to the estimated amount the Company believes will ultimately be collected. In addition to specific customer identification of potential bad debts, bad debt charges are recorded based on the Company’s historical losses and an overall assessment of past due trade accounts receivable outstanding. The allowance for doubtful accounts and returns is established through a provision reducing the carrying value of receivables. At March 31, 2021 and December 31, 2020, the allowance for doubtful accounts was $10,000 and $12,000, respectively. |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value. Cost is computed on a first-in, first-out basis. The Company’s inventories consist almost entirely of finished goods as of March 31, 2021 and December 31, 2020. The Company provides inventory reserves based on excess and obsolete inventories determined primarily by future demand forecasts. The write down amount is measured as the difference between the cost of the inventory and net realizable value based on upon assumptions about future demand and charged to the provision for inventory write down, which is a component of cost of sales. At the point of the loss recognition, a new, lower cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. At March 31, 2021 and December 31, 2020, the reserve for excess and obsolete inventory was $45,000 and $30,000, respectively. |
Derivative Financial Instruments | Derivative Financial Instruments The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. |
Research and Development | Research and Development Research and development costs are expensed in the period incurred. The costs primarily consist of personnel and supplies. |
Shipping and Handling Costs | Shipping and Handling Costs The Company’s shipping and handling costs relating to inbound freight are reported as cost of goods sold in the consolidated Statements of Operations, while shipping and handling costs relating to outbound freight are reported as selling, general and administrative expenses in the consolidated Statements of Operations. The Company classifies amounts billed to customers for shipping fees as revenues. |
Fair Value Measurements | Fair Value Measurements The Company determines the fair value of its assets and liabilities based on the exchange price in U.S. dollars 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 maximize the use of observable inputs and minimize the use of unobservable inputs. The Company uses a fair value hierarchy with three levels of inputs, of which the first two are considered observable and the last unobservable, to measure fair value: ● Level 1 — Quoted prices in active markets for identical assets or liabilities. ● Level 2 — Inputs, other than Level 1, that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. ● Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The carrying amounts of financial instruments such as cash, accounts receivable, inventories, and accounts payable and accrued liabilities, approximate the related fair values due to the short-term maturities of these instruments. The carrying values of notes payable approximate their fair values due to the fact that the interest rates on these obligations are based on prevailing market interest rates. The fair value of the derivative liabilities of $3,598,000 and $2,161,000 at March 31, 2021 and December 31, 2020, respectively, was valued using Level 2 inputs. |
Loss Per Share Calculations | Loss per Share Calculations Basic earnings per share are computed by dividing net income (loss) available to common shareholders by the weighted-average number of common shares available. Diluted earnings per share is computed by dividing the net income applicable to common stock holders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued using the treasury stock method. Potential common shares are excluded from the computation when their effect is antidilutive. The dilutive effect of potentially dilutive securities is reflected in diluted net income per share if the exercise prices were lower than the average fair market value of common shares during the reporting period. For the three months ended March 31, 2021, options to acquire 10,262,627 shares of common stock, warrants to acquire 32,283,140 shares of common stock, and 70,033,903 shares to be issued upon conversion of our convertible notes have been excluded from the calculation of weighted average common shares, as their effect would have been anti-dilutive. For the three months ended March 31, 2020, options to acquire 4,433,300 shares of common stock, warrants to acquire 21,283,140 shares of common stock, and 267,089,041 shares to be issued upon conversion of our convertible notes have been excluded from the calculation of weighted average common shares, as their effect would have been anti-dilutive. |
Concentration Risks | Concentration Risks Cash includes cash on hand and cash in banks and are reported as “Cash” in the consolidated balance sheets. At March 31, 2021 and December 31, 2020, cash includes cash on hand of $255,000 and $289,000, respectively, and cash in banks of $90,000 and $83,000, respectively. The balance of cash on hand is not insured by the Federal Deposit Insurance Corporation. The balance of cash in banks is insured by the Federal Deposit Insurance Corporation for up to $250,000. The Company operates in markets that are highly competitive and rapidly changing. Significant technological changes, shifting customer needs, the emergence of competitive products or services with new capabilities, and other factors could negatively impact the Company’s operating results. State and federal government laws could have a material adverse impact on the Company’s future revenues and results of operations. The Company’s products require specific components that currently are available from a limited number of sources. The Company purchases some of its key products and components from single vendors. During the three months ended March 31, 2021 and 2020, its ballasts, lamps, and reflectors, which comprised the clear majority of the Company’s purchases during those periods, were each only purchased from one separate vendor. The Company performs a regular review of customer activity and associated credit risks and does not require collateral or other arrangements. One customer accounted for 12% of the Company’s revenue for the three months ended March 31, 2021, and one customer accounted for 30% of the Company’s revenue for the three months ended March 31, 2020. Shipments to customers outside the United States comprised less than 5% of our sales for the three months ended March 31, 2021 and 2020, respectively. As of March 31, 2021, three customers accounted for 33%, 24%, and 12% of the Company’s trade accounts receivable balance, and as of December 31, 2020, three customers accounted for 37%, 23%, and 15% of the Company’s trade accounts receivable balance. |
Segment Reporting | Segment Reporting The Company operates in one segment for the manufacture and distribution of its products. In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief operating decision maker has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities in: economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes. Since the Company operates in one segment, all financial information required by “Segment Reporting” can be found in the accompanying consolidated financial statements. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments In August 2020, the FASB issued ASU No. 2020-06 (“ASU 2020-06”) “ Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40 Other recent accounting pronouncements issued by the FASB, its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements. |
Organization and Summary of S_3
Organization and Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Schedule of Disaggregated Revenue | In the following table, revenue is disaggregated by major product line for three months ended March 31, 2021: Sales Channels Lighting Plant Nutrients and Fertilizers Total Hydroponic resellers/retail $ 142,000 $ 312,000 $ 454,000 Direct to consumer/online - - - Total $ 142,000 $ 312,000 $ 454,000 In the following table, revenue is disaggregated by major product line for three months ended March 31, 2020: Sales Channels Lighting Plant Nutrients and Fertilizers Total Hydroponic resellers/retail $ 127,000 $ 175,000 $ 302,000 Direct to consumer/online 5,000 - 5,000 Total $ 132,000 $ 175,000 $ 307,000 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment consist of the following at March 31, 2021 and December 31, 2020: March 31, 2021 December 31, 2020 Machinery and equipment $ 81,000 $ 67,000 Computer equipment 11,000 11,000 Furniture and fixtures 48,000 40,000 Leasehold improvements 10,000 - 150,000 118,000 Less: accumulated depreciation (106,000 ) (103,000 ) Property and equipment, net $ 44,000 $ 15,000 |
Notes Payable to Related Part_2
Notes Payable to Related Parties - Past Due (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Notes Payable to Related Parties | Notes payable to related parties consists of the following at March 31, 2021 and December 31, 2020: March 31, 2020 December 31, 2020 Notes payable to officers/shareholders – past due (a) 600,000 600,000 Notes payable to related party – past due (b) 150,000 150,000 Notes payable to related parties – past due (c) 40,000 40,000 Total $ 790,000 $ 790,000 a. On May 9, 2016, the Company entered into note payable agreements with Alan Lien and Alvin Hao, each a former officer and director, to borrow $300,000 under each individual note. Pursuant to the terms of each of these agreements, the Company borrowed $300,000 from each of Alan Lien and Alvin Hao. The notes accrue interest at a rate of 8% per annum, are unsecured and were due on or before May 31, 2018. The loans are currently past due. A total of $600,000 was due on the combined notes at March 31, 2021 and December 31, 2020. b. On May 8, 2019, the Company entered into a note agreement with the sister of Alvin Hao, a former officer and director, to borrow $150,000. The loan accrues interest at 8% per annum (12% on default), is unsecured and is due on November 8, 2019. The note is currently past due. A total of $150,000 was due on the loans as of March 31, 2021 and December 31, 2020. c. The Company entered into note agreements with the parents of Alan Lien, the Company’s Chief Executive Officer and one of its directors. The loans accrue interest at 10% per annum, are unsecured and were due on or before December 31, 2016. The loans are currently past due. A total of $40,000 was due on the loans as of March 31, 2021 and December 31, 2020. |
Lease Payable (Tables)
Lease Payable (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Leases [Abstract] | |
Schedule of Maturities of Operating Lease Liability | Maturities of the Company’s lease liabilities are as follows: Year Ending Operating Leases Remainder of 2021 $ 446,000 2022 265,000 2023 142,000 2024 49,000 2025 44,000 Thereafter 11,000 Total lease payments 957,000 Less: Imputed interest (166,000 ) Total operating lease liability 791,000 Current portion (380,000 ) $ 411,000 |
Loans Payable (Tables)
Loans Payable (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Loans Payable | Notes payable consists of the following at March 31, 2021 and December 31, 2020: March 31, 2021 December 31, 2020 Notes payable to Celtic Bank – past due (a) $ - $ 11,000 SBA Paycheck Protection Program loan (b) 205,000 205,000 SBA Economic Injury Disaster Loan (c) 150,000 150,000 Total loans payable 355,000 366,000 Loans payable, current portion - (11,000 ) Loans payable, net of current portion $ 355,000 $ 355,000 a) On May 21, 2019, the Company entered into a loan agreement with Celtic Bank in the principal amount of $150,000 with interest at 40.44% per annum and due on May 21, 2020. The loan was guaranteed by Alvin Hao, a former officer of the Company. A total of $11,000 was owed on the loan as of December 31, 2020. During the three months ended March 31, 2021, the Company entered into a settlement agreement with Celtic Bank, whereas the Company agreed to make a reduced payment in full of $9,000, and recorded a gain on extinguishment of debt of $2,000, as reflected in the condensed consolidated statements of income during the three months ended March 31, 2021. b) On May 7, 2020, the Company was granted a loan (the “PPP loan”) from Wells Fargo Bank in the aggregate amount of $205,000, pursuant to the Paycheck Protection Program (the “PPP”) under the CARES Act. The PPP loan agreement is dated May 8, 2020, matures on May 7, 2022, bears interest at a rate of 1% per annum, with the first six months of interest deferred, and is unsecured and guaranteed by the U.S. Small Business Administration (“SBA”). The loan term may be extended to May 7, 2025, if mutually agreed to by the Company and lender. The Company applied ASC 470, Debt, to account for the PPP loan. The PPP loan may be prepaid at any time prior to maturity with no prepayment penalties. Funds from the PPP loan may only be used for qualifying expenses as described in the CARES Act, including qualifying payroll costs, qualifying group health care benefits, qualifying rent and debt obligations, and qualifying utilities. The Company intends to use the entire loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the loan may be forgiven if they are used for qualifying expenses. The Company intends to apply for forgiveness of the PPP loan with respect to these qualifying expenses, however, it cannot assure that such forgiveness of any portion of the PPP loan will occur. As for the potential loan forgiveness, once the PPP loan is, in part or wholly, forgiven and a legal release is received, the liability would be reduced by the amount forgiven and a gain on extinguishment would be recorded. The terms of the PPP loan provide for customary events of default including, among other things, payment defaults, breach of representations and warranties, and insolvency events. The Company was in compliance with the terms of the PPP loan as of March 31, 2021. A total of $205,000 was due on the PPP loan as of March 31, 2021 and December 31, 2020. c) On June 7, 2020, the Company obtained an Economic Injury Disaster Loan (“EIDL”) from the SBA in the amount of $150,000. Interest on the loan is at the rate of 3.75% per year, and all loan payments are deferred for twenty four months, at which time the balance is payable in monthly installments of $731 over a 30-year term. The loan is secured by all the Company’s assets. The Company was in compliance with the terms of the EIDL as of March 31, 2021. A total of $150,000 was due on the EIDL loan as of March 31, 2021 and December 31, 2020. |
Convertible Secured Note Paya_2
Convertible Secured Note Payable to Related Party (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Secured Note Payable to Related Party | Secured notes payable to related party consists of the following as of March 31, 2021 and December 31, 2020: March 31, 2021 December 31, 2020 YA II PN, Ltd. $ 2,275,000 $ 2,275,000 Less debt discount (37,000 ) (220,000 ) Secured note payable, net $ 2,238,000 $ 2,055,000 |
Derivative Liability (Tables)
Derivative Liability (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Liability Weighted Average Assumption | As of March 31, 2021 and December 31, 2020, the derivative liabilities were valued using a Black-Scholes Merton pricing model with the following assumptions: March 31, 2021 Issued During 2021 December 31, 2020 Exercise Price $ 0.033 $ - $ 0.05 Stock Price $ 0.048 $ - $ 0.013 Risk-free interest rate 0.07 % - % 0.09 % Expected volatility 299 % - % 268-278 % Expected life (in years) 1.0 - 0.25-0.62 Expected dividend yield 0 % - % 0 % Fair Value: Conversion Feature $ 3,598,000 $ - $ 2,161,000 |
Schedule of Changes in Estimated Fair Value of Embedded Derivative | The following table sets forth a summary of the changes in the estimated fair value of our embedded derivative during the three months ended March 31, 2021 and 2020: Three Months Ended March 31, 2021 March 31, 2020 Fair value at beginning of period $ 2,161,000 $ 1,332,000 Recognition of derivative liabilities upon initial valuation - 140,000 Extinguishment of derivative liabilities - - Net change in the fair value of derivative liabilities 1,437,000 942,000 Fair value at end of period $ 3,598,000 $ 2,414,000 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
Summary of Stock Options Activity | A summary of stock options for the three months ended March 31, 2021, is as follows: Weighted Number Average of Exercise Options Price Balance outstanding, December 31, 2020 10,002,210 0.077 Options granted 260,417 0.048 Options exercised - - Options expired or forfeited - - Balance outstanding, March 31, 2021 10,262,627 $ 0.76 Balance exercisable, March 31, 2021 10,262,627 $ 0.76 |
Schedule of Options Outstanding and Exercisable | Information relating to outstanding options at March 31, 2021, summarized by exercise price, is as follows: Outstanding Exercisable Exercise Price Per Share Shares Life (Years) Weighted Average Exercise Price Shares Weighted Average Exercise Price $ 0.01-0.05 9,162,627 4.29 $ 0.015 9,162,627 $ 0.015 $ 0.46 100,000 2.70 $ 0.46 100,000 $ 0.46 $ 0.60 1,000,000 1.86 $ 0.60 1,000,000 $ 0.60 10,262,627 2.34 $ 0.077 10,262,627 $ 0.077 |
Schedule of Stock Warrants Activity | A summary of warrants for the year ended March 31, 2021, is as follows: Weighted Number Average of Exercise Warrants Price Balance outstanding, December 31, 2020 28,283,140 0.05 Warrants granted 4,000,000 0.001 Warrants exercised - - Warrants expired or forfeited - - Balance outstanding, March 31, 2021 32,283,140 $ 0.05 Balance exercisable, March 31, 2021 32,283,140 $ 0.05 |
Schedule of Warrants Outstanding and Exercisable | Information relating to outstanding warrants at March 31, 2021, summarized by exercise price, is as follows: Outstanding Exercisable Exercise Price Per Share Shares Life (Years) Weighted Average Exercise Price Shares Weighted Average Exercise Price $ 0.001 4,000,000 5.00 $ 0.01 4,000,000 $ 0.01 $ 0.01 5,000,000 2.11 $ 0.01 5,000,000 $ 0.01 $ 0.05 23,000,000 3.41 $ 0.05 23,000,000 $ 0.05 $ 1.10 283,140 1.56 $ 1.10 283,140 $ 1.10 32,283,140 3.39 $ 0.05 32,283,140 $ 0.05 |
Organization and Summary of S_4
Organization and Summary of Significant Accounting Policies (Details Narrative) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2021USD ($)Segment$ / shares | Mar. 31, 2020USD ($)$ / shares | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | |
Date of incorporation | Mar. 2, 2007 | |||
Entity incorporation, state or country code | NV | |||
Net loss | $ (1,863,000) | $ (1,638,000) | ||
Stockholders' deficit | (10,376,000) | $ (10,189,000) | $ (8,736,000) | $ (8,624,000) |
Notes payable to related parties | 2,915,000 | |||
Accrued interest to related parties | 590,000 | 531,000 | ||
Contract obligations - past due | 820,000 | 816,000 | ||
Cash on hand | 345,000 | 372,000 | ||
Reserve of returned products | ||||
Accounts receivable, allowance for doubtful accounts | 10,000 | 12,000 | ||
Reserve for excess and obsolete inventories | 45,000 | 30,000 | ||
Fair value of derivative liabilities | 3,598,000 | 2,161,000 | ||
Cash on hand | 255,000 | 289,000 | ||
Cash at bank | 90,000 | $ 83,000 | ||
FDIC insured amount | $ 250,000 | |||
Number of operating segments | Segment | 1 | |||
United States [Member] | Maximum [Member] | ||||
Concentration risks percentage | 5.00% | 5.00% | ||
Revenue [Member] | One Customer [Member] | ||||
Concentration risks percentage | 12.00% | 30.00% | ||
Accounts Receivable [Member] | Customer One [Member] | ||||
Concentration risks percentage | 33.00% | 37.00% | ||
Accounts Receivable [Member] | Customer Two [Member] | ||||
Concentration risks percentage | 24.00% | 23.00% | ||
Accounts Receivable [Member] | Customer Three [Member] | ||||
Concentration risks percentage | 12.00% | 15.00% | ||
Options [Member] | ||||
Anti-dilutive shares excluded from calculation of weighted average common shares | $ / shares | $ 10,262,627 | $ 4,433,300 | ||
Warrants [Member] | ||||
Anti-dilutive shares excluded from calculation of weighted average common shares | $ / shares | 32,283,140 | 21,283,140 | ||
Convertible Notes Agreement [Member] | ||||
Anti-dilutive shares excluded from calculation of weighted average common shares | $ / shares | $ 70,033,903 | $ 267,089,041 |
Organization and Summary of S_5
Organization and Summary of Significant Accounting Policies - Schedule of Disaggregated Revenue (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Total | $ 454,000 | $ 307,000 |
Hydroponic Resellers/Retail [Member] | ||
Total | 454,000 | 302,000 |
Direct to Consumer/Online [Member] | ||
Total | 5,000 | |
Lighting [Member] | ||
Total | 142,000 | 132,000 |
Lighting [Member] | Hydroponic Resellers/Retail [Member] | ||
Total | 142,000 | 127,000 |
Lighting [Member] | Direct to Consumer/Online [Member] | ||
Total | 5,000 | |
Plant Nutrients and Fertilizers [Member] | ||
Total | 312,000 | 175,000 |
Plant Nutrients and Fertilizers [Member] | Hydroponic Resellers/Retail [Member] | ||
Total | 312,000 | 175,000 |
Plant Nutrients and Fertilizers [Member] | Direct to Consumer/Online [Member] | ||
Total |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 3,000 | $ 2,000 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Property and equipment, gross | $ 150,000 | $ 118,000 |
Less: accumulated depreciation | (106,000) | (103,000) |
Property and equipment, net | 44,000 | 15,000 |
Machinery and Equipment [Member] | ||
Property and equipment, gross | 81,000 | 67,000 |
Computer Equipment [Member] | ||
Property and equipment, gross | 11,000 | 11,000 |
Furniture and Fixtures [Member] | ||
Property and equipment, gross | 48,000 | 40,000 |
Leasehold Improvements [Member] | ||
Property and equipment, gross | $ 10,000 |
Contract Obligation Acquired _2
Contract Obligation Acquired from Related Parties (Details Narrative) - USD ($) | 12 Months Ended | |||
Dec. 31, 2019 | Mar. 31, 2021 | Dec. 31, 2020 | May 31, 2018 | |
Impairment charge | $ 1,139,000 | |||
Contract obligations - past due | $ 820,000 | $ 816,000 | ||
Contract obligations net of discount | $ 30,000 | $ 34,000 | ||
Acquisition Agreement [Member] | YLK Partners NV, LLC [Member] | ||||
Acquired interest percentage | 100.00% |
Notes Payable to Related Part_3
Notes Payable to Related Parties - Past Due (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2020 | |
Debt Disclosure [Abstract] | ||
Accrued interest on notes payable to related parties | $ 197,000 | $ 187,000 |
Additional accrued interest | 17,000 | |
Interest payments on notes payable to related parties | $ 7,000 |
Notes Payable to Related Part_4
Notes Payable to Related Parties - Past Due - Schedule of Notes Payable to Related Parties (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 | |
Note payable, net | $ 790,000 | $ 790,000 | |
Notes Payable to Officers/Shareholders - Past Due [Member] | |||
Note payable, net | [1] | 600,000 | 600,000 |
Notes Payable to Related Party - Past Due [Member] | |||
Note payable, net | [2] | 150,000 | 150,000 |
Notes Payable to Related Parties - Past Due [Member] | |||
Note payable, net | [3] | $ 40,000 | $ 40,000 |
[1] | On May 9, 2016, the Company entered into note payable agreements with Alan Lien and Alvin Hao, each a former officer and director, to borrow $300,000 under each individual note. Pursuant to the terms of each of these agreements, the Company borrowed $300,000 from each of Alan Lien and Alvin Hao. The notes accrue interest at a rate of 8% per annum, are unsecured and were due on or before May 31, 2018. The loans are currently past due. A total of $600,000 was due on the combined notes at March 31, 2021 and December 31, 2020. | ||
[2] | On May 8, 2019, the Company entered into a note agreement with the sister of Alvin Hao, a former officer and director, to borrow $150,000. The loan accrues interest at 8% per annum (12% on default), is unsecured and is due on November 8, 2019. The note is currently past due. A total of $150,000 was due on the loans as of March 31, 2021 and December 31, 2020. | ||
[3] | The Company entered into note agreements with the parents of Alan Lien, the Company's Chief Executive Officer and one of its directors. The loans accrue interest at 10% per annum, are unsecured and were due on or before December 31, 2016. The loans are currently past due. A total of $40,000 was due on the loans as of March 31, 2021 and December 31, 2020. |
Notes Payable to Related Part_5
Notes Payable to Related Parties - Past Due - Schedule of Notes Payable to Related Parties (Details) (Parenthetical) - USD ($) | May 08, 2019 | May 09, 2016 | Mar. 31, 2021 | Dec. 31, 2020 |
Note payable - related parties | $ 790,000 | $ 790,000 | ||
Notes Payable Agreement [Member] | Mr. Alan Lien [Member] | ||||
Purchases from related party | $ 300,000 | |||
Debt instruments maturity | May 31, 2018 | |||
Notes Payable Agreement [Member] | Mr. Alvin Hao [Member] | ||||
Purchases from related party | $ 300,000 | |||
Debt instruments maturity | May 31, 2018 | |||
Notes Payable Agreement [Member] | Mr. Alan Lien [Member] | ||||
Interest rate on notes | 8.00% | |||
Notes Payable Agreement [Member] | Mr. Hao [Member] | ||||
Interest rate on notes | 8.00% | |||
Notes Payable Agreement [Member] | Mr. Alan Lien and Mr. Alvin Hao [Member] | ||||
Note payable - related parties | 600,000 | 600,000 | ||
Notes Payable Agreement [Member] | Sister of Alvin Hao [Member] | ||||
Purchases from related party | $ 150,000 | |||
Interest rate on notes | 8.00% | |||
Debt instruments maturity | Nov. 8, 2019 | |||
Note payable - related parties | $ 150,000 | 150,000 | ||
Default interest rate | 12.00% | |||
Note Agreements [Member] | Mr. Alan Lien [Member] | ||||
Interest rate on notes | 10.00% | |||
Debt instruments maturity | Dec. 31, 2016 | |||
Note payable - related parties | $ 40,000 | $ 40,000 |
Lease Payable (Details Narrativ
Lease Payable (Details Narrative) | Jan. 11, 2021USD ($)ft² | Jan. 02, 2020USD ($)ft² | Mar. 31, 2021USD ($) | Mar. 31, 2020USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($)ft² |
Impairment of right of use asset | $ 82,000 | |||||
Lease payments | 4,000 | |||||
Right of use asset | 225,000 | $ 63,000 | ||||
Lease liability | 791,000 | 622,000 | ||||
Current operating lease liabilities | $ 380,000 | 440,000 | ||||
Weighted average remaining lease term | 2 years 10 months 6 days | |||||
Weighted average discount rate for operating leases | 10.00% | |||||
Rent expense | $ 18,000 | $ 6,000 | ||||
Carson, California [Member] | ||||||
Lease payments | 556,000 | 556,000 | ||||
Upland, California [Member] | ||||||
Amortization of right of use assets | 7,000 | |||||
Right of use asset | 56,000 | $ 63,000 | ||||
Florida [Member] | ||||||
Lease liability | 173,000 | |||||
Independent Party [Member] | Carson, California [Member] | ||||||
Area of land | ft² | 17,640 | |||||
Lease initial term | 5 years | |||||
Lease expiration date | Jun. 30, 2023 | |||||
Rental charges | $ 15,000 | |||||
Independent Party [Member] | Upland, California [Member] | ||||||
Area of land | ft² | 2,974 | |||||
Lease initial term | 3 years | |||||
Lease expiration date | Jan. 31, 2023 | |||||
Rental charges | $ 2,800 | |||||
Independent Party [Member] | Florida [Member] | ||||||
Area of land | ft² | 4,304 | |||||
Lease initial term | 5 years 2 months | |||||
Lease expiration date | Mar. 31, 2026 | |||||
Rental charges | $ 3,691 | |||||
Lease payments | $ 173,000 | |||||
Amortization of right of use assets | 4,000 | |||||
Right of use asset | $ 169,000 |
Lease Payable - Schedule of Mat
Lease Payable - Schedule of Maturities of Operating Lease Liability (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Leases [Abstract] | ||
Remainder of 2021 | $ 446,000 | |
2022 | 265,000 | |
2023 | 142,000 | |
2024 | 49,000 | |
2025 | 44,000 | |
Thereafter | 11,000 | |
Total lease payments | 957,000 | |
Less: Imputed interest | (166,000) | |
Total operating lease liability | 791,000 | $ 622,000 |
Current portion | (380,000) | (440,000) |
Non - current portion | $ 411,000 | $ 182,000 |
Legal Obligation Payable - (Det
Legal Obligation Payable - (Details Narrative) - Matthew Geschke [Member] - USD ($) | Jun. 26, 2020 | Mar. 31, 2021 | Dec. 31, 2020 |
Legal judgement | $ 448,000 | ||
Loss Contingency payable | $ 448,000 | $ 448,000 |
Loans Payable - Schedule of Loa
Loans Payable - Schedule of Loans Payable (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 | |
Total loans payable | $ 335,000 | $ 366,000 | |
Loans payable, current portion | (11,000) | ||
Loans payable, net of current portion | 355,000 | 355,000 | |
Notes payable to Celtic Bank [Member] | |||
Total loans payable | [1] | 11,000 | |
SBA Paycheck Protection Program loan [Member] | |||
Total loans payable | [2] | 205,000 | 205,000 |
SBA Economic Injury Disaster Loan [Member] | |||
Total loans payable | [3] | $ 150,000 | $ 150,000 |
[1] | On May 21, 2019, the Company entered into a loan agreement with Celtic Bank in the principal amount of $150,000 with interest at 40.44% per annum and due on May 21, 2020. The loan was guaranteed by Alvin Hao, a former officer of the Company. A total of $11,000 was owed on the loan as of December 31, 2020. During the three months ended March 31, 2021, the Company entered into a settlement agreement with Celtic Bank, whereas the Company agreed to make a reduced payment in full of $9,000, and recorded a gain on extinguishment of debt of $2,000, as reflected in the condensed consolidated statements of income during the three months ended March 31, 2021. | ||
[2] | On May 7, 2020, the Company was granted a loan (the "PPP loan") from Wells Fargo Bank in the aggregate amount of $205,000, pursuant to the Paycheck Protection Program (the "PPP") under the CARES Act. The PPP loan agreement is dated May 8, 2020, matures on May 7, 2022, bears interest at a rate of 1% per annum, with the first six months of interest deferred, and is unsecured and guaranteed by the U.S. Small Business Administration ("SBA"). The loan term may be extended to May 7, 2025, if mutually agreed to by the Company and lender. The Company applied ASC 470, Debt, to account for the PPP loan. The PPP loan may be prepaid at any time prior to maturity with no prepayment penalties. Funds from the PPP loan may only be used for qualifying expenses as described in the CARES Act, including qualifying payroll costs, qualifying group health care benefits, qualifying rent and debt obligations, and qualifying utilities. The Company intends to use the entire loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the loan may be forgiven if they are used for qualifying expenses. The Company intends to apply for forgiveness of the PPP loan with respect to these qualifying expenses, however, it cannot assure that such forgiveness of any portion of the PPP loan will occur. As for the potential loan forgiveness, once the PPP loan is, in part or wholly, forgiven and a legal release is received, the liability would be reduced by the amount forgiven and a gain on extinguishment would be recorded. The terms of the PPP loan provide for customary events of default including, among other things, payment defaults, breach of representations and warranties, and insolvency events. The Company was in compliance with the terms of the PPP loan as of March 31, 2021. A total of $205,000 was due on the PPP loan as of March 31, 2021 and December 31, 2020. | ||
[3] | On June 7, 2020, the Company obtained an Economic Injury Disaster Loan ("EIDL") from the SBA in the amount of $150,000. Interest on the loan is at the rate of 3.75% per year, and all loan payments are deferred for twenty four months, at which time the balance is payable in monthly installments of $731 over a 30-year term. The loan is secured by all the Company's assets. The Company was in compliance with the terms of the EIDL as of March 31, 2021. A total of $150,000 was due on the EIDL loan as of March 31, 2021 and December 31, 2020. |
Loans Payable - Schedule of L_2
Loans Payable - Schedule of Loans Payable (Details) (Parenthetical) - USD ($) | Jun. 07, 2020 | May 07, 2020 | May 21, 2019 | Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Loans payable | $ 335,000 | $ 366,000 | |||||
Gain on extinguishment of debt | 2,000 | ||||||
Paycheck Protection Program [Member] | |||||||
Interest rate | 1.00% | ||||||
Debt maturity date | May 7, 2025 | ||||||
Loans payable | 205,000 | 205,000 | |||||
Loan amount | $ 205,000 | ||||||
Notes payable to Celtic Bank [Member] | |||||||
Loans payable | [1] | 11,000 | |||||
Notes payable to Celtic Bank [Member] | Loan Agreement [Member] | |||||||
Principal amount | $ 150,000 | ||||||
Interest rate | 40.44% | ||||||
Debt maturity date | May 21, 2020 | ||||||
Notes payable to Celtic Bank [Member] | Settlement Agreement [Member] | |||||||
Debt principle payment | 9,000 | ||||||
Gain on extinguishment of debt | 2,000 | ||||||
SBA Economic Injury Disaster Loan [Member] | |||||||
Interest rate | 3.75% | ||||||
Loans payable | [2] | 150,000 | 150,000 | ||||
Loan amount | $ 150,000 | ||||||
Loan payable term | 30 years | ||||||
Monthly installment payable | $ 731 | ||||||
Economic Injury Disaster Loan [Member] | |||||||
Loans payable | $ 150,000 | $ 150,000 | |||||
[1] | On May 21, 2019, the Company entered into a loan agreement with Celtic Bank in the principal amount of $150,000 with interest at 40.44% per annum and due on May 21, 2020. The loan was guaranteed by Alvin Hao, a former officer of the Company. A total of $11,000 was owed on the loan as of December 31, 2020. During the three months ended March 31, 2021, the Company entered into a settlement agreement with Celtic Bank, whereas the Company agreed to make a reduced payment in full of $9,000, and recorded a gain on extinguishment of debt of $2,000, as reflected in the condensed consolidated statements of income during the three months ended March 31, 2021. | ||||||
[2] | On June 7, 2020, the Company obtained an Economic Injury Disaster Loan ("EIDL") from the SBA in the amount of $150,000. Interest on the loan is at the rate of 3.75% per year, and all loan payments are deferred for twenty four months, at which time the balance is payable in monthly installments of $731 over a 30-year term. The loan is secured by all the Company's assets. The Company was in compliance with the terms of the EIDL as of March 31, 2021. A total of $150,000 was due on the EIDL loan as of March 31, 2021 and December 31, 2020. |
Convertible Secured Note Paya_3
Convertible Secured Note Payable to Related Party (Details Narrative) | Sep. 23, 2020USD ($)Integer$ / sharesshares | Feb. 13, 2020USD ($)Integer$ / sharesshares | Oct. 29, 2019USD ($)Integer$ / sharesshares | May 10, 2018USD ($)Integer$ / sharesshares | Mar. 31, 2021USD ($)$ / sharesshares | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2020USD ($)$ / shares |
Debt conversion price | $ / shares | $ 0.05 | |||||||
Derivative, fair value | $ 389,000 | $ 177,000 | ||||||
Valuation discount | 350,000 | 150,000 | ||||||
Finance cost | $ 39,000 | $ 27,000 | ||||||
Unamortized balance of valuation discount | $ 37,000 | $ 220,000 | ||||||
Amortization of valuation discount | 183,000 | $ 146,000 | ||||||
Accrued interest to related parties | $ 49,000 | |||||||
Number of shares issued under conversion terms | shares | 70,033,933 | |||||||
Related Parties [Member] | ||||||||
Accrued interest to related parties | $ 393,000 | 344,000 | ||||||
Warrants [Member] | ||||||||
Warrants, term | 5 years | |||||||
Warrants to purchase number of shares | shares | 4,000,000 | |||||||
Warrants, exercise price | $ / shares | $ 0.001 | |||||||
YA II PN, Ltd. [Member] | ||||||||
Convertible notes payable | $ 275,000 | $ 1,500,000 | $ 1,500,000 | |||||
Interest rate | 10.00% | 8.00% | ||||||
Debt maturity date | Apr. 30, 2020 | Jun. 30, 2020 | ||||||
Conversion price percentage | 75.00% | 75.00% | ||||||
Trading days | Integer | 10 | 10 | ||||||
Debt extinguishment cost | 962,000 | |||||||
Warrants, term | 5 years | 5 years | ||||||
Warrants to purchase number of shares | shares | 13,000,000 | 13,000,000 | ||||||
Warrants, exercise price | $ / shares | $ 0.05 | $ 0.05 | ||||||
Warrant expiration date | Dec. 31, 2024 | May 31, 2024 | ||||||
Secured convertible debenture | $ 2,275,000 | 2,275,000 | ||||||
Unamortized balance of valuation discount | $ 37,000 | $ 220,000 | ||||||
YA II PN, Ltd. [Member] | Secured Promissory Note [Member] | ||||||||
Warrants or modification of warrants recorded as financing costs | $ 194,000 | |||||||
YA II PN, Ltd. [Member] | Secured Promissory Note [Member] | Warrants [Member] | ||||||||
Warrants to purchase number of shares | shares | 7,500,000 | |||||||
Warrants, exercise price | $ / shares | $ 0.50 | |||||||
YA II PN, Ltd. [Member] | Secured Promissory Note [Member] | Warrant One [Member] | ||||||||
Warrants to purchase number of shares | shares | 1,000,000 | |||||||
Warrants, exercise price | $ / shares | $ 0.50 | |||||||
YA II PN, Ltd. [Member] | Secured Promissory Note [Member] | Warrant Two [Member] | ||||||||
Warrants to purchase number of shares | shares | 2,250,000 | |||||||
Warrants, exercise price | $ / shares | $ 0.75 | |||||||
YA II PN, Ltd. [Member] | Secured Promissory Note [Member] | Warrant Three [Member] | ||||||||
Warrants to purchase number of shares | shares | 2,250,000 | |||||||
Warrants, exercise price | $ / shares | $ 1 | |||||||
YA II PN, Ltd. [Member] | Secured Promissory Note [Member] | Warrant Four [Member] | ||||||||
Warrants to purchase number of shares | shares | 2,000,000 | |||||||
Warrants, exercise price | $ / shares | $ 1.25 | |||||||
YA II PN, Ltd. [Member] | 2020 Note [Member] | ||||||||
Interest rate | 10.00% | |||||||
Debt maturity date | Aug. 10, 2021 | |||||||
Conversion price percentage | 75.00% | |||||||
Trading days | Integer | 10 | |||||||
Warrants, term | 5 years | |||||||
Warrants to purchase number of shares | shares | 3,000,000 | |||||||
Warrants, exercise price | $ / shares | $ 0.05 | |||||||
Warrants or modification of warrants recorded as financing costs | $ 66,000 | |||||||
Secured convertible debenture | $ 150,000 | |||||||
Convertible debt, description | The 2020 Note bears interest at a rate of 10% per annum (15% on default) and has a maturity date of August 10, 2021. | |||||||
Debt instrument default interest rate | 15.00% | |||||||
Proceeds from convertible secured debenture | $ 125,000 | |||||||
Closing costs | $ 25,000 | |||||||
YA II PN, Ltd. [Member] | September 2020 Note [Member] | ||||||||
Interest rate | 10.00% | |||||||
Debt maturity date | Mar. 23, 2021 | |||||||
Conversion price percentage | 75.00% | |||||||
Trading days | Integer | 10 | |||||||
Warrants, term | 5 years | |||||||
Warrants to purchase number of shares | shares | 7,000,000 | |||||||
Warrants, exercise price | $ / shares | $ 0.05 | |||||||
Warrants or modification of warrants recorded as financing costs | $ 68,000 | |||||||
Secured convertible debenture | $ 350,000 | |||||||
Convertible debt, description | The September 2020 Note bears interest at a rate of 10% per annum (15% on default) and has a maturity date of March 23, 2021. | |||||||
Debt instrument default interest rate | 15.00% | |||||||
Proceeds from convertible secured debenture | $ 340,000 | |||||||
Closing costs | 10,000 | |||||||
Derivative, fair value | $ 322,000 |
Convertible Secured Note Paya_4
Convertible Secured Note Payable to Related Party - Schedule of Secured Note Payable to Related Party (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Less debt discount | $ (37,000) | $ (220,000) |
Secured note payable, net | 2,238,000 | 2,055,000 |
YA II PN, Ltd. [Member] | ||
YA II PN, Ltd. | 2,275,000 | 2,275,000 |
Less debt discount | (37,000) | (220,000) |
Secured note payable, net | $ 2,238,000 | $ 2,055,000 |
Derivative Liability - Schedule
Derivative Liability - Schedule of Derivative Liability Weighted Average Assumption (Details) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2021USD ($)$ / shares | Dec. 31, 2020USD ($)$ / shares | Mar. 31, 2020$ / shares | |
Fair Value: Conversion Feature | $ | $ 3,598,000 | $ 2,161,000 | |
Issued During 2021 [Member] | |||
Fair Value: Conversion Feature | $ | |||
Exercise Price [Member] | |||
Derivative liability, measurement input, price per share | $ 0.033 | $ 0.05 | |
Exercise Price [Member] | Issued During 2021 [Member] | |||
Derivative liability, measurement input, price per share | |||
Stock Price [Member] | |||
Derivative liability, measurement input, price per share | $ 0.048 | $ 0.013 | |
Stock Price [Member] | Issued During 2021 [Member] | |||
Derivative liability, measurement input, price per share | |||
Risk Free Interest Rate [Member] | |||
Derivative liability, measurement input, percentage | 0.07 | 0.09 | |
Risk Free Interest Rate [Member] | Issued During 2021 [Member] | |||
Derivative liability, measurement input, percentage | 0 | ||
Expected Volatility [Member] | |||
Derivative liability, measurement input, percentage | 299 | ||
Expected Volatility [Member] | Minimum [Member] | |||
Derivative liability, measurement input, percentage | 268 | ||
Expected Volatility [Member] | Maximum [Member] | |||
Derivative liability, measurement input, percentage | 278 | ||
Expected Volatility [Member] | Issued During 2021 [Member] | |||
Derivative liability, measurement input, percentage | 0 | ||
Expected Life (In Years) [Member] | |||
Derivative liability, term | 1 year | ||
Expected Life (In Years) [Member] | Minimum [Member] | |||
Derivative liability, term | 2 months 30 days | ||
Expected Life (In Years) [Member] | Maximum [Member] | |||
Derivative liability, term | 7 months 13 days | ||
Expected Life (In Years) [Member] | Issued During 2021 [Member] | |||
Derivative liability, term | 0 years | ||
Expected Dividend Yield [Member] | |||
Derivative liability, measurement input, percentage | 0 | 0 | |
Expected Dividend Yield [Member] | Issued During 2021 [Member] | |||
Derivative liability, measurement input, percentage | 0 |
Derivative Liability - Schedu_2
Derivative Liability - Schedule of Changes in Estimated Fair Value of Embedded Derivative (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Fair value at beginning of period | $ 2,161,000 | $ 1,332,000 |
Recognition of derivative liabilities upon initial valuation | 140,000 | |
Extinguishment of derivative liabilities | ||
Net change in the fair value of derivative liabilities | 1,437,000 | 942,000 |
Fair value at end of period | $ 3,598,000 | $ 2,414,000 |
Shareholders' Equity (Details N
Shareholders' Equity (Details Narrative) | Jan. 02, 2021USD ($) | Mar. 31, 2021USD ($)$ / sharesshares | Mar. 31, 2020USD ($)shares | Dec. 31, 2020$ / sharesshares |
Debt instrument converted shares | shares | 70,033,933 | |||
Debt instrument converted price per share | $ / shares | $ 0.05 | |||
Number of options granted | shares | 260,417 | |||
Unvested options | shares | ||||
Warrant weighted average remaining contractual life | 2 years 4 months 2 days | |||
Stock Price [Member] | ||||
Warrant measurement input | $ / shares | 0.048 | |||
Risk Free Interest Rate [Member] | ||||
Warrant measurement input | 0.35 | |||
Expected Volatility [Member] | ||||
Warrant measurement input | 248 | |||
Expected Life [Member] | ||||
Warrants, term | 3 years | |||
Warrants [Member] | ||||
Warrants, term | 5 years | |||
Fair value of warrant | $ 191,000 | |||
Warrants to purchase common stock | shares | 4,000,000 | |||
Warrants, exercise price | $ / shares | $ 0.001 | |||
Warrant weighted average remaining contractual life | 3 years 4 months 20 days | |||
Intrinsic value of outstanding warrant | $ 378,000 | |||
YA II PN, Ltd. Advisors Global, LP [Member] | ||||
Debt instrument converted value | $ 29,000 | |||
Debt instrument converted shares | shares | 2,287,066 | |||
Debt instrument converted price per share | $ / shares | $ 0.0127 | |||
Directors [Member] | ||||
Stock issued for compensation, shares | shares | 472,000 | 2,166,667 | ||
Stock issued for compensation, value | $ 20,000 | $ 23,000 | ||
Mr.Davis [Member] | Employment Agreement [Member] | ||||
Requisite service period | 5 years | |||
Fair value of options received | $ 12,500 | |||
Fair value of option granted | $ 260,417 | |||
Number of options granted | shares | 12,000 | |||
Stock Price | $ / shares | $ 0.048 | |||
Risk-free interest rate | 0.35% | |||
Expected volatility | 248.00% | |||
Expected life | 3 years | |||
Weighted-average remaining contractual life of options outstanding and exercisable | 2 years 4 months 2 days | |||
Intrinsic value of outstanding stock options | $ 302,000 | |||
Intrinsic value of exercisable stock options | $ 302,000 |
Shareholders' Equity - Summary
Shareholders' Equity - Summary of Stock Options Activity (Details) | 3 Months Ended |
Mar. 31, 2021$ / sharesshares | |
Equity [Abstract] | |
Number of Options outstanding, beginning balance | shares | 10,002,210 |
Number of Options granted | shares | 260,417 |
Number of Options exercised | shares | |
Number of Options expired or forfeited | shares | |
Number of Options outstanding ending balance | shares | 10,262,627 |
Number of Options exercisable ending balance | shares | 10,262,627 |
Weighted Average Exercise Price outstanding beginning balance | $ / shares | $ 0.077 |
Weighted Average Exercise Price granted | $ / shares | 0.048 |
Weighted Average Exercise Price exercised | $ / shares | |
Weighted Average Exercise Price expired or forfeited | $ / shares | |
Weighted Average Exercise Price outstanding ending balance | $ / shares | 0.76 |
Weighted Average Exercise Price, exercisable ending balance | $ / shares | $ 0.76 |
Shareholders' Equity - Schedule
Shareholders' Equity - Schedule of Options Outstanding and Exercisable (Details) | 3 Months Ended |
Mar. 31, 2021$ / sharesshares | |
Options outstanding, shares | shares | 10,262,627 |
Options outstanding, life (years) | 2 years 4 months 2 days |
Options outstanding, weighted average exercise price | $ 0.077 |
Options exercisable, shares | shares | 10,262,627 |
Options exercisable, weighted average exercise price | $ 0.077 |
Exercise Price One [Member] | |
Options outstanding, shares | shares | 9,162,627 |
Options outstanding, life (years) | 4 years 3 months 15 days |
Options outstanding, weighted average exercise price | $ 0.015 |
Options exercisable, shares | shares | 9,162,627 |
Options exercisable, weighted average exercise price | $ 0.015 |
Exercise Price One [Member] | Minimum [Member] | |
Options outstanding, exercise price per share | 0.01 |
Exercise Price One [Member] | Maximum [Member] | |
Options outstanding, exercise price per share | 0.05 |
Exercise Price Two [Member] | |
Options outstanding, exercise price per share | $ 0.46 |
Options outstanding, shares | shares | 100,000 |
Options outstanding, life (years) | 2 years 8 months 12 days |
Options outstanding, weighted average exercise price | $ 0.46 |
Options exercisable, shares | shares | 100,000 |
Options exercisable, weighted average exercise price | $ 0.46 |
Exercise Price Three [Member] | |
Options outstanding, exercise price per share | $ 0.60 |
Options outstanding, shares | shares | 1,000,000 |
Options outstanding, life (years) | 1 year 10 months 10 days |
Options outstanding, weighted average exercise price | $ 0.60 |
Options exercisable, shares | shares | 1,000,000 |
Options exercisable, weighted average exercise price | $ 0.60 |
Shareholders' Equity - Schedu_2
Shareholders' Equity - Schedule of Stock Warrants Activity (Details) | 3 Months Ended |
Mar. 31, 2021$ / sharesshares | |
Equity [Abstract] | |
Number of warrants balance, beginning of period | shares | 28,283,140 |
Number of warrants, granted | shares | 4,000,000 |
Number of warrants, exercised | shares | |
Number of warrants, expired or forfeited | shares | |
Number of warrants, balance end of period | shares | 32,283,140 |
Number of warrants, exercisable of period | shares | 32,283,140 |
Weighted average exercise price balance, beginning of period | $ / shares | $ 0.05 |
Weighted average exercise price, granted | $ / shares | 0.001 |
Weighted average exercise price, exercised | $ / shares | |
Weighted average exercise price, expired or forfeited | $ / shares | |
Weighted average exercise price balance, end of period | $ / shares | 0.05 |
Weighted average exercise price, exercisable | $ / shares | $ 0.05 |
Shareholders' Equity - Schedu_3
Shareholders' Equity - Schedule of Warrants Outstanding and Exercisable (Details) | 3 Months Ended |
Mar. 31, 2021$ / sharesshares | |
Warrants [Member] | |
Outstanding warrants, shares | shares | 32,283,140 |
Outstanding warrants, life (years) | 3 years 4 months 20 days |
Outstanding warrants, weighted average exercise price | $ 0.05 |
Exercisable warrants, shares | shares | 32,283,140 |
Exercisable warrants, weighted average exercise price | $ 0.05 |
Warrant One [Member] | |
Outstanding warrants, exercise price per share | $ 0.001 |
Outstanding warrants, shares | shares | 4,000,000 |
Outstanding warrants, life (years) | 5 years |
Outstanding warrants, weighted average exercise price | $ 0.01 |
Exercisable warrants, shares | shares | 4,000,000 |
Exercisable warrants, weighted average exercise price | $ 0.01 |
Warrant Two [Member] | |
Outstanding warrants, exercise price per share | $ 0.01 |
Outstanding warrants, shares | shares | 5,000,000 |
Outstanding warrants, life (years) | 2 years 1 month 9 days |
Outstanding warrants, weighted average exercise price | $ 0.01 |
Exercisable warrants, shares | shares | 5,000,000 |
Exercisable warrants, weighted average exercise price | $ 0.01 |
Warrant Three [Member] | |
Outstanding warrants, exercise price per share | $ 0.05 |
Outstanding warrants, shares | shares | 23,000,000 |
Outstanding warrants, life (years) | 3 years 4 months 28 days |
Outstanding warrants, weighted average exercise price | $ 0.05 |
Exercisable warrants, shares | shares | 23,000,000 |
Exercisable warrants, weighted average exercise price | $ 0.05 |
Warrant Four [Member] | |
Outstanding warrants, exercise price per share | $ 1.10 |
Outstanding warrants, shares | shares | 283,140 |
Outstanding warrants, life (years) | 1 year 6 months 21 days |
Outstanding warrants, weighted average exercise price | $ 1.10 |
Exercisable warrants, shares | shares | 283,140 |
Exercisable warrants, weighted average exercise price | $ 1.10 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) | Mar. 30, 2021 | Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 |
Minimum consulting amount | $ 227,000 | $ 195,000 | ||
Research and development expense | 26,000 | 25,000 | ||
Loss on settlement of trade vendor payable | 106,000 | |||
Settlement Agreement [Member] | Sichenzia Ross Ference LLP [Member] | ||||
Accounts payable and accrued expenses | $ 160,000 | 266,000 | ||
Settlement amount | $ 75,000 | 75,000 | ||
Settlement agreement term | An initial installment payment of $5,000 on or before March 31, 2021, $5,000 on or before April 30, 2021, and a lump sum payment of $40,000 on or before June 7, 2021, for a total payments of $50,000; or An initial installment payment of $5,000 on or before March 31, 2021, $5,000 on or before April 30, 2021, $5,000 on or before May 31, 2021, $5,000 on or before June 30, 2021, $5,000 on or before July 30, 2021 and a lump sum payment of $50,000 on or before August 6, 2021 for a total payments of $75,000. | |||
Warrant term | 5 years | |||
Warrants to purchase shares of common stock | 4,000,000 | |||
Warrants, exercise price | $ 0.001 | |||
Fair value of warrant | $ 191,000 | 191,000 | ||
Original trade vendor | 160,000 | |||
Loss on settlement of trade vendor payable | 106,000 | |||
Technology License Agreement [Member] | Third Party Vendor [Member] | ||||
Minimum consulting amount | $ 100,000 | |||
Royalty percentage of net sales | 7.00% | |||
Royalty expenses | $ 1,429,000 | |||
Research and development expense | 25,000 | $ 25,000 | ||
Amended Agreement [Member] | ||||
Total royalty owed under agreement | $ 364,000 | $ 339,000 |