Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Mar. 24, 2016 | Jun. 30, 2015 | |
Document And Entity Information | |||
Entity Registrant Name | Terra Tech Corp. | ||
Entity Central Index Key | 1,451,512 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Common Stock, Shares Outstanding | 45,952,109 | ||
Entity Public Float | $ 10,538,797 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,015 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Current Assets: | ||
Cash | $ 418,082 | $ 846,650 |
Accounts receivable, net | 741,844 | 417,463 |
Prepaid expenses | 147,230 | 82,200 |
Inventory | 949,448 | 670,180 |
Total Current Assets | 2,256,604 | 2,016,493 |
Property, equipment and leasehold improvements, net | 6,694,975 | 5,446,743 |
Intangible assets, net | 118,932 | 161,412 |
Deposits | 94,528 | 94,578 |
Total Assets | 9,165,039 | 7,719,226 |
Current Liabilities | ||
Accounts payable and accrued expenses | 1,119,459 | 573,721 |
Derivative liability | 743,400 | 1,253,000 |
Short-term debt | 917,363 | 4,615,547 |
Total Current Liabilities | 2,780,222 | $ 6,442,268 |
Long Term Liabilities | ||
Deferred tax liability, net | 44,000 | |
Total Long Term Liabilities | $ 44,000 | |
Commitment and Contingencies | ||
Stockholders' Equity | ||
Common stock, Par value $0.001; authorized 350,000,000 shares; issued 303,023,744 and 197,532,892 shares as of December 31, 2015 and 2014, respectively | $ 303,024 | $ 197,533 |
Additional Paid in Capital | 51,843,071 | 38,081,784 |
Accumulated Deficit | (45,952,109) | (36,726,529) |
Total Terra Tech Corp. stockholders' equity | 6,210,286 | 1,568,288 |
Non-controlling interest | 130,531 | (291,330) |
Total Stockholders' Equity | 6,340,817 | 1,276,958 |
Total Liabilities and Stockholders' Equity | $ 9,165,039 | $ 7,719,226 |
Convertible Series A Preferred Stock | ||
Stockholders' Equity | ||
Preferred stock, value | ||
Convertible Series B Preferred Stock | ||
Stockholders' Equity | ||
Preferred stock, value | $ 16,300 | $ 15,500 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2015 | Dec. 31, 2014 |
Stockholders' Equity | ||
Preferred stock, Par value | $ 0.001 | $ 0.001 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, Authorized | 350,000,000 | 350,000,000 |
Common stock, Issued | 303,023,744 | 197,532,892 |
Common stock, Outstanding | 303,023,744 | 197,532,892 |
Convertible Series A Preferred Stock | ||
Stockholders' Equity | ||
Preferred stock, Par value | $ 0.001 | $ 0.001 |
Preferred stock, Authorized | 100 | 100 |
Preferred stock, Issued | 100 | 100 |
Convertible Series B Preferred Stock | ||
Stockholders' Equity | ||
Preferred stock, Par value | $ 0.001 | $ 0.001 |
Preferred stock, Authorized | 24,999,900 | 24,999,900 |
Preferred stock, Issued | 16,300,000 | 15,500,000 |
Preferred stock, Outstanding | 16,300,000 | 15,500,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Consolidated Statements Of Operations | ||
Total Revenues | $ 9,975,346 | $ 7,094,270 |
Cost of Goods Sold | 8,958,475 | 6,941,278 |
Total | 1,016,871 | 152,992 |
Selling, general and administrative expenses | 9,833,646 | 18,341,247 |
Loss from operations | (8,816,775) | $ (18,188,255) |
Other Income (Expenses) | ||
Amortization of debt discount | (696,180) | |
Loss on extinguishment of debt | (619,444) | |
Loss from derivatives issued with debt greater than debt carrying value | (561,000) | $ (4,808,000) |
Gain (Loss) on fair market valuation of derivatives | 1,800,100 | 1,912,037 |
Interest Expense | (469,576) | (1,096,324) |
Total Other Income (Expense) | (546,100) | (3,992,287) |
Loss before Provision of Income Taxes | (9,362,875) | $ (22,180,542) |
Provision for Income Taxes | 44,000 | |
Net Loss | (9,406,875) | $ (22,180,542) |
Net Loss attributable to non-controlling interest | 181,295 | 291,330 |
Net Loss attributable to Terra Tech Corp. | $ (9,225,580) | $ (21,889,212) |
Net Loss per Common Share attributable to Terra Tech Corp. common stockholders - Basic and Diluted | $ (0.04) | $ (0.13) |
Weighted Average Number of Common Shares Outstanding - Basic And Diluted | 240,194,811 | 174,297,430 |
CONSOLIDATED STATEMENT OF STOCK
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) | Preferred Stock Convertible Series A | Preferred Stock Convertible Series B | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Noncontrolling Interest | Total |
Beginning balance, Amount at Dec. 31, 2013 | $ 100 | $ 14,750 | $ 146,808 | $ 14,759,246 | $ (14,837,317) | $ 83,487 | |
Beginning balance, Shares at Dec. 31, 2013 | 14,750,000 | 146,806,928 | |||||
Sale of Common Stock, Shares | 6,600,000 | ||||||
Sale of Common Stock, Amount | $ 6,600 | 4,008,319 | 4,014,919 | ||||
Proceeds from issuance of Common Stock from the exercise of warrants, Shares | 4,613,362 | ||||||
Proceeds from issuance of Common Stock from the exercise of warrants, Amount | $ 4,614 | 288,806 | 293,420 | ||||
Issuance of warrants | 5,038,986 | 5,038,986 | |||||
Issuance of Common Stock for services, Shares | 6,973,414 | ||||||
Issuance of Common Stock for services, Amount | $ 6,973 | 3,707,580 | 3,714,553 | ||||
Issuance of Common Stock for debt and interest expense, Shares | 26,097,816 | ||||||
Issuance of Common Stock for debt and interest expense, Amount | $ 26,097 | 7,191,291 | 7,217,388 | ||||
Short swing profit payment | 67,100 | $ 67,100 | |||||
Common Stock retired, Shares | (740,000) | ||||||
Common Stock retired, Amount | $ (740) | 740 | |||||
Issuance of Common Stock for the exercise of cashless warrants, Shares | 3,003,335 | ||||||
Issuance of Common Stock for the exercise of cashless warrants, Amount | $ 3,003 | (3,003) | |||||
Issuance of Common Stock for compensation, Shares | 4,178,037 | ||||||
Issuance of Common Stock for compensation, Amount | $ 4,178 | 1,937,182 | $ 1,941,360 | ||||
Issuance of Preferred Stock for compensation, Shares | 750,000 | ||||||
Issuance of Preferred Stock for compensation, Amount | $ 750 | 1,085,537 | 1,086,287 | ||||
Non-controlling Share of Loss | $ (291,330) | (291,330) | |||||
Net loss | (21,889,212) | (21,889,212) | |||||
Ending balance, Amount at Dec. 31, 2014 | $ 15,500 | $ 197,533 | 38,081,784 | (36,726,529) | (291,330) | 1,276,958 | |
Ending balance, Shares at Dec. 31, 2014 | 100 | 15,500,000 | 197,532,892 | ||||
Sale of Common Stock, Shares | 34,301,796 | ||||||
Sale of Common Stock, Amount | $ 34,302 | 3,941,586 | 3,975,888 | ||||
Issuance of warrants | 1,148,069 | 1,148,069 | |||||
Issuance of Common Stock for services, Shares | 10,843,526 | ||||||
Issuance of Common Stock for services, Amount | $ 10,843 | 999,269 | 1,010,112 | ||||
Issuance of Common Stock for debt and interest expense, Shares | 56,645,530 | ||||||
Issuance of Common Stock for debt and interest expense, Amount | $ 56,646 | 6,996,232 | 7,052,878 | ||||
Issuance of Common Stock for compensation, Shares | 3,700,000 | ||||||
Issuance of Common Stock for compensation, Amount | $ 3,700 | 310,800 | 314,500 | ||||
Issuance of Preferred Stock for compensation, Shares | 800,000 | ||||||
Issuance of Preferred Stock for compensation, Amount | $ 800 | 365,331 | 366,131 | ||||
Non-controlling Share of Loss | (181,295) | (181,295) | |||||
Non-controlling cash contribution | 603,156 | 603,156 | |||||
Net loss | (9,225,580) | (9,225,580) | |||||
Ending balance, Amount at Dec. 31, 2015 | $ 16,300 | $ 303,024 | $ 51,843,071 | $ (45,952,109) | $ 130,531 | $ 6,340,817 | |
Ending balance, Shares at Dec. 31, 2015 | 100 | 16,300,000 | 303,023,744 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net Loss | $ (9,225,580) | $ (21,889,212) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
(Gain) loss on fair market valuation of derivatives | (1,800,100) | $ (1,912,037) |
Loss on extinguishment of debt | 619,444 | |
Amortization of debt discount | 696,180 | |
Deferred tax expense | 44,000 | |
Depreciation and amortization | 645,294 | $ 438,783 |
Warrants issued with common stock and debt | $ 1,148,069 | 5,038,986 |
Stock issued for interest expense | 396,555 | |
Stock issued for compensation | $ 680,630 | 3,027,647 |
Stock issued for services | 1,010,112 | 3,714,553 |
Equity instruments issued with debt greater than debt carrying amount | 561,000 | 4,808,000 |
Change in accounts receivable reserve | 153,660 | 18,140 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (478,041) | (393,700) |
Prepaid expenses | (65,030) | (81,343) |
Inventory | $ (279,268) | (670,180) |
Note receivable | 173,754 | |
Deposits | $ 50 | 5,422 |
Accounts payable | 1,164,308 | (528,723) |
Net cash used in operations | (5,125,272) | (7,853,355) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of property and equipment | $ (1,851,045) | (2,337,370) |
Purchase of intangible assets - domain names | (12,440) | |
Net cash used in investing activities | $ (1,851,045) | (2,349,810) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from issuance of notes payable | $ 2,150,000 | 7,344,737 |
Proceeds from issuance of notes payable to related parties | 27,500 | |
Payment on notes payable | (303,474) | |
Payments on notes payable to related parties | (130,000) | |
Proceeds from issuance of common stock and warrants and common stock subscribed | $ 3,975,888 | 4,014,919 |
Proceeds from issuance of common stock from the exercise of warrants | 293,420 | |
Short swing profit payment | 67,100 | |
Payments by subsidiaries for non-controlling interest | $ (181,295) | $ (291,330) |
Cash contribution from non-controlling interest | 603,156 | |
Net cash provided by financing activities | 6,547,749 | $ 11,022,872 |
NET CHANGE IN CASH AND CASH EQUIVALENTS | (428,568) | 819,707 |
CASH AND CASH EQUIVALENTS, beginning of period | 846,650 | 26,943 |
CASH AND CASH EQUIVALENTS, end of period | 418,082 | 846,650 |
SUPPLEMENTAL DISCLOSURE FOR OPERATING ACTIVITIES | ||
Cash paid for interest | 4,500 | 285,371 |
SUPPLEMENTAL DISCLOSURE FOR FINANCING ACTIVITIES | ||
Warrant expense | $ 1,148,069 | $ 5,038,986 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Organization References in this document to "the Company", "Terra Tech", "we", "us", or "our" are intended to mean Terra Tech Corp., individually, or as the context requires, collectively with its subsidiaries on a consolidated basis. The Company was incorporated in Nevada on July 22, 2008, under the name Private Secretary, Inc. The Company's original business was developing a software program that would allow for automatic call processing through voice-over-Internet protocol, or "VoIP", technology. The Company's operations were limited to capital formation, organization, and development of its business plan and target customer market. The Company generated no revenue. The Company changed its name to Terra Tech Corp. on January 27, 2012. Through its wholly-owned subsidiary, GrowOp Technology Ltd., a Nevada corporation ("GrowOp Technology"), the Company engages in the design, marketing, and sale of hydroponic equipment with proprietary technology to create sustainable solutions for the cultivation of indoor agriculture. The Company is also a wholesale seller of locally grown hydroponic produce, herbs and floral products through its wholly-owned subsidiary, Edible Garden Corp., a Nevada corporation ("Edible Garden"). Through MediFarm, LLC, a Nevada limited liability company ("MediFarm"), MediFarm I, LLC, a Nevada limited liability company ("MediFarm I"), and MediFarm II, LLC, a Nevada limited liability company ("MediFarm II"), subsidiaries in which the Company owns interests, the Company plans to operate medical marijuana cultivation, production, and dispensary facilities in Nevada. Through IVXX, LLC, a Nevada limited liability company ("IVXX"), the Company's wholly-owned subsidiary, the Company produces and sells a line of cannabis flowers and cigarettes, as well as a line of cannabis pure concentrates. Most recently, the Company formed another wholly-owned subsidiary, MediFarm I Real Estate, LLC, a Nevada limited liability company ("MediFarm I RE"), which will own the real property on which a medical marijuana dispensary will be constructed. The dispensary will be operated by MediFarm I. On February 9, 2012, the Company completed a reverse-triangular merger with GrowOp Technology, whereby it acquired all of the issued and outstanding shares of GrowOp Technology and in exchange the Company issued: (i) 33,998,520 shares of its common stock, (ii) 100 shares of Series A Preferred Stock, convertible into shares of common stock on a one-for-one basis, and (iii) 14,750,000 shares of Series B Preferred Stock, with each share convertible into 5.38425537 shares of common stock. The issuance represented approximately 50.3% of the Company's total shares of common stock outstanding, assuming the conversion of all the shares of Series A Preferred Stock and Series B Preferred Stock, immediately following the closing of the merger. As a result of the merger, GrowOp Technology became the Company's wholly-owned subsidiary. Following the merger, Terra Tech ceased its prior operations and is now solely a holding company. The Company acquired its second wholly-owned subsidiary, Edible Garden, in 2013. Edible Garden is a wholesale seller of locally grown hydroponic produce, which is distributed throughout the Midwest and the Northeast United States. The Company entered into a Share Exchange Agreement, dated March 23, 2013 (the "Share Exchange Agreement"), by and among the Company, Edible Garden,and the stockholders of Edible Garden. Pursuant to the Share Exchange Agreement, the Company offered and sold 1,250,000 shares of its common stock in consideration for all the issued and outstanding shares in Edible Garden. Separately, Amy Almsteier, one of the Company's stockholders and a director (and, at that time, an executive officer), offered and sold 7,650,000 shares of Series B Preferred Stock to Kenneth Vande Vrede, Michael Vande Vrede, Steven Vande Vrede, Dan Vande Vrede, Beverly Willekes, and David Vande Vrede (collectively, the "Former EG Principal Stockholders"). The 7,650,000 shares of Series B Preferred Stock are convertible at any time into 36,344,198 shares of common stock and have voting power equal to 765,000,000 shares of common stock. The effect of the issuance of the 1,250,000 shares of common stock and the sale of the 7,650,000 shares of Series B Preferred Stock by Ms. Almsteier was that the Former EG Principal Stockholders held approximately 25.7% of the Company's issued and outstanding shares of common stock and approximately 43.3% of the Company's voting power of as of March 23, 2013. Articles of Exchange, consummating the share exchange, were filed with the Secretary of the State of Nevada on April 24, 2013. On March 19, 2014, the Company formed MediFarm, a subsidiary. On July 18, 2014, the Company formed MediFarm I, a subsidiary. On July 30, 2014, the Company formed MediFarm II, a subsidiary. Through MediFarm, MediFarm I, and MediFarm II, the Company plans to operate medical marijuana cultivation, production, and dispensary facilities in Nevada. On September 16, 2014, the Company formed IVXX for the purpose of producing a line of cannabis flowers and cigarettes, as well as a complete line of cannabis pure concentrates including: oils, waxes, shatters, and clears. The Company began producing and selling IVXX's products during the first quarter of fiscal 2015. The Company currently offers these products to 200 select dispensaries in California. The Company uses its supercritical CO 2 On October 14, 2015, the Company formed MediFarm I RE. MediFarm I RE is a real estate holding company that owns the real property and building at which a medical marijuana dispensary facility will be located. It is the Company's intention that MediFarm I will operate the medical marijuana dispensary. The Company owns 50% of the membership interests in MediFarm I RE. The remaining membership interests are owned by Forever Young Investments, LLC (50%), an otherwise unaffiliated entity. The accompanying unaudited consolidated financial statements include all of the accounts of Terra Tech. These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for financial information and with the instructions to Form 10-K and Regulation S-X. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. Use of Estimates The preparation of the financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents Cash and all highly liquid investments with a maturity of three months or less from the date of purchase, including money market mutual funds, short-term time deposits, and government agency and corporate obligations, are classified as cash and cash equivalents. Accounts Receivable The Company reviews all outstanding accounts receivable for collectability on a quarterly basis. An allowance for doubtful accounts is recorded for any amounts deemed uncollectable. The Company does not accrue interest receivable on past due accounts receivable. There was an allowance of $184,642 at December 31, 2015 and $49,168 at December 31, 2014. Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets: 3-32 years for machinery and equipment, leasehold improvements and buildings are amortized over the estimated useful life. Repairs and maintenance expenditures which do not extend the useful lives of related assets are expensed as incurred. Intangibles Intangible assets with definite lives are amortized, but are tested for impairment quarterly and when an event occurs or circumstances change such that it is more likely than not that an impairment may exist. The Company tests intangibles for impairment by first comparing the carrying value of net assets to the fair value of the related operations. If the fair value is determined to be less than the carrying value, a second step is performed to compute the amount of the impairment. In this process, a fair value for intangibles is estimated, based in part on the fair value of the operations, and is compared to its carrying value. The shortfall of the fair value below the carrying value represents the amount of intangible impairment. The Company tests these intangibles for impairment by comparing their carrying value to current projections of discounted cash flows attributable to the customer list. Any excess carrying value over the amount of discounted cash flows represents the amount of the impairment. Deposits Deposits are for contractors, stores and land in California and Nevada. Revenue Recognition Revenue is recognized net of discounts, rebates, promotional adjustments, price adjustments and estimated returns and upon transfer of title and risk to the customer which occurs at shipping (F.O.B. terms). Upon shipment, the Company has no further performance obligations and collection is reasonably assured as the majority of sales are paid for prior to shipping. Cost of Goods Sold Cost of goods sold are for the plants grown and purchased and sold into the retail marketplace by Edible Garden. It also includes the cost incurred in producing the oils, waxes, shatters, and clears sold by IVXX. Research and Development Research and development costs are expensed as incurred. Income Taxes The Company provides for income taxes based on enacted tax law and statutory tax rates at which items of income and expenses are expected to be settled in our income tax return. Certain items of revenue and expense are reported for Federal income tax purposes in different periods than for financial reporting purposes, thereby resulting in deferred income taxes. Deferred taxes are also recognized for operating losses that are available to offset future taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company has incurred net operating losses for financial-reporting and tax-reporting purposes. Accordingly, for Federal and state income tax purposes, the benefit for income taxes has been offset entirely by a valuation allowance against the related Federal and state deferred tax asset for the year ended December 31, 2015. Loss Per Common Share Net loss per share is computed in accordance with the provisions of ASC 260, "Earnings Per Share" by dividing net loss by the weighted average number of shares of common stock outstanding during the period. During a loss period, the effect of the potential exercise of stock options, warrants, convertible preferred stock, and convertible debt are not considered in the diluted income (loss) per share calculation since the effect would be anti-dilutive. The results of operations were a net loss for the year ended December 31, 2015; therefore, the basic and diluted weighted average shares of common stock outstanding were the same. Fair Value of Financial Instruments The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level 1 Level 2 Level 3 The Company's valuation techniques used to measure the fair value of money market funds and certain marketable equity securities were derived from quoted prices in active markets for identical assets or liabilities. The valuation techniques used to measure the fair value of all other financial instruments, all of which have counterparties with high credit ratings, were valued based on quoted market prices or model driven valuations using significant inputs derived from or corroborated by observable market data. In accordance with the fair value accounting requirements, companies may choose to measure eligible financial instruments and certain other items at fair value. The Company has not elected the fair value option for any eligible financial instruments. Recently Issued Accounting Standards Leases – Balance Sheet Classification of Deferred Taxes – Inventory Measurement Going Concern Disclosures |
GOING CONCERN
GOING CONCERN | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 2. GOING CONCERN | The Company's future success is dependent upon its ability to achieve profitable operations and generate cash from operating activities, and upon additional financing. Management believes they can raise the appropriate funds needed to support their business plan and develop an operating company that is cash-flow positive. However, the Company incurred net losses for the year ended December 31, 2015, and has an accumulated deficit of approximately $46.0 million at December 31, 2015. The Company has not been able to generate sufficient cash from operating activities to fund its ongoing operations. There is no guarantee that the Company will be able to generate enough revenue and/or raise capital to support its operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability or classification of recorded assets and liabilities that might result should the Company be unable to continue as a going concern. |
CONCENTRATIONS OF BUSINESS AND
CONCENTRATIONS OF BUSINESS AND CREDIT RISK | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 3. CONCENTRATIONS OF BUSINESS AND CREDIT RISK | The Company maintains cash balances in several financial institutions that are insured by the Federal Deposit Insurance Corporation up to certain federal limitations. The Company provides credit in the normal course of business to customers located throughout the U.S. The Company performs ongoing credit evaluations of its customers and maintains allowances for doubtful accounts based on factors surrounding the credit risk of specific customers, historical trends, and other information. |
SHARE EXCHANGE
SHARE EXCHANGE | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 4. SHARE EXCHANGE | On March 23, 2013, the Company entered into the Share Exchange Agreement pursuant to which Edible Garden's stockholders exchanged common stock of Edible Garden for the Company's common stock. Pursuant to the Share Exchange Agreement, the Company offered and sold 1,250,000 shares of its common stock, valued at $212,500, in consideration for all the issued and outstanding shares in Edible Garden. The Company also acquired Edible Garden's customer list. The transaction was accounted for as a business acquisition. In accordance with generally accepted accounting principles, intangible assets are recorded at fair values as of the date of the transaction. The Company preliminarily allocated the $212,500 consideration paid for the acquired assets as follows: Cash 100 Intangible assets, customer list 212,400 Fair value acquired $ 212,500 Intangible assets with estimated useful lives are amortized over a five-year period. Amortization expense was approximately $42,480 for the year ended December 31, 2015. |
INVENTORY
INVENTORY | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 5. INVENTORY | Inventory consists of raw materials for Edible Garden's herb product lines and IVXX's line of cannabis pure concentrates. Work-In-Progress consists of live plants grown for Edible Garden's herb product lines along with IVXX's line of cannabis pure concentrates. Finished goods consists of IVXX's line of cannabis packaged to be sold into dispensaries. Cost of goods sold is calculated using the average costing method. The Company reviews its inventory periodically to determine net realizable value. The Company writes down inventory, if required, based on forecasted demand. These factors are impacted by market and economic conditions, new products introductions, and require estimates that may include uncertain elements. Inventory at December 31, 2015 and December 31, 2014 consisted of the following: December 31, December 31, 2015 2014 Raw Materials $ 277,340 $ 479,682 Work-In-Progress 542,530 190,498 Finished Goods 129,578 - $ 949,448 $ 670,180 |
PROPERTY, EQUIPMENT AND LEASEHO
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 6. PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS | Property, equipment, and leasehold improvements at cost, less accumulated depreciation, at December 31, 2015 and December 31, 2014 consisted of the following: December 31, December 31, 2015 2014 Land $ 1,454,124 $ - Furniture 70,786 53,790 Equipment 2,322,444 2,367,605 Leasehold improvements 3,893,330 3,468,243 Subtotal 7,740,684 5,889,638 Less accumulated depreciation (1,045,709 ) (442,895 ) Total $ 6,694,975 $ 5,446,743 Depreciation expense related to property and equipment for the year ended December 31, 2015 was $602,814 and for the year ended December 31, 2014 was $392,883. |
ACCOUNTS PAYABLE AND ACCRUED EX
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 7. ACCOUNTS PAYABLE AND ACCRUED EXPENSES | Accounts payable and accrued expenses consisted of the following: December 31, December 31, 2015 2014 Accounts payable $ 1,015,994 $ 240,204 Accrued interest 103,465 270,918 Accrued payroll taxes - 62,599 $ 1,119,459 $ 573,721 |
NOTE PAYABLE
NOTE PAYABLE | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 8. NOTE PAYABLE | Notes payable are as follows: December 31, December 31, 2015 2014 Unsecured promissory demand note dated May 7, 2012 issued to an accredited investor, which bore interest at a rate of 4% per annum. Holder was entitled to convert into common stock at $0.75 per share. In 2015, the holder of the note exchanged the note with another accredited investor. $ - $ 5,000 Promissory note dated July 25, 2014 issued to an accredited investor, which initially matured July 24, 2015 and bore interest at a rate of 12% per annum. The holder of the note extended the maturity date to July 25, 2016. Principal and interest may be converted into common stock based on the average trading price of the ten days prior to maturity at the holder's option. 150,000 150,000 Unsecured promissory demand notes, acquired by an accredited investor from the original debt holders, which bore interest at a rate of 4% per annum. Holder was entitled to convert into common stock at $0.75 per share. In 2015, the holder of the note exchanged the note with another accredited investor. - 109,306 Unsecured promissory demand notes issued to an accredited investor, which bears interest at a rate of 4% per annum. Holder may elect to convert into common stock at $0.75 per share. In 2015, the investor exchanged the notes from other accredited investors. 114,306 - 5% Original issue discount senior secured convertible promissory note dated March 5, 2014 issued to accredited investors, which matured September 5, 2015, and bore interest at a rate of 12% per annum. The fixed conversion price in effect was set at 90% of the 20-day VWAP of our common stock on February 5, 2014, or $0.30753 per share. In 2015, the holder of the note converted the debt and accrued interest into common stock. - 248,902 5% Original issue discount senior secured convertible promissory note dated May 5, 2014 issued to accredited investors, which matured November 5, 2015, and bore interest at a rate of 12% per annum. The fixed conversion price in effect was set at 90% of the 20-day VWAP of our common stock on February 5, 2014, or $0.30753 per share. In 2015, the holder of the note converted some of the debt and accrued interest into common stock. The remaining balance of the note and accrued interest was converted into common stock in March 2016. 96,491 482,456 5% Original issue discount senior secured convertible promissory note dated June 5, 2014 issued to accredited investors, which bore interest at a rate of 12% per annum. The fixed conversion price in effect was set at 90% of the 20-day VWAP of our common stock on February 5, 2014, or $0.30753 per share. In 2015, the holder of the note converted the debt and accrued interest into common stock. - 146,197 5% Original issue discount senior secured convertible promissory note dated July 1, 2014 issued to accredited investors, which bore interest at a rate of 12% per annum. The fixed conversion price in effect was set at 90% of the 20-day VWAP of our common stock on February 5, 2014, or $0.30753 per share. In 2015, the holder of the note converted the debt and accrued interest into common stock. - 578,947 5% Original issue discount senior secured convertible promissory note dated July 31, 2014 issued to accredited investors, which matures February 1, 2016 and bears interest at a rate of 12% per annum. The fixed conversion price in effect was set at 90% of the 20-day VWAP of our common stock on February 5, 2014, or $0.30753 per share. In 2015, the holder of the note converted the debt and accrued interest into common stock. - 2,894,739 Convertible promissory note dated April 7, 2015 issued to accredited investors, which matures October 7, 2016 and bears interest at a rate of 12% per annum. The conversion price in effect is $0.1303, subject to adjustment. 170,856 - Convertible promissory note dated May 13, 2015 issued to accredited investors, which matures November 13, 2016 and bears interest at a rate of 12% per annum. The conversion price in effect is $0.1211, subject to adjustment. 170,783 - Convertible promissory note dated December 14, 2015, issued to accredited investors, which maturing December 13, 2016, bearing interest at a rate of 12% per annum. The conversion price in effect is $0.1211, subject to adjustment. 214,927 - Total Debt 917,363 4,615,547 Less short-term portion 917,363 4,615,547 Long-term portion $ - $ - Total debt as of December 31, 2015 and December 31, 2014, was $917,363 and $4,615,547, respectively, which included unamortized debt discount of $693,435 and $0, respectively. The senior secured promissory notes are secured by shares of common stock. There was accrued interest of $103,465 as of December 31, 2015. On February 27, 2015, the Company entered into a Securities Purchase Agreement (the "Purchase Agreement") with certain purchasers (the "Purchasers") relating to the issuance and sale (the "Offering") of (i) 12% Convertible Promissory Notes (the "Notes") in the aggregate principal amount of Three Million Dollars ($3,000,000), that are convertible into shares (the "Conversion Shares") of the Company's common stock, par value $0.001 per share, and (ii) warrants (the "Warrants") to acquire shares (the "Warrant Shares") of the Company's common stock pursuant to the terms of the Purchase Agreement. The purchase of the Notes is expected to occur in six (6) tranches (each, a "Tranche", and, collectively, the "Tranches"), with the first Tranche of $750,000 closing simultaneously with the execution of the Purchase Agreement. Each additional Tranche is expected to be in the amount of $450,000 and, as long as we are not in default of the Notes, each Tranche is expected to close on every 30 th The Purchase Agreement contains customary representations, warranties, and covenants by, among, and for the benefit of the parties. The Purchasers were granted customary participation rights in future financings. The Purchase Agreement also limits the Company's ability to engage in subsequent equity sales for a certain period of time. The proceeds from the Offering are intended to be used for general corporate proceeds and cannot be used: (i) for the satisfaction of any portion of the Company's debt (other than payment of trade payables in the ordinary course of the Company's business and prior practices), (ii) for the redemption of the Company's common stock or common stock equivalents, (iii) for the settlement of any outstanding litigation, or (iv) in violation of the Foreign Corrupt Practices Act or the Office of Foreign Assets Control. The Offering is exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), pursuant to Section 4(a)(2) of the Securities Act (in that the Notes, the Conversion Shares, the Warrants, and the Warrant Shares were sold by us in a transaction not involving any public offering) and pursuant to Rule 506 of Regulation D promulgated thereunder. The Notes, the Conversion Shares, the Warrants, and the Warrant Shares are restricted securities that have not been registered under the Securities Act, and will not be registered under the Securities Act, and may not be offered or sold absent registration or applicable exemption from the registration requirements. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 9. FAIR VALUE MEASUREMENTS | The following table represents the fair value hierarchy for those financial assets measured at fair value on a recurring basis: Fair Value at December 31, Fair Value Measurement Using 2015 Level 1 Level 2 Level 3 Derivative liability - Conversion Feature $ 743,400 - - $ 743,400 $ 743,400 - - $ 743,400 Fair Value at December 31, Fair Value Measurement Using 2014 Level 1 Level 2 Level 3 Derivative liability - Conversion Feature $ 1,253,000 - - $ 1,253,000 $ 1,253,000 - - $ 1,253,000 Liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3): Balance at December 31, 2014 $ 1,253,000 Change in fair market value of Conversion Feature (1,800,100 ) Issuance of equity instruments with debt greater than debt carrying amount 561,000 Derivative debt converted into equity (1,168,500 ) Issuance of equity instruments with derivatives 1,898,000 Balance at December 31, 2015 $ 743,400 |
TAX EXPENSE
TAX EXPENSE | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 10. TAX EXPENSE | The expense (benefit) for income taxes consists of the following: December 31, 2015 December 31, 2014 Current: Federal $ - $ - State - - - - Deferred: Federal 44,000 - State - - Total $ 44,000 $ - The reconciliation between the Company's effective tax rate and the statutory tax rate is as follows: December 31, 2015 December 31, 2014 Expected Income tax expense (benefit) at statutory rate net $ (3,694,000 ) $ (8,940,000 ) Nondeductible items 368,000 2,173,000 Warrants expense 1,196,000 2,216,000 Derivatives expense (545,000 ) 1,274,000 Net operating losses 2,667,000 3,227,000 Other 52,000 50,000 Reported income tax expense (benefit) $ 44,000 $ - Effective tax rate -0.49% 0.00 % The components of deferred tax assets and liabilities are as follows: December 31, 2015 December 31, 2014 Deferred income tax assets: Allowance for bad debt $ 74,000 $ 21,000 Warrants expense 3,412,000 2,216,000 Derivatives expense 729,000 1,274,000 Net operating losses 7,029,000 3,227,000 11,244,000 6,738,000 Deferred income tax liabilities: Depreciation (44,000 ) - Total 11,200,000 6,738,000 Valuation allowance (11,244,000 ) (6,738,000 ) Net deferred tax assets $ (44,000 ) $ - Permanent differences include ordinary and necessary business expenses deemed by the Company as a non-allowable deduction under IRC § 280E, and tax deductions related to equity compensation that are less than the compensation recognized for financial reporting. As of December 31, 2015 and December 31, 2014, the Company had net operating loss carryforwards of approximately $16,250,000 and $12,276,000, respectively, which, if unused, will expire beginning in years 2034. These tax attributes are subject to an annual limitation from equity shifts, which constitute a change of ownership as defined under Internal Revenue Code Section 382, which will limit their utilization. The Company has yet to assess the effect of these limitations, but expects these losses to be substantially limited. Accordingly, the Company has placed a reserve against any assets associated with these losses. Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative losses incurred through the period ended December 31, 2015. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth. On the basis of this evaluation, as of December 31, 2015, a valuation allowance of has been recorded against all deferred tax assets as these assets are more likely than not to be unrealized. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence such as our projections for growth. For the year ended December 31, 2015, IVXX, Inc., produced and sold cannabis pure concentrates, subjecting the company to the limits of IRC §280E. Pursuant to IRC § 280E, the Company is allowed only to deduct expenses directly related to sales of product. The Company has allocated accelerated depreciation related to production equipment, which results in a difference in the cost of sales for financial reporting and tax reporting taxable income. As a result the Company had no current taxable income for the year ended December 31, 2015, but has recorded a deferred tax liability related to the tax depreciation in excess of that reported for financial reporting purposes. |
CAPITAL STOCK
CAPITAL STOCK | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 11. CAPITAL STOCK | Preferred Stock The Company authorized 25 million shares of preferred stock with $0.001 par value, of which there were 100 shares of Series A Preferred Stock outstanding as of December 31, 2015. Series A Preferred Stock is convertible on a one-for-one basis into common stock and has all of the voting rights of the Company's common stock. There were 16,300,000 shares of Series B Preferred Stock outstanding as of December 31, 2015. Each share of Series B Preferred Stock: (i) has voting rights equal to 100 shares of common stock, and (ii) is convertible, at the option of the holder, on a 1-for-5.384325537 basis, into shares of the Company's common stock. Please refer to Note 17, Subsequent Events Common Stock The Company authorized 350 million shares of common stock, $0.001 par value per share. As of December 31, 2015, 303,023,744 shares of common stock were issued and outstanding. |
WARRANTS
WARRANTS | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 12. WARRANTS | The Company has the following shares of common stock reserved for exercise of the warrants outstanding as of December 31, 2015: December 31, 2015 Weighted Average Exercise Shares Price Warrants outstanding – beginning of year 20,709,845 $ 0.23 Warrants exercised - 0.00 Warrants granted 17,856,563 0.20 Warrants expired (6,140,400 ) (0.33 ) Warrants outstanding – end of period 32,426,008 $ 0.18 The weighted exercise price and weighted fair value of the warrants granted by us as of December 31, 2015, are as follows: December 31, 2015 Weighted Average Weighted Exercise Average Price Fair Value Weighted average of warrants granted during the year whose exercise price exceeded fair market value at the date of grant $ 0.20 $ 0.20 The following table summarizes information about fixed-price warrants outstanding: Number Average Range of Outstanding at Remaining Weighted Exercise December 31, Contractual Average Prices 2015 Life Exercise Price $ 0.46 150,000 1 Months $ 0.46 $ 0.85 40,000 4 Months $ 0.85 $ 0.40 333,333 8 Months $ 0.40 $ 0.33 439,637 13 Months $ 0.33 $ 0.16 750,000 15 Months $ 0.16 $ 0.21 14,946,119 30 Months $ 0.21 $ 0.30 5,789,473 31 Months $ 0.30 $ 0.06 7,067,002 34 Months $ 0.06 $ 0.16 1,118,068 38 Months $ 0.16 $ 0.13 863,392 40 Months $ 0.13 $ 0.12 928,984 41 Months $ 0.12 32,426,008 For the warrants issued in June 2015, the Company valued the warrants utilizing the Black Scholes model with the following inputs: stock price $0.11, exercise price of $0.20625, volatility of 142.53%, years 3, treasury bond rate of 2.5%, and dividend rate of 0%. |
OPERATING LEASE COMMITMENTS
OPERATING LEASE COMMITMENTS | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 13. OPERATING LEASE COMMITMENTS | The Company leases certain business facilities under operating lease agreements that specify minimum rentals. Many of these have renewal provisions along with the option to acquire the property. The Company's net rent expense for the year ended December 31, 2015 and 2014 was $501,449 and $100,400, respectively. Future minimum lease payments under non-cancelable operating leases having an initial or remaining term of more than one year are as follows: Scheduled Year Ending December 31: Payments 2016 $ 541,656 2017 487,518 2018 478,587 2019 342,336 2020 256,173 2021 and thereafter 2,021,484 Total minimum rental payments $ 4,127,754 |
LITIGATION AND CLAIMS
LITIGATION AND CLAIMS | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 14. LITIGATION AND CLAIMS | The Company is the subject of lawsuits and claims arising in the ordinary course of business from time to time. The Company reviews any such legal proceedings and claims on an ongoing basis and follow appropriate accounting guidance when making accrual and disclosure decisions. The Company establishes accruals for those contingencies where the incurrence of a loss is probable and can be reasonably estimated, and it discloses the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued, if such disclosure is necessary for the Company's financial statements to not be misleading. To estimate whether a loss contingency should be accrued by a charge to income, the Company evaluates, among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of the loss. The Company does not record liabilities when the likelihood that the liability has been incurred is probable, but the amount cannot be reasonably estimated. Based upon present information, the Company determined that there were no matters that required an accrual as of December 31, 2015, nor were there any asserted or unasserted claims for which material losses are reasonably possible. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 15. SEGMENT INFORMATION | The Company's operating and reportable segments are currently organized around the following products that it offers as part of its core business strategy: · Hydroponic Produce · Cannabis Products These two reportable segments, which are described in greater detail below, had previously been reported on a combined basis as they had been operated and evaluated as one operating segment. The Company experienced significant growth over the last year in most of our product areas. As the Company has grown organically, and as the Company previously added to its capabilities through acquisitions, its products have increased in scale and become more strategically important and distinctly organized and managed under these two groupings. In addition, Derek Peterson, the Company's chief operating decision maker ("CODM") has begun reviewing results and managing and allocating resources between these two strategic business groupings, and has begun budgeting using these business segments. The Company's segment information for the year ended December 31, 2014 has been reclassified to conform to its current presentation. The Company's CODM reviews revenues including intersegment revenues, gross profit and operating income (loss) before income taxes when evaluating segment performance and allocating resources to each segment. Accordingly, intersegment revenue is included in the segment revenues presented in the tables below and is eliminated from revenues and cost of sales in the "Eliminations and Other" column. The "Eliminations and Other" column also includes various income and expense items that the Company does not allocate to its operating segments. These income and expense amounts include the results of the Company's hydroponic equipment, which are not material, interest income, interest expense, corporate overhead, and corporate-wide expense items such as legal and professional fees as well as expense items for which we have not identified a reasonable basis for allocation. The accounting policies of the reportable segments are the same as those described in Note 1 of the Notes to the Consolidated Financial Statements. Hydroponic Produce Cannabis Products 2 Summarized financial information concerning the Company's reportable segments is shown in the following tables. Total asset amounts at December 31, 2015 and 2014 exclude intercompany receivable balances eliminated in consolidation. 12 Months Ended December 31, 2015 Hydroponic Cannabis Eliminations Produce Products and Other Total Total Revenues $ 8,633,538 $ 1,207,424 $ 134,384 $ 9,975,346 Cost of Goods Sold 7,771,039 1,078,852 108,584 8,958,475 862,499 128,572 25,800 1,016,871 Selling, general and administrative expenses 1,910,375 763,728 7,159,543 9,833,646 Loss from operations (1,047,876 ) (635,156 ) (7,133,743 ) (8,816,775 ) Other Income (Expenses) Amortization of debt discount - - (696,180 ) (696,180 ) Loss on extinguishment of debt - - (619,444 ) (619,444 ) Loss from derivatives issued with debt greater than debt carrying value - - (561,000 ) (561,000 ) Gain (Loss) on fair market valuation of derivatives - - 1,800,100 1,800,100 Interest Income (Expense) - - (469,576 ) (469,576 ) Total Other Income (Expense) - - (546,100 ) (546,100 ) Loss before Provision of Income Taxes $ (1,047,876 ) $ (635,156 ) $ (7,679,843 ) $ (9,362,875 ) Total assets at December 31, 2015 $ 5,383,659 $ 1,671,966 $ 2,109,414 $ 9,165,039 12 Months Ended December 31, 2014 Hydroponic Cannabis Eliminations Produce Products and Other Total Total Revenues $ 6,627,109 $ - $ 467,161 $ 7,094,270 Cost of Goods Sold 6,667,967 - 273,311 6,941,278 (40,858 ) - 193,850 152,992 Selling, general and administrative expenses 1,506,684 1,115,577 15,718,986 18,341,247 Loss from operations (1,547,542 ) (1,115,577 ) (15,525,136 ) (18,188,255 ) Other Income (Expenses) Loss from derivatives issued with debt greater than debt carrying value - - (4,808,000 ) (4,808,000 ) Gain (Loss) on fair market valuation of derivatives - - 1,912,037 1,912,037 Interest Income (Expense) 2,232 - (1,098,556 ) (1,096,324 ) Total Other Income (Expense) 2,232 - (3,994,519 ) (3,992,287 ) Loss before Provision of Income Taxes $ (1,545,310 ) $ (1,115,577 ) $ (19,519,655 ) $ (22,180,542 ) Total assets at December 31, 2014 $ 5,956,861 $ 858,180 $ 904,185 $ 7,719,226 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 16. RELATED PARTY TRANSACTIONS | During the year ended December 31, 2015, our subsidiary, IVXX, purchased raw materials totaling $248,855 from an entity in which the Company's Chief Executive Officer has an ownership interest. IVXX also sold finished goods amounting to $434,661 to that same entity. The terms of the purchases of the raw materials and sales of the finished goods were at arms-length. There was an accounts receivable balance of $98,304 from this entity as of December 31, 2015. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 17. SUBSEQUENT EVENTS | Issuances and Sales of Common Stock During the first quarter of 2016, senior secured convertible promissory notes and accrued interest in the amount of $961,740 was converted into 13,906,149 shares of common stock. In the first quarter of 2016, the Company sold 25,715,674 shares of common stock for the net amount of $3,208,134 pursuant to an equity financing facility with Magna Equities II, LLC. In the first quarter of 2016, the Company adopted the 2016 Equity Incentive Plan. The Company granted ten-year options to directors, officers, and employees, pursuant to which such individuals are entitled to exercise options to purchase an aggregate of up to 6.7 million shares of the Company's common stock. The options have an exercise price of $0.09, and vest quarterly over a three-year period. Amendment to Certificate of Designation of Series B Preferred Stock; Designation of New Series of Preferred Stock: The Company filed an Amended and Restated Certificate of Designation of Series B Preferred Stock (the "Amended Series B Certificate") with the Secretary of State of the State of Nevada, effective March 29, 2016. The Amended Series B Certificate decreased the number of authorized shares of Series B Preferred Stock, specified a liquidation preference, clarified the provisions related to adjustments to the conversion rate upon certain events, and made such other amendments as the Company's Board of Directors deemed necessary. Effective March 29, 2016, the Company also designated two additional series of preferred stock: (i) Series Z Preferred Stock and (ii) Series Q Preferred Stock, by filing Certificate of Designations with the Secretary of State of the State of Nevada. The Certificate of Designation of Series Z Preferred Stock (the "Series Z Certificate") designates 8,300 shares as Series Z Preferred Stock and is intended to mirror the rights of the holders of the Series B Preferred Stock. Each share of Series Z Preferred Stock is convertible into 1,857 shares of Series B Preferred Stock immediately upon the Company filing with the Secretary of State of the State of Nevada an Amendment to its Articles of Incorporation to increase its authorized capital for, among other reasons, satisfaction of the terms of the potential acquisition of Black Oak, as discussed in more detail below. The holders of the Series Z Preferred Stock are entitled to a liquidation preference equal to $10.00 per share (subject to appropriate adjustment in the event of any stock dividend, forward stock split, or other similar recapitalization). Such liquidation preference is in preference (but equal with the holders of the Company's Series B Preferred Stock) to the holders of the common stock, but subordinate in preference to any sum to which the holders of the Company's Series A Preferred Stock are entitled. The Certificate of Designation of Series Q Preferred Stock (the "Series Q Certificate") designates 21,600 shares as Series Q Preferred Stock. Each share of Series Q Preferred Stock is convertible into 5,000 shares of the Company's common stock immediately upon the Company filing with the Secretary of State of the State of Nevada an Amendment to its Articles of Incorporation to increase its authorized capital for, among other reasons, satisfaction of the terms of the potential acquisition of Black Oak, as discussed in more detail below. The holders of the Series Q Preferred Stock are entitled to a liquidation preference equal to $0.001 per share (subject to appropriate adjustment in the event of any stock dividend, forward stock split, or other similar recapitalization). Such liquidation preference is in preference to the holders of the common stock, but subordinate in preference to any sum to which the holders of any shares of any other series of the Corporation's preferred stock are entitled. Copies of the Series B Certificate, Series Z Certificate, and Series Q Certificate are attached as exhibits to this Annual Report on Form 10-K. Acquisition of Blüm On January 12, 2016, the Company filed a Current Report on Form 8-K with the Securities and Exchange Commission, in which it disclosed that it had entered into an Agreement and Plan of Merger, dated December 23, 2015 (the "Merger Agreement"), with Generic Merger Sub, Inc., a California corporation and wholly-owned subsidiary of the Company (the "Merger Sub"), and Black Oak Gallery, a California corporation that operates a medical marijuana dispensary in Oakland, California under the name, Blüm ("Black Oak"). On March 1, 2016, the Company filed an amendment to its Current Report to disclose that the parties entered into a First Amendment to the Agreement and Plan of Merger, dated February 29, 2016 (the "First Amendment"), as described below. Pursuant to the Merger Agreement, among other things, and subject to the satisfaction or waiver of the closing conditions set forth in the Merger Agreement, Merger Sub will merge with and into Black Oak, with Black Oak as the surviving corporation, and becoming a wholly-owned subsidiary of the Company (the "Merger"). The Merger is intended to qualify for federal income tax purposes as a tax-free reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended. Subject to the terms and conditions of the Merger Agreement, at the closing of the Merger, the outstanding shares of common stock of Black Oak held by (i) three of the current shareholders of Black Oak (the "Group A Shareholders") will be converted into the right to receive approximately 8,172 shares of the Company's Series Z Preferred Stock, of which approximately 1,178 shares of Series Z Preferred Stock will be issued and paid at closing, and approximately 8,668,703 shares of the Company's Series B Preferred Stock, of which approximately 1,248,302 shares of Series B Preferred Stock will be issued and paid at closing and (ii) the remaining shareholders of Black Oak (the "Group B Shareholders") will be converted into the right to receive approximately 21,395 shares of the Company's Series Q Preferred Stock, of which approximately 3,700 shares of Series Q Preferred Stock will be issued and paid at closing. The shares of Series Z Preferred Stock, Series B Preferred Stock, and Series Q Preferred Stock that are issued but not paid to the Black Oak shareholders at closing will be subject to certain holdback and lock-up provisions, and held in an escrow account as security for the satisfaction of any post-closing adjustments or indemnification claims, as provided for in the Merger Agreement. Each share of Series Q Preferred Stock is to be converted into 5,000 shares of the Company's common stock and each share of Series Z Preferred Stock is to be converted into 1,857 shares of the Company's Series B Preferred Stock, in each case immediately upon the Company filing with the Secretary of State of the State of Nevada an Amendment to its Articles of Incorporation to increase its authorized capital for, among other reasons, satisfaction of the terms of this potential transaction. Accordingly, the approximately 21,395 shares of Series Q Preferred Stock to be issued to the Group B Shareholders is convertible into approximately 106,975,000 shares of common stock and the approximately 8,172 shares of Series Z Preferred Stock to be issued to the Group A Shareholders is convertible into approximately 15,175,404 shares of Series B Preferred Stock. Each share of Series B Preferred Stock remains convertible into 5.384325537 shares of common stock. Immediately following the effectiveness of the Merger, the current Black Oak shareholders (both the Group A Shareholders and the Group B Shareholders) are expected to own approximately 33.37% of the Company's common stock on a fully "as-converted basis," which percentage does not include certain shares of common stock, Series A Preferred Stock that may be converted into shares of common stock, or Series B Preferred Stock that may be converted into shares of common stock, as applicable, each as currently held by the Group A Shareholders. Derek Peterson, the Company's President and Chief Executive Officer, is one of the Group A Shareholders. The Group B Shareholders may also receive cash consideration equal to approximately $2,088,000. The securities paid to the Group A Shareholders and the Group B Shareholders are subject to certain post-closing adjustments that are based on certain performance indicators as of the first anniversary of the closing date of the Merger. The first indicator is based on the performance of the volume-weighted average price of the Company's common stock on the first anniversary of the closing date of the Merger compared to the price of the Company's common stock on the date of the Merger Agreement. The second indicator is based on the Company's revenues for the twelve-month period following the closing date of the Merger. A portion of the securities that the Group A Shareholders and the Group B Shareholders are entitled to receive at closing of the Merger will be held in an escrow until the first anniversary of the closing date of the Merger and the post-closing adjustments are complete. Consummation of the Merger is subject to certain closing conditions, including, among other things, receipt of all necessary approvals under federal and state securities laws, receipt of all authorizations required relating to the issuance of the Company's securities and transfer of all the shares pursuant to the terms of the Merger Agreement. The Company and Black Oak originally agreed that the closing of the Merger shall be as soon as reasonably practicable (but in any event, no later than the second business day) after the day on which the final closing conditions have been satisfied or validly waived, which satisfaction or waiver date shall not be prior to March 1, 2016 (the "Original Commitment Date"). On February 29, 2016, the parties executed the First Amendment to extend the Original Commitment Date to March 25, 2016. As a result of the First Amendment, the Company's right to terminate the Merger Agreement for any reason, in its discretion, was extended to March 25, 2016. The Company did not exercise its termination right. Accordingly, the Company can only terminate the Merger Agreement: (i) upon mutual written consent of all the parties, (ii) if there is a material breach of any covenant or obligation of Black Oak that is incapable of being cured prior to the closing date of the Merger or is not cured within 10 days Black Oak receives written notice of such breach, or (iii) the Company determines that the timely satisfaction of any of the closing conditions becomes impossible or impractical. Further, Black Oak committed to use commercially reasonable efforts to assist the Company in its preparation of Black Oak's financial statements, which statements are to be reasonably capable of being audited under GAAP and which audit is to be completed not later than June 8, 2016 (75 days after March 25, 2016). The Company will file a Current Report on Form 8-K to disclose these financial statements not later than June 8, 2016. The Company expects to close the Merger on March 31, 2016. Asset Purchase Agreement On March 10, 2016, the Company entered into an Asset Purchase Agreement (the "Purchase Agreement") with Therapeutics Medical, LLC (the "Seller"), pursuant to which the Company acquired from the Seller certain assets (the "Assets") related to a business engaged in the research, development, and marketing of nutraceutical supplements. The Purchase Agreement provides that the Company will issue a Convertible Promissory Note (the "Convertible Promissory Note") due September 10, 2017, to the Seller in the principal amount of $1.25 million for the purchase of the Assets. The Convertible Promissory Note accrues interest at the rate of one percent per annum, and is convertible into shares of the Company's common stock at a conversion price equal to 90% of the average of the lowest three (3) volume-weighted average prices of one share of common stock for the five (5) consecutive trading days prior to the conversion date. In addition, the Company may be required to issue an additional Convertible Promissory Note to the Seller based on the following calculation: (i) if the total revenue ("Total Revenue") generated by the Assets for the period beginning on April 1, 2016 and ending on March 31, 2017 (the "Applicable Period") is greater than $1.6 million but less than $3.2 million, the Company will issue to the Seller an additional Convertible Promissory Note in the principal amount equal to fifty (50%) of the Total Revenue in excess of $1.6 million; or (ii) if the Total Revenue generated by the Assets for the Applicable Period is greater than $3.2 million, the Company will issue to the Seller an additional Convertible Promissory Note in the principal amount equal to the sum of: (a) $800,000 (which equals 50% of the Total Revenue in excess of $1.6 million up to $3.2 million), plus (b) twenty five (25%) percent of the Total Revenue for the Applicable Period in excess of $3.2 million. |
SUMMARY OF SIGNIFICANT ACCOUN24
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Summary Of Significant Accounting Policies Policies | |
Organization | References in this document to "the Company", "Terra Tech", "we", "us", or "our" are intended to mean Terra Tech Corp., individually, or as the context requires, collectively with its subsidiaries on a consolidated basis. The Company was incorporated in Nevada on July 22, 2008, under the name Private Secretary, Inc. The Company's original business was developing a software program that would allow for automatic call processing through voice-over-Internet protocol, or "VoIP", technology. The Company's operations were limited to capital formation, organization, and development of its business plan and target customer market. The Company generated no revenue. The Company changed its name to Terra Tech Corp. on January 27, 2012. Through its wholly-owned subsidiary, GrowOp Technology Ltd., a Nevada corporation ("GrowOp Technology"), the Company engages in the design, marketing, and sale of hydroponic equipment with proprietary technology to create sustainable solutions for the cultivation of indoor agriculture. The Company is also a wholesale seller of locally grown hydroponic produce, herbs and floral products through its wholly-owned subsidiary, Edible Garden Corp., a Nevada corporation ("Edible Garden"). Through MediFarm, LLC, a Nevada limited liability company ("MediFarm"), MediFarm I, LLC, a Nevada limited liability company ("MediFarm I"), and MediFarm II, LLC, a Nevada limited liability company ("MediFarm II"), subsidiaries in which the Company owns interests, the Company plans to operate medical marijuana cultivation, production, and dispensary facilities in Nevada. Through IVXX, LLC, a Nevada limited liability company ("IVXX"), the Company's wholly-owned subsidiary, the Company produces and sells a line of cannabis flowers and cigarettes, as well as a line of cannabis pure concentrates. Most recently, the Company formed another wholly-owned subsidiary, MediFarm I Real Estate, LLC, a Nevada limited liability company ("MediFarm I RE"), which will own the real property on which a medical marijuana dispensary will be constructed. The dispensary will be operated by MediFarm I. On February 9, 2012, the Company completed a reverse-triangular merger with GrowOp Technology, whereby it acquired all of the issued and outstanding shares of GrowOp Technology and in exchange the Company issued: (i) 33,998,520 shares of its common stock, (ii) 100 shares of Series A Preferred Stock, convertible into shares of common stock on a one-for-one basis, and (iii) 14,750,000 shares of Series B Preferred Stock, with each share convertible into 5.38425537 shares of common stock. The issuance represented approximately 50.3% of the Company's total shares of common stock outstanding, assuming the conversion of all the shares of Series A Preferred Stock and Series B Preferred Stock, immediately following the closing of the merger. As a result of the merger, GrowOp Technology became the Company's wholly-owned subsidiary. Following the merger, Terra Tech ceased its prior operations and is now solely a holding company. The Company acquired its second wholly-owned subsidiary, Edible Garden, in 2013. Edible Garden is a wholesale seller of locally grown hydroponic produce, which is distributed throughout the Midwest and the Northeast United States. The Company entered into a Share Exchange Agreement, dated March 23, 2013 (the "Share Exchange Agreement"), by and among the Company, Edible Garden,and the stockholders of Edible Garden. Pursuant to the Share Exchange Agreement, the Company offered and sold 1,250,000 shares of its common stock in consideration for all the issued and outstanding shares in Edible Garden. Separately, Amy Almsteier, one of the Company's stockholders and a director (and, at that time, an executive officer), offered and sold 7,650,000 shares of Series B Preferred Stock to Kenneth Vande Vrede, Michael Vande Vrede, Steven Vande Vrede, Dan Vande Vrede, Beverly Willekes, and David Vande Vrede (collectively, the "Former EG Principal Stockholders"). The 7,650,000 shares of Series B Preferred Stock are convertible at any time into 36,344,198 shares of common stock and have voting power equal to 765,000,000 shares of common stock. The effect of the issuance of the 1,250,000 shares of common stock and the sale of the 7,650,000 shares of Series B Preferred Stock by Ms. Almsteier was that the Former EG Principal Stockholders held approximately 25.7% of the Company's issued and outstanding shares of common stock and approximately 43.3% of the Company's voting power of as of March 23, 2013. Articles of Exchange, consummating the share exchange, were filed with the Secretary of the State of Nevada on April 24, 2013. On March 19, 2014, the Company formed MediFarm, a subsidiary. On July 18, 2014, the Company formed MediFarm I, a subsidiary. On July 30, 2014, the Company formed MediFarm II, a subsidiary. Through MediFarm, MediFarm I, and MediFarm II, the Company plans to operate medical marijuana cultivation, production, and dispensary facilities in Nevada. On September 16, 2014, the Company formed IVXX for the purpose of producing a line of cannabis flowers and cigarettes, as well as a complete line of cannabis pure concentrates including: oils, waxes, shatters, and clears. The Company began producing and selling IVXX's products during the first quarter of fiscal 2015. The Company currently offers these products to 200 select dispensaries in California. The Company uses its supercritical CO 2 On October 14, 2015, the Company formed MediFarm I RE. MediFarm I RE is a real estate holding company that owns the real property and building at which a medical marijuana dispensary facility will be located. It is the Company's intention that MediFarm I will operate the medical marijuana dispensary. The Company owns 50% of the membership interests in MediFarm I RE. The remaining membership interests are owned by Forever Young Investments, LLC (50%), an otherwise unaffiliated entity. The accompanying unaudited consolidated financial statements include all of the accounts of Terra Tech. These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for financial information and with the instructions to Form 10-K and Regulation S-X. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. |
Use of Estimates | The preparation of the financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and all highly liquid investments with a maturity of three months or less from the date of purchase, including money market mutual funds, short-term time deposits, and government agency and corporate obligations, are classified as cash and cash equivalents. |
Accounts Receivable | The Company reviews all outstanding accounts receivable for collectability on a quarterly basis. An allowance for doubtful accounts is recorded for any amounts deemed uncollectable. The Company does not accrue interest receivable on past due accounts receivable. There was an allowance of $184,642 at December 31, 2015 and $49,168 at December 31, 2014. |
Property and Equipment | Property and equipment are stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets: 3-32 years for machinery and equipment, leasehold improvements and buildings are amortized over the estimated useful life. Repairs and maintenance expenditures which do not extend the useful lives of related assets are expensed as incurred. |
Intangibles | Intangible assets with definite lives are amortized, but are tested for impairment quarterly and when an event occurs or circumstances change such that it is more likely than not that an impairment may exist. The Company tests intangibles for impairment by first comparing the carrying value of net assets to the fair value of the related operations. If the fair value is determined to be less than the carrying value, a second step is performed to compute the amount of the impairment. In this process, a fair value for intangibles is estimated, based in part on the fair value of the operations, and is compared to its carrying value. The shortfall of the fair value below the carrying value represents the amount of intangible impairment. The Company tests these intangibles for impairment by comparing their carrying value to current projections of discounted cash flows attributable to the customer list. Any excess carrying value over the amount of discounted cash flows represents the amount of the impairment. |
Deposits | Deposits are for contractors, stores and land in California and Nevada. |
Revenue Recognition | Revenue is recognized net of discounts, rebates, promotional adjustments, price adjustments and estimated returns and upon transfer of title and risk to the customer which occurs at shipping (F.O.B. terms). Upon shipment, the Company has no further performance obligations and collection is reasonably assured as the majority of sales are paid for prior to shipping. |
Cost of Goods Sold | Cost of goods sold are for the plants grown and purchased and sold into the retail marketplace by Edible Garden. It also includes the cost incurred in producing the oils, waxes, shatters, and clears sold by IVXX. |
Research and Development | Research and development costs are expensed as incurred. |
Income Taxes | The Company provides for income taxes based on enacted tax law and statutory tax rates at which items of income and expenses are expected to be settled in our income tax return. Certain items of revenue and expense are reported for Federal income tax purposes in different periods than for financial reporting purposes, thereby resulting in deferred income taxes. Deferred taxes are also recognized for operating losses that are available to offset future taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company has incurred net operating losses for financial-reporting and tax-reporting purposes. Accordingly, for Federal and state income tax purposes, the benefit for income taxes has been offset entirely by a valuation allowance against the related Federal and state deferred tax asset for the year ended December 31, 2015. |
Loss Per Common Share | Net loss per share is computed in accordance with the provisions of ASC 260, "Earnings Per Share" by dividing net loss by the weighted average number of shares of common stock outstanding during the period. During a loss period, the effect of the potential exercise of stock options, warrants, convertible preferred stock, and convertible debt are not considered in the diluted income (loss) per share calculation since the effect would be anti-dilutive. The results of operations were a net loss for the year ended December 31, 2015; therefore, the basic and diluted weighted average shares of common stock outstanding were the same. |
Fair Value of Financial Instruments | The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level 1 Level 2 Level 3 The Company's valuation techniques used to measure the fair value of money market funds and certain marketable equity securities were derived from quoted prices in active markets for identical assets or liabilities. The valuation techniques used to measure the fair value of all other financial instruments, all of which have counterparties with high credit ratings, were valued based on quoted market prices or model driven valuations using significant inputs derived from or corroborated by observable market data. In accordance with the fair value accounting requirements, companies may choose to measure eligible financial instruments and certain other items at fair value. The Company has not elected the fair value option for any eligible financial instruments. |
Recently Issued Accounting Standards | Leases – Balance Sheet Classification of Deferred Taxes – Inventory Measurement Going Concern Disclosures |
SHARE EXCHANGE (Tables)
SHARE EXCHANGE (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Share Exchange Tables | |
Acquired assets | The Company preliminarily allocated the $212,500 consideration paid for the acquired assets as follows: Cash 100 Intangible assets, customer list 212,400 Fair value acquired $ 212,500 |
INVENTORY (Tables)
INVENTORY (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Inventory Tables | |
Inventory | Inventory at December 31, 2015 and December 31, 2014 consisted of the following: December 31, December 31, 2015 2014 Raw Materials $ 277,340 $ 479,682 Work-In-Progress 542,530 190,498 Finished Goods 129,578 - $ 949,448 $ 670,180 |
PROPERTY, EQUIPMENT AND LEASE27
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Property Equipment And Leasehold Improvements Tables | |
Property and equipment | Property, equipment, and leasehold improvements at cost, less accumulated depreciation, at December 31, 2015 and December 31, 2014 consisted of the following: December 31, December 31, 2015 2014 Land $ 1,454,124 $ - Furniture 70,786 53,790 Equipment 2,322,444 2,367,605 Leasehold improvements 3,893,330 3,468,243 Subtotal 7,740,684 5,889,638 Less accumulated depreciation (1,045,709 ) (442,895 ) Total $ 6,694,975 $ 5,446,743 |
ACCOUNTS PAYABLE AND ACCRUED 28
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Accounts Payable And Accrued Expenses Tables | |
Accounts payable and accrued expenses | Accounts payable and accrued expenses consisted of the following: December 31, December 31, 2015 2014 Accounts payable $ 1,015,994 $ 240,204 Accrued interest 103,465 270,918 Accrued payroll taxes - 62,599 $ 1,119,459 $ 573,721 |
NOTE PAYABLE (Tables)
NOTE PAYABLE (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Note Payable Tables | |
Notes payable | Notes payable are as follows: December 31, December 31, 2015 2014 Unsecured promissory demand note dated May 7, 2012 issued to an accredited investor, which bore interest at a rate of 4% per annum. Holder was entitled to convert into common stock at $0.75 per share. In 2015, the holder of the note exchanged the note with another accredited investor. $ - $ 5,000 Promissory note dated July 25, 2014 issued to an accredited investor, which initially matured July 24, 2015 and bore interest at a rate of 12% per annum. The holder of the note extended the maturity date to July 25, 2016. Principal and interest may be converted into common stock based on the average trading price of the ten days prior to maturity at the holder's option. 150,000 150,000 Unsecured promissory demand notes, acquired by an accredited investor from the original debt holders, which bore interest at a rate of 4% per annum. Holder was entitled to convert into common stock at $0.75 per share. In 2015, the holder of the note exchanged the note with another accredited investor. - 109,306 Unsecured promissory demand notes issued to an accredited investor, which bears interest at a rate of 4% per annum. Holder may elect to convert into common stock at $0.75 per share. In 2015, the investor exchanged the notes from other accredited investors. 114,306 - 5% Original issue discount senior secured convertible promissory note dated March 5, 2014 issued to accredited investors, which matured September 5, 2015, and bore interest at a rate of 12% per annum. The fixed conversion price in effect was set at 90% of the 20-day VWAP of our common stock on February 5, 2014, or $0.30753 per share. In 2015, the holder of the note converted the debt and accrued interest into common stock. - 248,902 5% Original issue discount senior secured convertible promissory note dated May 5, 2014 issued to accredited investors, which matured November 5, 2015, and bore interest at a rate of 12% per annum. The fixed conversion price in effect was set at 90% of the 20-day VWAP of our common stock on February 5, 2014, or $0.30753 per share. In 2015, the holder of the note converted some of the debt and accrued interest into common stock. The remaining balance of the note and accrued interest was converted into common stock in March 2016. 96,491 482,456 5% Original issue discount senior secured convertible promissory note dated June 5, 2014 issued to accredited investors, which bore interest at a rate of 12% per annum. The fixed conversion price in effect was set at 90% of the 20-day VWAP of our common stock on February 5, 2014, or $0.30753 per share. In 2015, the holder of the note converted the debt and accrued interest into common stock. - 146,197 5% Original issue discount senior secured convertible promissory note dated July 1, 2014 issued to accredited investors, which bore interest at a rate of 12% per annum. The fixed conversion price in effect was set at 90% of the 20-day VWAP of our common stock on February 5, 2014, or $0.30753 per share. In 2015, the holder of the note converted the debt and accrued interest into common stock. - 578,947 5% Original issue discount senior secured convertible promissory note dated July 31, 2014 issued to accredited investors, which matures February 1, 2016 and bears interest at a rate of 12% per annum. The fixed conversion price in effect was set at 90% of the 20-day VWAP of our common stock on February 5, 2014, or $0.30753 per share. In 2015, the holder of the note converted the debt and accrued interest into common stock. - 2,894,739 Convertible promissory note dated April 7, 2015 issued to accredited investors, which matures October 7, 2016 and bears interest at a rate of 12% per annum. The conversion price in effect is $0.1303, subject to adjustment. 170,856 - Convertible promissory note dated May 13, 2015 issued to accredited investors, which matures November 13, 2016 and bears interest at a rate of 12% per annum. The conversion price in effect is $0.1211, subject to adjustment. 170,783 - Convertible promissory note dated December 14, 2015, issued to accredited investors, which maturing December 13, 2016, bearing interest at a rate of 12% per annum. The conversion price in effect is $0.1211, subject to adjustment. 214,927 - Total Debt 917,363 4,615,547 Less short-term portion 917,363 4,615,547 Long-term portion $ - $ - |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value Measurements Tables | |
Fair value hierarchy financial assets measured | The following table represents the fair value hierarchy for those financial assets measured at fair value on a recurring basis: Fair Value at December 31, Fair Value Measurement Using 2015 Level 1 Level 2 Level 3 Derivative liability - Conversion Feature $ 743,400 - - $ 743,400 $ 743,400 - - $ 743,400 Fair Value at December 31, Fair Value Measurement Using 2014 Level 1 Level 2 Level 3 Derivative liability - Conversion Feature $ 1,253,000 - - $ 1,253,000 $ 1,253,000 - - $ 1,253,000 |
Liabilities measured at fair value on a recurring basis using significant unobservable inputs | Liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3): Balance at December 31, 2014 $ 1,253,000 Change in fair market value of Conversion Feature (1,800,100 ) Issuance of equity instruments with debt greater than debt carrying amount 561,000 Derivative debt converted into equity (1,168,500 ) Issuance of equity instruments with derivatives 1,898,000 Balance at December 31, 2015 $ 743,400 |
TAX EXPENSE (Tables)
TAX EXPENSE (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Tax Expense Tables | |
Schedule of expense (benefit) for income taxes | The expense (benefit) for income taxes consists of the following: December 31, 2015 December 31, 2014 Current: Federal $ - $ - State - - - - Deferred: Federal 44,000 - State - - Total $ 44,000 $ - |
Schedule of effective tax rate and the statutory tax rate | The reconciliation between the Company's effective tax rate and the statutory tax rate is as follows: December 31, 2015 December 31, 2014 Expected Income tax expense (benefit) at statutory rate net $ (3,694,000 ) $ (8,940,000 ) Nondeductible items 368,000 2,173,000 Warrants expense 1,196,000 2,216,000 Derivatives expense (545,000 ) 1,274,000 Net operating losses 2,667,000 3,227,000 Other 52,000 50,000 Reported income tax expense (benefit) $ 44,000 $ - Effective tax rate -0.49% 0.00 % |
Deferred tax assets and liabilities | The components of deferred tax assets and liabilities are as follows: December 31, 2015 December 31, 2014 Deferred income tax assets: Allowance for bad debt $ 74,000 $ 21,000 Warrants expense 3,412,000 2,216,000 Derivatives expense 729,000 1,274,000 Net operating losses 7,029,000 3,227,000 11,244,000 6,738,000 Deferred income tax liabilities: Depreciation (44,000 ) - Total 11,200,000 6,738,000 Valuation allowance (11,244,000 ) (6,738,000 ) Net deferred tax assets $ (44,000 ) $ - |
WARRANTS (Tables)
WARRANTS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Warrants Tables | |
Warrants outstanding | The Company has the following shares of common stock reserved for exercise of the warrants outstanding as of December 31, 2015: December 31, 2015 Weighted Average Exercise Shares Price Warrants outstanding – beginning of year 20,709,845 $ 0.23 Warrants exercised - 0.00 Warrants granted 17,856,563 0.20 Warrants expired (6,140,400 ) (0.33 ) Warrants outstanding – end of period 32,426,008 $ 0.18 |
Weighted exercise price and weighted fair value of the warrants granted | The weighted exercise price and weighted fair value of the warrants granted by us as of December 31, 2015, are as follows: December 31, 2015 Weighted Average Weighted Exercise Average Price Fair Value Weighted average of warrants granted during the year whose exercise price exceeded fair market value at the date of grant $ 0.20 $ 0.20 |
Summarizes information about fixed-price warrants outstanding | The following table summarizes information about fixed-price warrants outstanding: Number Average Range of Outstanding at Remaining Weighted Exercise December 31, Contractual Average Prices 2015 Life Exercise Price $ 0.46 150,000 1 Months $ 0.46 $ 0.85 40,000 4 Months $ 0.85 $ 0.40 333,333 8 Months $ 0.40 $ 0.33 439,637 13 Months $ 0.33 $ 0.16 750,000 15 Months $ 0.16 $ 0.21 14,946,119 30 Months $ 0.21 $ 0.30 5,789,473 31 Months $ 0.30 $ 0.06 7,067,002 34 Months $ 0.06 $ 0.16 1,118,068 38 Months $ 0.16 $ 0.13 863,392 40 Months $ 0.13 $ 0.12 928,984 41 Months $ 0.12 32,426,008 |
OPERATING LEASE COMMITMENTS (Ta
OPERATING LEASE COMMITMENTS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Operating Lease Commitments Tables | |
Future minimum lease payments | Future minimum lease payments under non-cancelable operating leases having an initial or remaining term of more than one year are as follows: Scheduled Year Ending December 31: Payments 2016 $ 541,656 2017 487,518 2018 478,587 2019 342,336 2020 256,173 2021 and thereafter 2,021,484 Total minimum rental payments $ 4,127,754 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Segment Information Tables | |
Summarized financial information | Summarized financial information concerning the Company's reportable segments is shown in the following tables. Total asset amounts at December 31, 2015 and 2014 exclude intercompany receivable balances eliminated in consolidation. 12 Months Ended December 31, 2015 Hydroponic Cannabis Eliminations Produce Products and Other Total Total Revenues $ 8,633,538 $ 1,207,424 $ 134,384 $ 9,975,346 Cost of Goods Sold 7,771,039 1,078,852 108,584 8,958,475 862,499 128,572 25,800 1,016,871 Selling, general and administrative expenses 1,910,375 763,728 7,159,543 9,833,646 Loss from operations (1,047,876 ) (635,156 ) (7,133,743 ) (8,816,775 ) Other Income (Expenses) Amortization of debt discount - - (696,180 ) (696,180 ) Loss on extinguishment of debt - - (619,444 ) (619,444 ) Loss from derivatives issued with debt greater than debt carrying value - - (561,000 ) (561,000 ) Gain (Loss) on fair market valuation of derivatives - - 1,800,100 1,800,100 Interest Income (Expense) - - (469,576 ) (469,576 ) Total Other Income (Expense) - - (546,100 ) (546,100 ) Loss before Provision of Income Taxes $ (1,047,876 ) $ (635,156 ) $ (7,679,843 ) $ (9,362,875 ) Total assets at December 31, 2015 $ 5,383,659 $ 1,671,966 $ 2,109,414 $ 9,165,039 12 Months Ended December 31, 2014 Hydroponic Cannabis Eliminations Produce Products and Other Total Total Revenues $ 6,627,109 $ - $ 467,161 $ 7,094,270 Cost of Goods Sold 6,667,967 - 273,311 6,941,278 (40,858 ) - 193,850 152,992 Selling, general and administrative expenses 1,506,684 1,115,577 15,718,986 18,341,247 Loss from operations (1,547,542 ) (1,115,577 ) (15,525,136 ) (18,188,255 ) Other Income (Expenses) Loss from derivatives issued with debt greater than debt carrying value - - (4,808,000 ) (4,808,000 ) Gain (Loss) on fair market valuation of derivatives - - 1,912,037 1,912,037 Interest Income (Expense) 2,232 - (1,098,556 ) (1,096,324 ) Total Other Income (Expense) 2,232 - (3,994,519 ) (3,992,287 ) Loss before Provision of Income Taxes $ (1,545,310 ) $ (1,115,577 ) $ (19,519,655 ) $ (22,180,542 ) Total assets at December 31, 2014 $ 5,956,861 $ 858,180 $ 904,185 $ 7,719,226 |
SUMMARY OF SIGNIFICANT ACCOUN35
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Allowance for account receivable | $ 184,642 | $ 49,168 |
Minimum [Member] | ||
Estimated useful lives | 3 years | |
Maximum [Member] | ||
Estimated useful lives | 32 years |
GOING CONCERN (Details Narrativ
GOING CONCERN (Details Narrative) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Going Concern Details Narrative | ||
Accumulated Deficit | $ (45,952,109) | $ (36,726,529) |
SHARE EXCHANGE (Details)
SHARE EXCHANGE (Details) | Dec. 31, 2015USD ($) |
Share Exchange Details | |
Cash | $ 100 |
Intangible assets, customer list | 212,400 |
Fair value acquired | $ 212,500 |
SHARE EXCHANGE (Details Narrati
SHARE EXCHANGE (Details Narrative) | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Share Exchange Details Narrative | |
Amortization expense | $ 42,480 |
Intangible assets with estimated useful lives | 5 years |
INVENTORY (Details)
INVENTORY (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Inventory Tables | ||
Raw Materials | $ 277,340 | $ 479,682 |
Work-In-Progress | 542,530 | $ 190,498 |
Finished Goods | 129,578 | |
Total | $ 949,448 | $ 670,180 |
PROPERTY, EQUIPMENT AND LEASE40
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Property Equipment And Leasehold Improvements Details | ||
Land | $ 1,454,124 | |
Furniture | 70,786 | $ 53,790 |
Equipment | 2,322,444 | 2,367,605 |
Leasehold improvements | 3,893,330 | 3,468,243 |
Subtotal | 7,740,684 | 5,889,638 |
Less accumulated depreciation | (1,045,709) | (442,895) |
Total | $ 6,694,975 | $ 5,446,743 |
PROPERTY, EQUIPMENT AND LEASE41
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Property Equipment And Leasehold Improvements Details Narrative | ||
Depreciation expense | $ 602,814 | $ 392,883 |
ACCOUNTS PAYABLE AND ACCRUED 42
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Accounts Payable And Accrued Expenses Details | ||
Accounts payable | $ 1,015,994 | $ 240,204 |
Accrued interest | $ 103,465 | 270,918 |
Accrued payroll taxes | 62,599 | |
Accounts payable and accrued expenses | $ 1,119,459 | $ 573,721 |
NOTE PAYABLE (Details)
NOTE PAYABLE (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Total Debt | $ 917,363 | $ 4,615,547 |
Less short-term portion | $ 917,363 | $ 4,615,547 |
Long-term portion | ||
Unsecured Promissory Demand Note [Member] | ||
Total Debt | $ 5,000 | |
Promissory Demand Note [Member] | ||
Total Debt | $ 150,000 | 150,000 |
Unsecured Promissory Demand Note One [Member] | ||
Total Debt | $ 109,306 | |
Unsecured Promissory Demand Note Two [Member] | ||
Total Debt | $ 114,306 | |
Original issue discount senior secured convertible promissory note [Member] | ||
Total Debt | $ 248,902 | |
Original issue discount senior secured convertible promissory note One [Member] | ||
Total Debt | $ 96,491 | 482,456 |
Original issue discount senior secured convertible promissory note Two [Member] | ||
Total Debt | 146,197 | |
Original issue discount senior secured convertible promissory note Three [Member] | ||
Total Debt | 578,947 | |
Original issue discount senior secured convertible promissory note Four [Member] | ||
Total Debt | $ 2,894,739 | |
Convertible promissory note [Member] | ||
Total Debt | $ 170,856 | |
Convertible promissory note one [Member] | ||
Total Debt | 170,783 | |
Convertible promissory note two [Member] | ||
Total Debt | $ 214,927 |
NOTE PAYABLE (Details Narrative
NOTE PAYABLE (Details Narrative) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Note Payable Details Narrative | ||
Total Debt | $ 917,363 | $ 4,615,547 |
Unamortized debt discount | 693,435 | $ 0 |
Accrued interest | $ 103,465 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Derivative liability - Conversion Feature | $ 743,400 | $ 1,253,000 |
Derivative liability | $ 743,400 | $ 1,253,000 |
Fair Value Measurement Using, Level 1 [Member] | ||
Derivative liability - Conversion Feature | ||
Derivative liability | ||
Fair Value Measurement Using, Level 2 [Member] | ||
Derivative liability - Conversion Feature | ||
Derivative liability | ||
Fair Value Measurement Using, Level 3 [Member] | ||
Derivative liability - Conversion Feature | $ 743,400 | $ 1,253,000 |
Derivative liability | $ 743,400 | $ 1,253,000 |
FAIR VALUE MEASUREMENTS (Deta46
FAIR VALUE MEASUREMENTS (Details 1) | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Fair Value Measurements Details 1 | |
Liabilities measured at fair value Beginning Balance | $ 1,253,000 |
Change in fair market value of Conversion Feature | (1,800,100) |
Issuance of equity instruments with debt greater than debt carrying amount | 561,000 |
Derivative debt converted into equity | (1,168,500) |
Issuance of equity instruments with derivatives | 1,898,000 |
Liabilities measured at fair value Ending Balance | $ 743,400 |
TAX EXPENSE (Details)
TAX EXPENSE (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Current: | ||
Federal | ||
State | ||
Total | ||
Deferred: | ||
Federal | $ 44,000 | |
State | ||
Total | $ 44,000 |
TAX EXPENSE (Details 1)
TAX EXPENSE (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Tax Expense Details 1 | ||
Expected Income tax expense (benefit) at statutory rate net | $ (3,694,000) | $ (8,940,000) |
Nondeductible items | 368,000 | 2,173,000 |
Warrants expense | 1,196,000 | 2,216,000 |
Derivatives expense | (545,000) | 1,274,000 |
Net operating losses | 2,667,000 | 3,227,000 |
Other | 52,000 | $ 50,000 |
Reported income tax expense (benefit) | $ 44,000 | |
Effective tax rate | (0.49%) | 0.00% |
TAX EXPENSE (Details 2)
TAX EXPENSE (Details 2) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Deferred income tax assets: | ||
Allowance for bad debt | $ 74,000 | $ 21,000 |
Warrants expense | 3,412,000 | 2,216,000 |
Derivatives expense | 729,000 | 1,274,000 |
Net operating losses | 7,029,000 | 3,227,000 |
Total | 11,244,000 | $ 6,738,000 |
Deferred income tax liabilities: | ||
Depreciation | (44,000) | |
Total | 11,200,000 | $ 6,738,000 |
Valuation allowance | (11,244,000) | $ (6,738,000) |
Net deferred tax assets | $ (44,000) |
TAX EXPENSE (Details Nattative)
TAX EXPENSE (Details Nattative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Tax Expense Details Nattative | ||
Net operating loss carryforwards | $ 16,250,000 | $ 12,276,000 |
Net operating loss carryforwards expiring from | 2,034 |
CAPITAL STOCK (Details Narrativ
CAPITAL STOCK (Details Narrative) - $ / shares | Dec. 31, 2015 | Dec. 31, 2014 |
Preferred stock, Par value | $ 0.001 | $ 0.001 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, Authorized | 350,000,000 | 350,000,000 |
Common stock, Issued | 303,023,744 | 197,532,892 |
Common stock, Outstanding | 303,023,744 | 197,532,892 |
Convertible Series A Preferred Stock | ||
Preferred stock, Par value | $ 0.001 | $ 0.001 |
Preferred stock, Authorized | 100 | 100 |
Convertible Series B Preferred Stock | ||
Preferred stock, Par value | $ 0.001 | $ 0.001 |
Preferred stock, Authorized | 24,999,900 | 24,999,900 |
Preferred stock, Outstanding | 16,300,000 | 15,500,000 |
WARRANTS (Details)
WARRANTS (Details) | 12 Months Ended |
Dec. 31, 2015$ / sharesshares | |
Shares | |
Warrants outstanding - beginning of year | shares | 20,709,845 |
Warrants exercised | shares | |
Warrants granted | shares | 17,856,563 |
Warrants expired | shares | (6,140,400) |
Warrants outstanding - end of period | shares | 32,426,008 |
Weighted Average Exercise Price | |
Warrants outstanding - beginning of year | $ / shares | $ 0.23 |
Warrants exercised | $ / shares | 0 |
Warrants granted | $ / shares | 0.20 |
Warrants expired | $ / shares | (0.33) |
Warrants outstanding - end of period | $ / shares | $ 0.18 |
WARRANTS (Details 1)
WARRANTS (Details 1) | 12 Months Ended |
Dec. 31, 2015$ / shares | |
Warrants Details 1 | |
Weighted average exercise price of warrants granted | $ 0.20 |
Weighted average fair value of warrants granted | $ 0.20 |
WARRANTS (Details 2)
WARRANTS (Details 2) | 12 Months Ended |
Dec. 31, 2015USD ($)$ / shares | |
Number of warrants Outstanding | $ | $ 32,426,008 |
Exercise Price Range One [Member] | |
Range of Exercise Prices | $ 0.46 |
Number of warrants Outstanding | $ | $ 150,000 |
Average Remaining Contractual Life | 1 month |
Weighted Average Exercise Price | $ 0.46 |
Exercise Price Range Two [Member] | |
Range of Exercise Prices | $ 0.85 |
Number of warrants Outstanding | $ | $ 40,000 |
Average Remaining Contractual Life | 4 months |
Weighted Average Exercise Price | $ 0.85 |
Exercise Price Range Three [Member] | |
Range of Exercise Prices | $ 0.4 |
Number of warrants Outstanding | $ | $ 333,333 |
Average Remaining Contractual Life | 8 months |
Weighted Average Exercise Price | $ 0.4 |
Exercise Price Range Four [Member] | |
Range of Exercise Prices | $ 0.33 |
Number of warrants Outstanding | $ | $ 439,637 |
Average Remaining Contractual Life | 13 months |
Weighted Average Exercise Price | $ 0.33 |
Exercise Price Range Five [Member] | |
Range of Exercise Prices | $ 0.16 |
Number of warrants Outstanding | $ | $ 750,000 |
Average Remaining Contractual Life | 15 months |
Weighted Average Exercise Price | $ 0.16 |
Exercise Price Range Six [Member] | |
Range of Exercise Prices | $ 0.21 |
Number of warrants Outstanding | $ | $ 14,946,119 |
Average Remaining Contractual Life | 30 months |
Weighted Average Exercise Price | $ 0.21 |
Exercise Price Range Seven [Member] | |
Range of Exercise Prices | $ 0.3 |
Number of warrants Outstanding | $ | $ 5,789,473 |
Average Remaining Contractual Life | 31 months |
Weighted Average Exercise Price | $ 0.3 |
Exercise Price Range Eight [Member] | |
Range of Exercise Prices | $ 0.06 |
Number of warrants Outstanding | $ | $ 7,067,002 |
Average Remaining Contractual Life | 34 months |
Weighted Average Exercise Price | $ 0.06 |
Exercise Price Range Nine [Member] | |
Range of Exercise Prices | $ 0.16 |
Number of warrants Outstanding | $ | $ 1,118,068 |
Average Remaining Contractual Life | 38 months |
Weighted Average Exercise Price | $ 0.16 |
Exercise Price Range Ten [Member] | |
Range of Exercise Prices | $ 0.13 |
Number of warrants Outstanding | $ | $ 863,392 |
Average Remaining Contractual Life | 40 months |
Weighted Average Exercise Price | $ 0.13 |
Exercise Price Range Eleven [Member] | |
Range of Exercise Prices | $ 0.12 |
Number of warrants Outstanding | $ | $ 928,984 |
Average Remaining Contractual Life | 41 months |
Weighted Average Exercise Price | $ 0.12 |
OPERATING LEASE COMMITMENTS (De
OPERATING LEASE COMMITMENTS (Details) | Dec. 31, 2015USD ($) |
Year Ending December 31: | |
2,016 | $ 541,656 |
2,017 | 487,518 |
2,018 | 478,587 |
2,019 | 342,336 |
2,020 | 256,173 |
2021 and thereafter | 2,021,484 |
Total minimum rental payments | $ 4,127,754 |
OPERATING LEASE COMMITMENTS (56
OPERATING LEASE COMMITMENTS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Operating Lease Commitments Details Narrative | ||
Net rent expense | $ 501,449 | $ 100,400 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Total Revenues | $ 9,975,346 | $ 7,094,270 |
Cost of Goods Sold | 8,958,475 | 6,941,278 |
Total | 1,016,871 | 152,992 |
Selling, general and administrative expenses | 9,833,646 | 18,341,247 |
Loss from operations | (8,816,775) | $ (18,188,255) |
Other Income (Expenses) | ||
Amortization of debt discount | (696,180) | |
Loss from derivatives issued with debt greater than debt carrying value | (561,000) | $ (4,808,000) |
Gain (Loss) on fair market valuation of derivatives | (1,800,100) | (1,912,037) |
Interest Income (Expense) | (469,576) | (1,096,324) |
Total Other Income (Expense) | (546,100) | (3,992,287) |
Loss before Provision of Income Taxes | (9,362,875) | (22,180,542) |
Hydroponic Produce [Member] | ||
Total Revenues | 8,633,538 | 6,627,109 |
Cost of Goods Sold | 7,771,039 | 6,667,967 |
Total | 862,499 | (40,858) |
Selling, general and administrative expenses | 1,910,375 | 1,506,684 |
Loss from operations | $ (1,047,876) | $ (1,547,542) |
Other Income (Expenses) | ||
Amortization of debt discount | ||
Loss on extinguishment of debt | ||
Loss from derivatives issued with debt greater than debt carrying value | ||
Gain (Loss) on fair market valuation of derivatives | ||
Interest Income (Expense) | $ 2,232 | |
Total Other Income (Expense) | 2,232 | |
Loss before Provision of Income Taxes | $ (1,047,876) | (1,545,310) |
Total assets | 5,383,659 | $ 5,956,861 |
Cannabis Products [Member] | ||
Total Revenues | 1,207,424 | |
Cost of Goods Sold | 1,078,852 | |
Total | 128,572 | |
Selling, general and administrative expenses | 763,728 | $ 1,115,577 |
Loss from operations | $ (635,156) | $ (1,115,577) |
Other Income (Expenses) | ||
Amortization of debt discount | ||
Loss on extinguishment of debt | ||
Loss from derivatives issued with debt greater than debt carrying value | ||
Gain (Loss) on fair market valuation of derivatives | ||
Interest Income (Expense) | ||
Total Other Income (Expense) | ||
Loss before Provision of Income Taxes | $ (635,156) | $ (1,115,577) |
Total assets | 1,671,966 | 858,180 |
Eliminations And Other [Member] | ||
Total Revenues | 134,384 | 467,161 |
Cost of Goods Sold | 108,584 | 273,311 |
Total | 25,800 | 193,850 |
Selling, general and administrative expenses | 7,159,543 | 15,718,986 |
Loss from operations | (7,133,743) | (15,525,136) |
Other Income (Expenses) | ||
Amortization of debt discount | (696,180) | |
Loss on extinguishment of debt | (619,444) | |
Loss from derivatives issued with debt greater than debt carrying value | (561,000) | (4,808,000) |
Gain (Loss) on fair market valuation of derivatives | 1,800,100 | 1,912,037 |
Interest Income (Expense) | (469,576) | (1,098,556) |
Total Other Income (Expense) | (546,100) | (3,994,519) |
Loss before Provision of Income Taxes | (7,679,843) | (19,519,655) |
Total assets | 2,109,414 | 904,185 |
Segment Information [Member] | ||
Total Revenues | 9,975,346 | 7,094,270 |
Cost of Goods Sold | 8,958,475 | 6,941,278 |
Total | 1,016,871 | 152,992 |
Selling, general and administrative expenses | 9,833,646 | 18,341,247 |
Loss from operations | (8,816,775) | (18,188,255) |
Other Income (Expenses) | ||
Amortization of debt discount | (696,180) | |
Loss on extinguishment of debt | (619,444) | |
Loss from derivatives issued with debt greater than debt carrying value | (561,000) | (4,808,000) |
Gain (Loss) on fair market valuation of derivatives | 1,800,100 | 1,912,037 |
Interest Income (Expense) | (469,576) | (1,096,324) |
Total Other Income (Expense) | (546,100) | (3,992,287) |
Loss before Provision of Income Taxes | (9,362,875) | (22,180,542) |
Total assets | $ 9,165,039 | $ 7,719,226 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Related Party Transactions Details Narrative | |
Accounts receivable | $ 98,304 |
Raw materials purchased | $ 248,855 |