Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Feb. 09, 2021 | |
Cover [Abstract] | ||
Entity Registrant Name | MJ Holdings, Inc. | |
Entity Central Index Key | 0001456857 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 68,613,541 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2020 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets | ||
Cash | $ 8,385 | $ 22,932 |
Accounts receivable, net | 17,338 | 11,675 |
Prepaid expense | 338,782 | 476,742 |
Marketable securities - available for sale | 150,000 | 150,000 |
Other current assets | 156,229 | |
Total current assets | 514,505 | 817,578 |
Property and equipment, net | 4,273,097 | 4,574,082 |
Intangible assets | 300,000 | 300,000 |
Deposits | 289,817 | 289,817 |
Operating lease - Right to use asset | 2,034,071 | 2,194,278 |
Total assets | 7,411,490 | 8,175,755 |
Current liabilities | ||
Accounts payable and accrued expenses | 1,852,877 | 1,076,145 |
Other current liabilities | 432,006 | |
Deposits | 538,921 | 441,000 |
Notes payable - related party | 200,405 | |
Current portion of long-term notes payable | 179,938 | 1,249,561 |
Current portion of operating lease obligation | 240,483 | 237,604 |
Total current liabilities | 3,444,630 | 3,004,310 |
Non-current liabilities | ||
Long-term notes payable, net of current portion | 1,933,667 | 929,526 |
Operating lease long-term, net of current portion | 1,951,075 | 2,131,042 |
Total non-current liabilities | 3,884,742 | 3,060,568 |
Total liabilities | 7,329,372 | 6,064,878 |
Stockholders' equity | ||
Preferred stock, value | ||
Common stock, $0.001 par value, 95,000,000 shares authorized, 65,756,262 and 65,436,449 shares issued, issuable, and outstanding at September 30, 2020 and December 31, 2019, respectively | 65,756 | 65,436 |
Additional paid-in capital | 18,243,672 | 18,177,723 |
Common stock issuable | 19 | |
Subscription payable | 124,535 | 10,000 |
Accumulated deficit | (18,241,114) | (16,038,345) |
Total stockholders' equity attributable to MJ Holdings, Inc. | 192,849 | 2,214,833 |
Non-controlling interest | (110,731) | (103,956) |
Total stockholders' equity | 82,118 | 2,110,877 |
Total liabilities and stockholders' equity | 7,411,490 | 8,175,755 |
Series A Convertible Preferred Stock [Member] | ||
Stockholders' equity | ||
Preferred stock, value |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2020 | Dec. 31, 2019 |
Preferred stock, stated value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 2,500 |
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 | 65,756,262 | 65,436,449 |
Common stock, shares outstanding | 65,756,262 | 65,436,449 |
Series A Convertible Preferred Stock [Member] | ||
Preferred stock, stated value | $ 1,000 | $ 1,000 |
Preferred stock, shares authorized | 2,500 | 2,500 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Statement [Abstract] | ||||
Revenue, net | $ 173,541 | $ 418,528 | $ 696,613 | $ 1,197,598 |
Operating expenses | ||||
Direct costs of revenue | 10,332 | 346,367 | 550,530 | 85,562 |
General and administrative | 390,546 | 1,970,751 | 1,888,273 | 4,212,177 |
Depreciation | 112,973 | 104,477 | 336,462 | 257,834 |
Marketing and selling | 248 | 34,285 | 7,040 | 30,443 |
Total operating expenses | 514,099 | 2,455,880 | 2,782,305 | 5,386,316 |
Operating loss | (340,558) | (2,037,352) | (2,085,692) | (4,188,718) |
Other income (expense) | ||||
Interest expense | (28,975) | (29,485) | (127,352) | (105,995) |
Interest income | 4,586 | 5,330 | 13,759 | 6,001 |
Loss on impairment of investment | (1,086) | (10,259) | ||
Total other income (expense) | (25,475) | (24,155) | (123,852) | (99,994) |
Net loss before income taxes | (366,033) | (2,061,507) | (2,209,544) | (4,288,712) |
Provision for income taxes | ||||
Net loss | (366,033) | (2,061,507) | (2,209,544) | (4,288,712) |
Loss (gain) attributable to non-controlling interest | (1,646) | (21,500) | (6,775) | (27,836) |
Net loss attributable to common stockholders | $ (364,387) | $ (2,040,007) | $ (2,202,769) | $ (4,260,876) |
Net loss attributable to common stockholders per share - basic and diluted | $ (0.01) | $ (0.03) | $ (0.03) | $ (0.07) |
Weighted average number of shares outstanding - basic and diluted | 65,756,262 | 59,003,090 | 65,694,138 | 57,640,807 |
Condensed Consolidated Statem_2
Condensed Consolidated Statement of Changes In Stockholders' Deficit (Unaudited) - USD ($) | Preferred Stock [Member] | Common Stock Issuable [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Subscription Payable [Member] | Non Controlling Interest [Member] | Accumulated Deficit [Member] | Total |
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 | |||||||
Stock subscriptions payable | 1,350,000 | 1,350,000 | ||||||
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 | |||||||
Net loss | (4,288,712) | |||||||
Balance at Sep. 30, 2019 | $ 29 | $ 64,624 | 17,807,899 | 260,000 | $ (27,836) | (12,131,325) | 5,973,391 | |
Balance, shares at Sep. 30, 2019 | 28,979 | 64,624,780 | ||||||
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 | |||||||
Balance at Dec. 31, 2019 | $ 19 | $ 65,436 | 18,177,723 | 10,000 | (103,956) | (16,038,345) | 2,110,877 | |
Balance, shares at Dec. 31, 2019 | 18,562 | 65,436,449 | ||||||
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 | |||||||
Issuance of common stock for services | $ 10 | $ 1,318 | 658,277 | 659,605 | ||||
Issuance of common stock for services, shares | 10,417 | 1,317,731 | ||||||
Issuance of common stock for conversion of debt and interest | $ 19 | $ 500 | 258,761 | 259,280 | ||||
Issuance of common stock for conversion of debt and interest, shares | 18,562 | 500,000 | ||||||
Stock subscriptions payable | $ 10,440 | 5,209,560 | (4,945,000) | 275,000 | ||||
Stock subscriptions payable, shares | 10,440,000 | |||||||
Net loss | (21,500) | (2,040,007) | (2,061,507) | |||||
Balance at Sep. 30, 2019 | $ 29 | $ 64,624 | 17,807,899 | 260,000 | (27,836) | (12,131,325) | 5,973,391 | |
Balance, shares at Sep. 30, 2019 | 28,979 | 64,624,780 | ||||||
Balance at Dec. 31, 2019 | $ 19 | $ 65,436 | 18,177,723 | 10,000 | (103,956) | (16,038,345) | 2,110,877 | |
Balance, shares at Dec. 31, 2019 | 18,562 | 65,436,449 | ||||||
Issuance of common stock for services | $ 281 | 55,969 | 56,250 | |||||
Issuance of common stock for services, shares | 281,251 | |||||||
Issuance of common stock for conversion of debt and interest | $ (19) | $ 19 | ||||||
Issuance of common stock for conversion of debt and interest, shares | (18,562) | 18,562 | ||||||
Net loss | (2,262) | (1,208,270) | (1,210,532) | |||||
Balance at Mar. 31, 2020 | $ 65,736 | 18,233,692 | 10,000 | (106,218) | (17,246,615) | 956,595 | ||
Balance, shares at Mar. 31, 2020 | 65,736,262 | |||||||
Balance at Dec. 31, 2019 | $ 19 | $ 65,436 | 18,177,723 | 10,000 | (103,956) | (16,038,345) | 2,110,877 | |
Balance, shares at Dec. 31, 2019 | 18,562 | 65,436,449 | ||||||
Net loss | (2,209,544) | |||||||
Balance at Sep. 30, 2020 | $ 65,756 | 18,243,672 | 124,535 | (110,731) | (18,241,114) | 82,118 | ||
Balance, shares at Sep. 30, 2020 | 65,756,262 | |||||||
Balance at Mar. 31, 2020 | $ 65,736 | 18,233,692 | 10,000 | (106,218) | (17,246,615) | 956,595 | ||
Balance, shares at Mar. 31, 2020 | 65,736,262 | |||||||
Stock subscriptions payable | $ 20 | 9,980 | (10,000) | |||||
Stock subscriptions payable, shares | 20,000 | |||||||
Net loss | (2,867) | (630,112) | (632,979) | |||||
Balance at Jun. 30, 2020 | $ 65,756 | 18,243,672 | (109,085) | (17,876,727) | 323,616 | |||
Balance, shares at Jun. 30, 2020 | 65,756,262 | |||||||
Stock subscriptions payable | 124,535 | 124,535 | ||||||
Stock subscriptions payable, shares | ||||||||
Net loss | (1,646) | (364,387) | (366,033) | |||||
Balance at Sep. 30, 2020 | $ 65,756 | $ 18,243,672 | $ 124,535 | $ (110,731) | $ (18,241,114) | $ 82,118 | ||
Balance, shares at Sep. 30, 2020 | 65,756,262 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash Flows from Operating Activities | ||
Net loss | $ (2,209,544) | $ (4,288,712) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Amortization of right to use asset | 160,207 | 98,063 |
Expenses paid on behalf of the Company | 36,405 | |
Common stock and options issued for services | 56,250 | 675,604 |
Depreciation | 336,462 | 257,834 |
Reserve on investment | 10,259 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (15,922) | (22,451) |
Inventory | (158,550) | |
Prepaid expenses | 137,960 | 118,713 |
Deposits | 97,921 | (892,241) |
Accounts payable and accrued liabilities | 776,732 | 122,180 |
Customer deposits | 54,584 | |
Deferred revenue | 1,300 | |
Deferred rent | (7,150) | |
Other current assets | 156,229 | |
Other current liabilities | 432,006 | |
Operating lease liability | (177,088) | (114,944) |
Net cash used in operating activities | (202,123) | (4,155,770) |
Cash Flows from Investing Activities | ||
Purchase of property and equipment | (35,477) | |
Payment for leasehold improvements | (1,107,016) | |
Issuance of note receivable | (150,000) | |
Purchase of cost method investment | (250,000) | |
Net cash used in investing activities | (35,477) | (1,507,016) |
Financing activities | ||
Proceeds from notes payable | 201,000 | |
Proceeds from notes payable - related party | 164,000 | |
Repayment of notes payable | (65,482) | (265,193) |
Proceeds from the issuance of common stock | 5,915,000 | |
Proceeds from common stock to be issued | 260,000 | |
Proceeds from stock subscription payable | 124,535 | |
Net cash provided by financing activities | 223,053 | 6,110,807 |
Net change in cash | (14,547) | 448,021 |
Cash, beginning of period | 22,932 | 56,656 |
Cash, end of period | 8,385 | 504,677 |
Supplemental disclosure of cash flow information: | ||
Interest paid | 53,919 | 83,362 |
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 | |
Conversion of debt and interest for common stock | 259,280 | |
Common stock issued for stock subscriptions payable | 10,000 | |
Common stock issued for prior period debt conversion | $ 19 |
Nature of the Business
Nature of the Business | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of the Business | Note 1 — Nature of the Business MJ Holdings, Inc. (OTCPK: MJNE) is a highly-diversified cannabis holding company providing cultivation management, asset and infrastructure development – currently concentrated in the Las Vegas market. It is the Company’s intention to grow its business and provide a 360-degree spectrum of infrastructure, including, cannabis cultivation, production of cannabis related products, management services, dispensaries and consulting services. The Company intends to grow its business through joint ventures with existing companies possessing complementary subject matter expertise, acquisition of existing companies and through the development of new opportunities. The Company intends to “prove the concept” profitably in the rapidly expanding Las Vegas market and then use that anticipated success as a template for replicating the concept in other developing states through a combination of strategic partnerships, acquisitions and opening new operations. The Company was incorporated on November 17, 2006, as Securitas EDGAR Filings, Inc. under the laws of the State of Nevada. Prior to the formation of Securitas EDGAR Filings Inc., the business was operated as Xpedient EDGAR Filings, LLC, a Florida Limited Liability Company, formed on October 31, 2005. On November 21, 2005, Xpedient EDGAR Filings LLC amended its Articles of Organization to change its name to Securitas EDGAR Filings, LLC. On January 21, 2009, Securitas EDGAR Filings LLC merged into Securitas EDGAR Filings, Inc., a Nevada corporation. On February 14, 2014, the Company amended and restated its Articles of Incorporation and changed its name to MJ Holdings, Inc. On November 22, 2016, in connection with a plan to divest the Company of its real estate business, the Company submitted to its stockholders an offer to exchange (the “Exchange Offer”) its common stock for shares in MJ Real Estate Partners, LLC, (“MJRE”) a newly-formed LLC formed for the sole purpose of effecting the Exchange Offer. On January 10, 2017, the Company accepted for exchange 1,800,000 shares of its Common Stock in exchange for 1,800,000 shares of MJRE’s common units, representing membership interests in MJRE. Effective February 1, 2017, the Company transferred its ownership interests in the real estate properties and its subsidiaries, through which the Company held ownership of the real estate properties, to MJRE. MJRE also assumed the senior notes and any and all obligations associated with the real estate properties and business, effective February 1, 2017. On August 25, 2020, the Company entered into a Consulting Agreement (the “Agreement”) with Sylios Corp (the “Consultant”). Under the terms of the Agreement, the Consultant shall prepare the Company’s filings with the Securities and Exchange Commission (the “SEC”) including its Annual report on Form 10-K and Quarterly Reports on Form 10-Q. The Consultant shall receive $20,000 in cash compensation plus 100,000 shares of the Company’s common stock. The Agreement has a term of six (6) months or until the Company’s Quarterly report for the period ended September 30, 2020 is filed with the SEC. Please see Note 12 — Subsequent Events Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements contained in its Annual Report on Form 10-K for the year ended December 31, 2019 (“Form 10-K”). The results of operations for the three and nine months ended September 30, 2020 and 2019 are not necessarily indicative of the operating results for the full years. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2 — Summary of Significant Accounting Policies Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Red Earth, LLC, HDGLV, LLC, Icon Management, LLC, Alternative Hospitality, LLC, Condo Highrise Management, LLC and Prescott Management, LLC. Inter-company balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates and assumptions are required in the determination of the fair value of financial instruments and the valuation of stock-based compensation. Some of these judgments can be subjective and complex, and, consequently, actual results may differ from these estimates. Fair Value of Financial Instruments Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of September 30, 2020 and December 31, 2019. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, prepaid expenses and accounts payable. Fair values were assumed to approximate carrying values for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) for identical instruments that are highly liquid, observable and actively traded in over-the-counter markets. Fair values determined by Level 2 inputs utilize inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations whose inputs are observable and can be corroborated by market data. Level 3 inputs are unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Level 1: Level 2 Level 3: If inputs from levels 1 and 2 are not available, FASB acknowledges that fair value measures of many assets and liabilities are less precise. The board describes Level 3 inputs as “unobservable,” and limits their use by saying they “shall be used to measure fair value to the extent that observable inputs are not available.” This category allows “for situations in which there is little, if any, market activity for the asset or liability at the measurement date”. The FASB explains that “observable inputs” are gathered from sources other than the reporting company and that they are expected to reflect assumptions made by market participants. As of September 30, 2020 and December 31, 2019, the Company’s investment in marketable securities – available for sale was determined to be a level 1 investment. Cash Cash includes cash on hand and deposits placed with banks or other financial institutions, which are unrestricted as to withdrawal and use and with an original maturity of three months or less. The Company maintains its cash in bank deposit accounts. The Company had $8,385 cash at September 30, 2020. The Company, at various times throughout the year, had cash in financial institutions in excess of Federally insured limits. However, the Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on its credit balances. Accounts Receivable and Allowance for Doubtful Accounts: Accounts receivable are recorded at invoiced amount and generally do not bear interest. An allowance for doubtful accounts is established, as necessary, based on past experience and other factors which, in management’s judgment, deserve current recognition in estimating bad debts. Such factors include growth and composition of accounts receivable, the relationship of the allowance for doubtful accounts to accounts receivable and current economic conditions. The determination of the collectability of amounts due from customer accounts requires the Company to make judgments regarding future events and trends. Allowances for doubtful accounts are determined based on assessing the Company’s portfolio on an individual customer and on an overall basis. This process consists of a review of historical collection experience, current aging status of the customer accounts, and the financial condition of the Company’s customers. Based on a review of these factors, the Company establishes or adjusts the allowance for specific customers and the accounts receivable portfolio as a whole. September 30, 2020 December 31, 2019 Accounts receivable $ 29,338 $ 23,675 Less: allowance (12,000 ) (12,000 ) Net accounts receivable $ 17,338 $ 11,675 Debt Issuance Costs Costs associated with obtaining, closing, and modifying loans and/or debt instruments are netted against the carrying amount of the debt instrument, and charged to interest expense over the term of the loan. Inventory Inventories consist of finished goods as of September 30, 2020. Inventories are valued at the lower of cost or net realizable value. The Company determines 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. The Company has performed a valuation and has established a reserve against its finished goods inventory. Property and Equipment Property and equipment are stated at cost less accumulated depreciation and any impairment losses. Depreciation is computed using the straight-line method over the useful lives of the assets. Major renewals and betterments are capitalized and depreciated; maintenance and repairs that do not extend the life of the respective assets are expensed as incurred. Upon disposal of assets, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in the consolidated statements of operations. Construction in progress primarily represents the construction or the renovation costs stated at cost less any accumulated impairment loss, which is not depreciated. Costs incurred are capitalized and transferred to property and equipment upon completion, at which time depreciation commences. Property and equipment are depreciated over their estimated useful lives as follows: Buildings 12 years Land Not depreciated Leasehold Improvements Lessor of lease term or 5 years Machinery and Equipment 5 years Furniture and Fixtures 5 years Long–lived Assets Long-lived assets, including real estate property and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by comparison of their carrying amounts to future undiscounted cash flows the assets are expected to generate. If the assets are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the assets exceeds its fair value. Non- Controlling Interest The Company’s non-controlling interest represents the minority shareholder’s ownership interest related to the Company’s subsidiary, Alternative Hospitality, Inc. The Company reports its non-controlling interest in subsidiaries as a separate component of equity in the Consolidated Balance Sheets and reports both net loss attributable to the non-controlling interest and net loss attributable to the Company’s common shareholders on the face of the Consolidated Statements of Operations. The Company’s equity interest in Alternative Hospitality, Inc. is 51% and the non-controlling stockholder’s interest is 49%. This is reflected in the Consolidated Statements of Equity. Revenue Recognition On January 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) 606 – Revenue from Contracts with Customers Generally, the Company considers all revenues as arising from contracts with customers. Revenue is recognized based on the five-step process outlined in the Accounting Standards Codification (“ASC”) 606: Step 1 – Identify the Contract with the Customer – A contract exists when (a) the parties to the contract have approved the contract and are committed to perform their respective obligations, (b) the entity can identify each party’s rights regarding the goods or services to be transferred, (c) the entity can identify the payment terms for the goods or services to be transferred, (d) the contract has commercial substance and it is probably that the entity will collect substantially all of the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer. Step 2 – Identify Performance Obligations in the Contract – Upon execution of a contract, the Company identifies as performance obligations each promise to transfer to the customer either (a) goods or services that are distinct, or (b) a series of distinct goods or services that are substantially the same and have the same pattern of transfer to the customer. To the extent a contract includes multiple promised goods or services, the Company must apply judgement to determine whether the goods or services are capable of being distinct within the context of the contract. If these criteria are not met, the goods or services are accounted for as a combined performance obligation. Step 3 – Determine the Transaction Price – When (or as) a performance obligation is satisfied, the Company shall recognize as revenue the amount of the transaction price that is allocated to the performance obligation. The contract terms are used to determine the transaction price. Generally, all contracts include fixed consideration. If a contract did include variable consideration, the Company would determine the amount of variable consideration that should be included in the transaction price based on expected value method. Variable consideration would be included in the transaction price, if in the Company’s judgement, it is probable that a significant future reversal of cumulative revenue under the contract would not occur. Step 4 – Allocate the Transaction Price – After the transaction price has been determined, the next step is to allocate the transaction price to each performance obligation in the contract. If the contract only has one performance obligation, the entire transaction price will be applied to that obligation. If the contract has multiple performance obligations, the transaction price is allocated to the performance obligations based on the relative standalone selling price (SSP) at contract inception. Step 5 – Satisfaction of the Performance Obligations (and Recognize Revenue) – Revenue is recognized when (or as) goods or services are transferred to a customer. The Company satisfies each of its performance obligations by transferring control of the promised good or service underlying that performance obligation to the customer. Control is the ability to direct the use of and obtain substantially all of the remaining benefits from an asset. It includes the ability to prevent other entities from directing the use of and obtaining the benefits from an asset. Indicators that control has passed to the customer include: a present obligation to pay; physical possession of the asset; legal title; risks and rewards of ownership; and acceptance of the asset(s). Performance obligations can be satisfied at a point in time or over time. The majority of the Company’s revenue was derived under the agreements, Consulting Agreement and Equipment Lease Agreement, entered into with Acres Cultivation, LLC. Revenue derived from consulting services fees are recognized over the term of the arrangement as services are provided. Revenue is presented net of discounts, fees and other related taxes. Revenue derived from equipment leases Other Current Liabilities The Company’s other current liabilities consisted of amounts due under the management agreement and performance guarantee with Acres Cultivation, LLC. As of September 30, 2020 and December 31, 2019, other current liabilities were $432,006 and $-, respectively. Stock-Based Compensation The Company’s share-based payment awards principally consist of grants of common stock. In accordance with the applicable accounting guidance, stock-based payment awards are classified as either equity or liabilities. For equity-classified awards, the Company measures compensation cost based on the grant date fair value and recognizes compensation expense in the consolidated statements of operations over the requisite service or performance period the award is expected to vest. The fair value of liability-classified awards is at each reporting date through the settlement date. Change in fair value during the requisite service period will be remeasured as compensation cost over that period. The Company utilizes its historical stock price to determine the volatility of any stock-based compensation. The expected dividend yield is 0% as the Company has not paid any dividends on its common stock and does not anticipate it will pay any dividends in the foreseeable future. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant date with a term equal to the expected term of the stock-based award. For stock-based financial instruments issued to parties other than employees, the Company uses the contractual term of the financial instruments as the expected term of the stock-based financial instruments. The assumptions used in calculating the fair value of stock-based financial instruments represent its best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and it uses different assumptions, its stock-based compensation expense could be materially different in the future. Convertible Instruments The Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC 815, Derivatives and Hedging Activities. Applicable GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. The Company accounts for convertible instruments (when it has been determined that the embedded conversion options should not be bifurcated from their host instruments) as follows: The Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption. Operating Leases The Company leases production and warehouse facilities and office space under operating leases. Operating lease agreements may contain rent escalation clauses, rent holidays or certain landlord incentives, including tenant improvement allowances. Rent expense with scheduled rent increases or landlord incentives are recognized on a straight-line basis over the lease term, beginning with the effective lease commencement date, which is generally the date in which the Company takes possession of or controls the physical use of the property. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance on deferred tax assets is established when management considers it is more likely than not that some portion or all of the deferred tax assets will not be realized. Tax benefits from an uncertain tax position are only recognized if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. Interest and penalties related to unrecognized tax benefits are recorded as incurred as a component of income tax expense. The Company has not recognized any tax benefits from uncertain tax positions for any of the reporting periods presented. Recent Accounting Pronouncements Leases: Leases (Topic 842) Stock Based Compensation: Compensation – Stock Compensation (Topic 718) Improvements to Nonemployee Share Based Payment Accounting. The amendments in this Update expand the scope of stock compensation to include share-based payment transactions for acquiring goods and services from nonemployees. The guidance in this Update does not apply to transactions involving equity instruments granted to a lender or investor that provides financing to the issuer. The guidance is effective for fiscal years beginning after December 31, 2018 including interim periods within the fiscal year. The Company adopted with an effective date of January 1, 2019. |
Going Concern
Going Concern | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern | Note 3 — Going Concern The Company has recurring net losses, which have resulted in an accumulated deficit of $18,241,114 and negative working capital of $2,930,125 as of September 30, 2020. The Company incurred a net loss of $2,209,544 for the nine months ended September 30, 2020. At September 30, 2020, the Company had cash and cash equivalents of $8,385. These factors raise substantial doubt about the Company’s ability to continue as a going concern for 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 investments. Historically, the Company has financed its operations principally through equity and debt financing. |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Note 4 — Property and Equipment Property and Equipment at September 30, 2020 and December 31, 2019 consisted of the following: September 30, December 31, Leasehold Improvements 323,281 323,281 Machinery and Equipment 1,052,203 1,052,203 Building and Land 3,150,000 3,150,000 Furniture and Fixtures 578,844 543,366 Total property and equipment 5,104,328 5,068,850 Less: Accumulated depreciation (831,231 ) (494,768 ) Property and equipment, net 4,273,097 4,574,082 Depreciation expense for the nine months ended September 30, 2020 and 2019 was $336,462 and $257,834, respectively. |
Intangible Assets
Intangible Assets | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Note 5— Intangible Assets In October 2016, Red Earth 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. The Provisional Grow License remains in a provisional status until the Company has completed the build out of a cultivation facility and obtained approval from the state of Nevada to begin cultivation in the approved facility. Once approval from the state of Nevada is received, the Company begins the cultivation process. |
Notes Payable
Notes Payable | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Notes Payable | Note 6 — Notes Payable Notes payable as of September 30, 2020 and December 31, 2019 consist of the following: September 30, December 31, Note payable bearing interest at 6.50%, originated November 1, 2018, due on October 31, 2023, originally $1,100,000 (i) $ 1,026,438 $ 1,086,662 Note payable bearing interest at 5.0%, originated January 17, 2019, due on January 31, 2022, originally $750,000 (ii) 750,000 750,000 Note payable bearing interest at 9.0%, originated January 17, 2019, due on January 16, 2020, originally $150,000 (iii) 100,000 100,000 Note payable bearing interest at 6.5% originated April 1, 2019, due on March 31, 2022, originally $250,000 (iv) 237,167 242,425 Notes payable, related party, bearing interest at 9.0%, originated February 20, 2020, due on February 19, 2021, originally $110,405 (v) 110,405 - Notes payable, related party, bearing interest at 9.0%, originated April 3, 2020, due on March 30, 2021, originally $90,000 (vi) 90,000 - Total notes payable $ 2,314,010 $ 2,179,087 Less: current portion (380,343 ) (1,249,561 ) Long-term notes payable $ 1,933,667 $ 929,526 (i) On September 21, 2018, the Company, through its wholly-owned subsidiary Prescott Management, LLC, entered into a contract to purchase an approximately 10,000 square foot office building located at 1300 South Jones Boulevard, Las Vegas, Nevada 89146 for $1,500,000, subject to seller financing in the amount of $1,100,000, amortizing over 30 years at an interest rate of 6.5% per annum with monthly installments of $6,952.75 beginning on November 1, 2018, and continuing on the same day of each month thereafter until October 31, 2019. Upon the one-year anniversary of the note, a principal reduction payment of $50,000 is due, and provided that the monthly payments and the principal reduction payment have been made, the payments will be recalculated and re-amortized on the same terms with a new scheduled monthly payment of $6,559 beginning on November 1, 2019 and continuing until October 31, 2023, at which time the entire sum of principal in the amount of $986,438, plus any accrued interest, is due and payable. The Company closed the purchase on October 18, 2018. The building is home to the Company’s business operations. As of September 30, 2020, $1,026,438 principal and $11,736 interest remain due. Please see Note 12 — Subsequent Events (ii) On January 17, 2019, the Company executed a promissory note for $750,000 with FR Holdings LLC, a Wyoming limited liability company. The note accrues interest at 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. As of September 30, 2020, $750,000 principal and $29,583 interest remain due. (iii) On January 17, 2019, the Company executed a short-term promissory note for $150,000 with Let’s Roll Holdings, LLC, and entity controlled by the Company’s Chief Cultivation Officer and a director. The note accrues interest at 9.0% per annum and is due on January 16, 2020. Principal payments in the amount of $50,000 were made during the year ended December 31, 2019. As of September 30, 2020, $100,000 principal and $17,526 interest remain due. (iv) On April 1, 2019, the Company executed a promissory note for $250,000 with John T. Jacobs and Teresa D. Jacobs. The note accrues interest at 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. As of September 30, 2020, $237,167 principal and $10,807 interest remain due. (v) On February 20, 2020, the Company’s subsidiary, Alternative Hospitality, Inc. (the “Borrower”), issued a Short-Term Promissory Note (the “Note”) to Pyrros One, LLC (the “Holder”), an entity controlled by a relative of a director of the Company, in the amount of $110,405 that matures on February 19, 2021. The Note shall bear interest at a rate of 9% per annum with interest-only payments in the amount of $825 due on or before the twentieth day of each month commencing on April 20, 2020. The Borrower was required to make an interest and principal reduction payment in the amount of $1,233 on or before March 20, 2020. The Holder is granted a security interest in that certain real property located at 1300 S. Jones Blvd, Las Vegas, NV 89146, which is owned by the Borrower. As of September 30, 2020, $110,405 principal and $1,125 interest remain due. (vi) On March 31, 2020, the Company’s subsidiary, Condo Highrise Management, LLC (the “Borrower”), issued a Short-Term Promissory Note (the “Note”) to Pyrros One, LLC (the “Holder”), an entity controlled by a relative of a director of the Company, in the amount of $90,000 that matures on March 30, 2021. The Note shall bear interest at a rate of 9% per annum with interest-only payments in the amount of $675 due on or before the first day of each month commencing on May 1, 2020. The Holder is granted a security interest in that certain real property located at 4295 Hwy 343, Amargosa, NV 89020. which is owned by the Borrower. The transaction closed on April 3, 2020. As of September 30, 2020, $90,000 principal and $4,050 interest remain due. Amount Fiscal year ending December 31: 2020 7,070 2021 376,593 2022 915,613 2023 1,014,734 2024 - Thereafter - Total minimum loan payments $ 2,314,010 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 7 — Commitments and Contingencies Employment Agreements On October 15, 2018, the Company entered into an employment agreement (the “Tierney Employment Agreement”) with Terrence M. Tierney. Pursuant to the Tierney Employment Agreement, the Company appointed Mr. Tierney, to the position of Chief Administrative Officer, in addition to his previous role as Secretary. The initial term of employment is for a three-year period (or until September 30, 2021), unless extended or otherwise terminated in accordance with its terms. The effective date of The Tierney Employment Agreement automatically renews for successive periods of three (3) years unless either party gives written notice to the other party that it does not wish to automatically renew. Mr. Tierney’s annual salary is equal to or greater than any other senior executive of the Company with the exception of the Chief Executive Officer. The Tierney Employment Agreement defers salary of $10,000 per month of Mr. Tierney’s salary until such time as the Company has achieved gross annual sales of $20,000,000 or net annual profits (as defined in the Tierney Employment Agreement) of $5,000,000 or has raised a total of $50,000,000 in equity or debt financing. In addition, the Company agreed to issue 500,000 shares of common stock pursuant to a stock award agreement within thirty (30) days of adoption of an omnibus benefit plan. Such shares have not yet been issued. On January 22, 2020, the Board appointed Mr. Tierney to the additional position of interim President. There are no changes to Mr. Tierney’s current employment agreement other than his additional duties as President. Mr. Tierney will have day-to-day oversight of the Company’s operations and continue to advise the Board on strategic initiatives and business development. On August 7, 2020, the Company’s Board of Directors terminated, with cause, the employment of Terrence M. Tierney, JD, effective immediately. At the time of termination, Mr. Tierney served as the Company’s Secretary, Chief Administrative Officer and interim President. Under the terms of Mr. Tierney’s Employment Agreement, the Company shall be under no further obligation to the Executive, except to pay all accrued but unpaid base salary and accrued vacation to the date of termination thereof. On February 18, 2019, the Company entered into an employment agreement (the “Balaouras Employment Agreement”) with Paris Balaouras. Mr. Balaouras was appointed Chief Executive Officer of the Company on December 15, 2017. The initial term of employment was for a five-year period (or until December 31, 2022), unless extended or otherwise terminated in accordance with its terms. The effective date of the Balaouras Employment Agreement was January 1, 2019, and continues until the earlier of: (i) the effective date of any subsequent employment agreement between Mr. Balaouras and us; (ii) the effective date of any termination of employment as provided for in the Balaouras Employment Agreement; or (iii) five (5) years from the effective date; provided, that the Balaouras Employment Agreement automatically renews for successive periods of three (3) years unless either party gives written notice to the other party that it does not wish to automatically renew, which written notice must be received by the other party no less than ninety (90) days and no more than one hundred eighty (180) days prior to the expiration of the applicable term. Mr. Balaouras elected to waive any 2018 salary, which was recorded as an expense and additional to paid-in capital in 2018, and defer 52% of his 2019 salary; which such deferment shall continue until such time as the Company has operated on a positive cash flow basis for a period of not less than three months. At that time, all deferred compensation shall be payable in equal monthly installments for a period of 24 months. At the sole election of Mr. Balaouras, he may be paid any deferred compensation in cash or in the Company’s common stock. On June 1, 2019, the Company entered in an employment agreement with Mr. Laurence Ruhe to serve as the Company’s Chief Financial Officer. Mr. Ruhe shall serve a two-year term, effective June 1, 2019, with annual base compensation of $100,000 plus 46,296 of Stock to vest in twelve equal monthly installments of 3,858 shares commencing on July 1, 2019. Mr. Ruhe’s compensation will be reviewed annually and may be adjusted as determined by the Company’s Compensation Committee or Board. Additionally, Mr. Ruhe shall be entitled to receive an annual discretionary bonus as determined by the Board. On March 2, 2020, Mr. Ruhe tendered his resignation to the Company’s Board of Directors (the “Board”). The Board accepted Mr. Ruhe’s resignation effective immediately. Mr. Ruhe also stepped down as an advisor to the Company’s Audit Committee. Additionally, pursuant to the terms of Mr. Ruhe’s employment contract with the Company, Mr. Ruhe forfeited 11,709 shares of unvested common stock previously issued to Mr. Ruhe. The Company elected to allow Mr. Ruhe to retain the shares that had yet to vest at the time of his resignation. On July 15, 2019 the Company’s Board of Directors (the “Board”) appointed Richard S. Groberg to be the President of the Company. Mr. Groberg shall initially serve a three-year term effective July 15, 2019 pursuant to a written employment agreement (the “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 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. On January 22, 2020, Mr. Groberg, tendered his resignation to the Company’s Board of Directors (the “Board”). The Board accepted Mr. Groberg’s resignation effective immediately. The Company and Mr. Groberg executed a mutual Separation Agreement. The Company elected to allow Mr. Groberg to retain the shares that had yet to vest at the time of his resignation. On September 1, 2020, the Company entered into an Employment Agreement (the “Agreement”) with Paris Balaouras (the “Employee”). Under the terms of the Agreement, the Employee shall serve as the Company’s Chief Cultivation Officer for a term of three (3) years (the “Term”) commencing on September 15, 2020. The Employee shall receive a base salary of $105,000 annually, shall be eligible to receive an annual discretionary bonus during the Term, based on performance criteria determined by the board of directors of the Company in its sole discretion, in amount equal to up to 100% of Employee’s base salary for the then current fiscal year, shall be eligible to receive an annual discretionary stock grant during the Term which shall be vested in equal increments of 1/3 rd On September 1, 2020, the Company entered into an Employment Agreement (the “Agreement”) with Roger Bloss. Under the terms of the Agreement, the Employee shall serve as the Company’s Interim Chief Executive Officer for a term of six (6) months and the Chief Executive Officer and for an additional two (2) years and six (6) months as the Chief Executive Officer for a total of three (3) years (the “Term”) commencing on September 15, 2020. The Employee shall receive a base salary of $105,000 annually, shall be eligible to receive an annual discretionary bonus during the Term, based on performance criteria determined by the board of directors of the Company in its sole discretion, in amount equal to up to 100% of Employee’s base salary for the then current fiscal year, shall be eligible to receive an annual discretionary stock grant during the Term which shall be vested in equal increments of 1/3 rd On September 1, 2020, the Company entered into an Employment Agreement (the “Agreement”) with Bernard Moyle. Under the terms of the Agreement, the Employee shall serve as the Company’s Secretary/Treasurer for a term of three (3) years (the “Term”) commencing on September 15, 2020. The Employee shall receive a base salary of $60,000 annually, shall be eligible to receive an annual discretionary bonus during the Term, based on performance criteria determined by the board of directors of the Company in its sole discretion, in amount equal to up to 200% of Employee’s base salary for the then current fiscal year, shall, at commencement of the Term receive a grant of stock of 500,000 shares and shall be eligible to receive an annual discretionary stock grant during the Term which shall be vested in equal increments of 1/3 rd Board of Directors Services Agreements On September 1, 2020, the Board appointed David C. Dear as a director of the Company. On September 15, 2020, the Company entered into a Board of Directors Services Agreement (the “Agreement”) with Messrs. Bloss, Dear and Balaouras (collectively, the “Directors”). Under the terms of the Agreement, each of the Directors shall provide services to the Company as a member of the Board of Directors for a period of not less than one year. Each of the Directors shall receive compensation as follows: (i) Fifteen Thousand and no/100 dollars ($15,000.00), paid in four (4) equal installments on the last calendar day of each quarter, and (ii) Fifteen Thousand (15,000) shares of the Company’s common stock on the last calendar day of each quarter. The Agreement for each of the Directors is effective as of October 1, 2020. Operating Leases The Company leases a production / warehouse facility under a non-cancelable operating lease that expires in June 2027. As of September 30, 2020, the Company recorded operating lease liabilities of $2,191,558 and right of use assets for operating leases of 2,034,071. During the nine months ended September 30, 2020, operating cash outflows relating to operating lease liabilities was $177,088, and the expense for right of use assets for operating leases was $160,207. As of September 30, 2020, the Company’s operating leases had a weighted-average remaining term of 8.13 years. Future minimal rental and lease commitments under non-cancelable operating leases with terms in excess of one year as of September 30, 2020, are as follows: Amount Fiscal year ending December 31: 2020 (excluding the nine months ended September 30, 2020) 87,660 2021 350,640 2022 350,755 2023 350,986 2024 351,333 Thereafter 1,150,995 Total minimum lease payments $ 2,642,369 Rent expense, incurred pursuant to operating leases for the nine months ended September 30, 2020 and 2019, was $262,980 and $323,754, 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. In 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. |
Capital Stock
Capital Stock | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Capital Stock | Note 8 — Capital Stock General The Company is currently authorized to issue up to 95,000,000 shares of Common Stock and 5,000,000 shares of preferred stock, par value $0.001 per share. Common Stock Of the 95,000,000 shares of Common Stock authorized by the Company’s Articles of Incorporation, 65,756,262 shares of Common Stock are issued and outstanding as of September 30, 2020. Each holder of Common Stock is entitled to one vote per share on all matters to be voted upon by the stockholders and are not entitled to cumulative voting for the election of directors. Holders of Common Stock are entitled to receive ratably such dividends, if any, as may be declared from time to time by the board of directors out of funds legally available therefor subject to the rights of preferred stockholders. The Company has not paid any dividends and does not intend to pay any cash dividends to the holders of Common Stock in the foreseeable future. The Company anticipates reinvesting its earnings, if any, for use in the development of its business. In the event of liquidation, dissolution, or winding up of the Company, the holders of Common Stock are entitled, unless otherwise provided by law or the Company’s Articles of Incorporation, including any certificate of designations for a series of preferred stock, to share ratably in all assets remaining after payment of liabilities and the preferences of preferred stockholders. Holders of the Company’s Common Stock do not have preemptive, conversion, or other subscription rights. There are no redemptions or sinking fund provisions applicable to the Company’s Common Stock. Common Stock Issuances For the nine months ended September 30, 2020 and year ended December 31, 2019, the Company issued and/or sold the following unregistered securities: For the nine months ended September 30, 2020: On February 11, 2020, the Company issued 250,000 shares of common stock to its former Secretary and President for services rendered on behalf of the Company. On March 31, 2020, the Company issued 31,251 shares of common stock to its former Chief Financial Officer for services rendered on behalf of the Company. On March 31, 2020, the Company issued 18,562 shares of common stock to its current Interim Chief Executive Officer for services rendered on behalf of the Company. On April 7, 2020, the Company issued 20,000 shares of common stock to an accredited investor for purchasing shares through the Company’s Regulation D offering. The shares were issued in full satisfaction of the previously recorded stock subscription payable for funds received by the Company on October 13, 2018 in the amount of $10,000. On July 22, 2020, the Company entered into a Securities Purchase Agreement (the “Agreement”) with an accredited investor (the “Investor”). Under the terms of the Agreement, the Investor agreed to purchase 4,500,000 shares of the Company’s common stock at $0.0888 per share for a total purchase price of $400,000. The Investor was also to be issued a warrant granting the Investor the right to acquire 1,000,000 shares of the Company’s common stock at an exercise price of $0.10. The warrant was to be dated August 3, 2020 and have a term of three years. The Investor funded $250,000 of the purchase amount on July 31, 2020. On August 10, the Company returned $125,465 of the funds to the Investor for a net investment of $124,535. The Company is to issue the Investor 1,402,279 shares of common stock and a warrant granting the Investor the right to purchase 250,000 shares of common stock under the revised terms of the Agreement. Please see Note 12 — Subsequent Events For the year ended December 31, 2019: Between January 1, 2019 and December 2019, the Company issued 1,845,635 shares of Common Stock to approximately 15 persons in exchange for services rendered on behalf of the Company valued at approximately $896,229. The issuances were made pursuant to the exemptions for registration afforded by Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D, promulgated under the Securities Act. Between January 1, 2019 and December 31, 2019, the Company sold an aggregate of 12,130,000 shares of Common Stock for $6,075,000 to approximately 20 investors all of whom were accredited investors. The issuances were made pursuant to the exemptions for registration afforded by Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D, promulgated under the Securities Act. On February 10, 2019, the Company’s largest shareholder, Red Dot Development, LLC (“Red Dot”), returned 20,000,000 shares of the Company’s common stock to the Company for cancellation in exchange for a payment of $20,000, which as of December 31, 2019 has been accrued as a payable by the Company. On April 1, 2019, the Company issued 66,667 shares of common stock to the Sellers of THC park as per the terms of the Sales Agreement. On July 15, 2019, the Company issued 500,000 shares of common stock for the conversion of a $250,000 note payable. At September 30, 2020 and December 31, 2019, there are 65,756,262 and 65,436,449 shares of Common Stock issued and outstanding, respectively. Preferred Stock The Board is authorized, without further approval from our stockholders, to create one or more series of preferred stock, and to designate the rights, privileges, preferences, restrictions, and limitations of any given series of preferred stock. Accordingly, the Board may, without stockholder approval, issue shares of preferred stock with dividend, liquidation, conversion, voting, or other rights that could adversely affect the voting power or other rights of the holders of Common Stock. The issuance of preferred stock could have the effect of restricting dividends payable to holders of our Common Stock, diluting the voting power of our Common Stock, impairing the liquidation rights of our Common Stock, or delaying or preventing a change in control of us, all without further action by our stockholders. Of the 5,000,000 shares of preferred stock, par value $0.001 per share, authorized in our Articles of Incorporation, 2,500 shares are designated as Series A Convertible Preferred Stock. Series A Convertible Preferred Stock Each share of Series A Preferred Stock is convertible, at the option of the holder, into that number of shares of Common Stock determined by dividing the stated value of each share of Series A Preferred Stock (currently, $1,000) by the conversion price (currently, $0.75). The stated value and the conversion price are subject to adjustment as provided for in the Certificate of Designation. We are prohibited from effecting a conversion of the Series A Preferred Stock to the extent that, after giving effect to the conversion, the holder (together with such holder’s affiliates and any persons acting as a group with holder or any of such holder’s affiliates) would beneficially own in excess of 4.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion. A holder, upon notice to us, may increase or decrease this beneficial ownership limitation; provided, that, in no event can the holder increase the beneficial ownership limitation in excess of 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon the conversion of the Series A Preferred Stock then held by holder. Such increase of the beneficial ownership limitation cannot be effective until the 61 st Preferred Stock Issuances For the nine months ended September 30, 2020: None For the year ended December 31,2019: None At September 30, 2020 and December 31, 2019, there are 0 and 0 shares of Series A Preferred Stock issued and outstanding, respectively. |
Basic and Diluted Earnings (Los
Basic and Diluted Earnings (Loss) per Common Share | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Basic and Diluted Earnings (Loss) per Common Share | Note 9 — Basic and Diluted Earnings (Loss) per Common Share Basic earnings (loss) per share is computed by dividing the net income or net loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is calculated using the treasury stock method and reflects the potential dilution that could occur if warrants were exercised and were not anti-dilutive. For the nine months ended September 30, 2020, basic and diluted loss per common share were the same since there were no potentially dilutive shares outstanding during the respective periods. The outstanding warrants and options as of September 30, 2020, to purchase 1,243,000 shares of common stock were not included in the calculations of diluted loss per share because the impact would have been anti-dilutive. |
Stock Based Compensation
Stock Based Compensation | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock Based Compensation | Note 10 — Stock Based Compensation A summary of the warrants and options issued, exercised and expired are below: Stock Options On June 22, 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. Pursuant to the Advisory Agreement, the Company granted 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 3 years. A summary of the options issued, exercised and expired are below: Options: Shares Weighted Avg. Remaining Contractual Life in Years Balance at December 31, 2019 10,000 $ 1.20 1.5 Issued - - - Exercised - - - Expired - - - Balance at September 30, 2020 10,000 $ 1.20 1.0 Options outstanding as of September 30, 2020 and December 31, 2019 were 10,000 and 10,000, respectively. 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, and (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. A summary of the warrants issued, exercised and expired are below: Warrants: Shares Weighted Avg. Remaining Contractual Life in Years Balance at December 31, 2019 1,233,000 $ 0.83 1.5 Issued - - - Exercised - - - Expired - - - Balance at September 30, 2020 1,233,000 $ 0.83 0.8 Warrants outstanding as of September 30, 2020 and December 31, 2019 were 1,233,000 and 1,233,000, respectively. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 11 — Related Party Transactions On February 20, 2020, the Company’s subsidiary, Alternative Hospitality, Inc. (the “Borrower”), issued a Short-Term Promissory Note (the “Note”) to Pyrros One, LLC (the “Holder”), an entity controlled by a relative of a director of the Company, in the amount of $110,405 that matures on February 19, 2021. The Note shall bear interest at a rate of 9% per annum with interest-only payments in the amount of $825 due on or before the twentieth day of each month commencing on April 20, 2020. The Borrower was required to make an interest and principal reduction payment in the amount of $1,233 on or before March 20, 2020. The Holder is granted a security interest in that certain real property located at 1300 S. Jones Blvd, Las Vegas, NV 89146, which is owned by the Borrower. On March 31, 2020, the Company’s subsidiary, Condo Highrise Management, LLC (the “Borrower”), issued a Short-Term Promissory Note (the “Note”) to Pyrros One, LLC (the “Holder”), an entity controlled by a relative of a director of the Company, in the amount of $90,000 that matures on March 30, 2021. The Note shall bear interest at a rate of 9% per annum with interest-only payments in the amount of $675 due on or before the first day of each month commencing on May 1, 2020. The Holder is granted a security interest in that certain real property located at 4295 Hwy 343, Amargosa, NV 89020 which is owned by the Borrower. The transaction closed on April 3, 2020. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 12 — Subsequent Events The following material events occurred subsequent to the quarter ended September 30, 2020: On October 1, 2020, the Company entered into an Employment Agreement (the “Agreement”) with Jim Kelly. The Agreement became effective as of October 1, 2020. Under the terms of the Agreement, the Employee shall serve as the Company’s Interim Chief Financial Officer for a term of (i) the sooner of six (6) months, or (ii) the completion of all regulatory filings, including but not limited to the Company’s 2019 Annual Report on Form 10-K, the March 31, 2020 Quarterly Report on Form 10-Q, the June 30, 2020 Quarterly Report on Form 10-Q, the September 30, 2020 Quarterly Report on Form 10-Q and all required Current Reports on Form 8-K, with the Securities and Exchange Commission (“SEC”) to bring the Company current with the SEC. The Employee shall receive a base salary of $24,000 annually, shall be eligible to receive an annual discretionary bonus during the Term, based on performance criteria determined by the C-Suite of the Company in its sole discretion, in an amount equal to up to 400% of the Employee’s base salary for the then current fiscal year, and at commencement of the Term the Employee shall receive a grant of stock of 500,000 restricted shares of the Company’s common stock. On October 13, 2020, the Company’s former President and Secretary filed a lien in Clark County, Nevada in the net amount of $501,085 against the Company’s property located at 1300 S. Jones Blvd, Unit 110, Las Vegas, NV 89146 for unpaid compensation, expense reimbursement, accrued leave, severance pay and penalties. Additionally, on November 6, 2020, the Company’s former President and Secretary filed two liens in Nye County, NV in the net amount of $501,085 against the Company’s property located at 4295 Highway 73, Armagosa, NV 89020, also known as the Company’s THC park, and one lien in Nye County, NV in the net amount of $501,085 against the property owned by Acres Cultivation, LLC and the site of the Company’s three (3) acre grow. On December 8, 2020, the Company entered into Amendment No. 1 (the “Amendment”) to the Revenue Participation Rights Agreement previously entered into with Blue Sky Companies, LLC and Let’s Roll NV, LLC. Under the terms of the Amendment, the new effective Date of the Agreement shall be revised to the date that the first payment shall be due in 2021 from the 2020 3-acre grow. In addition, (i) the Company’s 2020 obligation under the original Agreement for the 2019 grow is deemed satisfied in full, (ii) on or before April 30, 2027, the Company shall pay a $26,000 exit fee. On December 10, 2020, the Company received a short-term loan in the amount $100,000 from a director of the Company. The loan bears no interest and is due on demand. On December 14, 2020, the Company issued 500,000 shares of restricted common stock to its Secretary as per the terms of the Employment Agreement dated September 15, 2020. On December 14, 2020, the Company issued 500,000 shares of restricted common stock to its Interim Chief Financial Officer as per the terms of the Employment Agreement dated October 1, 2020. On December 14, 2020, the Company issued 250,000 shares of restricted common stock to its Interim Chief Executive Officer for services rendered on behalf of the Company. On December 14, 2020, the Company issued 1,402,279 shares of restricted common stock to an accredited investor as per the terms of the Securities Purchase Agreement dated July 22, 2020. On December 14, 2020, the Company issued 2,500 shares of restricted common stock for services rendered on behalf of the Company. On December 14, 2020, the Company issued 2,500 shares of restricted common stock for services rendered on behalf of the Company. On December 14, 2020, the Company issued 200,000 shares of restricted common stock to a Consultant for consulting services rendered on behalf of the Company. On December 14, 2020, the Company and Sylios Corp entered into an Amendment to the Consulting Agreement (the “Amendment”) dated August 25, 2020. Under the terms of the Amendment, the parties agreed to amend the compensation due the Consultant to as follows: Consultant shall receive a total of $10,000 cash compensation and 200,000 shares of the Company’s common stock. As of the date of the Amendment, the Consultant had received all cash compensation. On January 11, 2021, the Company issued an accredited investor a Common Stock Purchase Warrant Agreement in conjunction with the July 2020 Securities Purchase Agreement granting the holder the right to purchase up to 250,000 shares of the Company’s common stock at an exercise price of $0.10 for a term of 4-years. On January 11, 2021, the Company (as “Purchaser”) entered into a Letter of Intent (“LOI”) with MJ Distributing, Inc. (the “Seller”) to define the terms for the purchase of MJ Distributing C202, LLC and MJ Distributing P133, LLC inclusive of two cultivation licenses and two production licenses. The parties had previously entered into a Membership Interest Purchase Agreement (the “MIPA 1”) dated April 2, 2019 to facilitate the same proposed transaction. The parties did not close on MIPA 1. Under the terms of the new Membership Interest Purchase Agreement (“MIPA 2”), the Purchaser is to make a non-refundable payment in the amount of $300,000 upon execution of the LOI, a second payment in the amount of $200,000 on or before January 31, 2021, a third payment in the amount of $100,000 on or before February 12, 2021 and subsequent payments in the amount of $100,000 on or before the 12 th On January 12, 2021, the Company closed on the sale of its corporate office building located at 1300 S. Jones Blvd, Las Vegas, NV 89146 for the sales price of $1,627,500. On January 14, 2021, the Company entered into a Debt Conversion and Stock Purchase Agreement (the “Agreement”) with David Dear (the “Investor”), a director of the Company. Under the terms of the Agreement, the Company shall issue 526,316 shares of common stock to the Investor in satisfaction of the $100,000 short term loan made to the Company by the Investor on December 10, 2020. In addition, the Investor elected to purchase an additional 263,148 shares of common stock at a per share price of $0.19 for a total of $50,000. On January 21, 2021, the Company received a Notice of Termination (the “Notice”), effective immediately, from Acres Cultivation, LLC (“Acres”) on the following three (3) agreements (collectively, herein the “Cooperation Agreement”): 1) The Cultivation and Sales Agreement entered into by and between MJNE and Acres, dated as of January 1, 2019 (the “Cultivation and Sales Agreement” or “CSA”), pursuant to Sections 5.3, and 16.20 (cross-default); 2) The Consulting Agreement, by and between Acres and MJNE, made as of January 1, 2019 (the “Consulting Agreement”), pursuant to Sections 10 and 11.10 (cross-default); and 3) The Equipment Lease Agreement between Acres and MJNE, dated as of January 1, 2019 (the “Equipment Lease Agreement”), pursuant to Sections 8(ii), 8(iv), and 29 (cross-default). Within the Notice, Acres makes claims that the Company and its subsidiaries failed to perform in accordance with the terms and conditions of the Cooperation Agreement. The Company and Acres (the “Parties”) are in active discussions in an effort to remedy the alleged breaches noted within the Notice. There is no guarantee that the Parties will reach a resolution satisfactory to the Company. On January 22, 2021 (the “effective Date”), the MJ Holdings, Inc. (“MJNE”) entered into a Cultivation and Sales Agreement (the “Agreement”) with MKC Development Group, LLC (the “Company”). Under the terms of the Agreement, MJNE shall retain the Company to provide oversight and management of MJNE’s cultivation and sale of products at MJNE’s Amargosa Valley, NV farm. The Agreement shall commence on the Effective Date, continue for a period of ten (10) years and automatically renew for a period of five (5) years. As deposits, security and royalty, the Company shall pay to MJNE: (i) a $600,000 non-refundable deposit upon execution of the Agreement, and; (ii) a security deposit of $10,000 to be applied against the last month’s obligations and a $10,000 payment to be applied against the first month’s rent, and; (iii) $10,000 on the first of each month for security and compliance, and; (iv) a royalty of 10% of gross revenue less applicable taxes (hereinafter “Net Sales Revenue”) on all sales of product by the Company; and (v) the Company shall, after the first two (2) years from execution of the Agreement, be responsible to pay to MJNE a minimum royalty of $83,000.00 per month. As compensation, MJNE shall pay to the Company: (i) 90% of Net Sales Revenue to the Company as the Management Fee. The transaction closed on January 27, 2021. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Red Earth, LLC, HDGLV, LLC, Icon Management, LLC, Alternative Hospitality, LLC, Condo Highrise Management, LLC and Prescott Management, LLC. Inter-company balances and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates and assumptions are required in the determination of the fair value of financial instruments and the valuation of stock-based compensation. Some of these judgments can be subjective and complex, and, consequently, actual results may differ from these estimates. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of September 30, 2020 and December 31, 2019. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, prepaid expenses and accounts payable. Fair values were assumed to approximate carrying values for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) for identical instruments that are highly liquid, observable and actively traded in over-the-counter markets. Fair values determined by Level 2 inputs utilize inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations whose inputs are observable and can be corroborated by market data. Level 3 inputs are unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Level 1: Level 2 Level 3: If inputs from levels 1 and 2 are not available, FASB acknowledges that fair value measures of many assets and liabilities are less precise. The board describes Level 3 inputs as “unobservable,” and limits their use by saying they “shall be used to measure fair value to the extent that observable inputs are not available.” This category allows “for situations in which there is little, if any, market activity for the asset or liability at the measurement date”. The FASB explains that “observable inputs” are gathered from sources other than the reporting company and that they are expected to reflect assumptions made by market participants. As of September 30, 2020 and December 31, 2019, the Company’s investment in marketable securities – available for sale was determined to be a level 1 investment. |
Cash | Cash Cash includes cash on hand and deposits placed with banks or other financial institutions, which are unrestricted as to withdrawal and use and with an original maturity of three months or less. The Company maintains its cash in bank deposit accounts. The Company had $8,385 cash at September 30, 2020. The Company, at various times throughout the year, had cash in financial institutions in excess of Federally insured limits. However, the Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on its credit balances. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts: Accounts receivable are recorded at invoiced amount and generally do not bear interest. An allowance for doubtful accounts is established, as necessary, based on past experience and other factors which, in management’s judgment, deserve current recognition in estimating bad debts. Such factors include growth and composition of accounts receivable, the relationship of the allowance for doubtful accounts to accounts receivable and current economic conditions. The determination of the collectability of amounts due from customer accounts requires the Company to make judgments regarding future events and trends. Allowances for doubtful accounts are determined based on assessing the Company’s portfolio on an individual customer and on an overall basis. This process consists of a review of historical collection experience, current aging status of the customer accounts, and the financial condition of the Company’s customers. Based on a review of these factors, the Company establishes or adjusts the allowance for specific customers and the accounts receivable portfolio as a whole. September 30, 2020 December 31, 2019 Accounts receivable $ 29,338 $ 23,675 Less: allowance (12,000 ) (12,000 ) Net accounts receivable $ 17,338 $ 11,675 |
Debt Issuance Costs | Debt Issuance Costs Costs associated with obtaining, closing, and modifying loans and/or debt instruments are netted against the carrying amount of the debt instrument, and charged to interest expense over the term of the loan. |
Inventory | Inventory Inventories consist of finished goods as of September 30, 2020. Inventories are valued at the lower of cost or net realizable value. The Company determines 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. The Company has performed a valuation and has established a reserve against its finished goods inventory. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost less accumulated depreciation and any impairment losses. Depreciation is computed using the straight-line method over the useful lives of the assets. Major renewals and betterments are capitalized and depreciated; maintenance and repairs that do not extend the life of the respective assets are expensed as incurred. Upon disposal of assets, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in the consolidated statements of operations. Construction in progress primarily represents the construction or the renovation costs stated at cost less any accumulated impairment loss, which is not depreciated. Costs incurred are capitalized and transferred to property and equipment upon completion, at which time depreciation commences. Property and equipment are depreciated over their estimated useful lives as follows: Buildings 12 years Land Not depreciated Leasehold Improvements Lessor of lease term or 5 years Machinery and Equipment 5 years Furniture and Fixtures 5 years |
Long-lived Assets | Long–lived Assets Long-lived assets, including real estate property and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by comparison of their carrying amounts to future undiscounted cash flows the assets are expected to generate. If the assets are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the assets exceeds its fair value. |
Non- Controlling Interest | Non- Controlling Interest The Company’s non-controlling interest represents the minority shareholder’s ownership interest related to the Company’s subsidiary, Alternative Hospitality, Inc. The Company reports its non-controlling interest in subsidiaries as a separate component of equity in the Consolidated Balance Sheets and reports both net loss attributable to the non-controlling interest and net loss attributable to the Company’s common shareholders on the face of the Consolidated Statements of Operations. The Company’s equity interest in Alternative Hospitality, Inc. is 51% and the non-controlling stockholder’s interest is 49%. This is reflected in the Consolidated Statements of Equity. |
Revenue Recognition | Revenue Recognition On January 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) 606 – Revenue from Contracts with Customers Generally, the Company considers all revenues as arising from contracts with customers. Revenue is recognized based on the five-step process outlined in the Accounting Standards Codification (“ASC”) 606: Step 1 – Identify the Contract with the Customer – A contract exists when (a) the parties to the contract have approved the contract and are committed to perform their respective obligations, (b) the entity can identify each party’s rights regarding the goods or services to be transferred, (c) the entity can identify the payment terms for the goods or services to be transferred, (d) the contract has commercial substance and it is probably that the entity will collect substantially all of the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer. Step 2 – Identify Performance Obligations in the Contract – Upon execution of a contract, the Company identifies as performance obligations each promise to transfer to the customer either (a) goods or services that are distinct, or (b) a series of distinct goods or services that are substantially the same and have the same pattern of transfer to the customer. To the extent a contract includes multiple promised goods or services, the Company must apply judgement to determine whether the goods or services are capable of being distinct within the context of the contract. If these criteria are not met, the goods or services are accounted for as a combined performance obligation. Step 3 – Determine the Transaction Price – When (or as) a performance obligation is satisfied, the Company shall recognize as revenue the amount of the transaction price that is allocated to the performance obligation. The contract terms are used to determine the transaction price. Generally, all contracts include fixed consideration. If a contract did include variable consideration, the Company would determine the amount of variable consideration that should be included in the transaction price based on expected value method. Variable consideration would be included in the transaction price, if in the Company’s judgement, it is probable that a significant future reversal of cumulative revenue under the contract would not occur. Step 4 – Allocate the Transaction Price – After the transaction price has been determined, the next step is to allocate the transaction price to each performance obligation in the contract. If the contract only has one performance obligation, the entire transaction price will be applied to that obligation. If the contract has multiple performance obligations, the transaction price is allocated to the performance obligations based on the relative standalone selling price (SSP) at contract inception. Step 5 – Satisfaction of the Performance Obligations (and Recognize Revenue) – Revenue is recognized when (or as) goods or services are transferred to a customer. The Company satisfies each of its performance obligations by transferring control of the promised good or service underlying that performance obligation to the customer. Control is the ability to direct the use of and obtain substantially all of the remaining benefits from an asset. It includes the ability to prevent other entities from directing the use of and obtaining the benefits from an asset. Indicators that control has passed to the customer include: a present obligation to pay; physical possession of the asset; legal title; risks and rewards of ownership; and acceptance of the asset(s). Performance obligations can be satisfied at a point in time or over time. The majority of the Company’s revenue was derived under the agreements, Consulting Agreement and Equipment Lease Agreement, entered into with Acres Cultivation, LLC. Revenue derived from consulting services fees are recognized over the term of the arrangement as services are provided. Revenue is presented net of discounts, fees and other related taxes. Revenue derived from equipment leases |
Other Current Liabilities | Other Current Liabilities The Company’s other current liabilities consisted of amounts due under the management agreement and performance guarantee with Acres Cultivation, LLC. As of September 30, 2020 and December 31, 2019, other current liabilities were $432,006 and $-, respectively. |
Stock-Based Compensation | Stock-Based Compensation The Company’s share-based payment awards principally consist of grants of common stock. In accordance with the applicable accounting guidance, stock-based payment awards are classified as either equity or liabilities. For equity-classified awards, the Company measures compensation cost based on the grant date fair value and recognizes compensation expense in the consolidated statements of operations over the requisite service or performance period the award is expected to vest. The fair value of liability-classified awards is at each reporting date through the settlement date. Change in fair value during the requisite service period will be remeasured as compensation cost over that period. The Company utilizes its historical stock price to determine the volatility of any stock-based compensation. The expected dividend yield is 0% as the Company has not paid any dividends on its common stock and does not anticipate it will pay any dividends in the foreseeable future. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant date with a term equal to the expected term of the stock-based award. For stock-based financial instruments issued to parties other than employees, the Company uses the contractual term of the financial instruments as the expected term of the stock-based financial instruments. The assumptions used in calculating the fair value of stock-based financial instruments represent its best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and it uses different assumptions, its stock-based compensation expense could be materially different in the future. |
Convertible Instruments | Convertible Instruments The Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC 815, Derivatives and Hedging Activities. Applicable GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. The Company accounts for convertible instruments (when it has been determined that the embedded conversion options should not be bifurcated from their host instruments) as follows: The Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption. |
Operating Leases | Operating Leases The Company leases production and warehouse facilities and office space under operating leases. Operating lease agreements may contain rent escalation clauses, rent holidays or certain landlord incentives, including tenant improvement allowances. Rent expense with scheduled rent increases or landlord incentives are recognized on a straight-line basis over the lease term, beginning with the effective lease commencement date, which is generally the date in which the Company takes possession of or controls the physical use of the property. |
Income Taxes | Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance on deferred tax assets is established when management considers it is more likely than not that some portion or all of the deferred tax assets will not be realized. Tax benefits from an uncertain tax position are only recognized if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. Interest and penalties related to unrecognized tax benefits are recorded as incurred as a component of income tax expense. The Company has not recognized any tax benefits from uncertain tax positions for any of the reporting periods presented. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Leases: Leases (Topic 842) Stock Based Compensation: Compensation – Stock Compensation (Topic 718) Improvements to Nonemployee Share Based Payment Accounting. The amendments in this Update expand the scope of stock compensation to include share-based payment transactions for acquiring goods and services from nonemployees. The guidance in this Update does not apply to transactions involving equity instruments granted to a lender or investor that provides financing to the issuer. The guidance is effective for fiscal years beginning after December 31, 2018 including interim periods within the fiscal year. The Company adopted with an effective date of January 1, 2019. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Schedule of Accounts Receivable and Allowance for Doubtful Accounts | Based on a review of these factors, the Company establishes or adjusts the allowance for specific customers and the accounts receivable portfolio as a whole. September 30, 2020 December 31, 2019 Accounts receivable $ 29,338 $ 23,675 Less: allowance (12,000 ) (12,000 ) Net accounts receivable $ 17,338 $ 11,675 |
Schedule of Property, Plant and Equipment Estimated Useful Lives | Property and equipment are depreciated over their estimated useful lives as follows: Buildings 12 years Land Not depreciated Leasehold Improvements Lessor of lease term or 5 years Machinery and Equipment 5 years Furniture and Fixtures 5 years |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and Equipment at September 30, 2020 and December 31, 2019 consisted of the following: September 30, December 31, Leasehold Improvements 323,281 323,281 Machinery and Equipment 1,052,203 1,052,203 Building and Land 3,150,000 3,150,000 Furniture and Fixtures 578,844 543,366 Total property and equipment 5,104,328 5,068,850 Less: Accumulated depreciation (831,231 ) (494,768 ) Property and equipment, net 4,273,097 4,574,082 |
Notes Payable (Tables)
Notes Payable (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Notes Payable | Notes payable as of September 30, 2020 and December 31, 2019 consist of the following: September 30, December 31, Note payable bearing interest at 6.50%, originated November 1, 2018, due on October 31, 2023, originally $1,100,000 (i) $ 1,026,438 $ 1,086,662 Note payable bearing interest at 5.0%, originated January 17, 2019, due on January 31, 2022, originally $750,000 (ii) 750,000 750,000 Note payable bearing interest at 9.0%, originated January 17, 2019, due on January 16, 2020, originally $150,000 (iii) 100,000 100,000 Note payable bearing interest at 6.5% originated April 1, 2019, due on March 31, 2022, originally $250,000 (iv) 237,167 242,425 Notes payable, related party, bearing interest at 9.0%, originated February 20, 2020, due on February 19, 2021, originally $110,405 (v) 110,405 - Notes payable, related party, bearing interest at 9.0%, originated April 3, 2020, due on March 30, 2021, originally $90,000 (vi) 90,000 - Total notes payable $ 2,314,010 $ 2,179,087 Less: current portion (380,343 ) (1,249,561 ) Long-term notes payable $ 1,933,667 $ 929,526 (i) On September 21, 2018, the Company, through its wholly-owned subsidiary Prescott Management, LLC, entered into a contract to purchase an approximately 10,000 square foot office building located at 1300 South Jones Boulevard, Las Vegas, Nevada 89146 for $1,500,000, subject to seller financing in the amount of $1,100,000, amortizing over 30 years at an interest rate of 6.5% per annum with monthly installments of $6,952.75 beginning on November 1, 2018, and continuing on the same day of each month thereafter until October 31, 2019. Upon the one-year anniversary of the note, a principal reduction payment of $50,000 is due, and provided that the monthly payments and the principal reduction payment have been made, the payments will be recalculated and re-amortized on the same terms with a new scheduled monthly payment of $6,559 beginning on November 1, 2019 and continuing until October 31, 2023, at which time the entire sum of principal in the amount of $986,438, plus any accrued interest, is due and payable. The Company closed the purchase on October 18, 2018. The building is home to the Company’s business operations. As of September 30, 2020, $1,026,438 principal and $11,736 interest remain due. Please see Note 12 — Subsequent Events (ii) On January 17, 2019, the Company executed a promissory note for $750,000 with FR Holdings LLC, a Wyoming limited liability company. The note accrues interest at 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. As of September 30, 2020, $750,000 principal and $29,583 interest remain due. (iii) On January 17, 2019, the Company executed a short-term promissory note for $150,000 with Let’s Roll Holdings, LLC, and entity controlled by the Company’s Chief Cultivation Officer and a director. The note accrues interest at 9.0% per annum and is due on January 16, 2020. Principal payments in the amount of $50,000 were made during the year ended December 31, 2019. As of September 30, 2020, $100,000 principal and $17,526 interest remain due. (iv) On April 1, 2019, the Company executed a promissory note for $250,000 with John T. Jacobs and Teresa D. Jacobs. The note accrues interest at 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. As of September 30, 2020, $237,167 principal and $10,807 interest remain due. (v) On February 20, 2020, the Company’s subsidiary, Alternative Hospitality, Inc. (the “Borrower”), issued a Short-Term Promissory Note (the “Note”) to Pyrros One, LLC (the “Holder”), an entity controlled by a relative of a director of the Company, in the amount of $110,405 that matures on February 19, 2021. The Note shall bear interest at a rate of 9% per annum with interest-only payments in the amount of $825 due on or before the twentieth day of each month commencing on April 20, 2020. The Borrower was required to make an interest and principal reduction payment in the amount of $1,233 on or before March 20, 2020. The Holder is granted a security interest in that certain real property located at 1300 S. Jones Blvd, Las Vegas, NV 89146, which is owned by the Borrower. As of September 30, 2020, $110,405 principal and $1,125 interest remain due. (vi) On March 31, 2020, the Company’s subsidiary, Condo Highrise Management, LLC (the “Borrower”), issued a Short-Term Promissory Note (the “Note”) to Pyrros One, LLC (the “Holder”), an entity controlled by a relative of a director of the Company, in the amount of $90,000 that matures on March 30, 2021. The Note shall bear interest at a rate of 9% per annum with interest-only payments in the amount of $675 due on or before the first day of each month commencing on May 1, 2020. The Holder is granted a security interest in that certain real property located at 4295 Hwy 343, Amargosa, NV 89020. which is owned by the Borrower. The transaction closed on April 3, 2020. As of September 30, 2020, $90,000 principal and $4,050 interest remain due. |
Schedule of Minimum Loan Payments | Amount Fiscal year ending December 31: 2020 7,070 2021 376,593 2022 915,613 2023 1,014,734 2024 - Thereafter - Total minimum loan payments $ 2,314,010 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Rental and Lease Commitments | Future minimal rental and lease commitments under non-cancelable operating leases with terms in excess of one year as of September 30, 2020, are as follows: Amount Fiscal year ending December 31: 2020 (excluding the nine months ended September 30, 2020) 87,660 2021 350,640 2022 350,755 2023 350,986 2024 351,333 Thereafter 1,150,995 Total minimum lease payments $ 2,642,369 |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Summary of Options Issued, Exercised and Expired | A summary of the options issued, exercised and expired are below: Options: Shares Weighted Avg. Remaining Contractual Life in Years Balance at December 31, 2019 10,000 $ 1.20 1.5 Issued - - - Exercised - - - Expired - - - Balance at September 30, 2020 10,000 $ 1.20 1.0 |
Summary of Warrants Issued, Exercised and Expired | A summary of the warrants issued, exercised and expired are below: Warrants: Shares Weighted Avg. Remaining Contractual Life in Years Balance at December 31, 2019 1,233,000 $ 0.83 1.5 Issued - - - Exercised - - - Expired - - - Balance at September 30, 2020 1,233,000 $ 0.83 0.8 |
Nature of the Business (Details
Nature of the Business (Details Narrative) - USD ($) | Jan. 10, 2017 | Sep. 30, 2020 | Aug. 25, 2020 | Dec. 31, 2019 |
Common stock | 65,756,262 | 65,436,449 | ||
Consulting Agreement [Member] | Sylios Corp [Member] | ||||
Consultant fees | $ 20,000 | |||
Common stock | 100,000 | |||
MJ Real Estate Partners, LLC [Member] | ||||
Number of common stocks, exchanged during period | 1,800,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
Cash | $ 8,385 | |
Other current liabilities | $ 432,006 | |
Expected dividend yield | 0.00% | |
Stockholder [Member] | ||
Non-controlling interest percentage | 49.00% | |
Alternative Hospitality, Inc [Member] | ||
Equity interest | 51.00% |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Accounts Receivable and Allowance for Doubtful Accounts (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Accounting Policies [Abstract] | ||
Accounts receivable | $ 29,338 | $ 23,675 |
Less: allowance | (12,000) | (12,000) |
Net accounts receivable | $ 17,338 | $ 11,675 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Schedule of Property, Plant and Equipment Estimated Useful Lives (Details) | 9 Months Ended |
Sep. 30, 2020 | |
Buildings [Member] | |
Property, plant and equipment, estimated useful lives | 12 years |
Land [Member] | |
Property, plant and equipment, estimated useful lives, description | Not depreciated |
Leasehold Improvements [Member] | |
Property, plant and equipment, estimated useful lives, description | Lessor of lease term or 5 years |
Machinery and Equipment [Member] | |
Property, plant and equipment, estimated useful lives | 5 years |
Furniture and Fixtures [Member] | |
Property, plant and equipment, estimated useful lives | 5 years |
Going Concern (Details Narrativ
Going Concern (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||
Accumulated deficit | $ (18,241,114) | $ (18,241,114) | $ (16,038,345) | ||||||
Negative working capital | 2,930,125 | 2,930,125 | |||||||
Net loss | (366,033) | $ (632,979) | $ (1,210,532) | $ (2,061,507) | $ (1,580,717) | $ (646,488) | (2,209,544) | $ (4,288,712) | |
Cash and cash equivalents | $ 8,385 | $ 8,385 | $ 22,932 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 112,973 | $ 104,477 | $ 336,462 | $ 257,834 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Total property and equipment | $ 5,104,328 | $ 5,068,850 |
Less: Accumulated depreciation | (831,231) | (494,768) |
Property and equipment, net | 4,273,097 | 4,574,082 |
Leasehold Improvements [Member] | ||
Total property and equipment | 323,281 | 323,281 |
Machinery and Equipment [Member] | ||
Total property and equipment | 1,052,203 | 1,052,203 |
Building and Land [Member] | ||
Total property and equipment | 3,150,000 | 3,150,000 |
Furniture and Fixtures [Member] | ||
Total property and equipment | $ 578,844 | $ 543,366 |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) - Provisional Grow License [Member] - USD ($) | 1 Months Ended | |
Feb. 28, 2017 | Oct. 31, 2016 | |
Investor [Member] | ||
Payment for business acquisition | $ 350,000 | |
Asset Purchase and Sale Agreement [Member] | ||
Agreement amount received from seller | $ 300,000 | |
Payment for deposit | $ 25,000 |
Notes Payable - Schedule of Not
Notes Payable - Schedule of Notes Payable (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 | |
Total notes payable | $ 2,314,010 | $ 2,179,087 | |
Less: current portion | (179,938) | (1,249,561) | |
Long-term notes payable | 1,933,667 | 929,526 | |
Note Payable One [Member] | |||
Total notes payable | [1] | 1,026,438 | 1,086,662 |
Note Payable Two [Member] | |||
Total notes payable | [2] | 750,000 | 750,000 |
Note Payable Three [Member] | |||
Total notes payable | [3] | 100,000 | 100,000 |
Note Payable Four [Member] | |||
Total notes payable | [4] | 237,167 | 242,425 |
Note Payable Five [Member] | |||
Total notes payable | [5] | 110,405 | |
Note Payable Six [Member] | |||
Total notes payable | [6] | $ 90,000 | |
[1] | On September 21, 2018, the Company, through its wholly-owned subsidiary Prescott Management, LLC, entered into a contract to purchase an approximately 10,000 square foot office building located at 1300 South Jones Boulevard, Las Vegas, Nevada 89146 for $1,500,000, subject to seller financing in the amount of $1,100,000, amortizing over 30 years at an interest rate of 6.5% per annum with monthly installments of $6,952.75 beginning on November 1, 2018, and continuing on the same day of each month thereafter until October 31, 2019. Upon the one-year anniversary of the note, a principal reduction payment of $50,000 is due, and provided that the monthly payments and the principal reduction payment have been made, the payments will be recalculated and re-amortized on the same terms with a new scheduled monthly payment of $6,559 beginning on November 1, 2019 and continuing until October 31, 2023, at which time the entire sum of principal in the amount of $986,438, plus any accrued interest, is due and payable. The Company closed the purchase on October 18, 2018. The building is home to the Company's business operations. As of September 30, 2020, $1,026,438 principal and $11,736 interest remain due. Please see Note 12 - Subsequent Events for further information. | ||
[2] | On January 17, 2019, the Company executed a promissory note for $750,000 with FR Holdings LLC, a Wyoming limited liability company. The note accrues interest at 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. As of September 30, 2020, $750,000 principal and $29,583 interest remain due. | ||
[3] | On January 17, 2019, the Company executed a short-term promissory note for $150,000 with Let's Roll Holdings, LLC, and entity controlled by the Company's Chief Cultivation Officer and a director. The note accrues interest at 9.0% per annum and is due on January 16, 2020. Principal payments in the amount of $50,000 were made during the year ended December 31, 2019. As of September 30, 2020, $100,000 principal and $17,526 interest remain due. | ||
[4] | On April 1, 2019, the Company executed a promissory note for $250,000 with John T. Jacobs and Teresa D. Jacobs. The note accrues interest at 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. As of September 30, 2020, $237,167 principal and $10,807 interest remain due. | ||
[5] | On February 20, 2020, the Company's subsidiary, Alternative Hospitality, Inc. (the "Borrower"), issued a Short-Term Promissory Note (the "Note") to Pyrros One, LLC (the "Holder"), an entity controlled by a relative of a director of the Company, in the amount of $110,405 that matures on February 19, 2021. The Note shall bear interest at a rate of 9% per annum with interest-only payments in the amount of $825 due on or before the twentieth day of each month commencing on April 20, 2020. The Borrower was required to make an interest and principal reduction payment in the amount of $1,233 on or before March 20, 2020. The Holder is granted a security interest in that certain real property located at 1300 S. Jones Blvd, Las Vegas, NV 89146, which is owned by the Borrower. As of September 30, 2020, $110,405 principal and $1,125 interest remain due. | ||
[6] | On March 31, 2020, the Company's subsidiary, Condo Highrise Management, LLC (the "Borrower"), issued a Short-Term Promissory Note (the "Note") to Pyrros One, LLC (the "Holder"), an entity controlled by a relative of a director of the Company, in the amount of $90,000 that matures on March 30, 2021. The Note shall bear interest at a rate of 9% per annum with interest-only payments in the amount of $675 due on or before the first day of each month commencing on May 1, 2020. The Holder is granted a security interest in that certain real property located at 4295 Hwy 343, Amargosa, NV 89020. which is owned by the Borrower. The transaction closed on April 3, 2020. As of September 30, 2020, $90,000 principal and $4,050 interest remain due. |
Notes Payable - Schedule of N_2
Notes Payable - Schedule of Notes Payable (Details) (Parenthetical) | Apr. 03, 2020USD ($) | Mar. 31, 2020USD ($) | Feb. 20, 2020USD ($) | Apr. 02, 2019USD ($) | Jan. 17, 2019USD ($) | Nov. 01, 2018USD ($) | Sep. 21, 2018USD ($)ft² | Sep. 30, 2020USD ($) | Jun. 30, 2020USD ($) | Dec. 31, 2019USD ($) |
Prescott Management LLC [Member] | ||||||||||
Debt instrument principal value | $ 1,026,438 | |||||||||
Area of land | ft² | 10,000 | |||||||||
Seller financing | $ 1,500,000 | |||||||||
Debt instrument monthly installments | $ 6,953 | |||||||||
Interest payable | 11,736 | |||||||||
Notes payable, description | The Company, through its wholly-owned subsidiary Prescott Management, LLC, entered into a contract to purchase an approximately 10,000 square foot office building located at 1300 South Jones Boulevard, Las Vegas, Nevada 89146 for $1,500,000, subject to seller financing in the amount of $1,100,000, amortizing over 30 years at an interest rate of 6.5% per annum with monthly installments of $6,952.75 beginning on November 1, 2018, and continuing on the same day of each month thereafter until October 31, 2019. Upon the one-year anniversary of the note, a principal reduction payment of $50,000 is due, and provided that the monthly payments and the principal reduction payment have been made, the payments will be recalculated and re-amortized on the same terms with a new scheduled monthly payment of $6,559 beginning on November 1, 2019 and continuing until October 31, 2023, at which time the entire sum of principal in the amount of $986,438, plus any accrued interest, is due and payable. The Company closed the purchase on October 18, 2018. The building is home to the Company's business operations. | |||||||||
Prescott Management LLC [Member] | One-Year Anniversary [Member] | ||||||||||
Debt instrument monthly installments | $ 50,000 | |||||||||
Prescott Management LLC [Member] | New Scheduled Payment [Member] | Beginning on November 1, 2019 and Continuing Until October 31, 2023 [Member] | ||||||||||
Debt instrument principal value | 986,438 | |||||||||
Debt instrument monthly installments | $ 6,559 | |||||||||
Note Payable One [Member] | ||||||||||
Debt interest rate | 6.50% | |||||||||
Debt instrument maturity date | Oct. 31, 2023 | |||||||||
Debt instrument principal value | $ 1,100,000 | |||||||||
Note Payable Two [Member] | ||||||||||
Debt interest rate | 5.00% | |||||||||
Debt instrument maturity date | Jan. 31, 2022 | |||||||||
Debt instrument principal value | $ 750,000 | |||||||||
Promissory Note [Member] | John T. Jacobs and Teresa D. Jacobs [Member] | ||||||||||
Debt interest rate | 6.50% | |||||||||
Debt instrument principal value | $ 250,000 | 237,167 | ||||||||
Debt instrument monthly installments | $ 2,178 | |||||||||
Interest payable | 10,807 | |||||||||
Debt instrument maturity date, description | Beginning May 1, 2019 until March 31, 2020 | |||||||||
Debt instrument principal payment reduction | $ 50,000 | |||||||||
Debt instrument payment term | The payments shall be re-amortized (15-year amortization) | |||||||||
Promissory Note [Member] | Second Payment [Member] | March 31, 2021 [Member] | John T. Jacobs and Teresa D. Jacobs [Member] | ||||||||||
Debt instrument principal payment reduction | $ 50,000 | |||||||||
Debt instrument payment term | The payments shall be re-amortized (15-year amortization) | |||||||||
Promissory Note [Member] | FR Holdings LLC [Member] | ||||||||||
Debt interest rate | 5.00% | |||||||||
Debt instrument principal value | $ 750,000 | 750,000 | ||||||||
Debt instrument monthly installments | $ 3,125 | |||||||||
Interest payable | 29,583 | |||||||||
Debt instrument maturity date, description | Beginning February 1, 2019 until January 31, 2022 | |||||||||
Note Payable Three [Member] | ||||||||||
Debt interest rate | 9.00% | |||||||||
Debt instrument maturity date | Jan. 16, 2020 | |||||||||
Debt instrument principal value | $ 150,000 | |||||||||
Short Term Promissory Note [Member] | Alternative Hospitality, Inc [Member] | ||||||||||
Debt interest rate | 9.00% | |||||||||
Debt instrument maturity date | Feb. 19, 2021 | |||||||||
Debt instrument principal value | $ 110,405 | 110,405 | ||||||||
Debt instrument monthly installments | 825 | |||||||||
Interest payable | 1,125 | |||||||||
Debt instrument principal payment reduction | $ 1,233 | |||||||||
Short Term Promissory Note [Member] | Condo Highrise Management, LLC [Member] | ||||||||||
Debt interest rate | 9.00% | |||||||||
Debt instrument maturity date | Mar. 30, 2021 | |||||||||
Debt instrument principal value | 90,000 | $ 90,000 | ||||||||
Debt instrument monthly installments | $ 675 | |||||||||
Interest payable | 4,050 | |||||||||
Short Term Promissory Note [Member] | FR Holdings LLC [Member] | Chief Cultivation Officer and Director [Member] | ||||||||||
Debt instrument principal value | 100,000 | |||||||||
Interest payable | $ 17,526 | |||||||||
Short Term Promissory Note [Member] | Roll Holdings LLC [Member] | Chief Cultivation Officer and Director [Member] | ||||||||||
Debt interest rate | 9.00% | |||||||||
Debt instrument principal value | $ 150,000 | $ 50,000 | ||||||||
Note Payable Four [Member] | ||||||||||
Debt interest rate | 6.50% | |||||||||
Debt instrument maturity date | Mar. 31, 2022 | |||||||||
Debt instrument principal value | $ 250,000 | |||||||||
Note Payable Five [Member] | ||||||||||
Debt interest rate | 9.00% | |||||||||
Debt instrument maturity date | Feb. 19, 2021 | |||||||||
Debt instrument principal value | $ 110,405 | |||||||||
Note Payable Six [Member] | ||||||||||
Debt interest rate | 9.00% | |||||||||
Debt instrument maturity date | Mar. 30, 2021 | |||||||||
Debt instrument principal value | $ 90,000 |
Notes Payable - Schedule of Min
Notes Payable - Schedule of Minimum Loan Payments (Details) | Sep. 30, 2020USD ($) |
Debt Disclosure [Abstract] | |
2020 | $ 7,070 |
2021 | 376,593 |
2022 | 915,613 |
2023 | 1,014,734 |
2024 | |
Thereafter | |
Total minimum loan payments | $ 2,314,010 |
Commitments and Contingencies_2
Commitments and Contingencies (Details Narrative) - USD ($) | Sep. 15, 2020 | Sep. 01, 2020 | Mar. 02, 2020 | Jul. 15, 2019 | Jun. 01, 2019 | Feb. 18, 2019 | Oct. 15, 2018 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 |
Net loss | $ (366,033) | $ (632,979) | $ (1,210,532) | $ (2,061,507) | $ (1,580,717) | $ (646,488) | $ (2,209,544) | $ (4,288,712) | ||||||||
Stock awarded options to purchase | ||||||||||||||||
Lease expiration | Jun. 30, 2027 | |||||||||||||||
Operating lease liabilities | 2,191,558 | $ 2,191,558 | ||||||||||||||
Right of use assets | $ 2,034,071 | 2,034,071 | $ 2,194,278 | |||||||||||||
Operating cash outflows relating to operating lease liabilities | 177,088 | |||||||||||||||
Expense for right of use assets | $ 160,207 | 98,063 | ||||||||||||||
Weighted-average remaining term | 8 years 1 month 16 days | 8 years 1 month 16 days | ||||||||||||||
Rent expense | $ 262,980 | $ 323,754 | ||||||||||||||
Employment Agreement [Member] | Mr. Laurence Ruhe [Member] | ||||||||||||||||
Issuance of common stock for services, shares | 3,858 | |||||||||||||||
Annual base compensation | $ 100,000 | |||||||||||||||
Vesting shares | 46,296 | |||||||||||||||
Shares forfeited during the period | 11,709 | |||||||||||||||
Agreement term | 2 years | |||||||||||||||
Employment Agreement [Member] | Richard S. Groberg [Member] | ||||||||||||||||
Annual base compensation | $ 180,000 | |||||||||||||||
Agreement term | 3 years | |||||||||||||||
Annual base compensation per month | $ 5,000 | |||||||||||||||
Number of restricted stock awards | 400,000 | |||||||||||||||
Vesting percentage | 25.00% | |||||||||||||||
Vesting percentage, description | 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. | |||||||||||||||
Employment Agreement [Member] | Richard S. Groberg [Member] | First Anniversary [Member] | ||||||||||||||||
Vesting percentage | 25.00% | |||||||||||||||
Employment Agreement [Member] | Richard S. Groberg [Member] | Second Anniversary [Member] | ||||||||||||||||
Vesting percentage | 25.00% | |||||||||||||||
Employment Agreement [Member] | Richard S. Groberg [Member] | Third Anniversary [Member] | ||||||||||||||||
Vesting percentage | 25.00% | |||||||||||||||
Employment Agreement [Member] | Paris Balaouras [Member] | ||||||||||||||||
Annual base compensation | $ 105,000 | |||||||||||||||
Annual discretionary bonus percentage | 100.00% | |||||||||||||||
Employment agreement description | On September 1, 2020, the Company entered into an Employment Agreement (the "Agreement") with Paris Balaouras (the "Employee"). Under the terms of the Agreement, the Employee shall serve as the Company's Chief Cultivation Officer for a term of three (3) years (the "Term") commencing on September 15, 2020. The Employee shall receive a base salary of $105,000 annually, shall be eligible to receive an annual discretionary bonus during the Term, based on performance criteria determined by the board of directors of the Company in its sole discretion, in amount equal to up to 100% of Employee's base salary for the then current fiscal year, shall be eligible to receive an annual discretionary stock grant during the Term which shall be vested in equal increments of 1/3rd each over a three year period beginning on the first anniversary of employment, shall be eligible to receive a compensatory stock grant of 667,000 shares for and in consideration of past compensation ($224,000 at September 15, 2020) foregone by Employee; such grant exercisable at Employee's option as such time as Employer is profitable at the NOI level on a trailing twelve (12) month basis or upon other commercial reasonable terms as the Board may determine and shall be awarded options to purchase 500,000 shares of the Company's common stock, exercisable at a price of $.75 per share. | |||||||||||||||
Stock reserved for future issuance | 667,000 | |||||||||||||||
Consideration of past compensation | $ 224,000 | |||||||||||||||
Stock awarded options to purchase | 500,000 | |||||||||||||||
Stock option exercisable price | $ 0.75 | |||||||||||||||
Employment Agreement [Member] | Roger Bloss [Member] | ||||||||||||||||
Annual base compensation | $ 105,000 | |||||||||||||||
Annual discretionary bonus percentage | 100.00% | |||||||||||||||
Employment agreement description | On September 1, 2020, the Company entered into an Employment Agreement (the "Agreement") with Roger Bloss. Under the terms of the Agreement, the Employee shall serve as the Company's Interim Chief Executive Officer for a term of six (6) months and the Chief Executive Officer and for an additional two (2) years and six (6) months as the Chief Executive Officer for a total of three (3) years (the "Term") commencing on September 15, 2020. The Employee shall receive a base salary of $105,000 annually, shall be eligible to receive an annual discretionary bonus during the Term, based on performance criteria determined by the board of directors of the Company in its sole discretion, in amount equal to up to 100% of Employee's base salary for the then current fiscal year, shall be eligible to receive an annual discretionary stock grant during the Term which shall be vested in equal increments of 1/3rd each over a three year period beginning on the first anniversary of employment and shall be awarded options to purchase 500,000 shares of the Company's common stock, exercisable at a price of $.75 per share. | |||||||||||||||
Stock awarded options to purchase | 500,000 | |||||||||||||||
Stock option exercisable price | $ 0.75 | |||||||||||||||
Employment Agreement [Member] | Bernard Moyle [Member] | ||||||||||||||||
Annual base compensation | $ 60,000 | |||||||||||||||
Annual discretionary bonus percentage | 200.00% | |||||||||||||||
Employment agreement description | On September 1, 2020, the Company entered into an Employment Agreement (the "Agreement") with Bernard Moyle. Under the terms of the Agreement, the Employee shall serve as the Company's Secretary/Treasurer for a term of three (3) years (the "Term") commencing on September 15, 2020. The Employee shall receive a base salary of $60,000 annually, shall be eligible to receive an annual discretionary bonus during the Term, based on performance criteria determined by the board of directors of the Company in its sole discretion, in amount equal to up to 200% of Employee's base salary for the then current fiscal year, shall, at commencement of the Term receive a grant of stock of 500,000 shares and shall be eligible to receive an annual discretionary stock grant during the Term which shall be vested in equal increments of 1/3rd each over a three year period beginning on the first anniversary of employment and shall be awarded options to purchase 500,000 shares of the Company's common stock, exercisable at a price of $.75 per share. | |||||||||||||||
Stock awarded options to purchase | 500,000 | |||||||||||||||
Stock option exercisable price | $ 0.75 | |||||||||||||||
Employment Agreement [Member] | Terrence M. Tierney [Member] | ||||||||||||||||
Employee term | 3 years | |||||||||||||||
Employment agreements, description | On October 15, 2018, the Company entered into an employment agreement (the "Tierney Employment Agreement") with Terrence M. Tierney. Pursuant to the Tierney Employment Agreement, the Company appointed Mr. Tierney, to the position of Chief Administrative Officer, in addition to his previous role as Secretary. The initial term of employment is for a three-year period (or until September 30, 2021), unless extended or otherwise terminated in accordance with its terms. The effective date of The Tierney Employment Agreement automatically renews for successive periods of three (3) years unless either party gives written notice to the other party that it does not wish to automatically renew. Mr. Tierney's annual salary is equal to or greater than any other senior executive of the Company with the exception of the Chief Executive Officer. The Tierney Employment Agreement defers salary of $10,000 per month of Mr. Tierney's salary until such time as the Company has achieved gross annual sales of $20,000,000 or net annual profits (as defined in the Tierney Employment Agreement) of $5,000,000 or has raised a total of $50,000,000 in equity or debt financing. In addition, the Company agreed to issue 500,000 shares of common stock pursuant to a stock award agreement within thirty (30) days of adoption of an omnibus benefit plan. | |||||||||||||||
Cost of goods and services sold | $ 20,000,000 | |||||||||||||||
Net loss | 5,000,000 | |||||||||||||||
Proceeds from issuance or sale of equity | $ 50,000,000 | |||||||||||||||
Issuance of common stock for services, shares | 500,000 | |||||||||||||||
Employment Agreement [Member] | Paris Balaouras [Member] | ||||||||||||||||
Employment agreements, description | The Company entered into an employment agreement (the "Balaouras Employment Agreement") with Paris Balaouras. Mr. Balaouras was appointed Chief Executive Officer of the Company on December 15, 2017. The initial term of employment was for a five-year period (or until December 31, 2022), unless extended or otherwise terminated in accordance with its terms. The effective date of the Balaouras Employment Agreement was January 1, 2019, and continues until the earlier of: (i) the effective date of any subsequent employment agreement between Mr. Balaouras and us; (ii) the effective date of any termination of employment as provided for in the Balaouras Employment Agreement; or (iii) five (5) years from the effective date; provided, that the Balaouras Employment Agreement automatically renews for successive periods of three (3) years unless either party gives written notice to the other party that it does not wish to automatically renew, which written notice must be received by the other party no less than ninety (90) days and no more than one hundred eighty (180) days prior to the expiration of the applicable term. Mr. Balaouras elected to waive any 2018 salary, which was recorded as an expense and additional to paid-in capital in 2018, and defer 52% of his 2019 salary; which such deferment shall continue until such time as the Company has operated on a positive cash flow basis for a period of not less than three months. At that time all deferred compensation shall be payable in equal monthly installments for a period of 24 months. | |||||||||||||||
Employment Agreement [Member] | Chief Cultivation Officer [Member] | Paris Balaouras [Member] | ||||||||||||||||
Term of employment agreement | 3 years | |||||||||||||||
Employment Agreement [Member] | Chief Executive Officer [Member] | Roger Bloss [Member] | ||||||||||||||||
Term of employment agreement | 3 years | |||||||||||||||
Employment Agreement [Member] | Secretary/Treasurer [Member] | Bernard Moyle [Member] | ||||||||||||||||
Term of employment agreement | 3 years | |||||||||||||||
Board of Directors Services Agreement [Member] | Directors [Member] | ||||||||||||||||
Stock issued during period value of common stock | $ 15,000 | |||||||||||||||
Stock issued during period shares of common stock | 15,000 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Future Minimum Rental and Lease Commitments (Details) | Sep. 30, 2020USD ($) |
Income Tax Disclosure [Abstract] | |
2020 (excluding the nine months ended September 30, 2020) | $ 87,660 |
2021 | 350,640 |
2022 | 350,755 |
2023 | 350,986 |
2024 | 351,333 |
Thereafter | 1,150,995 |
Total minimum lease payments | $ 2,642,369 |
Capital Stock (Details Narrativ
Capital Stock (Details Narrative) - USD ($) | Aug. 10, 2020 | Jul. 31, 2020 | Jul. 22, 2020 | Apr. 07, 2020 | Mar. 31, 2020 | Mar. 31, 2020 | Feb. 11, 2020 | Jul. 15, 2019 | Apr. 02, 2019 | Feb. 10, 2019 | Oct. 13, 2018 | Mar. 31, 2020 | Sep. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Dec. 31, 2019 |
Common stock, shares authorized | 95,000,000 | 95,000,000 | ||||||||||||||
Preferred stock, shares authorized | 5,000,000 | 2,500 | ||||||||||||||
Common stock, par value | $ 0.001 | $ 0.001 | ||||||||||||||
Preferred stock, par value | $ 0.001 | $ 0.001 | ||||||||||||||
Common stock, shares issued | 65,756,262 | 65,436,449 | ||||||||||||||
Common stock, shares outstanding | 65,756,262 | 65,436,449 | ||||||||||||||
Warrant outstanding | 1,233,000 | 1,233,000 | ||||||||||||||
Value of shares issued for services | $ 56,250 | $ 659,605 | $ 16,000 | |||||||||||||
Preferred stock, shares issued | 0 | 0 | ||||||||||||||
Preferred stock, shares outstanding | 0 | 0 | ||||||||||||||
Series A Convertible Preferred Stock [Member] | ||||||||||||||||
Preferred stock, shares authorized | 2,500 | 2,500 | ||||||||||||||
Preferred stock, par value | $ 1,000 | $ 1,000 | ||||||||||||||
Conversion price | $ 0.75 | $ 0.75 | ||||||||||||||
Preferred stock, shares issued | 0 | 0 | ||||||||||||||
Preferred stock, shares outstanding | 0 | 0 | ||||||||||||||
Note Payable [Member] | ||||||||||||||||
Stock, issued during the period conversion | 500,000 | |||||||||||||||
Stock, issued during the period conversion, shares | $ 250,000 | |||||||||||||||
Red Dot Development, LLC [Member] | ||||||||||||||||
Number of shares returned | 20,000,000 | |||||||||||||||
Number of shares returned, value | $ 20,000 | |||||||||||||||
Common Stock [Member] | ||||||||||||||||
Number of shares issued for services | 281,251 | 1,317,731 | 16,236 | |||||||||||||
Value of shares issued for services | $ 281 | $ 1,318 | $ 16 | |||||||||||||
Preferred Stock [Member] | ||||||||||||||||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 | ||||||||||||||
Preferred stock, par value | $ 0.001 | $ 0.001 | ||||||||||||||
Number of shares issued for services | ||||||||||||||||
Value of shares issued for services | ||||||||||||||||
Sales Agreement [Member] | THC Park [Member] | ||||||||||||||||
Number of shares issued | 66,667 | |||||||||||||||
Former Secretary and President [Member] | ||||||||||||||||
Number of shares issued for services | 250,000 | |||||||||||||||
Former Chief Financial Officer [Member] | ||||||||||||||||
Number of shares issued for services | 31,251 | |||||||||||||||
Interim Chief Executive Officer [Member] | ||||||||||||||||
Number of shares issued for services | 18,562 | |||||||||||||||
Accredited Investor [Member] | ||||||||||||||||
Number of shares issued for services | 20,000 | |||||||||||||||
Proceeds from subscription payable | $ 10,000 | |||||||||||||||
Doug Brown [Member] | Purchase Agreement [Member] | ||||||||||||||||
Number of shares issued | 4,500,000 | |||||||||||||||
Stock issued during period value of common stock | $ 400,000 | |||||||||||||||
Warrant Issued | 1,000,000 | |||||||||||||||
Exercise price | $ 0.10 | |||||||||||||||
Class of warrant or righst date | Aug. 3, 2020 | |||||||||||||||
Warrant term | 3 years | |||||||||||||||
Investor funded on purchase amount | $ 124,535 | $ 250,000 | ||||||||||||||
Warrant outstanding | 250,000 | |||||||||||||||
Repayment of investor funded amount | $ 125,465 | |||||||||||||||
Doug Brown [Member] | Purchase Agreement [Member] | Common Stock [Member] | ||||||||||||||||
Number of shares issued | 1,402,279 | |||||||||||||||
Fifteen Persons [Member] | ||||||||||||||||
Number of shares issued for services | 1,845,635 | |||||||||||||||
Value of shares issued for services | $ 896,229 | |||||||||||||||
Number of common stock shares sold | 12,130,000 | |||||||||||||||
Number of common stock shares sold, value | $ 6,075,000 | |||||||||||||||
Holder [Member] | Series A Convertible Preferred Stock [Member] | ||||||||||||||||
Ownership percentage | 4.99% | 4.99% | ||||||||||||||
Debt conversion, description | We are prohibited from effecting a conversion of the Series A Preferred Stock to the extent that, after giving effect to the conversion, the holder (together with such holder's affiliates and any persons acting as a group with holder or any of such holder's affiliates) would beneficially own in excess of 4.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion. A holder, upon notice to us, may increase or decrease this beneficial ownership limitation; provided, that, in no event can the holder increase the beneficial ownership limitation in excess of 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon the conversion of the Series A Preferred Stock then held by holder. |
Basic and Diluted Earnings (L_2
Basic and Diluted Earnings (Loss) Per Common Share (Details Narrative) (USD $) | 9 Months Ended |
Sep. 30, 2020shares | |
Earnings Per Share [Abstract] | |
Anti-dilute purchase of common stock not inculded in diluted loss per share | 1,243,000 |
Stock Based Compensation (Detai
Stock Based Compensation (Details Narrative) - $ / shares | Jun. 22, 2018 | Sep. 30, 2019 | Sep. 30, 2020 | Dec. 31, 2019 |
Number of option granted, shares | ||||
Option exercise price per | ||||
Options term | 1 year 6 months | |||
Options outstanding | 10,000 | 10,000 | ||
Warrants outstanding | 1,233,000 | 1,233,000 | ||
Warrants [Member] | ||||
Warrants ,description | (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, and (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. | |||
Corporate Advisory Agreement [Member] | ||||
Number of option granted, shares | 10,000 | |||
Option exercise price per | $ 1.20 | |||
Options term | 3 years |
Stock Based Compensation - Summ
Stock Based Compensation - Summary of Options Issued, Exercised and Expired (Details) | 9 Months Ended |
Sep. 30, 2020$ / sharesshares | |
Share-based Payment Arrangement [Abstract] | |
Shares, Beginning Balance | shares | 10,000 |
Shares, Issued | shares | |
Shares, Exercised | shares | |
Shares, Expired | shares | |
Shares, Ending Balance | shares | 10,000 |
Weighted Average Exercise Price, Beginning Balance | $ / shares | $ 1.20 |
Weighted Average Exercise Price, Issued | $ / shares | |
Weighted Average Exercise Price, Exercised | $ / shares | |
Weighted Average Exercise Price, Expired | $ / shares | |
Weighted Average Exercise Price, Ending Balance | $ / shares | $ 1.20 |
Remaining Contractual Life in Years, Beginning Balance | 1 year 6 months |
Remaining Contractual Life in Years, Ending Balance | 1 year |
Stock Based Compensation - Su_2
Stock Based Compensation - Summary of Warrants Issued, Exercised and Expired (Details) | 9 Months Ended |
Sep. 30, 2020$ / sharesshares | |
Share-based Payment Arrangement [Abstract] | |
Warrants Shares, Beginning Balance | shares | 1,233,000 |
Warrants Shares, Issued | shares | |
Warrants Shares, Exercised | shares | |
Warrants Shares, Expired | shares | |
Warrants Shares, Ending Balance | shares | 1,233,000 |
Weighted Avg. Exercise Price Warrant, Beginning Balance | $ / shares | $ 0.83 |
Weighted Avg. Exercise Price Warrant, Issued | $ / shares | |
Weighted Avg. Exercise Price Warrant, Exercised | $ / shares | |
Weighted Avg. Exercise Price Warrant, Expired | $ / shares | |
Weighted Avg. Exercise Price Warrant, Ending Balance | $ / shares | $ 0.83 |
Remaining Contractual Life in Years, Beginning Balance | 1 year 6 months |
Remaining Contractual Life in Years, Ending Balance | 9 months 18 days |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - Pyrros One, LLC [Member] - USD ($) | Mar. 31, 2020 | Feb. 20, 2020 | Jun. 30, 2020 |
Alternative Hospitality, Inc [Member] | |||
Debt instrument principal value | $ 110,405 | ||
Debt instrument maturity date | Feb. 19, 2021 | ||
Debt interest rate | 9.00% | ||
Debt instrument monthly installements, interest | $ 825 | ||
Debt instrument reduction in interest and principal | $ 1,233 | ||
Debt instrument collateral | The Holder is granted a security interest in that certain real property located at 1300 S. Jones Blvd, Las Vegas, NV 89146, which is owned by the Borrower. | ||
Condo Highrise Management, LLC [Member] | Short Term Promissory Note [Member] | |||
Debt instrument principal value | $ 90,000 | ||
Debt instrument maturity date | Mar. 30, 2021 | ||
Debt interest rate | 9.00% | ||
Debt instrument monthly installements, interest | $ 675 | ||
Debt instrument collateral | The Holder is granted a security interest in that certain real property located at 4295 Hwy 343, Amargosa, NV 89020 which is owned by the Borrower. The transaction closed on April 3, 2020. |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Feb. 12, 2021 | Jan. 31, 2021 | Jan. 22, 2021 | Jan. 14, 2021 | Jan. 12, 2021 | Jan. 11, 2021 | Dec. 14, 2020 | Dec. 10, 2020 | Dec. 08, 2020 | Oct. 01, 2020 | Apr. 07, 2020 | Nov. 06, 2020 | Oct. 13, 2020 | Sep. 30, 2020 | Dec. 31, 2019 |
Property net amount | $ 4,273,097 | $ 4,574,082 | |||||||||||||
Subsequent Event [Member] | |||||||||||||||
Sales price amount | $ 1,627,500 | ||||||||||||||
Subsequent Event [Member] | MJ Distributing, Inc.[Member] | |||||||||||||||
Stock issued during period shares of common stock | 200,000 | ||||||||||||||
Non-refundable payment amount | $ 300,000 | ||||||||||||||
Subsequent payments amount | $ 100,000 | ||||||||||||||
Subsequent Event [Member] | MJ Distributing, Inc.[Member] | Second Payment [Member] | |||||||||||||||
Non-refundable payment amount | $ 200,000 | ||||||||||||||
Subsequent Event [Member] | MJ Distributing, Inc.[Member] | Third Payment [Member] | |||||||||||||||
Non-refundable payment amount | $ 100,000 | ||||||||||||||
Subsequent Event [Member] | Restricted Common Stock [Member] | |||||||||||||||
Number of shares services rendered | 2,500 | ||||||||||||||
Subsequent Event [Member] | Restricted Common Stock [Member] | |||||||||||||||
Number of shares services rendered | 2,500 | ||||||||||||||
Former President [Member] | Subsequent Event [Member] | |||||||||||||||
Property net amount | $ 501,085 | $ 501,085 | |||||||||||||
Former President [Member] | Subsequent Event [Member] | On or before April 30, 2027 [Member] | |||||||||||||||
Exit fee | $ 26,000 | ||||||||||||||
Former President [Member] | Subsequent Event [Member] | Acres Cultivation, LLC [Member] | |||||||||||||||
Property net amount | $ 501,085 | ||||||||||||||
Director [Member] | Subsequent Event [Member] | |||||||||||||||
Short-term loan | $ 100,000 | ||||||||||||||
Interim Chief Financial Officer [Member] | Subsequent Event [Member] | |||||||||||||||
Number shares of restricted common stock | 250,000 | ||||||||||||||
Accredited Investor [Member] | |||||||||||||||
Number of shares services rendered | 20,000 | ||||||||||||||
Consultant [Member] | Subsequent Event [Member] | Restricted Common Stock [Member] | |||||||||||||||
Number of shares services rendered | 200,000 | ||||||||||||||
Employment Agreement [Member] | Subsequent Event [Member] | Jim Kelly [Member] | |||||||||||||||
Salary to officer | $ 24,000 | ||||||||||||||
Annual discretionary bonus percentage | 400.00% | ||||||||||||||
Employment agreement description | On October 1, 2020, the Company entered into an Employment Agreement (the "Agreement") with Jim Kelly. The Agreement became effective as of October 1, 2020. Under the terms of the Agreement, the Employee shall serve as the Company's Interim Chief Financial Officer for a term of (i) the sooner of six (6) months, or (ii) the completion of all regulatory filings, including but not limited to the Company's 2019 Annual Report on Form 10-K, the March 31, 2020 Quarterly Report on Form 10-Q, the June 30, 2020 Quarterly Report on Form 10-Q, the September 30, 2020 Quarterly Report on Form 10-Q and all required Current Reports on Form 8-K, with the Securities and Exchange Commission ("SEC") to bring the Company current with the SEC. The Employee shall receive a base salary of $24,000 annually, shall be eligible to receive an annual discretionary bonus during the Term, based on performance criteria determined by the C-Suite of the Company in its sole discretion, in an amount equal to up to 400% of the Employee's base salary for the then current fiscal year, and at commencement of the Term the Employee shall receive a grant of stock of 500,000 restricted shares of the Company's common stock. | ||||||||||||||
Employment Agreement [Member] | Subsequent Event [Member] | Jim Kelly [Member] | Restricted Stock [Member] | |||||||||||||||
Stock awarded options to purchase | 500,000 | ||||||||||||||
Employment Agreement [Member] | Secretary [Member] | Subsequent Event [Member] | |||||||||||||||
Number shares of restricted common stock | 500,000 | ||||||||||||||
Employment Agreement [Member] | Interim Chief Financial Officer [Member] | Subsequent Event [Member] | |||||||||||||||
Number shares of restricted common stock | 500,000 | ||||||||||||||
Securities Purchase Agreement [Member] | Accredited Investor [Member] | Subsequent Event [Member] | |||||||||||||||
Number shares of restricted common stock | 1,402,279 | ||||||||||||||
Consulting Agreement [Member] | Subsequent Event [Member] | Sylios Corp [Member] | |||||||||||||||
Cash compensation | $ 10,000 | ||||||||||||||
Cash compensation, shares | 200,000 | ||||||||||||||
Common Stock Purchase Warrant Agreement [Member] | Accredited Investor [Member] | Subsequent Event [Member] | |||||||||||||||
Right to purchase of shares common stock | 250,000 | ||||||||||||||
Exercise price | $ 0.10 | ||||||||||||||
Warrant term | 4 years | ||||||||||||||
Debt Conversion and Stock Purchase Agreement [Member] | David Dear [Member] | Subsequent Event [Member] | |||||||||||||||
Short-term loan | $ 100,000 | ||||||||||||||
Stock issued during period shares of common stock | 263,148 | 526,316 | |||||||||||||
Stock issued during period value of common stock | $ 50,000 | ||||||||||||||
Common stock price per shares | $ 0.19 | ||||||||||||||
Cultivation and Sales Agreement [Member] | Subsequent Event [Member] | MKC Development LLC [Member] | |||||||||||||||
Agreement term | 10 years | ||||||||||||||
Agreement renewal term | 5 years | ||||||||||||||
Non refundable deposit | $ 600,000 | ||||||||||||||
Security deposit | 10,000 | ||||||||||||||
Rent payable | 10,000 | ||||||||||||||
Security and compliance payable per month | $ 10,000 | ||||||||||||||
Royalty receviable percentage on gross revenue | 10.00% | ||||||||||||||
Royalty receivable per month | $ 83,000 | ||||||||||||||
Royalty payable percentage on net sales revenue | 90.00% |