Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Dec. 11, 2019 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | MJ Holdings, Inc. | |
Entity Central Index Key | 0001456857 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2019 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2019 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Current Reporting Status | Yes | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 64,624,781 | |
Entity File Number | 000-55900 | |
Entity Interactive Data Current | Yes | |
Entity Incorporation State Country Code | NV |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Current assets | ||
Cash | $ 2,471,888 | $ 56,656 |
Accounts receivable | 2,590 | |
Inventory | 1,746,402 | 1,587,852 |
Prepaid expense | 695,812 | 481,216 |
Other receivable | 150,000 | |
Prepaid inventory | 150,524 | 337,560 |
Total current assets | 5,217,216 | 2,463,284 |
Property and equipment, net | 4,471,788 | 2,628,951 |
Intangible assets | 300,000 | 300,000 |
Marketable securities - available for sale | 150,000 | 150,000 |
Deposits | 517,433 | 138,634 |
Right of use asset | 1,336,574 | |
Total assets | 11,993,011 | 5,680,869 |
Current liabilities | ||
Accounts payable and accrued expenses | 749,684 | 619,202 |
Customer deposit | 386,416 | 386,416 |
Short term convertible note payable, related party | 250,000 | |
Current portion of long-term notes payable | 122,740 | 312,905 |
Short-term notes payable | 150,000 | |
Operating lease obligation, short term | 158,121 | |
Deferred revenue | 3,250 | |
Total current liabilities | 1,820,211 | 1,318,523 |
Non-current liabilities | ||
Long-term notes payable, net of discount, net of current portion | 1,967,712 | 1,036,101 |
Operating lease obligation, net of current portion | 1,364,075 | |
Deferred rent | 204,026 | |
Total non-current liabilities | 3,331,787 | 1,240,127 |
Total liabilities | 5,151,998 | 2,558,650 |
Stockholders' equity | ||
Preferred stock, $0.001 par value, 5,000,000 shares authorized 2,500 shares authorized, 0 shares issued and outstanding at June 30, 2019 and December 31, 2018 | ||
Common stock, $0.001 par value, 95,000,000 shares authorized, 52,367,049 and 70,894,146 shares issued, issuable, and outstanding at June 30, 2019 and December 31, 2018, respectively | 52,366 | 70,894 |
Additional paid-in capital | 11,681,301 | 10,921,774 |
Subscription receivable | 5,205,000 | |
Accumulated deficit | (10,091,318) | (7,870,449) |
Total MJ Holdings, Inc. stockholders' equity | 6,847,349 | 3,122,219 |
Non-controlling interest | (6,336) | |
Total stockholders' equity | 6,841,013 | 3,122,219 |
Total liabilities and stockholders' equity | $ 11,993,011 | $ 5,680,869 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 95,000,000 | 95,000,000 |
Common stock, shares issued | 52,367,049 | 70,894,146 |
Common stock, shares outstanding | 52,367,049 | 70,894,146 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Statement [Abstract] | ||||
Revenue, net | $ 198,842 | $ 779,070 | ||
Operating expenses | ||||
Direct costs of revenue | 23,488 | 539,495 | ||
General and administrative | 1,621,761 | 419,233 | 2,241,426 | 610,998 |
Depreciation | 61,075 | 153,357 | ||
Marketing and selling | 35,078 | 174,741 | (3,842) | 184,256 |
Total operating expenses | 1,741,402 | 593,974 | 2,930,436 | 795,254 |
Operating loss | (1,542,560) | (593,974) | (2,151,366) | (795,254) |
Other income (expense) | ||||
Interest expense | (38,816) | (161) | (76,510) | (365) |
Interest income | 659 | 671 | ||
Total other income (expense) | (38,157) | (161) | (75,839) | (365) |
Provision for income taxes | ||||
Net loss before non-controlling interest | (1,580,717) | (593,813) | (2,227,205) | (794,889) |
Loss attributable to non-controlling interest | 6,336 | 6,336 | ||
Net loss attributable to common stockholders | $ (1,574,381) | $ (593,813) | $ (2,220,869) | $ (794,889) |
Net loss attributable to common stockholders per share - basic and diluted | $ (0.03) | $ (0.01) | $ (0.04) | $ (0.01) |
Weighted average number of shares outstanding - basic and diluted | 51,274,448 | 63,159,497 | 56,948,376 | 63,071,079 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Cash Flows from Operating Activities | ||
Net loss | $ (2,227,205) | $ (794,889) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Amortization of right to use asset | 64,897 | |
Amortization of deferred rent | (7,150) | 105,315 |
Common stock and options issued for services | 15,999 | 4,836 |
Depreciation | 153,357 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (1,949) | |
Interest receivable | (641) | |
Inventory | (158,550) | |
Prepaid expenses and prepaid inventory | (27,560) | (629,663) |
Deposits | (378,799) | 3,750 |
Accounts payable and accrued liabilities | 110,482 | (66,132) |
Customer deposits | 386,416 | |
Deferred revenue | 3,250 | |
Operating lease liability | (76,151) | |
Net cash used in operating activities | (2,530,020) | (990,367) |
Cash Flows from Investing Activities | ||
Purchases of property and equipment | (796,194) | (360,701) |
Issuance of note receivable | (150,000) | |
Net cash used in investing activities | (946,194) | (360,701) |
Financing activities | ||
Proceeds from notes payable | 201,000 | |
Repayment of notes payable | (209,554) | |
Proceeds from the issuance of common stock | 695,000 | 471,501 |
Proceeds from subscription payable | 5,205,000 | 200,000 |
Payment of debt issuance costs | ||
Repayment of convertible note due to related party | (900,000) | |
Net cash provided by (used in) financing activities | 5,891,446 | (228,499) |
Net change in cash | 2,415,232 | (1,579,567) |
Cash, beginning of period | 56,656 | 2,513,863 |
Cash, end of period | 2,471,888 | 934,296 |
Supplemental disclosure of cash flow information: | ||
Interest paid | ||
Income taxes paid | ||
Non-cash investing activities: | ||
Return and cancellation of common stock | 20,000 | |
Right to use asset obtained in exchange for operating lease obligation | 1,598,347 | |
Common stock and debt issued for asset acquisition | 300,000 | |
Financing purchases of property and equipment | $ 900,000 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) | Preferred Stock | Common Stock Issuable | Common Stock | Additional paid in Capital | Subscription Payable | Subscription Receivable | Noncontrolling Interest | Accumulated Deficit | Total |
Balance at Dec. 31, 2017 | $ 400,000 | $ 62,675 | $ 1,704,764 | $ (362,521) | $ 1,804,918 | ||||
Balance,Shares at Dec. 31, 2017 | 62,675,407 | ||||||||
Issuance of common stock for services | $ 1 | 1,085 | 1,086 | ||||||
Issuance of common stock for services,Shares | 1,448 | ||||||||
Issuance of common stock for stock subscriptions payable | $ 100,000 | $ 383 | 286,118 | 386,501 | |||||
Issuance of common stock for stock subscriptions payable, shares | 382,001 | ||||||||
Net loss | (201,075) | (201,075) | |||||||
Balance at Mar. 31, 2018 | $ 500,000 | $ 63,059 | 1,991,967 | (563,596) | 1,991,430 | ||||
Balance,Shares at Mar. 31, 2018 | 63,058,856 | ||||||||
Issuance of common stock for stock subscriptions payable | $ 100,000 | $ 418 | 313,332 | (125,000) | 288,750 | ||||
Issuance of common stock for stock subscriptions payable, shares | 418,332 | ||||||||
Net loss | (593,814) | (593,814) | |||||||
Balance at Jun. 30, 2018 | $ 600,000 | $ 63,477 | 2,305,299 | $ (125,000) | (1,157,410) | 1,686,366 | |||
Balance,Shares at Jun. 30, 2018 | 63,477,188 | ||||||||
Balance at Dec. 31, 2018 | $ 70,894 | 10,921,774 | (7,870,449) | 3,122,219 | |||||
Balance,Shares at Dec. 31, 2018 | 70,894,146 | ||||||||
Issuance of common stock for services | $ 16 | 15,984 | 16,000 | ||||||
Issuance of common stock for services,Shares | 16,236 | ||||||||
Issuance of common stock for stock subscriptions payable | 1,350,000 | 1,350,000 | |||||||
Issuance of common stock for stock subscriptions payable, shares | |||||||||
Return of common stock for cash | $ (20,000) | (20,000) | |||||||
Return of common stock for cash, shares | (20,000,000) | ||||||||
Net loss | (646,488) | (646,488) | |||||||
Balance at Mar. 31, 2019 | $ 50,910 | 10,937,758 | 1,350,000 | (8,516,937) | 3,821,731 | ||||
Balance,Shares at Mar. 31, 2019 | 50,910,382 | ||||||||
Balance at Dec. 31, 2018 | $ 70,894 | 10,921,774 | (7,870,449) | 3,122,219 | |||||
Balance,Shares at Dec. 31, 2018 | 70,894,146 | ||||||||
Issuance of common stock for services | $ 16,000 | $ 16 | |||||||
Issuance of common stock for services,Shares | 16,236 | 508,781 | |||||||
Issuance of common stock for stock subscriptions payable | 5,205,000 | $ 5,205,000 | |||||||
Return of common stock for cash | $ 20,000 | (20,000) | |||||||
Return of common stock for cash, shares | 20,000,000 | ||||||||
Balance at Jun. 30, 2019 | $ 52,366 | 11,681,301 | 5,205,000 | (6,336) | (10,091,318) | 6,841,013 | |||
Balance,Shares at Jun. 30, 2019 | 52,367,049 | ||||||||
Balance at Mar. 31, 2019 | $ 50,910 | 10,937,758 | 1,350,000 | (8,516,937) | 3,821,731 | ||||
Balance,Shares at Mar. 31, 2019 | 50,910,382 | ||||||||
Issuance of common stock for purchase of property and equipment | $ 66 | 49,933 | 49,999 | ||||||
Issuance of common stock for purchase of property and equipment, shares | 66,667 | ||||||||
Common stock for cash and subscriptions | $ 1,390 | 693,610 | 3,855,000 | 4,550,000 | |||||
Common stock for cash and subscriptions, shares | 1,390,000 | ||||||||
Net loss | (6,336) | (1,574,381) | (1,580,717) | ||||||
Balance at Jun. 30, 2019 | $ 52,366 | $ 11,681,301 | $ 5,205,000 | $ (6,336) | $ (10,091,318) | $ 6,841,013 | |||
Balance,Shares at Jun. 30, 2019 | 52,367,049 |
Nature of the Business
Nature of the Business | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of the Business | Note 1 — Nature of the Business MJ Holdings Inc. (OTC Pink: MJNE. the "Company", "we", "us") is a publicly-traded, cannabis holding company providing cultivation management, licensing support, production management and asset and infrastructure development – currently concentrating on the Las Vegas market. It is our intention to grow our business and provide a 360-degree spectrum of infrastructure (including: cultivation, production management, dispensaries and consulting services) through: the acquisition of existing companies; joint ventures with existing companies possessing complementary expertise, and/or through the development of new opportunities. (See Note 14 - Subsequent Events for highlights of major events subsequent to June 30, 2019). |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Note 2 — Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). Accordingly, these consolidated financial statements do not include all of the information and footnotes required for audited annual financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to make consolidated financial statements not misleading have been included. The balance sheet at December 31, 2018, has been derived from the Company's audited consolidated financial statements as of that date. The unaudited condensed consolidated financial statements included herein should be read in conjunction with the audited consolidated financial statements and the notes thereto that are included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018, that was filed with the SEC on October 16, 2019. The results of operations for the three and six months ended June 30, 2019, are not necessarily indicative of the results to be expected for the full year or any future periods. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. The significant accounting policies followed by the Company for interim reporting are consistent with those included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018. There were no material changes to our significant accounting policies during the interim period ended June 30, 2019. |
Going Concern
Going Concern | 6 Months Ended |
Jun. 30, 2019 | |
Going Concern [Abstract] | |
Going Concern | Note 3 — Going Concern The Company has recurring net losses, which have resulted in an accumulated deficit of $10,091,318 as of June 30, 2019. The Company incurred a net loss of $2,220,869 and negative cash flows from operations of $2,530,020 for the period ended June 30, 2019. These factors raise substantial doubt about the Company's ability to continue as a going concern for a period of one year from the issuance of the financial statements. The ability of the Company to continue as a going concern is dependent on the Company's ability to further implement its business plan, raise capital, and generate revenues. The Financial Statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. The Company's current capital resources include cash, and inventories. Historically, the Company has financed its operations principally through det and/or equity markets. |
Inventory
Inventory | 6 Months Ended |
Jun. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Inventory | Note 4 — Inventory At June 30, 2019, and December 31, 2018, inventory consisted of finished goods that amounted to $1,746,402. Inventories are valued at the lower of cost or net realizable value. We determine cost on the basis of the first in first out method. The Company periodically reviews inventories for obsolescence and any inventories identified as obsolete are reserved or written off. |
Prepayments, Customer Deposits
Prepayments, Customer Deposits and Deposits | 6 Months Ended |
Jun. 30, 2019 | |
Prepayments Customer Deposits and Deposits [Abstract] | |
Prepayments, Customer Deposits and Deposits | Note 5 — Prepayments, Customer Deposits and Deposits Prepaid Expenses In February 2018, the Company began discussions with an unrelated third-party regarding designing, purchasing, and reselling greenhouses. The Company provided expertise in constructing greenhouses, and the other party advised that it would enter into an agreement to design, procure, and operate greenhouses. In April 2018, the third party notified the Company and the purchasers of the greenhouses that it could not continue with the construction of the greenhouses because of unrelated hardships. As of June 30, 2019, the Company had received $386,416 in deposits from the purchasers, which were recorded as customer deposits on the balance sheet, and had paid $335,083 expenses related to the design, purchase and resale of the green houses, which expenses were recorded as prepaid expenses. Management Agreement In April of 2018, the Company entered into a management agreement with the holder of a State of Nevada cultivation license (the "Licensed Operator"), so that the Company can lawfully engage in the cultivation of marijuana for sale under the laws of the State of Nevada. The term of the agreement was for eight years, pursuant to which the Licensed Operator has engaged the Company to develop, manage and operate a licensed cultivation facility on three-acres of property owned by the Licensed Operator. In January of this year the Company terminated the existing management agreement and entered into a Cultivation and Sales Agreement, Consulting Agreement and Equipment Lease Agreement with the Licensed Operator (collectively the "Agreements"). Upon completion of the construction of the outdoor cultivation facility, at the Company's sole cost and expense, and receipt of the appropriate approvals from the local and state authorities, the Company began cultivating marijuana in August of 2018. Pursuant to the terms of the Agreement, the Company agreed to generate sales of at least $2,000,000 per year from product cultivated from the outdoor cultivation facility. The Licensed Operator may terminate the agreement, in accordance with the terms of the Agreements, if the Company does not generate at least $2,000,000 in annual revenues. The Company may cure a breach of this provision by paying 10% of the revenue shortfall to the Licensed Operator. Pursuant to the Agreements, the Licensed Operator will: (i) retain 15% of the net revenues generated from product cultivated from the outdoor cultivation facility and (ii) pay 85% of the net revenues to the Company. Upon execution of the initial management agreement, the Company paid $300,000 to the Licensed Operator as consideration for the opportunity to construct and manage the outdoor cultivation facility on the Licensed Operator's property. In exchange for the initial consideration, the Licensed Operator agreed not to retain 15% of the first $2 million of net revenues generated from the outdoor cultivation facility. In addition, once the outdoor facility began cultivating in August of 2018, the Company became obligated to pay the Licensed Operator $7,000 per month for compliance, security, and other administrative costs incurred by the Licensed Operator during the term of the Agreements. The Company recorded the $300,000 paid to the Licensed Operator as prepaid expenses. The balance of the prepaid expenses as of June 30, 2019 is $68,689. In order to develop and manage the three-acre outdoor facility, the Company, in March of 2018, entered into a management services agreement with a Nevada limited liability company (the "Manager") to provide operational oversight and cultivation management for the Company's three-acre outdoor cultivation facility. The term of the agreement was for three years. The Manager was entitled to receive compensation equal to twelve percent of the gross yield sales from each harvest with six percent payable in the form of cash and six percent payable in the form of the Company's common stock. In May of 2019 the Company and the Manager agreed to terminate the existing management agreement. The Company agreed to pay to the Manager total compensation equaling $318,000 upon termination of the management agreement in the form of $159,000 in cash and shares of the Company's common stock with a value $159,000. Deposits As of June 30, 2019, the Company had a total of $517,433 on deposit. These consist of deposits on contractual obligations. |
Property and Equipment
Property and Equipment | 6 Months Ended |
Jun. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Note 6 — Property and Equipment Property and equipment at June 30, 2019 and December 31, 2018 consisted of the following: June 30, December 31, Leasehold Improvements $ 154,478 $ 17,535 Machinery and Equipment 1,044,496 919,782 Building and Land 3,100,000 1,500,000 Furniture and Fixtures 450,133 314,890 Total property and equipment 4,749,107 2,752,207 Less: Accumulated depreciation (277,319 ) (123,256 ) Property and equipment, net $ 4,471,788 $ 2,628,951 Depreciation expense for the six months ending June 30, 2019 and 2018 was $153,357 and $0, respectively. |
Intangible Assets
Intangible Assets | 6 Months Ended |
Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Note 7 — Intangible Assets In October 2016, Red Earth, LLC ("Red Earth") a subsidiary for the Company, entered into an Asset Purchase and Sale Agreement with the owner of a provisional Medical Marijuana Establishment Registration Certificate (the "Provisional Grow License") issued by the state of Nevada for the cultivation of medical marijuana for $300,000. To initiate the purchase and transfer the Provisional Grow License, the Company paid a $25,000 deposit to the seller in October 2016. In February 2017, an investor advanced the Company $350,000 to fund the purchase of the Provisional Grow License. In April 2018, the State of Nevada finalized and approved the transfer of the provisional cultivation license to Red Earth. In July 2018, we completed the first phase of construction on this facility and we received a City of Las Vegas Conditional Business License (the "Conditional License") to operate a marijuana cultivation facility in a portion of our Western Avenue leasehold. In August of 2019, we entered into a membership interest purchase agreement to sell forty-nine (49%) percent of Red Earth to an unrelated third party (See Note 14- Subsequent Events for further description of the transaction). We expect to obtain final approvals towards perfecting the cultivation license from the State of Nevada and City of Las Vegas regulatory authorities by the end of the second quarter of 2020, but we can provide no assurances on the receipt and/or timing of the final approvals. As of the date of this filing we have not commenced operations pursuant to the terms and requirements of the Conditional License. |
Marketable Securities - Availab
Marketable Securities - Available for Sale | 6 Months Ended |
Jun. 30, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
Marketable Securities - Available for Sale | Note 8 — Marketable Securities – Available for Sale On August 13, 2018, the Company entered into a Stock Exchange Agreement with Healthier Choices Management Corp. (HCMC) to acquire 1,500,000,000 shares of Healthier Choices' common stock in exchange for 85,714 shares of Healthier Choices common stock. The value of the stock exchanged by each party on the date of exchange was $150,000. This represents a less than 5% ownership interest for each company in the others' Company; and, the shares issued are restricted. The Company recorded the 85,714 shares of HCMC common stock as an available for sale security and intends to mark the value to market each reporting period based on the current market value of its held shares in Healthier Choices. As of the transaction date, the price as quoted on the OTC Markets for Healthier Choices common stock was $0.0001 per share. |
Notes Payable
Notes Payable | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Notes Payable | Note 9 — Notes Payable Notes payable as of June 30, 2019 and December 31, 2018 consist of the following: June 30, December 31, Note payable bearing interest at 6.50%, originated November 1, 2018, due on October 31, 2023 originally $1,100,000 $ 1,092,936 $ 1,099,006 Note payable bearing interest at 5.0%, originated January 17, 2019, due on January 31, 2022 750,000 - Convertible note payable – related party bearing interest at 5.00%, originated October 17, 2018, due on October 16, 2019 250,000 250,000 Note payable bearing interest at 9.0%, originated January 17, 2019, due on January 16, 2020 150,000 - Note payable bearing interest at 6.5% originated April 1, 2019, due on March 31, 2022 originally $250,000 247,516 - Total notes payable $ 2,490,452 $ 1,349,006 Less: current portion (522,740 ) (312,905 ) Long-term notes payable $ 1,967,712 $ 1,036,101 On January 17, 2019, the Company executed a promissory note for $750,000 with FR Holdings LLC, a Wyoming limited liability company. The note pays interest of 5.0% per annum, payable in regular monthly installments of $3,125, due on or before the same day of each month beginning February 1, 2019 until January 31, 2022 at which the entire principal and any then accrued interest thereon shall be due and payable. On February 14, 2019, the Company executed a short-term promissory note for $100,000 with Stran & Company. The note bears no interest during the first 90 days. Thereafter, interest shall accrue on the unpaid principal balance at a fixed rate of 0.5% per month. The note was paid in full on April 1, 2019. On February 01, 2019 per agreement the Company executed a short-term promissory note for $101,000 with Roll On, LLC, who is a related party. The note bears no interest. The balance as of March 31, 2019 is $85,000. The note was paid in full on April 1, 2019. On January 17, 2019 the Company executed a short-term promissory note for $150,000 with Let's Roll Holdings, LLC. The note bears an interest rate of 9.0% per annum and is due and payable in full plus accrued interest on January 16, 2020. On April 1, 2019 the Company executed a promissory note for $250,000 with John T. Jacobs and Teresa D. Jacobs. The note bears an interest rate of 6.5% per annum, payable in regular monthly installments of $2,178, due on or before the same day of each month beginning May 1, 2019 until March 31, 2020 at which time a principal reduction of $50,000 shall be due, the payments shall be re-amortized (15-year amortization). On or before March 31, 2021, a second principal reduction of $50,000 shall be due, the payments shall be re-amortized (15-year amortization). Payments shall continue to be paid until March 31, 2022, at which time the entire sum of principal and accrued interest shall be due and payable. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 10 — Commitments and Contingencies Operating Leases The Company leases a production / warehouse facility under a non-cancelable operating lease that expire in June 2027. Future minimal rental and lease commitments under non-cancelable operating leases with terms in excess of one year as of June 30, 2019, are as follows: Amount Fiscal year ending December 31: 2019 $ 230,640 2020 230,640 2021 230,640 2022 230,755 2023 230,986 Thereafter 812,328 Less payments made thru second quarter 2019 115,320 Total minimum lease payments $ 1,850,669 Rental expense is accounted for on the straight-line method. Rent expense, incurred pursuant to operating leases for the six months ended June 30, 2019 and 2018, was $209,967 and $105,316 respectively. Litigation From time to time, the Company may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. When the Company is aware of a claim or potential claim, it assesses the likelihood of any loss or exposure. If it is probable that a loss will result and the amount of the loss can be reasonably estimated, the Company will record a liability for the loss. I addition to the estimated loss, the liability includes probable and estimable legal cost associated with the claim or potential claim. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm the Company business. There is no pending litigation involving the Company at this time. |
Preferred Stock
Preferred Stock | 6 Months Ended |
Jun. 30, 2019 | |
Equity [Abstract] | |
Preferred Stock | Note 11 — Preferred Stock Preferred stock, par value $0.001, 5,000,000 shares authorized, 0 shares outstanding as of June 30, 2019. Series A convertible Preferred stock $1,000 stated value, 2,500 authorized, 0 shares outstanding as of June 30, 2019. |
Common Stock
Common Stock | 6 Months Ended |
Jun. 30, 2019 | |
Equity [Abstract] | |
Common Stock | Note 12 — Common Stock During the six months ended June 30, 2019, the Company issued 16,236 shares of Company's common stock in exchange for professional services valued at $16,000. During the six months ended June 30, 2019, the Company had received back from a shareholder 20,000,000 shares of Company's common stock in exchange for $20,000. During the six months ended June 30, 2019, the Company received cash proceeds related to stock subscriptions payable of $5,205,000. Subsequent to the period end, the Company will issue 10,410,000 shares of common stock in full satisfaction of the subscription payable. |
Warrants and Options
Warrants and Options | 6 Months Ended |
Jun. 30, 2019 | |
Warrants and Options [Abstract] | |
Warrants and Options | Note 13 — Warrants and Options Warrants In June of 2019, in conjunction with the Company's offering under Rule 506 of Regulation D of the Securities Act (the "Offering") the Company granted warrants to each participant in the Offering upon the following terms and conditions: a) each participant has the right to acquire additional shares of the Company's Common Stock equal to ten (10%) of the shares purchased in the offering (the "Warrants"); b) one-half of the Warrants granted to each participant have an exercise price of $0.65 and the other one-half have an exercise price of $1.00; c) the Warrants shall be exercisable between June 5, 2019, the date of grant and June 4, 2021 the date of expiration of the Warrants. Prior to the Reverse Merger, the Company had issued warrants to acquire 166,665 shares of common stock as compensation for consulting services. These warrants expire between July 2019 and October 2019 and have exercise prices in excess of $2.50 per share. A summary of the warrants issued, exercised and expired are below: Weighted Avg. Exercise Shares Price Balance at December 31, 2018 166,665 $ 5.88 Issued - - Exercised - - Expired - - Balance at March 31, 2019 166,665 $ 5.88 Issued 1,233,000 0.83 Exercised - - Expired - - Balance at June 30, 2019 1,399,665 $ 1.42 Stock Options In July 2018, the Company entered into a Corporate Advisory Agreement ("Advisory Agreement") with a New York City based consulting company (the "Consultant") to provide business management, corporate compliance and related services to the Company and its subsidiaries. The Advisory Agreement granted to the Consultant an option to acquire up to 10,000 additional shares of the Company's common stock at an exercise price of $1.20. The options have a term of three years. A summary of the options issued, exercised and expired are below: Weighted Avg. Exercise Shares Price Balance at December 31, 2018 10,000 $ 1.20 Issued - - Exercised - - Expired - - Balance at March 31, 2019 10,000 $ 1.20 Issued - - Exercised - - Expired - - Balance at June 30, 2019 10,000 $ 1.20 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 14 — Subsequent Events The following material events occurred subsequent to the quarter ended June 30, 2019: On July 15, 2019 our Board of Directors appointed Richard S. Groberg to be the President of the Company. Mr. Groberg replaces Paris Balaouras, who was interim President from January 1, 2019 until July 15, 2019. Mr. Balaouras will continue in his role as the Company's CEO and Chairman of the Board. Mr. Groberg shall initially serve a three-year term effective July 15, 2019 pursuant to a written employment agreement (the "RSG Employment Agreement") with an annual base compensation of $180,000, of which $5,000 per month shall be deferred until January 15, 2020 or such earlier date pursuant to the terms of the RSG Employment Agreement and then shall be payable in cash or shares of the Company's common stock (the "Stock"). The Employment Agreement provides for a restricted stock award of 400,000 shares of the Company's Stock to vest: 25% six months after the effective date of the Employment Agreement; 25% on the first anniversary after the effective date of the Employment Agreement, 25% on the second anniversary after the effective date of the Employment Agreement and 25% on the third anniversary after the effective date of the Employment Agreement. Effective August 1, 2019 we entered into an agreement to lease an approximately 17,000 sq. ft. commercial building in Pahrump, NV. The lease is for a term of ten years at an initial monthly rent of $10,000 per month with rent increases each August 1 st On August 28, 2019 we entered into a material definitive agreement with an Ohio limited liability company (the "Buyer") to sell forty-nine percent (49%) of the membership interests in the Company's wholly owned subsidiary Red Earth for $441,000. The membership interest purchase agreement (the "MIPA3") requires the Buyer to make an additional $3,559,000 payment into a execution fund (the "Fund") to be utilized for the improvement and build-out of the Company's Western Avenue leasehold in Las Vegas, Nevada. The payment was due within ten (10) business days of the receipt by Red Earth of a special use permit ("SUP") from the City of Las Vegas for our Western Avenue facility. The Company received notice on October 21, 2019 that the SUP was granted. As of the date of this filing the Buyer has established the Fund. The Buyer, in conjunction with the Company, will jointly manage and operate the facility upon completion. The MIPA3 also requires the Buyer to make a final payment to the Company of $1,000,000 between 90 and 180 days after issuance of the SUP. Additionally, the Buyer has a first refusal right to fund and build a 40,000 sq. ft. greenhouse facility at the Company's Amargosa Valley Farm the terms of which are to be negotiated in good faith upon the exercise of any rights granted to the Buyer in the MIPA3. The Company made the following issuances subsequent to June 30, 2019: Shares Fair Value Average Price per Share Common stock issued for services 508,781 $ 244,392 $ 0.48 Membership interest purchase in recreational, cultivation and production certificates 1,429,798 697,409 0.45 Common stock issued for stock subscriptions payable 12,033,823 5,734,420 0.48 Total 13,972,4021 $ 6,622,221 $ 0.47 The Company has evaluated subsequent events through the date the financial statements were issued and filed with the Securities and Exchange Commission. The Company has determined that there are no other such events that warrant disclosure or recognition in the financial statements, except as stated herein. |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | June 30, December 31, Leasehold Improvements $ 154,478 $ 17,535 Machinery and Equipment 1,044,496 919,782 Building and Land 3,100,000 1,500,000 Furniture and Fixtures 450,133 314,890 Total property and equipment 4,749,107 2,752,207 Less: Accumulated depreciation (277,319 ) (123,256 ) Property and equipment, net $ 4,471,788 $ 2,628,951 |
Notes Payable (Tables)
Notes Payable (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Notes Payable [Abstract] | |
Schedule of notes payable | June 30, December 31, Note payable bearing interest at 6.50%, originated November 1, 2018, due on October 31, 2023 originally $1,100,000 $ 1,092,936 $ 1,099,006 Note payable bearing interest at 5.0%, originated January 17, 2019, due on January 31, 2022 750,000 - Convertible note payable – related party bearing interest at 5.00%, originated October 17, 2018, due on October 16, 2019 250,000 250,000 Note payable bearing interest at 9.0%, originated January 17, 2019, due on January 16, 2020 150,000 - Note payable bearing interest at 6.5% originated April 1, 2019, due on March 31, 2022 originally $250,000 247,516 - Total notes payable $ 2,490,452 $ 1,349,006 Less: current portion (522,740 ) (312,905 ) Long-term notes payable $ 1,967,712 $ 1,036,101 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum rental and lease commitments | Amount Fiscal year ending December 31: 2019 $ 230,640 2020 230,640 2021 230,640 2022 230,755 2023 230,986 Thereafter 812,328 Less payments made thru second quarter 2019 115,320 Total minimum lease payments $ 1,850,669 |
Warrants and Options (Tables)
Warrants and Options (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Warrants and Options [Abstract] | |
Schedule of warrants issued, exercised and expired | Weighted Avg. Exercise Shares Price Balance at December 31, 2018 166,665 $ 5.88 Issued - - Exercised - - Expired - - Balance at March 31, 2019 166,665 $ 5.88 Issued 1,233,000 0.83 Exercised - - Expired - - Balance at June 30, 2019 1,399,665 $ 1.42 |
Schedule of stock option activity | Weighted Avg. Exercise Shares Price Balance at December 31, 2018 10,000 $ 1.20 Issued - - Exercised - - Expired - - Balance at March 31, 2019 10,000 $ 1.20 Issued - - Exercised - - Expired - - Balance at June 30, 2019 10,000 $ 1.20 |
Subsequent Events (Tables)
Subsequent Events (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Subsequent Events [Abstract] | |
Schedule of types of issuance shares | Shares Fair Value Average Price per Share Common stock issued for services 508,781 $ 244,392 $ 0.48 Membership interest purchase in recreational, cultivation and production certificates 1,429,798 697,409 0.45 Common stock issued for stock subscriptions payable 12,033,823 5,734,420 0.48 Total 13,972,4021 $ 6,622,221 $ 0.47 |
Going Concern (Details)
Going Concern (Details) - USD ($) | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Going Concern (Textual) | |||
Accumulated deficit | $ (10,091,318) | $ (7,870,449) | |
Net Loss | (2,227,205) | $ (794,889) | |
Operating cash flow | $ (2,530,020) | $ (990,367) |
Inventory (Details)
Inventory (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Inventory (Textual) | ||
Inventory | $ 1,746,402 | $ 1,587,852 |
Prepayments, Customer Deposit_2
Prepayments, Customer Deposits and Deposits (Details) | 1 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019USD ($)a | May 31, 2019 | Aug. 31, 2018 | Jun. 30, 2019USD ($)a | Dec. 31, 2018USD ($) | Apr. 30, 2018USD ($) | |
Prepayments, Customer Deposits and Deposits (Textual) | ||||||
Customer deposits | $ 386,416 | $ 386,416 | $ 386,416 | |||
Prepaid expenses | $ 335,083 | $ 335,083 | ||||
Term of agreement | 8 years | |||||
Area of land | a | 3 | 3 | ||||
Purchased goods from the seller | $ 2,000,000 | |||||
Condition of operator terminate sales agreement, description | The Licensed Operator may terminate the agreement, in accordance with the terms of the Agreements, if the Company does not generate at least $2,000,000 in annual revenues. The Company may cure a breach of this provision by paying 10% of the revenue shortfall to the Licensed Operator. Pursuant to the Agreements, the Licensed Operator will: (i) retain 15% of the net revenues generated from product cultivated from the outdoor cultivation facility and (ii) pay 85% of the net revenues to the Company. Upon execution of the initial management agreement, the Company paid $300,000 to the Licensed Operator as consideration for the opportunity to construct and manage the outdoor cultivation facility on the Licensed Operator’s property. | |||||
Amount to paid from revenue, description | In exchange for the initial consideration, the Licensed Operator agreed not to retain 15% of the first $2 million of net revenues generated from the outdoor cultivation facility. In addition, once the outdoor facility began cultivating in August of 2018, the Company became obligated to pay the Licensed Operator $7,000 per month for compliance, security, and other administrative costs incurred by the Licensed Operator during the term of the Agreements. The Company recorded the $300,000 paid to the Licensed Operator as prepaid expenses. The balance of the prepaid expenses as of June 30, 2019 is $68,689. | |||||
Deposit | $ 517,433 | $ 517,433 | ||||
Management Services Agreement [Member] | ||||||
Prepayments, Customer Deposits and Deposits (Textual) | ||||||
Term of agreement | 3 years | |||||
Area of land | a | 3 | 3 | ||||
Bonus compensation to manager, description | The Manager was entitled to receive compensation equal to twelve percent of the gross yield sales from each harvest with six percent payable in the form of cash and six percent payable in the form of the Company's common stock. | |||||
Terminate the existing management agreement, description | The Company and the Manager agreed to terminate the existing management agreement. The Company agreed to pay to the Manager total compensation equaling $318,000 upon termination of the management agreement in the form of $159,000 in cash and shares of the Company's common stock with a value $159,000. |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Summary of Property, plant and equipment | ||
Total Property and Equipment, Net | $ 4,471,788 | $ 2,628,951 |
Property, Plant and Equipment [Member] | ||
Summary of Property, plant and equipment | ||
Total | 4,749,107 | 2,752,207 |
Less: Accumulated depreciation | (277,319) | (123,256) |
Total Property and Equipment, Net | 4,471,788 | 2,628,951 |
Property, Plant and Equipment [Member] | Leasehold Improvements [Member] | ||
Summary of Property, plant and equipment | ||
Total | 154,478 | 17,535 |
Property, Plant and Equipment [Member] | Machinery and Equipment [Member] | ||
Summary of Property, plant and equipment | ||
Total | 1,044,496 | 919,782 |
Property, Plant and Equipment [Member] | Building and Land [Member] | ||
Summary of Property, plant and equipment | ||
Total | 3,100,000 | 1,500,000 |
Property, Plant and Equipment [Member] | Furniture and Fixtures [Member] | ||
Summary of Property, plant and equipment | ||
Total | $ 450,133 | $ 314,890 |
Property and Equipment (Detai_2
Property and Equipment (Details Textual) - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Property and Equipment (Textual) | ||
Depreciation expenses | $ 153,357 |
Intangible Assets (Details)
Intangible Assets (Details) - Asset Purchase and Sale Agreement [Member] - USD ($) | 1 Months Ended | ||
Aug. 31, 2019 | Feb. 28, 2017 | Oct. 31, 2016 | |
Intangible Assets (Textual) | |||
Agreement amount received from seller | $ 300,000 | ||
Deposit to seller | $ 25,000 | ||
Advanced received from investor | $ 350,000 | ||
Membership agreement, description | We entered into a membership interest purchase agreement to sell forty-nine (49%) percent of Red Earth to an unrelated third party (See Note 14- Subsequent Events for further description of the transaction). We expect to obtain final approvals towards perfecting the cultivation license from the State of Nevada and City of Las Vegas regulatory authorities by the end of the second quarter of 2020, but we can provide no assurances on the receipt and/or timing of the final approvals. |
Marketable Securities - Avail_2
Marketable Securities - Available for Sale Securities (Details) - USD ($) | Aug. 13, 2018 | Jun. 30, 2019 | Dec. 31, 2018 |
Common stock per share | $ 0.001 | $ 0.001 | |
Stock Exchange Agreement [Member] | |||
Shares acquired | 1,500,000,000 | ||
Common stock in exchange, shares | 85,714 | 85,714 | |
Common stock in exchange, value | $ 150,000 | ||
Common stock per share | $ 0.0001 | ||
Ownership interest | 5.00% |
Notes Payable (Details)
Notes Payable (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Less: current portion | $ (122,740) | $ (312,905) |
Long-term notes payable | 1,967,712 | 1,036,101 |
Note payable bearing interest at 6.50%, originated November 1, 2018, due on October 31, 2023 originally $1,100,000 [Member] | ||
Total notes payable | 1,092,936 | 1,099,006 |
Note payable bearing interest at 5.0%, originated January 17, 2019, due on January 31, 2022 [Member] | ||
Total notes payable | 750,000 | |
Convertible note payable - related party bearing interest at 5.00%, originated October 17, 2018, due on October 16, 2019 [Member] | ||
Total notes payable | 250,000 | 250,000 |
Note payable bearing interest at 9.0%, originated January 17, 2019, due on January 16, 2020 [Member] | ||
Total notes payable | 150,000 | |
Note payable bearing interest at 6.5% originated April 1, 2019, due on March 31, 2022 originally $250,000 [Member] | ||
Total notes payable | 247,516 | |
Notes Payable [Member] | ||
Total notes payable | 2,490,452 | 1,349,006 |
Less: current portion | (522,740) | (312,905) |
Long-term notes payable | $ 1,967,712 | $ 1,036,101 |
Notes Payable (Details Textual)
Notes Payable (Details Textual) - USD ($) | Apr. 02, 2019 | Feb. 14, 2019 | Feb. 01, 2019 | Jan. 17, 2019 | Jun. 30, 2019 |
Notes Payable (Textual) | |||||
Bearing interest, percentage | 6.50% | 0.50% | 5.00% | ||
Principle amount | $ 85,000 | ||||
Short-term promissory note | $ 250,000 | $ 100,000 | $ 101,000 | $ 750,000 | |
Monthly Installment | $ 2,178 | $ 3,125 | |||
Convertible note payable description | The Company executed a promissory note for $250,000 with John T. Jacobs and Teresa D. Jacobs. The note bears an interest rate of 6.5% per annum, payable in regular monthly installments of $2,178, due on or before the same day of each month beginning May 1, 2019 until March 31, 2020 at which time a principal reduction of $50,000 shall be due, the payments shall be re-amortized (15-year amortization). On or before March 31, 2021, a second principal reduction of $50,000 shall be due, the payments shall be re-amortized (15-year amortization). Payments shall continue to be paid until March 31, 2022, at which time the entire sum of principal and accrued interest shall be due and payable. | The Company executed a short-term promissory note for $100,000 with Stran & Company. The note bears no interest during the first 90 days. Thereafter, interest shall accrue on the unpaid principal balance at a fixed rate of 0.5% per month. The note was paid in full on April 1, 2019. | The Company executed a short-term promissory note for $101,000 with Roll On, LLC, who is a related party. The note bears no interest. The balance as of March 31, 2019 is $85,000. The note was paid in full on April 1, 2019. | The Company executed a promissory note for $750,000 with FR Holdings LLC, a Wyoming limited liability company. The note pays interest of 5.0% per annum, payable in regular monthly installments of $3,125, due on or before the same day of each month beginning February 1, 2019 until January 31, 2022 at which the entire principal and any then accrued interest thereon shall be due and payable. | |
Let's Roll Holdings, LLC [Member] | |||||
Notes Payable (Textual) | |||||
Bearing interest, percentage | 9.00% | ||||
Short-term promissory note | $ 150,000 | ||||
Convertible note payable description | The Company executed a short-term promissory note for $150,000 with Let's Roll Holdings, LLC. The note bears an interest rate of 9.0% per annum and is due and payable in full plus accrued interest on January 16, 2020. | ||||
Note payable bearing interest at 6.50%, originated November 1, 2018, due on October 31, 2023 originally $1,100,000 [Member] | |||||
Notes Payable (Textual) | |||||
Bearing interest, percentage | 6.50% | ||||
Maturity date, description | Due on October 31, 2023. | ||||
Principle amount | $ 1,100,000 | ||||
Note payable bearing interest at 5.0%, originated January 17, 2019, due on January 31, 2022 [Member] | |||||
Notes Payable (Textual) | |||||
Bearing interest, percentage | 5.00% | ||||
Maturity date, description | Due on January 31, 2022. | ||||
Convertible note payable – related party bearing interest at 5.00%, originated October 17, 2018, due on October 16, 2019 [Member] | |||||
Notes Payable (Textual) | |||||
Bearing interest, percentage | 5.00% | ||||
Maturity date, description | Due on October 16, 2019. | ||||
Note payable bearing interest at 9.0%, originated January 17, 2019, due on January 16, 2020 [Member] | |||||
Notes Payable (Textual) | |||||
Bearing interest, percentage | 9.00% | ||||
Maturity date, description | Due on January 16, 2020. | ||||
Note payable bearing interest at 6.5% originated April 1, 2019, due on March 31, 2022 originally $250,000 [Member] | |||||
Notes Payable (Textual) | |||||
Bearing interest, percentage | 6.50% | ||||
Maturity date, description | Due on March 31, 2022. | ||||
Principle amount | $ 250,000 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - Operating Leases [Member] | Jun. 30, 2019USD ($) |
Fiscal year ending December 31: | |
2019 | $ 230,640 |
2020 | 230,640 |
2021 | 230,640 |
2022 | 230,755 |
2023 | 230,986 |
Thereafter | 812,328 |
Less payments made thru second quarter 2019 | 115,320 |
Total minimum lease payments | $ 1,850,669 |
Commitments and Contingencies_3
Commitments and Contingencies (Details Textual) - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Commitments and Contingencies (Textual) | ||
Operating leases rent expense | $ 209,967 | $ 105,316 |
Description of operating lease expiration | The Company leases a production / warehouse facility under a non-cancelable operating lease that expire in June 2027. |
Preferred Stock (Details)
Preferred Stock (Details) - $ / shares | Jun. 30, 2019 | Dec. 31, 2018 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares outstanding | 0 | 0 |
Series A convertible Preferred stock [Member] | ||
Preferred stock, par value | $ 1,000 | |
Preferred stock, shares authorized | 2,500 | |
Preferred stock, shares outstanding | 0 |
Common Stock (Details)
Common Stock (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | |
Exchange for professional services value | $ 16,000 | $ 1,086 | $ 16 | ||
Exchange for professional services shares | 508,781 | ||||
Subscriptions payable | 1,350,000 | $ 288,750 | 386,501 | $ 5,205,000 | |
Common stock value of shareholder | (20,000) | (20,000) | |||
Common stock [Member] | |||||
Exchange for professional services value | $ 16 | $ 1 | $ 16,000 | ||
Exchange for professional services shares | 16,236 | 1,448 | 16,236 | ||
Subscriptions payable | $ 418 | $ 383 | |||
Common stock value of shareholder | $ (20,000) | $ 20,000 | |||
Common stock shares of shareholder | (20,000,000) | 20,000,000 | |||
Subscription payable [Member] | |||||
Exchange for professional services value | |||||
Subscriptions payable | $ 1,350,000 | 5,205,000 | |||
Common stock value of shareholder | |||||
Subscription payable [Member] | Subsequent Event [Member] | |||||
Exchange for professional services shares | 10,410,000 |
Warrants and Options (Details)
Warrants and Options (Details) - $ / shares | 3 Months Ended | |
Jun. 30, 2019 | Mar. 31, 2019 | |
Warrants [Member] | ||
Shares, Beginning Balance | 10,000 | 10,000 |
Shares, Issued | ||
Shares, Exercised | ||
Shares, Expired | ||
Shares, Ending Balance | 10,000 | 10,000 |
Weighted Avg. Exercise Price, Beginning Balance | $ 1.20 | $ 1.20 |
Weighted Avg. Exercise Price, Issued | ||
Weighted Avg. Exercise Price, Exercised | ||
Weighted Avg. Exercise Price, Expired | ||
Weighted Avg. Exercise Price, Ending Balance | $ 1.20 | $ 1.20 |
Stock Options [Member] | ||
Shares, Beginning Balance | 166,665 | 166,665 |
Shares, Issued | 1,233,000 | |
Shares, Exercised | ||
Shares, Expired | ||
Shares, Ending Balance | 1,399,665 | 166,665 |
Weighted Avg. Exercise Price, Beginning Balance | $ 5.88 | $ 5.88 |
Weighted Avg. Exercise Price, Issued | 0.83 | |
Weighted Avg. Exercise Price, Exercised | ||
Weighted Avg. Exercise Price, Expired | ||
Weighted Avg. Exercise Price, Ending Balance | $ 1.42 | $ 5.88 |
Warrants and Options (Details T
Warrants and Options (Details Textual) - $ / shares | 1 Months Ended | 3 Months Ended | 6 Months Ended |
Jul. 31, 2018 | Mar. 31, 2019 | Jun. 30, 2019 | |
Corporate Advisory Agreement [Member] | Stock Options [Member] | |||
Warrants and Options (Textual) | |||
Acquired additional shares | 10,000 | ||
Exercise price | $ 1.20 | ||
Term of option | 3 years | ||
Warrants [Member] | |||
Warrants and Options (Textual) | |||
Acquired additional shares | 166,665 | ||
Warrant expiry, description | These warrants expire between July 2019 and October 2019 | ||
Exercise price | $ 2.50 | ||
Warrant Excercise price, description | In June of 2019, in conjunction with the Company’s offering under Rule 506 of Regulation D of the Securities Act (the “Offering”) the Company granted warrants to each participant in the Offering upon the following terms and conditions: a) each participant has the right to acquire additional shares of the Company’s Common Stock equal to ten (10%) of the shares purchased in the offering (the “Warrants”); b) one-half of the Warrants granted to each participant have an exercise price of $0.65 and the other one-half have an exercise price of $1.00; c) the Warrants shall be exercisable between June 5, 2019, the date of grant and June 4, 2021 the date of expiration of the Warrants |
Subsequent Events (Details)
Subsequent Events (Details) | 6 Months Ended |
Jun. 30, 2019USD ($)$ / sharesshares | |
Shares | |
Common stock issued for services | 508,781 |
Membership interest purchase in recreational, cultivation and production certificates | 1,429,798 |
Common stock issued for stock subscriptions payable | 12,033,823 |
Total | 139,724,021 |
Fair Value | |
Common stock issued for services | $ | $ 244,392 |
Membership interest purchase in recreational, cultivation and production certificates | $ | $ 697,409 |
Common stock issued for stock subscriptions payable | 5,734,420 |
Total fair value of shares | $ | $ 6,622,221 |
Average Price per Share | |
Common stock issued for services | $ / shares | $ .48 |
Membership interest purchase in recreational, cultivation and production certificates | $ / shares | 0.45 |
Common stock issued for stock subscriptions payable | $ / shares | .48 |
Total | $ / shares | $ 0.47 |
Subsequent Events (Details Text
Subsequent Events (Details Textual) | Aug. 01, 2019USD ($)ft² | Jul. 15, 2019USD ($) | Aug. 28, 2019USD ($)ft² | Jun. 30, 2019a | Apr. 30, 2019 |
Subsequent Events (Textual) | |||||
Area of land | a | 3 | ||||
Membership Interest Purchase Agreement [Member] | |||||
Subsequent Events (Textual) | |||||
Membership interest purchase agreement, description | We executed a membership interest purchase agreement (the "MIPA2") to acquire all of the membership interests in two Nevada limited liability companies that are each a holder of a State of Nevada marijuana license. Marijuana Establishment Registration Certificate, Application No. C202 and Marijuana Establishment Registration Certificate, Application No. P133 (collectively the "Certificates"). The terms of the MIPA2 require the Company to purchase the licenses for the total sum of $1,250,000 each, $750,000 in cash and $500,000 per license in the Company's common stock. The terms of the MIPA2 provide for a $250,000 non-refundable down payment and include a short term note in the amount of $500,000 carrying an annual interest rate of two percent (2%) which, together with accrued interest, is due and payable on or before December 18, 2019. The Company has made non-refundable deposits totaling $550,000 and has reduced the principal of the aforementioned note to $200,000. The Company is obligated to issue approximately 1,400,000 shares of our common stock in fulfillment of our obligations in the MIPA2 and has executed a $750,000 long term note (the "LT Note") in favor of the current license holders that becomes due and payable upon the earlier of a) six months after the transfer of the Certificates to the Company, or b) six months after the production/cultivation is declared fully operational by the applicable regulatory agencies, or c) March 10, 2020. The LT Note carries an 8% annual interest rate and there is no penalty for any prepayments of the LT Note. Additionally, the sellers shall receive, at closing, warrants to purchase up to 1,500,000 additional shares of the Company's common stock; 1,000,000 warrants shall be exercisable for a period of three years from the closing date at an exercise price of $2.00 per share and 500,000 warrants shall be exercisable for a period of two years from the closing date at an exercise price of $1.50 per share (collectively the "MJ Warrants"). The LT Note, MJ Warrants and the common shares issued will be held in escrow until the transaction closes upon the terms of the MIPA2. On November 21, 2019 the Company received an SUP from the Nye County Nevada Board of Commissioners to operate a Marijuana processing facility at our leasehold in Pahrump, NV, subsequently on November 25, 2019 we also received an SUP to operate a cultivation facility at our Pahrump location. Upon receipt of all necessary regulatory approvals, we plan to move the cultivation license to the Company's 260-acre facility in the Amargosa Valley of Nevada and move the production license into our recently Pahrump, NV facility. | ||||
Purchase And Sale Agreement [Member] | Coachill Holdings, LLC [Member] | |||||
Subsequent Events (Textual) | |||||
Purchase and sale agreement, description | A subsidiary of Alternative Hospitality, Inc. (collectively "AHI") executed a purchase and sale agreement with Coachill Holdings, LLC ("CHL") to acquire a parcel of land located within a 100-acre industrial cannabis park near Desert Hot Springs, CA (the "Property") to develop AHI's first hotel project. The purchase price for the property is $5,125,000. CHL is contributing $3,000,000 toward the purchase price of this property in exchange for a twenty-five percent ownership interest in Coachill-Inn, LLC. AHI has made an initial non-refundable deposit of $150,000 toward the purchase of the Property and will make an additional $1,975,000 in equity contribution at closing own and thereby 51% of Coachill-Inn, when the transaction closes. The transaction is expected to close in the first quarter of 2020. | ||||
Subsequent Events [Member] | |||||
Subsequent Events (Textual) | |||||
Area of land | ft² | 17,000 | ||||
Deposits | $ 20,000 | ||||
Agreement to lease description | We entered into an agreement to lease an approximately 17,000 sq. ft. commercial building in Pahrump, NV. The lease is for a term of ten years at an initial monthly rent of $10,000 per month with rent increases each August 1st during the term of the lease equal to the Consumer Price Index of the Bureau of Labor Statistics of the U.S. Department of Labor for CPI W (Urban Wage Earners and Clerical Workers) for Las Vegas, Nevada. The Company paid the property owner a security deposit in the amount of $20,000. While the Company took possession of the premises on August 1, 2019, the monthly rent did not commence until October 1, 2019. The Company has an option, exercisable between July 1, 2020 and July 1, 2024, to purchase the property for $1,800,000. The leasehold has previously been utilized as a fully-licensed, State of Nevada approved marijuana cultivation facility; and, it is the Company’s intention to move our marijuana processing license into this facility upon receipt of all required regulatory approvals – anticipated in the first quarter of 2020. | ||||
Subsequent Events [Member] | RSG Employment Agreement [Member] | |||||
Subsequent Events (Textual) | |||||
Annual base compensation | $ 180,000 | ||||
Term of employment agreement | 3 years | ||||
Description of employment agreement | Pursuant to a written employment agreement (the “RSG Employment Agreement”) with an annual base compensation of $180,000, of which $5,000 per month shall be deferred until January 15, 2020 or such earlier date pursuant to the terms of the RSG Employment Agreement and then shall be payable in cash or shares of the Company’s common stock (the “Stock”). The Employment Agreement provides for a restricted stock award of 400,000 shares of the Company’s Stock to vest: 25% six months after the effective date of the Employment Agreement; 25% on the first anniversary after the effective date of the Employment Agreement, 25% on the second anniversary after the effective date of the Employment Agreement and 25% on the third anniversary after the effective date of the Employment Agreement. | ||||
Subsequent Events [Member] | Material Definitive Agreement [Member] | |||||
Subsequent Events (Textual) | |||||
Area of land | ft² | 40,000 | ||||
Purchase price | $ 441,000 | ||||
Description of subsequent event | We entered into a material definitive agreement with an Ohio limited liability company (the "Buyer") to sell forty-nine percent (49%) of the membership interests in the Company's wholly owned subsidiary Red Earth for $441,000. The membership interest purchase agreement (the "MIPA3") requires the Buyer to make an additional $3,559,000 payment into a execution fund (the "Fund") to be utilized for the improvement and build-out of the Company's Western Avenue leasehold in Las Vegas, Nevada. The payment was due within ten (10) business days of the receipt by Red Earth of a special use permit ("SUP") from the City of Las Vegas for our Western Avenue facility. The Company received notice on October 21, 2019 that the SUP was granted. As of the date of this filing the Buyer has established the Fund. The Buyer, in conjunction with the Company, will jointly manage and operate the facility upon completion. The MIPA3 also requires the Buyer to make a final payment to the Company of $1,000,000 between 90 and 180 days after issuance of the SUP. Additionally, the Buyer has a first refusal right to fund and build a 40,000 sq. ft. greenhouse facility at the Company's Amargosa Valley Farm the terms of which are to be negotiated in good faith upon the exercise of any rights granted to the Buyer in the MIPA3. |