Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | May 05, 2020 | Jun. 30, 2019 | |
Document And Entity Information | |||
Entity Registrant Name | GENERAL CANNABIS CORP | ||
Document Type | 10-K/A | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Common Stock, Shares Outstanding | 40,281,881 | ||
Entity Public Float | $ 31,638,715 | ||
Amendment Description | This Amendment No. 2 on Form 10-K/A (this "Amendment") to the Annual Report on Form 10-K of General Cannabis Corp (the "Company") for the fiscal year ended December 31, 2019 (the "Original Form 10-K"), as filed with the Securities and Exchange Commission (the "SEC") on May 14, 2020 and amended by Amendment No.1 thereto filed with the SEC on June 22, 2020, is being filed to amend and restate our audited consolidated financial statements and related disclosures as of and for the year ended December 31, 2019. | ||
Amendment Flag | true | ||
Entity Central Index Key | 0001477009 | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Well-known Seasoned Issuer | No | ||
Document Period End Date | Dec. 31, 2019 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity File Number | 000-54457 | ||
Entity Incorporation, State or Country Code | CO | ||
Entity Address, Address Line One | 6565 E. Evans Avenue | ||
Entity Address, City or Town | Denver | ||
Entity Address, State or Province | CO | ||
Entity Address, Postal Zip Code | 80224 | ||
City Area Code | 303 | ||
Local Phone Number | 759-1300 | ||
Title of 12(b) Security | None | ||
Entity Interactive Data Current | Yes |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Current Assets | ||
Cash and cash equivalents | $ 122,390 | $ 7,604,562 |
Accounts receivable, net | 85,204 | 116,622 |
Note receivable, net - current portion | 375,000 | 50,000 |
Prepaid expenses and other current assets | 546,970 | 421,579 |
Assets held for sale | 375,218 | 649,775 |
Assets of discontinued operations | 47,453 | 144,365 |
Total current assets | 1,552,235 | 8,986,903 |
Note receivable, net | 93,333 | |
Property and equipment, net | 1,507,327 | 1,439,067 |
Investment | 250,000 | 250,000 |
Assets held for sale | 15,584 | 66,255 |
Assets of discontinued operations | 83,525 | |
Total Assets | 3,502,004 | 10,742,225 |
Current Liabilities | ||
Accounts payable and accrued expenses | 1,221,194 | 442,707 |
Interest payable | 93,375 | |
Customer deposits | 562,803 | 308,111 |
Accrued stock payable | 80,657 | |
Notes payable (net of discount) | 2,230,684 | 5,273,906 |
Related party note payable (net of discount) | 99,667 | |
Warrant derivative liability | 4,620,593 | |
Liabilities held for sale | 149,249 | 159,944 |
Liabilities of discontinued operations | 207,993 | 6,220 |
Total current liabilities | 9,266,216 | 6,190,888 |
Commitments and Contingencies (Note 13) | ||
Stockholders? Equity (Deficit) | ||
Preferred stock, no par value; 5,000,000 shares authorized; no shares issued and outstanding at December 31, 2019 and 2018 | ||
Common Stock, $0.001 par value; 100,000,000 shares authorized; 39,497,480 shares and 36,222,752 shares issued and outstanding on December 31, 2019 and 2018, respectively | 39,498 | 36,223 |
Additional paid-in capital | 61,468,034 | 56,303,061 |
Accumulated deficit | (67,271,744) | (51,787,947) |
Total Stockholders? Equity (Deficit) | (5,764,212) | 4,551,337 |
Total Liabilities & Stockholders? Equity (Deficit) | $ 3,502,004 | $ 10,742,225 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parentheticals) - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 |
CONSOLIDATED BALANCE SHEETS | ||
Preferred stock, par value (in Dollars per share) | $ 0 | $ 0 |
Preferred Stock, Shares Authorized | 5,000,000 | |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common Stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Common Stock, shares authorized | 100,000,000 | 100,000,000 |
Common Stock, shares issued | 39,497,480 | 36,222,752 |
Common Stock, shares outstanding | 39,497,480 | 36,222,752 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
REVENUES | ||
Rent and interest | $ 95,437 | $ 18,749 |
Total revenues | 3,666,346 | 1,737,256 |
COSTS AND EXPENSES | ||
Cost of service revenues | 858,714 | 1,055,593 |
Cost of goods sold | 1,608,386 | 400,097 |
Selling, general and administrative | 4,379,800 | 3,411,724 |
Share-based expense | 3,966,621 | 5,995,007 |
Professional fees | 1,598,818 | 1,383,367 |
Depreciation and amortization | 115,696 | 62,443 |
Total costs and expenses | 12,528,035 | 12,308,231 |
OPERATING LOSS | (8,861,689) | (10,570,975) |
OTHER (INCOME) EXPENSE | ||
Amortization of debt discount and equity issuance costs | 2,019,726 | 4,234,823 |
Loss on extinguishment of debt | 377,300 | |
Interest expense, net | 345,371 | 323,557 |
Loss on warrant derivative liability | 2,204,172 | |
Loss from Desert Created investment | 182,136 | |
Impairment of Desert Created investment | 147,035 | 823,819 |
Total other expense, net | 4,946,569 | 5,564,335 |
NET LOSS FROM CONTINUING OPERATIONS | (13,808,258) | (16,135,310) |
Loss from discontinued operations | (1,675,539) | (838,448) |
NET LOSS | (15,483,797) | (16,973,758) |
Deemed dividend | (2,341,000) | |
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ (17,824,797) | $ (16,973,758) |
PER SHARE DATA ? Basic and diluted | ||
Net loss from continuing operations per share (in Dollars per share) | $ (0.36) | $ (0.46) |
Net loss from discontinued operations per share (in Dollars per share) | (0.04) | (0.02) |
Net loss attributable to common stockholders per share (in Dollars per share) | $ (0.47) | $ (0.49) |
Weighted average number of common shares outstanding (in Shares) | 38,106,781 | 34,938,978 |
Services | ||
REVENUES | ||
Revenues | $ 1,787,863 | $ 1,186,624 |
Product | ||
REVENUES | ||
Revenues | 1,783,046 | $ 531,883 |
Total revenues | $ 1,783,046 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS | 12 Months Ended |
Dec. 31, 2018USD ($) | |
OPERATING ACTIVITIES | |
Net loss | $ (16,973,758) |
Adjustments to reconcile net loss to net cash used in operating activities: | |
Amortization of debt discount and equity issuance costs | 4,234,823 |
Depreciation and amortization expense | 149,504 |
Bad debt expense | 87,592 |
Impairment of assets | 823,819 |
Impairment of Desert Created investment | 823,819 |
Loss from Desert Created investment | 182,136 |
Share-based payments | 5,995,007 |
Changes in operating assets and liabilities: | |
Accounts receivable | (56,954) |
Prepaid expenses and other assets | (231,746) |
Inventory | (88,494) |
Accounts payable and accrued liabilities | (311,628) |
Net cash used in operating activities: | (5,726,207) |
INVESTING ACTIVITIES | |
Purchase of property and equipment | (241,311) |
Lending on notes receivable | (650,000) |
Proceeds on notes receivable | 600,000 |
Proceeds on investment in Desert Created | 23,045 |
Net cash used in investing activities | (568,266) |
FINANCING ACTIVITIES | |
Note principal used to exercise warrants | 3,985,197 |
Proceeds from exercise of stock options | 721,034 |
Proceeds from notes payable | 7,500,000 |
Payments on notes payable | (1,621,250) |
Payments on Infinity Note ? related party | (1,370,126) |
Net cash provided by (used in) financing activities | 9,214,855 |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 2,920,382 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | 7,957,169 |
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION | |
Cash paid for interest | 637,586 |
NON-CASH INVESTING & FINANCING ACTIVITIES | |
Issuance of common stock for accrued stock payable | 321,860 |
Issuance of common stock and warrants for investment in Desert Created | 979,000 |
8.5% Warrants [Member] | |
FINANCING ACTIVITIES | |
Note principal used to exercise warrants | 651,000 |
NON-CASH INVESTING & FINANCING ACTIVITIES | |
Securities recorded as a debt discount and loss on extinguishment of debt | 5,366,000 |
Flowhub Holdings, LLC [Member] | |
INVESTING ACTIVITIES | |
Investment in Flowhub SAFE | (250,000) |
Desert Created Company LLC | |
INVESTING ACTIVITIES | |
Investment in Desert Created | (50,000) |
Discontinued Operations | |
FINANCING ACTIVITIES | |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 5,036,787 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ 7,957,169 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS? EQUITY (DEFICIT) - USD ($) | Common StockMile High [Member] | Common StockDesert Created Company LLC | Common Stock | Additional Paid-in CapitalMile High [Member] | Additional Paid-in CapitalFeinsod Agreement [Member] | Additional Paid-in CapitalDesert Created Company LLC | Additional Paid-in CapitalServices | Additional Paid-in Capital8.5% Warrants [Member] | Additional Paid-in Capital12% Warrants [Member] | Additional Paid-in Capital15% Warrants | Additional Paid-in Capital | Accumulated Deficit | Mile High [Member] | Feinsod Agreement [Member] | Desert Created Company LLC | Services | 8.5% Warrants [Member] | 12% Warrants [Member] | 15% Warrants | Total |
Balance at the beginning of the year at Dec. 31, 2017 | $ 27,693 | $ 38,292,493 | $ (34,814,189) | $ 3,505,997 | ||||||||||||||||
Balance at the beginning of the year (in Shares) at Dec. 31, 2017 | 27,692,910 | |||||||||||||||||||
Common stock issued upon exercise of warrants for debt | $ 7,547 | 4,795,510 | 4,803,057 | |||||||||||||||||
Common stock issued upon exercise of warrants for debt (in Shares) | 7,546,286 | |||||||||||||||||||
Common stock issued upon exercise of stock options | $ (731) | (720,303) | (721,034) | |||||||||||||||||
Common stock issued upon exercise of stock options (in Shares) | 731,264 | |||||||||||||||||||
Common stock issued for services | $ 104 | $ 73 | $ 154,896 | 234,928 | $ 155,000 | 235,001 | ||||||||||||||
Common stock issued for services (in Shares) | 104,359 | 72,933 | ||||||||||||||||||
Common stock and warrants issued | $ 75 | $ 978,925 | $ 979,000 | |||||||||||||||||
Common stock and warrants issued (in Shares) | 75,000 | |||||||||||||||||||
Stock options granted to employees and consultants | 3,626,271 | 3,626,271 | ||||||||||||||||||
Stock options under Feinsod Agreement | $ 2,062,270 | $ 2,062,270 | ||||||||||||||||||
Warrants issued with Notes | $ 71,465 | $ 5,366,000 | $ 71,465 | $ 5,366,000 | ||||||||||||||||
Net loss | (16,973,758) | (16,973,758) | ||||||||||||||||||
Balance at the end of the year at Dec. 31, 2018 | $ 36,223 | 56,303,061 | (51,787,947) | 4,551,337 | ||||||||||||||||
Balance at the end of the year(in Shares) at Dec. 31, 2018 | 36,222,752 | |||||||||||||||||||
Common stock issued upon exercise of stock options | $ (270) | (188,500) | (188,770) | |||||||||||||||||
Common stock issued upon exercise of stock options (in Shares) | 269,728 | |||||||||||||||||||
Stock options granted to employees and consultants | 3,885,964 | 3,885,964 | ||||||||||||||||||
Sale of common stock, net of issuance costs | $ 3,000 | 503,614 | 506,614 | |||||||||||||||||
Sale of common stock, net of issuance costs (in Shares) | 3,000,000 | |||||||||||||||||||
Warrants issued with Notes | $ 392,000 | $ 158,100 | 28,800 | $ 392,000 | $ 158,100 | 28,800 | ||||||||||||||
Common stock issued for property and equipment | $ 5 | 7,995 | 8,000 | |||||||||||||||||
Common stock issued for property and equipment (in Shares) | 5,000 | |||||||||||||||||||
Net loss | (15,483,797) | (15,483,797) | ||||||||||||||||||
Balance at the end of the year at Dec. 31, 2019 | $ 39,498 | $ 61,468,034 | $ (67,271,744) | $ (5,764,212) | ||||||||||||||||
Balance at the end of the year(in Shares) at Dec. 31, 2019 | 39,497,480 |
NATURE OF OPERATIONS, HISTORY A
NATURE OF OPERATIONS, HISTORY AND PRESENTATION | 12 Months Ended |
Dec. 31, 2019 | |
NATURE OF OPERATIONS, HISTORY AND PRESENTATION | |
NATURE OF OPERATIONS, HISTORY AND PRESENTATION | NOTE 1. NATURE OF OPERATIONS, HISTORY AND PRESENTATION Nature of Operations General Cannabis Corp, a Colorado Corporation (the “Company,” “we,” “us,” “our,” or “GCC”) (formerly, Advanced Cannabis Solutions, Inc.), was incorporated on June 3, 2013, and provides services and products to the regulated cannabis industry. On June 6, 2018 we began trading on the OTCQX® Best Market after upgrading from the OTCQB® Venture Market. As of December 31, 2019, our operations are segregated into the following two segments: Operations Consulting and Products (“Operations Segment”) Through Next Big Crop (“NBC”), we deliver comprehensive consulting services to the cannabis industry that include obtaining licenses, compliance, cultivation, retail operations, logistical support, facility design and construction, and expansion of existing operations. During 2019 and 2018, 59% and 60% of NBC’s revenue was with three customers and one customer, respectively. NBC oversees our wholesale equipment and supply business, operated under the name “GC Supply,” which provides turnkey sourcing and stocking services to cultivation, retail and infused products manufacturing facilities. Our products include building materials, equipment, consumables and compliance packaging. There are generally multiple suppliers for the products we sell; however, there are a limited number of manufacturers of certain high-tech cultivation equipment. Capital Investments and Real Estate (“Investments Segment”) As a publicly traded company, we have access to capital that may not be available to businesses operating in the cannabis industry. Accordingly, we may provide debt or equity capital through (a) loans or revolving lines of credit, (b) leasing real estate we own, or (c) investing in businesses using cash or shares of our common stock. Held for Sale - Security and Cash Transportation Services (“Security Segment”) We provide advanced security, including on-site professionals and cash transport, to licensed cannabis cultivators, cannabis processing facilities and retail shops, under the business name Iron Protection Group (“IPG”) in California and Colorado, and security services to non-cannabis customers in Colorado, such as hotels, apartment buildings and retail. On December 26, 2019, the board of directors and management made the strategic decision to investigate a possible buyer for the security segment and if no buyer could be found, cease operations of the security segment. We transferred all our Colorado security contracts and employees to a company on January 16, 2020. We will receive $1.00 per man hour worked on existing contracts for a period of one year. On February 6, 2020 we cancelled all our security contracts in California. Discontinued Operations - Consumer Goods and Marketing Consulting (“Consumer Goods Segment”) Our apparel business, Chiefton, has two primary revenue streams. Chiefton Supply strives to create innovative, unique t-shirts, hats, hoodies and accessories. Our apparel is sold through our on-line shop, cannabis retailers, non-cannabis retailers, and specialty t-shirt and gift shops. Chiefton Design provides design, branding and marketing strategy consulting services to the cannabis industry, which frequently includes sourcing and selling customer-specific apparel and accessories. On December 26, 2019, the board of directors and management made the strategic move to cease operations of Chiefton. All operations of Chiefton were abandoned on December 31, 2019. Our CBD retail business, STOA Wellness, opened in July of 2019. STOA Wellness offers a curated collection of high quality CBD products for athletes and general wellness. On December 26, 2019, the board of directors committed to a plan to cease operations of STOA Wellness. We transferred all assets of STOA Wellness to an individual on January 10, 2020, in exchange for the release on the outstanding lease. Basis of Presentation The accompanying consolidated financial statements include the results of GCC and its ten wholly-owned subsidiary companies: (a) 6565 E. Evans Owner LLC, a Colorado limited liability company formed in 2014; (b) General Cannabis Capital Corporation, a Colorado corporation formed in 2015; (c) GC Security LLC (“GCS”), a Colorado limited liability company formed in 2015; (d) GC-NY Health, LLC, a New York limited liability company formed in 2019; (e) Standard Cann, Inc., a Colorado corporation formed in 2019; (f) Cannasseur, LLC, a Colorado limited liability company formed in 2019; (g) Cannasseur Dispensary, LLC, a limited liability company formed in 2019; (h) Cannasseur Cultivation, LLC, a limited liability company formed in 2019; (i) Cannasseur Extraction, LLC, a limited liability company formed in 2019 and (j) GC Corp., a Colorado corporation, originally formed in 2013 under the name ACS Corp. In 2015, the name was changed to GC Corp. Intercompany accounts and transactions have been eliminated. The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Although these estimates are based on our knowledge of current events and actions we may undertake in the future, actual results may ultimately differ from these estimates and assumptions. Furthermore, when testing assets for impairment in future periods, if management uses different assumptions or if different conditions occur, impairment charges may result. Going Concern The consolidated financial statements have been prepared on a going concern basis, which assumes we will be able to realize our assets and discharge our liabilities in the normal course of business for the foreseeable future. Our cash of approximately $225,000 as of December 31, 2019, is not sufficient to absorb our operating losses and retire our debt of approximately $2,330,000. The warrants associated with this debt, if exercised, would provide sufficient funds to retire the debt; however, there is no guarantee that these warrants will be exercised. Our ability to continue as a going concern is dependent upon our generating profitable operations in the future and / or obtaining the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Management believes that (a) we will be successful obtaining additional capital and (b) actions presently being taken to further implement our business plan and generate additional revenues provide opportunity for the Company to continue as a going concern. While we believe in the viability of our strategy to generate additional revenues and our ability to raise additional funds, there can be no assurances to that effect. Accordingly, there is substantial doubt about our ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern. Significant Accounting Policies Cash and Cash Equivalents Cash and cash equivalents include cash on hand, deposits with banks, and investments that are highly liquid and have maturities of three months or less at the date of purchase. We maintain our cash balances in financial institutions that, from time to time, may exceed amounts insured by the Federal Deposit Insurance Corporation ($250,000 as of December 31, 2019). Inventory Our inventory consists of finished goods, including apparel and supplies for the cannabis market. Inventory is stated at the lower of cost (net realizable value), using average cost to determine cost. We monitor inventory cost compared to selling price in order to determine if a write down to net realizable value is necessary. In December 2019, we ceased all operations of Chiefton and determined we would be ceasing operations of STOA in January 2020. As a result, we wrote down all of the remaining inventory to $0 as of December 31, 2019. We recognized $147,035 in expense as a result of this write down of inventory and is included in loss on discontinued operations on the statement of operations. Accounts Receivable, net Accounts receivable are recorded at the original invoiced amount due from our customers less an allowance for any potential uncollectible amounts. We control credit risk related to accounts receivable through credit approvals, credit limits and monitoring processes. In making the determination of the appropriate allowance for doubtful accounts, management considers prior experience with customers, analysis of accounts receivable aging reports, changes in customer payment patterns, and historical write-offs. The allowance for doubtful accounts totaled $111,000 and $9,000 as of December 31, 2019 and 2018, respectively. The amounts charged to operations and write-offs were immaterial for the periods presented. Notes Receivable Notes receivable consist primarily of amounts due to us related to the financing of different business ventures. Direct loan origination costs we incur are netted with loan origination fees we receive and the net amount, loan origination fees or costs, is included in notes receivable on the consolidated balance sheets. The loan origination fees or costs are amortized over the term of the underlying note receivable and included in interest income in the consolidated statements of operations. We report notes receivable at the principal balance outstanding less an allowance for losses. We monitor the financial condition of the notes receivable and record provisions for estimated losses when we believe it is probable that the holders of the notes receivable will be unable to make their required payments. We charge interest at a fixed rate and interest income is calculated by applying the effective rate to the outstanding principal balance. Right-of-use Asset / Lease Liability We adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2016‑02 “Leases (Topic 842)” on January 1, 2019, which requires all assets and liabilities arising from leases to be recognized in our consolidated balance sheets. In July 2018, the FASB added an optional transition method which the Company elected upon adoption of the new standard. This allowed us to recognize and measure leases existing at January 1, 2019 without restating comparative information. In addition, the Company elected to apply the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allows us to carry forward the historical lease classification. We first evaluated our leases to determine whether they are classified as a finance lease or as an operating lease. A lease is a finance lease if any of the following criteria are met: (a) ownership transfers, (b) the lease includes an option to purchase the underlying asset, (c) the lease term is for the major part of the remaining economic life of the underlying asset, (d) the present value of the lease payments equals or exceeds the fair value of the underlying asset, or (e) the underlying asset is of a specialized nature that is expected to have no alternative use to the lessor at the end of the lease term. All of our leases are classified as operating leases. We then determined whether the short-term exemption applies; that is, is the lease term 12 months or less and does not include a purchase option whose exercise is reasonably certain. If the short-term exemption applies then lease payments are recognized as expense and no asset or liability is recorded. If the short-term exemption does not apply, then we recorded an operating lease right-of-use asset and a corresponding operating lease liability equal to the present value of the lease payments. All of our leases entered into prior to 2019 met the short-term exemption, so modification to prior period financial position was is not required. The two-year commercial real estate lease we entered into in February 2019 did not meet the short-term exemption and, accordingly, we recorded the present value of the lease payments of $83,525, as a right-of-use asset and a lease liability in the consolidated balance sheet. We recognize operating lease expense on a straight-line basis over the life of the lease. Property and Equipment, net Property and equipment are recorded at historical cost, less accumulated depreciation. Major additions and improvements are capitalized, while replacements, maintenance and repairs, which do not improve or extend the life of the respective assets, are expensed as incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the assets: thirty years for buildings, the lesser of five years or the life of the lease for leasehold improvements, and three to five years for furniture, fixtures and equipment, software and vehicles. Land is not depreciated. When property or equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the respective accounts with the resulting gain or loss reflected in operations. Business Combinations Amounts paid for acquisitions are allocated to the assets acquired and liabilities assumed based on their estimated fair value at the date of acquisition. The fair value of identifiable intangible assets is based on detailed valuations that use information and assumptions provided by management, including expected future cash flows. We allocate any excess purchase price over the fair value of the net assets and liabilities acquired to goodwill. Identifiable intangible assets with finite lives are amortized over their useful lives. Acquisition-related costs, including advisory, legal, accounting, valuation and other costs, are expensed in the periods in which the costs are incurred. The results of operations of acquired businesses are included in the consolidated financial statements from the acquisition date. Intangible Assets Intangible assets consist primarily of customer relationships and marketing-related intangibles. Our intangible assets are being amortized on a straight-line basis over a period of two years and are fully amortized as of December 31, 2019. Impairment of Long-lived Assets We periodically evaluate whether the carrying value of property, equipment and intangible assets has been impaired when circumstances indicate the carrying value of those assets may not be recoverable. The carrying amount is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If the carrying value is not recoverable, the impairment loss is measured as the excess of the asset’s carrying value over its fair value. Our impairment analyses require management to apply judgment in estimating future cash flows as well as asset fair values, including forecasting useful lives of the assets, assessing the probability of different outcomes, and selecting the discount rate that reflects the risk inherent in future cash flows. If the carrying value is not recoverable, we assess the fair value of long-lived assets using commonly accepted techniques, and may use more than one method, including, but not limited to, recent third-party comparable sales and undiscounted cash flow models. If actual results are not consistent with our assumptions and estimates, or our assumptions and estimates change due to new information, we may be exposed to an impairment charge in the future. Investments We use the equity method for investments when we are able to exercise significant influence over, but do not control, the investee, and are not the primary beneficiary of the investee’s activities. We include our portion of an equity-method investee’s net income or loss within other expense on the consolidated statements of operations. In the event that the cost basis in an investment exceeds the fair value of the underlying business, we record an impairment charge to reduce our carrying value to the estimated fair value. We record investments that do not qualify for treatment under the equity method at fair value, unless there is no readily determinable fair value. We record at cost equity investments that do not have readily determinable fair value and assess for impairment at each reporting period. We are able to switch to fair value at our option. Debt We issue debt that may have separate warrants, conversion features, or no equity-linked attributes. Debt with warrants – When we issue debt with warrants, we treat the warrants as a debt discount, record as a contra-liability against the debt, and amortize the balance over the life of the underlying debt as amortization of debt discount expense in the consolidated statements of operations. The offset to the contra-liability is recorded as additional paid in capital in our consolidated balance sheets. If the debt is retired early, the associated debt discount is then recognized immediately as amortization of debt discount expense in the consolidated statement of operations. The debt is treated as conventional debt. We determine the value of the non-complex warrants using the Black-Scholes Option Pricing Model (“Black-Scholes”) using the stock price on the date of issuance, the risk-free interest rate associated with the life of the debt, and the volatility of our stock. For warrants with complex terms, we use the binomial lattice model to estimate their fair value. Modification of Debt - When we change the terms of existing notes payable, we evaluate the amendments under ASC 470-50, Debt Modification and Extinguishment to determine whether the change should be treated as a modification or as a debt extinguishment. This evaluation includes analyzing whether there are significant and consequential changes to the economic substance of the note. If the change is deemed insignificant then the change is considered a debt modification, whereas if the change is substantial the change is reflected as a debt extinguishment. Fair Value of Financial Instruments U.S. generally accepted accounting principles (“GAAP”) requires disclosing the fair value of financial instruments to the extent practicable for financial instruments which are recognized or unrecognized in the consolidated balance sheet. The fair value of the financial instruments disclosed herein is not necessarily representative of the amount that could be realized or settled, nor does the fair value amount consider the tax consequences of realization or settlement. In assessing the fair value of financial instruments, the Company uses a variety of methods and assumptions, which are based on estimates of market conditions and risks existing at the time. For certain instruments, including accounts receivable and accounts payable, the Company estimated that the carrying amount approximated fair value because of the short maturities of these instruments. All debt is based on current rates at which the Company could borrow funds with similar remaining maturities and approximates fair value. GAAP establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use on unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs consist of items that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is described below: Level 1 – Quoted prices in active markets for identical assets or liabilities. There are no fair valued assets or liabilities classified under Level 1 as of December 31, 2019 and 2018. Level 2 – Observable prices that are based on inputs not quoted on active markets but corroborated by market data. There are no fair valued assets or liabilities classified under Level 2 as of December 31, 2019 and 2018. Level 3 – Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs (see Note 12). Level 3 liabilities are valued using unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the liabilities. For fair value measurements categorized within Level 3 of the fair value hierarchy, the Company’s accounting and finance department, which reports to the Chief Financial Officer, determines its valuation policies and procedures. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s accounting and finance department and are approved by the Chief Financial Officer. Level 3 Valuation Techniques: Level 3 financial liabilities consist of the derivative liabilities for which there is no current market for these securities such that the determination of fair value requires significant judgment or estimation. Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate. The Company deems financial instruments which do not have fixed settlement provisions to be derivative instruments. In accordance with GAAP the fair value of these warrants is classified as a liability on the Company’s consolidated balance sheets because, according to the terms of the warrants, a fundamental transaction could give rise to an obligation of the Company to pay cash to its warrant holders. Such instruments do not have fixed settlement provisions and have also been recorded as derivative liabilities. Corresponding changes in the fair value of the derivative liabilities are recognized in earnings on the Company’s consolidated statements of operations in each subsequent period. The Company’s derivative liabilities are carried at fair value and were classified as Level 3 in the fair value hierarchy due to the use of significant unobservable inputs. Extinguishment of Notes Payable When we change the terms of existing notes payable subsequent to the maturity date, we evaluate the amendments under ASC 470-50, Debt Modification and Extinguishment to determine whether the change should be treated as a debt extinguishment or as a debt modification. This evaluation includes analyzing whether there are significant and consequential changes to the economic substance of the note. If the change is deemed insignificant then the change is considered a debt modification, whereas if the change is substantial the change is reflected as a debt extinguishment. If determined to be a debt extinguishment, the difference between the fair value of the new instrument compared to the original instrument is reflected as a gain or loss on extinguishment of debt. Warrants Instruments Warrants with derivative features – When we raise capital by issuing warrants that do not have complex terms, they are recorded as additional paid in capital in our consolidated balance sheet. When we issue warrants that have complex terms, such as a clause in which the warrant agreements contain a cash settlement provision whereby the holders could settle the warrants for cash upon a fundamental transaction that is considered outside of the control of management, such as a change of control, the warrants are considered to be a derivative that are recorded as a liability at fair value. The warrant derivative liability is adjusted to its fair value at the end of each reporting period, with the change being recorded as other expense or gain. Revenue Recognition We have two main revenue streams: (i) product sales; and (ii) licensing and consulting. Product sales are recorded at the time that control of the products is transferred to customers. In evaluating the timing of the transfer of control of products to customers, we consider several indicators, including significant risks and rewards of products, our right to payment, and the legal title of the products. Based on the assessment of control indicators, sales are generally recognized when products are delivered to customers. Revenue from licensing and consulting services is recognized when our obligations to our client are fulfilled which is determined when milestones in the contract are achieved. ASC Topic 606 is a comprehensive revenue recognition model that requires revenue to be recognized when control of the promised goods or services are transferred to our customers at an amount that reflects the consideration that we expect to receive. Application of ASC Topic 606 requires us to use more judgment and make more estimates than under former guidance. Application of ASC Topic 606 requires a five-step model applicable to all product offerings revenue streams as follows: Identification of the contract, or contracts, with a customer A contract with a customer exists when (i) we enter into an enforceable contract with a customer that defines each party’s rights regarding the goods or services to be transferred and identifies the payment terms related to these goods or services, (ii) the contract has commercial substance and, (iii) we determine that collection of substantially all consideration for goods or services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. We apply judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit or financial information pertaining to the customer. Identification of the performance obligations in the contract Performance obligations promised in a contract are identified based on the goods or services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the goods or service either on its own or together with other resources that are readily available from third parties or from us, and are distinct in the context of the contract, whereby the transfer of the goods or services is separately identifiable from other promises in the contract. When a contract includes multiple promised goods or services, we apply judgment to determine whether the promised goods or services are capable of being distinct and are distinct within the context of the contract. If these criteria are not met, the promised goods or services are accounted for as a combined performance obligation. Determination of the transaction price The transaction price is determined based on the consideration to which we will be entitled to receive in exchange for transferring goods or services to our customer. We estimate any variable consideration included in the transaction price using the expected value method that requires the use of significant estimates for discounts, cancellation periods, refunds and returns. Variable consideration is described in detail below. Allocation of the transaction price to the performance obligations in the contract If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative Stand-Alone Selling Price (“SSP,”) basis. We determine SSP based on the price at which the performance obligation would be sold separately. If the SSP is not observable, we estimate the SSP based on available information, including market conditions and any applicable internally approved pricing guidelines. Recognition of revenue when, or as, we satisfy a performance obligation We recognize revenue at the point in time that the related performance obligation is satisfied by transferring the promised goods or services to our customer. Principal versus Agent Considerations When another party is involved in providing goods or services to our customer, we apply the principal versus agent guidance in ASC Topic 606 to determine if we are the principal or an agent to the transaction. When we control the specified goods or services before they are transferred to our customer, we report revenue gross, as principal. If we do not control the goods or services before they are transferred to our customer, revenue is reported net of the fees paid to the other party, as agent. Our evaluation to determine if we control the goods or services within ASC Topic 606 includes the following indicators: We are primarily responsible for fulfilling the promise to provide the specified good or service. When we are primarily responsible for providing the goods and services, such as when the other party is acting on our behalf, we have indication that we are the principal to the transaction. We consider if we may terminate our relationship with the other party at any time without penalty or without permission from our customer. We have risk before the specified good or service have been transferred to a customer or after transfer of control to the customer. We may commit to obtaining the services of another party with or without an existing contract with our customer. In these situations, we have risk of loss as principal for any amount due to the other party regardless of the amount(s) we earn as revenue from our customer. The entity has discretion in establishing the price for the specified good or service. We have discretion in establishing the price our customer pays for the specified goods or services. Contract Liabilities Contract liabilities consist of customer advance payments and billings in excess of revenue recognized. We may receive payments from our customers in advance of completing our performance obligations. We record contract liabilities equal to the amount of payments received in excess of revenue recognized, including payments that are refundable if the customer cancels the contract according to the contract terms. Contract liabilities have been historically recorded as current liabilities on our consolidated financial statements when the time to fulfill the performance obligations under terms of our contracts is less than one year. We have no Long-term contract liabilities which would represent the amount of payments received in excess of revenue earned, including those that are refundable, when the time to fulfill the performance obligation is greater than one year. Share-based Payments Employee and non-employee awards – We account for share-based compensation in accordance with the fair value recognition provisions of ASC 718, Compensation – Stock Compensation , and ASC 505, Equity , which require all share-based payments to employees and non-employees, including grants of employee stock options, to be recognized as an expense in the consolidated financial statements based on their fair values. The fair value of stock options is estimated using the Black-Scholes option pricing formula that requires assumptions for expected volatility, expected dividends, the risk-free interest rate and the expected term of the option. Stock options generally vest in one year. The Company accounts for forfeitures of share-based grants as they occur. If any of the assumptions used in the Black-Scholes model or the anticipated number of shares to be awarded change significantly, share-based compensation expense may differ materially in the future from that recorded in the current period. Market price-based awards – We may issue share-based payments that vest when certain market conditions are met, such as our common stock trading above a certain value for a specific number of days. We recognize expense for market price-based options at the estimated fair value of the options using the binomial lattice model over the estimated life of the options used in the model, or immediately upon the market conditions being met. We use historical data to estimate the expected price volatility, the expected stock option life and expected forfeiture rate. The risk-free interest rate is based on the United States Treasury yield curve in effect at the time of grant for the estimated life of the stock option. Shipping and Handling Payments by customers to us for shipping and handling costs are included in revenue on the consolidated statements of operations, while our expense is included in cost of goods sold. Shipping and handling for inventory are included as a component of inventory |
RESTATEMENT OF CONSOLIDATED FIN
RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS | 12 Months Ended |
Dec. 31, 2019 | |
RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS | |
RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS | NOTE 2. RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS On July 1, 2020, the audit committee of the board of directors and management of the Company concluded that the Company’s previously issued audited consolidated financial statements for the year ended December 31, 2019, should no longer be relied upon because of an error in the Company’s accounting for certain outstanding common stock warrants, which are referred to as the 2019 Warrants herein. The error relates to the determination of the number of shares of common stock subject to the 2019 Warrants that were issued by the Company in May 2019, which contain certain anti-dilution adjustment provisions with respect to subsequent issuances of securities by the Company at a price below the exercise price of such warrants. At the time of issuance, the 2019 Warrants represented the right to purchase 3,000,000 shares of common stock at a per share exercise price of $1.30. In the Company’s Form 10-K for the year ended December 31, 2019, the Company accounted for certain dilutive issuances of securities by the Company during 2019 by reflecting that the exercise price of such warrants had decreased to $0.45 per share as a result of the anti-dilution adjustment provisions contained in the warrants, but the Company did not correctly account for the increase in shares subject to such warrants resulting from the anti-dilution adjustment provisions contained in the warrants. Such adjustment provisions increased the number of shares subject to the 2019 Warrants to 8,666,666 shares as of December 31, 2019. The cumulative effect of the restatement on the Company's financial statements is an increase in the derivative liability balance and a corresponding increase in loss on derivative instruments of $3.2 million at December 31, 2019. These adjustments are non-cash and do not impact the Company’s revenue, operating expenses, operating income, cash flows or cash and cash equivalents as previously reported. The effects of the restatement on the consolidated balance sheets are summarized in the following table: December 31, 2019 As Originally Reported Adjustments As Restated ASSETS Current Assets Cash and Cash Equivalents $ 122,390 $ — $ 122,390 Accounts receivable, net 85,204 — 85,204 Note receivable, net – current portion 375,000 — 375,000 Prepaid expenses and other current assets 546,970 — 546,970 Assets held for sale 375,218 — 375,218 Assets of discontinued operations 47,453 — 47,453 Total Current Assets $ 1,552,235 — $ 1,552,235 Note receivable, net 93,333 — 93,333 Property and equipment, net 1,507,327 — 1,507,327 Investment 250,000 — 250,000 Assets held for sale 15,584 — 15,584 Assets of discontinued operations 83,525 — 83,525 Total Assets $ 3,502,004 $ — $ 3,502,004 LIABILITIES & STOCKHOLDERS’ EQUITY (DEFICIT) Current Liabilities Accounts payable and accrued expenses $ 1,221,194 $ — $ 1,221,194 Interest payable 93,375 — 93,375 Customer deposits 562,803 — 562,803 Accrued stock payable 80,657 — 80,657 Notes payable (net of discount) 2,230,684 — 2,230,684 Related party note payable (net of discount) 99,667 — 99,667 Warrant derivative liability 1,599,436 3,201,157 4,620,593 Liabilities held for sale 149,249 — 149,249 Liabilities of discontinued operations 207,993 — 207,993 Total current liabilities $ 6,245,058 $ 3,201,157 $ 9,266,216 Stockholders’ Equity (Deficit) Common Stock 39,498 — 39,498 Additional paid-in capital 61,468,034 — 61,468,034 Accumulated deficit (64,250,586) (3,201,157) (67,271,744) Total Stockholders’ Equity (Deficit) $ (2,743,054) $ (3,201,157) $ (5,764,212) Total Liabilities & Stockholders’ Equity (Deficit) $ 3,502,004 $ — $ 3,502,004 The effects of the restatement on the consolidated statements of operations and comprehensive income/loss are summarized in the following table: Year Ended December 31, 2019 As Originally Reported Adjustments As Restated Revenues Services $ 1,787,863 $ — $ 1,787,863 Rent and interest 95,437 — 95,437 Product sale 1,783,046 — 1,783,046 Total revenues 3,666,346 — 3,666,346 Costs and Expenses Cost of service revenues 858,714 — 858,714 Cost of goods sold 1,608,386 — 1,608,386 Selling, general, and administrative 4,379,800 — 4,379,800 Share-based expense 3,966,621 — 3,966,621 Professional fees 1,598,818 — 1,598,818 Depreciation and amortization 115,696 — 115,696 Total costs and expenses 12,528,035 — 12,528,035 Operating Loss (8,861,689) — (8,861,689) Other (Income) Expense Amortization of debt discount and equity issuance costs 2,019,726 — 2,019,726 Loss on extinguishment of debt 377,300 — 377,300 Interest expense, net 345,371 — 345,371 (Gain) loss on warrant derivative liability (816,916) 3,201,157 2,204,172 Total other expense, net 1,925,411 3,201,157 4,946,569 Net Loss from Continuing Operations $ (10,787,100) $ (3,201,157) $ (13,808,258) Loss from discontinued operations (1,675,539) — (1,675,539) Net Loss $ (12,462,639) $ (3,201,157) $ (15,483,797) Deemed dividend (2,341,000) — (2,341,000) Net Loss Attributable to Common Stockholders $ (14,803,639) $ (3,201,157) $ (17,824,797) Per Share Data – Basic and diluted Net loss from continuing operations $ (0.28) $ (0.08) $ (0.36) Net loss from discontinued operations $ (0.04) $ — $ (0.04) Net loss attributable to common stockholders per share $ (0.39) $ (0.08) $ (0.47) Weighted average number of common shares outstanding — The effects of the restatement on the consolidated statement of cash flows are summarized in the following table: December 31, 2019 As Originally Reported Adjustments As Restated Operating Activities Net loss $ (12,462,639) $ (3,201,157) $ (15,483,797) Adjustments to reconcile net loss to net cash used in operating activities: Amortization of debt discount and equity issuance costs 2,019,726 — 2,019,726 Loss on extinguishment of debt 377,300 — 377,300 Depreciation and amortization expense 196,247 — 196,247 Amortization of loan origination fees (13,333) — (13,333) Bad debt expense 174,249 — 174,249 Impairment of assets 147,035 — 147,035 Loss on disposal of property and equipment 104,803 — 104,803 (Gain) loss on warrant derivative liability (816,986) 3,201,157 2,204,172 Share-based payments 3,966,621 — 3,966,621 Changes in operating assets and liabilities: Accounts receivable (101,766) — (101,766) Prepaid expenses and other assets (138,254) — (138,254) Inventory (23,772) — (23,772) Accounts payable and accrued liabilities 1,242,108 — 1,242,108 Net cash used in operating activities: (5,328,661) — (5,328,661) INVESTING ACTIVITIES Purchase of property and equipment (318,639) — (318,639) Lending on notes receivable (705,000) — (705,000) Proceeds on notes receivable 270,000 — 270,000 Net cash used in investing activities (753,639) — (753,639) FINANCING ACTIVITIES Proceeds from sale of common stock and warrants 2,604,355 — 2,604,355 Proceeds from exercise of stock options 188,770 — 188,770 Proceeds from notes payable 1,455,000 — 1,455,000 Payments on notes payable (5,898,000) — (5,898,000) Payments on Infinity Note - related party — — — Net cash provided by (used in) financing activities (1,649,875) — (1,649,875) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (7,732,175) — (7,732,175) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 7,957,169 — 7,957,169 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 224,994 $ — $ 224,994 SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION Cash paid for interest $ 305,195 $ — $ 305,195 NON-CASH INVESTING & FINANCING ACTIVITIES Deemed dividend from warrant repricing $ 2,603,000 $ — $ 2,603,000 Operating lease right-of-use asset/Operating lease liability 154,200 — 154,200 12% Warrants recorded as a debt discount and loss on extinguishment of debt 392,000 — 392,000 SBI Warrants recorded as a debt discount and loss on extinguishment of debt 28,800 — 28,800 15% Warrants recorded as a debt discount and additional paid-in capital 158,100 — 158,100 |
INVESTMENTS AND ACQUISITIONS
INVESTMENTS AND ACQUISITIONS | 12 Months Ended |
Dec. 31, 2019 | |
INVESTMENTS AND ACQUISITIONS | |
INVESTMENTS AND ACQUISITIONS | NOTE 3. INVESTMENTS AND ACQUISITIONS Flowhub SAFE On November 7, 2018, we invested $250,000 in Flowhub Holdings, LLC (“Flowhub”) through a simple agreement for future equity (the “Flowhub SAFE”). The Flowhub SAFE provides us with the right to either (a) future equity in Flowhub when it completes an equity financing, or (b) future equity in Flowhub or cash proceeds if there is a liquidity event. If there is an equity financing, Flowhub would issue to us (a) a number of standard preferred units equal to our investment divided by the price per share of the standard preferred units if the pre-money valuation is less than or equal to the valuation cap ($35 million); or (b) a number of safe preferred units equal to the purchase amount divided by the valuation cap ($35 million), if the pre-money valuation is greater than the valuation cap. If there is a liquidity event, we will receive either (a) a cash payment equal to the purchase amount or (b) automatically receive a number of common units equal to the purchase amount divided by the liquidity price. Our investment in the Flowhub SAFE is recorded on the cost method of accounting and included under investment on the consolidated balance sheet and is shown as long-term, as it is not readily convertible into cash. Desert Created Company LLC / DB Products Arizona, LLC In January 2018, we entered into a limited liability company operating agreement with DNFC LLC (“DNFC”), pursuant to the formation of Desert Created Company LLC (“Desert Created”). Each party owned a 50% interest in Desert Created, which took over the assets and operations of DB Products Arizona, LLC (“DB Arizona”). Desert Created produces and distributes cannabis-infused edible products in Arizona. In connection with the formation of Desert Created, we contributed 75,000 shares of our common stock and warrants to purchase 75,000 shares of our common stock, at an exercise price of $2.00 per share, to members of DNFC (collectively, the “DNFC Sellers”). This pricing was agreed to in November 2017, however, the transaction did not close until January 2018. In the interim, our stock price increased substantially, which was the reason for the initial impairment noted below. In October 2018, we sold our 50% interest to DNFC for cash consideration of $23,045 and, accordingly, impaired the remaining balance. The 75,000 shares of our common stock were valued at $461,000, based on the closing price per share of our common stock on January 24, 2018, or $7.23 per share, reduced by a discount of 15% due to the restrictions on the DNFC Seller’s ability to immediately sell such shares. The warrants were valued at $518,000, using the Black-Scholes model, assuming a life of 5.0 years, a risk-free interest rate of 1.2% and a volatility of 150%. The fair value of Desert Created was estimated based on the relative fair value of the underlying assets and liabilities, consisting primarily of cash, accounts receivable, equipment and accounts payable. The purchase price allocation was as follows: Common Stock $ 461,000 Warrants 518,000 Initial investment in Desert Created $ 979,000 Fair value of Desert Created $ 347,000 Percentage ownership 50 % Fair value of 50% of Desert Created 173,500 Initial investment in Desert Created 979,000 Initial impairment $ 805,500 The income and losses related to Desert Created were recognized using the equity method of accounting. The value of the investment as of December 31, 2018, consists of the following and is included in prepaid expenses and other current assets on the balance sheet: Initial investment in Desert Created $ 979,000 Initial impairment (805,500) Additional investment 50,000 Net loss (182,136) Additional impairment (18,319) Proceeds from sale of investment (23,045) December 31, 2018 $ — |
DISCONTINUED OPERATIONS
DISCONTINUED OPERATIONS | 12 Months Ended |
Dec. 31, 2019 | |
DISCONTINUED OPERATIONS | |
DISCONTINUED OPERATIONS | NOTE 4. DISCONTINUED OPERATIONS Security Segment On December 26, 2019, the board of directors and management made the strategic decision to investigate a possible buyer for the security segment and if no buyer could be found, cease operations of the security segment. We transferred all our Colorado security contracts and employees to a company on January 16, 2020. We will receive $1.00 per man hour worked on existing contracts for a period of one year. On February 6, 2020 we cancelled all our security contracts in California. The assets and liabilities classified as held for sale for the security segment are presented separately in the balance sheet and the operating results for the years ended December 31, 2019 and 2018 are presented as discontinued operations. Assets and liabilities of discontinued operations held for sale included the following: December 31, 2019 2018 Cash and cash equivalents $ 77,380 $ 352,607 Accounts receivable, net 280,058 277,857 Prepaid expenses and other current assets 17,780 19,311 Current assets held for sale $ 375,218 $ 649,775 Property and equipment, net $ 15,584 $ 24,008 Intangibles — 42,247 Noncurrent assets held for sale $ 15,584 $ 66,255 Accounts payable and accrued expenses $ 88,309 $ 78,065 Customer deposits 60,940 81,879 Current liabilities held for sale $ 149,249 $ 159,944 A breakdown of the discontinued operations is presented as follows: Year ended December 31, 2019 2018 Service revenues $ 2,118,732 $ 2,602,365 Cost of service revenues 1,650,823 2,033,544 Cost of goods sold — 4,373 Selling, general and administrative 877,795 795,381 Professional fees 4,219 104,730 Depreciation and amortization 51,654 87,061 Total costs and expenses 2,584,491 3,025,089 OPERATING LOSS (465,759) (422,724) Interest expense, net 3,422 2,421 NET LOSS FROM DISCONTINUED OPERATIONS $ (469,181) $ (425,145) The cash flows related to discontinued operations have not been segregated, and are included in the consolidated statements of cash flows. The following table provides selected information on cash flows related to discontinued operations for 2019 and 2018. Year ended December 31, 2019 2018 Receivables (2,201) (86,373) Prepaids and other 10,951 (7,715) Depreciation and amortization 51,654 87,061 Capital expenditures (2,556) (11,139) Accounts payable and accrued expenses 10,244 2,479 Customer deposits (20,939) 60,878 Consumer Goods Segment On December 26, 2019, the board of directors and management made the strategic move to cease operations of Chiefton. On December 26, 2019, the board of directors committed to a plan to cease operations of STOA Wellness. We transferred all assets of STOA Wellness to an individual on January 10, 2020, in exchange for the release on the outstanding lease. The assets and liabilities classified as discontinued operations for the consumer goods segment are presented separately in the balance sheet and the operating results for the years ended December 31, 2019 and 2018 are presented as discontinued operations. Assets and liabilities of discontinued operations included the following: December 31, 2019 2018 Cash and cash equivalents $ 25,223 $ — Accounts receivable, net 7,836 21,102 Prepaid expenses and other current assets 14,394 — Inventory — 123,263 Current assets discontinued operations $ 47,453 $ 144,365 Right to use asset $ 83,525 $ — Noncurrent assets discontinued operations $ 83,525 $ — Accounts payable and accrued expenses $ 124,468 $ 4,920 Customer deposits — 1,300 Operating lease liability – current portion 83,525 — Current liabilities discontinued operations $ 207,993 $ 6,220 A breakdown of the discontinued operations is presented as follows: Year ended December 31, 2019 2018 Service $ — $ 145,079 Product 222,220 134,012 Total Revenues 222,220 279,091 Cost of service revenues — 59,227 Cost of goods sold 223,354 186,120 Selling, general and administrative 833,742 410,529 Professional fees 110,064 36,518 Depreciation and amortization 28,897 — Impairment of assets 232,521 — Total costs and expenses 1,428,578 692,394 OPERATING LOSS (1,206,358) (413,303) NET LOSS FROM DISCONTINUED OPERATIONS $ (1,206,358) $ (413,303) The cash flows related to discontinued operations have not been segregated, and are included in the consolidated statements of cash flows. The following table provides selected information on cash flows related to discontinued operations for 2019 and 2018. Year ended December 31, 2019 2018 Receivables 13,266 1,962 Prepaids and other (14,394) — Inventory — (88,494) Depreciation and amortization 28,897 — Capital expenditures (114,384) — Accounts payable and accrued expenses 119,548 4,920 Customer deposits (1,300) 1,300 Loss on disposal of segment 232,521 — |
ACCOUNTS RECEIVABLE AND CUSTOME
ACCOUNTS RECEIVABLE AND CUSTOMER DEPOSITS | 12 Months Ended |
Dec. 31, 2019 | |
ACCOUNTS RECEIVABLE AND CUSTOMER DEPOSITS | |
ACCOUNTS RECEIVABLE AND CUSTOMER DEPOSITS | NOTE 5. ACCOUNTS RECEIVABLE AND CUSTOMER DEPOSITS Our accounts receivable consisted of the following: December 31, 2019 2018 Accounts receivable $ 196,204 $ 125,622 Less: Allowance for doubtful accounts (111,000) (9,000) Total $ 85,204 $ 116,622 We record bad debt expense when we conclude the credit risk of a customer indicates the amount due under the contract is not collectible. We recorded bad debt expense of $103,182 and $15,864, respectively, during the years ended December 31, 2019 and 2018. As of December 31, 2019, and 2018, prepaid expenses and other current assets includes $0 and $18,164 of unbilled revenue, respectively, representing amounts for services completed but not billed. Our customer deposit liability had the following activity: Amount December 31, 2018 $ 308,111 Additional deposits received 2,252,416 Less: Deposits recognized as revenue (1,997,724) December 31, 2019 $ 562,803 |
NOTES RECEIVABLE
NOTES RECEIVABLE | 12 Months Ended |
Dec. 31, 2019 | |
NOTES RECEIVABLE | |
NOTES RECEIVABLE | NOTE 6. NOTES RECEIVABLE Our notes receivable consisted of the following: December 31, December 31, 2019 2018 CCR Note $ 375,000 $ — BB Note 100,000 — BRB Realty — 50,000 Total Principal 475,000 50,000 Unamortized loan origination fee (6,667) — 468,333 50,000 Less: Current portion (375,000) (50,000) Long-term portion $ 93,333 $ — In March 2019, we agreed to loan $375,000 to Consolidated C.R., LLC (“CCR”) pursuant to the terms of a convertible promissory note (“CCR Note”), bearing interest at 12% per annum, collateralized by virtually all of the assets of CCR and a maturity date of September 2020. Interest is due on the first of every month starting in November 2019. CCR is a vertically integrated medical cannabis company located in San Juan, Puerto Rico. As of December 31, 2019, we had loaned $375,000, of which $155,000 was loaned in the first quarter, to CCR under the CCR Note. The CCR Note included a loan origination fee of $15,000, which is being recognized as interest income over the term of the agreement. On January 3, 2019, we loaned $100,000 to Beacher Brewing, LLC (“BB”) pursuant to the terms of a promissory note (“BB Note”), bearing interest at 11% per annum and a maturity date of January 3, 2020. Interest is due in advance at the beginning of each quarter. On December 13, 2019, we agreed to extend the maturity date to January 3, 2021. On December 13, 2018, we loaned $50,000 to BRB Realty, LLC (“BRB”) pursuant to the terms of a promissory note (“BRB Note”), bearing interest at 13% per annum and a maturity date of June 12, 2019. On January 19, 2019 the BRB Note was amended with an additional loan amount of $250,000 bearing an interest rate of 13% and a new maturity date of July 15, 2019. On July 15, 2019, BRB Realty extended the maturity date, in accordance with the terms of the BRB Note, an additional six months with an increased interest rate to 15%. Interest is due at the beginning of each month. In December 2019, we agreed to forgive $30,000 of the note receivable in exchange for early payment. The note was paid off on December 3, 2019 and the $30,000 was recorded as bad debt expense and is included in sales, general and administrative on the consolidated statement of operations. The BRB Note included a loan origination fee of $5,000, which is being recognized as interest income over the term of the agreement. |
PREPAIDS AND OTHER CURRENT ASSE
PREPAIDS AND OTHER CURRENT ASSETS | 12 Months Ended |
Dec. 31, 2019 | |
PREPAIDS AND OTHER CURRENT ASSETS | |
PREPAIDS AND OTHER CURRENT ASSETS | NOTE 7. PREPAIDS AND OTHER CURRENT ASSETS Our Prepaids and other current assets consist of the following: December 31, 2019 2018 Prepaid insurance $ 74,026 $ 81,667 Prepaid product for resale 292,306 173,852 Other 180,638 166,060 $ 546,970 $ 421,579 |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 12 Months Ended |
Dec. 31, 2019 | |
PROPERTY AND EQUIPMENT, NET | |
PROPERTY AND EQUIPMENT, NET | NOTE 8. PROPERTY AND EQUIPMENT, NET Property and equipment consisted of the following: December 31, 2019 2018 Land $ 800,000 $ 800,000 Buildings 508,104 508,104 Furniture, fixtures and equipment 331,467 274,380 Software 120,111 — 1,759,682 1,582,484 Less: Accumulated depreciation (252,355) (143,417) $ 1,507,327 $ 1,439,067 Depreciation expense was $115,696 and $62,443, respectively, for the years ended December 31, 2019 and 2018. |
ACCOUNTS PAYABLE AND ACCRUED EX
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 12 Months Ended |
Dec. 31, 2019 | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | NOTE 9. ACCOUNTS PAYABLE AND ACCRUED EXPENSES Our accounts payable and accrued expenses consist of the following: December 31, 2019 2018 Accounts payable $ 879,347 $ 125,151 Accrued payroll, taxes and vacation 305,259 232,313 Property taxes and other 36,588 85,243 $ 1,221,194 $ 442,707 |
ACCRUED STOCK PAYABLE
ACCRUED STOCK PAYABLE | 12 Months Ended |
Dec. 31, 2019 | |
ACCRUED STOCK PAYABLE | |
ACCRUED STOCK PAYABLE | NOTE 10. ACCRUED STOCK PAYABLE The following tables summarize the changes in accrued common stock payable: Number of Amount Shares December 31, 2018 $ — — Employee stock award – accrual 80,657 34,469 December 31, 2019 $ 80,657 34,469 On January 29, 2019, we granted an employee $100,000 worth of our common stock, with fifty percent vesting on July 29, 2019 and the remaining amount vesting over eighteen months. Based on a stock price of $2.34 on the date of grant, the employee would receive 42,736 shares of our common stock upon vesting. We are recognizing the value of the grant ratably over the vesting periods. As of December 31, 2019, no stock had been issued to the employee and as a result we are recognizing the stock liability. |
NOTES PAYABLE
NOTES PAYABLE | 12 Months Ended |
Dec. 31, 2019 | |
NOTES PAYABLE | |
NOTES PAYABLE | NOTE 11. NOTES PAYABLE Our notes payable consisted of the following: December 31, December 31, 2019 2018 2019 12% Notes $ 1,506,000 $ — 8.5% Notes — 6,849,000 SBI Note 750,000 — 2019 15% Notes 200,000 — Related party note payable 100,000 — Unamortized debt discount (225,649) (1,575,094) 2,330,351 5,273,906 Less: Current portion (2,330,351) (5,273,906) Long-term portion $ — $ — 2019 12% Notes In September 2019, we completed a private placement with certain accredited investors pursuant to (a) a senior unsecured promissory note, bearing interest at 12% payable quarterly, with principal due October 31, 2020, with an option for us to extend the due date to October 31, 2021 (“2019 12% Notes”) and (b) warrants with an exercise price of $1.30 per share and a life of 1.1 years; however, if we prepay at any time the life extends to October 31, 2022 (“2019 12% Warrants”) (combined the “2019 12% Agreements”). We may prepay the 2019 12% Notes at any time, but in any event must pay at least one year of interest. We issued an aggregate of $1,506,000 under the 2019 12% Notes and warrants to purchase an aggregate of 1,506,000 shares of common stock. We received $400,000 in cash and $1,106,000 from modifying the outstanding principal under the 8.5% Notes; see 8.5% Notes below. The change in terms of the 8.5% Notes is treated as a debt extinguishment and the fair value of the warrants of $298,500 is included in our consolidated statement of operations and as additional paid-in capital. The relative fair value of the 2019 12% Warrants was recorded as a debt discount and additional paid-in capital of $93,500. For the year ended December 31, 2019, amortization of debt discount includes $23,432. The 2019 12% Notes are otherwise treated as conventional debt. For purposes of determining the loss on extinguishment of debt and the debt discount, the underlying assumptions used in the Black-Scholes model to determine the fair value of the 2019 12% Warrants were: Current stock price $ 0.82 - 0.92 Exercise price $ 1.30 Risk-free interest rate 1.63 - 1.68 % Expected dividend yield — Expected term (in years) 1.10 Expected volatility 124 % 8.5% Notes In April 2018, we completed a $7,500,000 private placement pursuant to a promissory note (“8.5% Notes”) and warrant purchase agreement (the “8.5% Agreement”) with certain accredited investors, bearing interest at 8.5%, with principal due May 1, 2019, and interest payable quarterly. During the second quarter this note was extended to be due June 1, 2019. On June 6, 2019, we made payments of approximately $5.7 million, leaving approximately $1.1 million outstanding. In the event of default, the interest rate increases to 18%. The 8.5% Notes are collateralized by a security interest in substantially all of our assets. We may prepay the 8.5% Notes at any time, but in any event must pay at least one year of interest. In September 2019, we modified the debt agreement into the 2019 12% Notes. Subject to the terms and conditions of the 8.5% Agreement, each investor was granted fully-vested warrants equal to their note principal times 80%, or six million warrants, with an exercise price of $2.35 per share and a life of two years (the “8.5% Warrants”). Should we issue any equity-based instruments at a price lower than the exercise price(s) of the 8.5% Warrants, other than under our Incentive Plan (as defined below), the exercise price(s) of the 8.5% Warrants will be adjusted to the lower price. If the shares underlying the 8.5% Warrants were not registered for resale on a registration statement within six months, we would have issued an additional warrant to each purchaser at the same exercise price for one-half of the shares covered by the initial 8.5% Warrants. A registration statement related to the 8.5% Warrants was declared effective on June 5, 2018. We may call the 8.5% Warrants at $0.01 per share if our stock trades above $8.00 per share for 15 consecutive days. The 8.5% Warrants may be exercised at the option of the holder by paying cash or by applying the amount due under the 8.5% Notes as consideration. We received $7,500,000 of cash for issuing the 8.5% Notes. The relative fair value of the 8.5% Warrants was recorded as a debt discount and additional paid-in capital of $5,366,000. For the years ended December 31, 2019 and 2018, amortization of debt discount expense was $1,575,094 and $3,790,906, respectively, from the 8.5% Notes. The 8.5% Notes are otherwise treated as conventional debt. For purposes of determining the debt discount, the underlying assumptions used in the binomial lattice model to determine the fair value of the 8.5% Warrants as of April 2018, were: Current stock price $ 4.18 Exercise price $ 2.35 Risk-free interest rate 2.46 % Expected dividend yield — Expected term (in years) 2.0 Expected volatility 134 % Number of iterations 5 SBI Debt In July 2019, we completed a $855,000 private placement pursuant to a promissory note (“SBI Note”) with a certain accredited investor, bearing interest at 10% with principal due on October 18, 2019. On October 18, 2019, SBI agreed to an extension to November 1, 2019. On November 1, 2019, SBI agreed to another extension of the debt to November 15, 2019. On November 15, 2019, SBI agreed to another extension of debt to November 29, 2019 with an increase in principal amount of the note from $855,000 to $905,000. On November 27, 2019, SBI agreed to an extension of the note to December 13, 2019. On December 13, 2019, SBI agreed to extend the maturity date to December 20, 2019. On December 30, 2019 SBI agreed to extend the maturity date of the note to January 31, 2020, upon the payment of $195,911, of which $40,911 was for accrued interest and $155,000 towards the outstanding principal of the note. See Note 16 for further detail. The change in terms of the SBI note is treated as a debt extinguishment. The additional $50,000 of principal was treated as a debt extinguishment and included in our consolidated statement of operations. We received $755,000 of cash for issuing the SBI Note and the difference between the cash received and the principal amount was recorded as a debt discount of $100,000 and has been fully amortized. 15% Notes In December 2019, we sold $300,000 promissory notes (“15% Notes”) and warrants to certain accredited investors. The promissory notes, bear interest at 15%, with principal due January 31, 2021, and interest payable quarterly. We may prepay the 15% Notes at any time, but in any event must pay at least six months of interest. Included in these notes is an amount of $100,000 from a board member, a related party. The warrants granted to the investors are fully-vested and the number of shares underlying the warrants three time the principal amount of the Notes or nine hundred thousand warrants, with an exercise price of $0.45 per share (the “15% Warrants”). The 15% Warrants were issued in three tranches, A, B, and C. All the warrants have the same terms except the expiration dates. Warrant A has an expiration date of December 31, 2020, Warrant B has an expiration date of December 31, 2021 and Warrant C has an expiration date of December 31, 2022. We received $300,000 of cash for issuing the 15% Notes. The relative fair value of the 15% Warrants was recorded as a debt discount and additional paid-in capital of $158,100. For the years ended December 31, 2019 and 2018, amortization of debt discount expense was $2,519 and $0, respectively, from the 15% Notes. The 15% Notes are otherwise treated as conventional debt. For purposes of determining the debt discount, the underlying assumptions used in the binomial lattice model to determine the fair value of the 15% Warrants as of December 2019, were: Current stock price $ 0.54 - 0.67 Exercise price $ 0.45 Risk-free interest rate 1.60 - 1.62 % Expected dividend yield — Expected term (in years) 1.01 - 3.06 Expected volatility 118 - 119 % |
WARRANT DERIVATIVE LIABILITY RE
WARRANT DERIVATIVE LIABILITY RESTATED | 12 Months Ended |
Dec. 31, 2019 | |
WARRANT DERIVATIVE LIABILITY RESTATED | |
WARRANT DERIVATIVE LIABILITY RESTATED | NOTE 12. WARRANT DERIVATIVE LIABILITY RESTATED On May 31, 2019 we received gross proceeds of $3 million by issuing three million shares of our common stock and three million warrants (“2019 Warrants”) to purchase shares of our common stock (together “2019 Units”) in a registered direct offering for $1.00 per 2019 Unit (combined the “2019 Capital Raise”). The 2019 Warrants, issued with the 2019 Capital Raise, are accounted for as a derivative liability. The 2019 Warrant agreements contain a cash settlement provision whereby the holders could settle the warrants for cash based on the Black-Scholes value, upon certain fundamental transactions, as defined in the 2019 Warrant agreement, that are considered outside of the control of management, such as a change of control, The original exercise price of the 2019 Warrants was $1.30 per share. The 2019 Warrants contain certain anti-dilution adjustment provisions with respect to subsequent issuances of securities by the Company at a price below the exercise price of such warrants. As a result of such subsequent issuances of securities by the Company during 2019, the exercise price of the 2019 Warrants had decreased to $0.45 per share and the number of shares subject to the 2019 Warrants had increased to 8,666,666 shares of common stock as of December 31, 2019. The following are the key assumptions that were used to determine the fair value of the 2019 Warrants: May 31, December 31, 2019 2019 (Restated) Number of shares underlying the warrants 3,000,000 8,666,666 Fair market value of stock $ 0.95 $ 0.63 Exercise price $ 1.30 $ 0.45 Volatility 133 % 124 % Risk-free interest rate 1.93 % 1.69 % Warrant life (years) 5.00 4.41 The following table sets forth a summary of the changes in the fair value of the warrant derivative liability, our Level 3 financial liabilities that are measured at fair value on a recurring basis: December 31, 2019 2018 (Restated) Beginning balance $ — $ — Recognition of warrant derivative liability on May 31, 2019 2,416,421 — Change in fair value of warrants derivative liability 2,204,172 — Ending balance $ 4,620,593 $ — |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2019 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 13. COMMITMENTS AND CONTINGENCIES Legal From time to time, the Company is a party to various litigation matters incidental to the conduct of its business. The Company is not presently a party to any legal proceedings that would have a material adverse effect on its business, operating results, financial condition or cash flows. |
DEFERRED TAXES
DEFERRED TAXES | 12 Months Ended |
Dec. 31, 2019 | |
DEFERRED TAXES | |
DEFERRED TAXES | NOTE 14. DEFERRED TAXES The income tax was $0 as of December 31, 2019 and 2018. Significant components of the Company’s deferred tax assets at December 31, 2019 and 2018 are shown below. A valuation allowance has been established as realization of such deferred tax assets has not met the more likely-than-not threshold requirement. The increase in the valuation allowance in 2019 represents the increase in deferred tax assets that the Company has determined is not more likely than not of being recovered. If the Company’s judgment changes and it is determined that the Company will be able to realize these deferred tax assets, the tax benefits relating to any reversal of the valuation allowance on deferred tax assets will be accounted for as a reduction to income tax expense. The components of net deferred tax assets are as follows: December 31, 2019 2018 (Restated) Net operating loss carryforwards $ 7,116,767 $ 5,383,012 Equity-based instruments 5,810,660 5,004,624 Long-lived assets and other 491,730 555,138 Capital loss carryforward 120,318 — Deferred tax asset valuation allowance (13,539,475) (10,942,774) $ — $ — A reconciliation of our income tax provision and the amounts computed by applying statutory rates to income before income taxes is as follows: Year ended December 31, 2019 2018 (Restated) Income tax benefit at statutory rate $ (3,251,597) $ (3,564,489) State income tax benefit, net of Federal benefit (566,351) (620,849) Equity-based instruments 146,446 (326,242) Fair market value adjustment/loss on extinguishment – derivative liabilities 636,532 — Amortization of debt discount 498,018 1,044,210 Other (59,749) 47,895 Valuation allowance 2,596,701 3,419,475 $ — $ — As of December 31, 2019 and 2018, the Company had federal and state net operating loss carryforwards of approximately $29 million and $22 million, respectively. Of the current net operating loss carryforwards, $14 million expire starting in 2033 through 2037 and $15 million do not expire. Pursuant to the Internal Revenue Code Sections 382 and 383, use of the Company’s U.S. federal and state net operating loss carryforwards may be limited in the event of a cumulative change in ownership of more than 50% within a three-year period. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2019 | |
STOCKHOLDERS? EQUITY | |
STOCKHOLDERS? EQUITY | NOTE 15. STOCKHOLDERS’ EQUITY 2019 Capital Raise Restated On May 31, 2019 we received gross proceeds of $3 million by issuing three million shares of our common stock and three million warrants to purchase shares of our common stock in a registered direct offering for $1.00 per 2019 Unit. The 2019 Warrants had an exercise price of $1.30 per share at issuance and are exercisable for five years from the date of issuance. The number of shares issuable pursuant to the warrants granted under the 2019 Warrants, as well as the exercise price of those warrants, is subject to adjustment as a result of certain future equity issuances of securities by the Company at a price below the then-effective exercise price of the 2019 Warrants. As a result of such subsequent issuances of securities by the Company during the fourth quarter of 2019, the exercise price of the 2019 Warrants had decreased to $0.45 per share and the number of shares subject to the 2019 Warrants had increased to 8,666,666 shares of common stock as of December 31, 2019. We received cash of $2,604,355 which is net of $395,645 of issuance costs, of which $318,681 is included as equity issuance costs and $76,964 is included as a reduction of additional paid in capital. Of the gross proceeds, we recorded $2,416,422 as a warrant derivative liability, as discussed in Note 11. We used a portion of the net proceeds from the issuance of the 2019 Units to pay down the 8.5% Notes by $5,743,000, leaving $1,106,000 outstanding. Share-based compensation Share-based compensation expense consisted of the following: Year ended December 31, 2019 2018 Employee Awards $ 3,040,497 $ 3,626,271 Consulting Awards 85,683 306,466 Feinsod Agreement 840,441 2,062,270 $ 3,966,621 $ 5,995,007 Employee Stock Options On October 29, 2014, the Board authorized the adoption of and, on June 26, 2015, our stockholders ratified, our 2014 Equity Incentive Plan for the issuance of 10 million shares of our common stock and, in April 2018, stockholders approved an increase of 5 million shares of common stock that may be granted (the “Incentive Plan”). The Incentive Plan provides for the issuance of up to 15 million shares of our common stock and is designed to provide an additional incentive to executives, employees, directors and key consultants, aligning our long term interests with participants. A Registration Statement on Form S‑8 for the initial 10 million shares automatically became effective in May 2016, and a Registration Statement on Form S‑8 for the additional 5 million shares and 900,000 shares under the Feinsod Agreement automatically became effective in June 2018 (collectively, the “Registration Statements”). The Registration Statements relate to 15,000,000 shares of our common stock, which are issuable pursuant to or, upon exercise of, options that have been granted or may be granted under our Incentive Plan. As of December 31, 2019, there were 986,442 shares available to issue under the Incentive Plan. Share-based compensation costs for award grants to employees and directors (“Employee Awards”) are recognized on a straight-line basis over the service period for the entire award, with the amount of compensation cost recognized at any date equaling at least the portion of the award that is vested. The following summarizes the Black-Scholes assumptions used to value the Employee Awards granted: Year ended December 31, 2019 2018 Exercise price $ 0.55 - 2.37 $ 1.71 - 7.17 Stock price on date of grant $ 0.55 - 2.37 $ 1.71 - 7.17 Volatility 119 - 130 % 131 - 140 % Risk-free interest rate 1.43 - 2.60 % 2.1 - 2.9 % Expected life (years) 3.0 3.0 Dividend yield — — The following summarizes Employee Awards activity: Weighted- Weighted- average average Remaining Number of Exercise Price Contractual Aggregate Shares per Share Term (in years) Intrinsic Value Outstanding at December 31, 2018 9,173,380 1.68 Granted 5,927,390 0.98 Exercised (269,728) 0.70 Forfeited or expired (3,947,262) 1.80 Outstanding at December 31, 2019 10,883,780 1.28 5.4 $ 61,000 Exercisable at December 31, 2019 7,331,365 $ 1.51 5.8 $ 8,000 As of December 31, 2019, there was approximately $838,267 of total unrecognized compensation expense related to unvested Employee Awards, which is expected to be recognized over a weighted-average period of twelve and a half months. Consulting Services As needed, we may issue warrants and options to third parties in exchange for consulting services. Stock-based compensation costs for award grants to third parties for consulting services (“Consulting Awards”) are recognized on a straight-line basis over the contractual term. The fair value of each warrant grant is estimated using Black-Scholes. We use historical data to estimate the expected price volatility. The risk-free interest rate is based on the United States Treasury yield curve in effect at the time of valuation for the estimated life of the option. The following summarizes the Black-Scholes assumptions to value the Consulting Awards granted: Year ended December 31, 2019 2018 Exercise price $ 0.71 - 2.37 $ 3.08 Stock price, date of valuation $ 0.71 - 2.37 $ 3.08 Volatility 125 - 141 % 134 % Risk-free interest rate 1.64 - 2.62 % 2.3 % Expected life (years) 2.0 - 5.0 2.0 Dividend yield — — The following summarizes Consulting Awards activity: Weighted- Weighted- average average Remaining Number of Exercise Price Contractual Aggregate Shares per Share Term (in years) Intrinsic Value Outstanding at December 31, 2018 50,000 2.53 Granted 85,000 1.31 Exercised — — Forfeited or expired (10,000) 1.40 Outstanding and exercisable at December 31, 2019 1.79 1.1 $ 0.00 We granted 25,000 shares of common stock with a fair value of $92,500 to a non-employee for consulting services, which were issued in July 2018. Additionally, we granted 47,933 shares of common stock with a fair value of $142,500 to non-employees for consulting services, which were issued in October 2018. During 2019, we granted 85,000 options with a fair value of $93,614 to non-employees for consulting services. Feinsod Employment Agreement On December 8, 2017, we entered into an agreement (the “Feinsod Agreement”) with Michael Feinsod for his continued service as our Executive Chairman of our Board of Directors. Pursuant to the agreement, Mr. Feinsod received (a) 600,000 stock options that vest on the anniversary date of the agreement for the next three years, or 200,000 per year (“Time-based Options”); and (b) three tranches of 100,000 stock options that vest when our stock price has an average trading price for 20 days of $3.50, $5.00 and $6.50 (“Market-based Options”). The options have an exercise price of $3.45 per share and a ten-year life. These options were not issued under the Incentive Plan; however, the underlying shares were included in the Registration Statement on Form S‑8 that automatically became effective in June 2018. During the quarter ended March 31, 2018, the $3.50 and $5.00 Market-based Options vested and, accordingly, the expense associated with those options was recognized immediately. On August 6, 2019, we entered into an agreement (the “Feinsod Agreement”) with Michael Feinsod for his permanent service as our Chief Executive Officer. Pursuant to the agreement, Mr. Feinsod received 1,000,000 stock options that vest when our stock price has a trading price of equal to or above $4.51 per share for five consecutive days. The options have an exercise price of $0.83 per share and a ten-year life. These options were issued under the Incentive Plan. The options were valued using the Monte Carlo method. For the year ended December 31, 2019, we recognized approximately $116,000 of share-based compensation expense related to these options. The underlying assumptions used in the Monte Carlo simulations to determine the fair value of options were: August 6,2019 Current stock price $ 0.83 Exercise price $ 0.83 Vesting goal $ 4.51 Risk-free interest rate 1.73 % Expected term (in years) 10 Expected volatility 123 % DB Option Agreement warrants In order to extend the DB Option Agreement with Infinity Capital, in March 2016 we granted Infinity Capital warrants to purchase 100,000 shares of our common stock at an exercise price of $0.67 per share with a five year life. All 100,000 warrants were still outstanding as of December 31, 2019. IPG Acquisition Warrants In connection with the IPG acquisition in 2015, we issued to IPG 500,000 fully-vested warrants to purchase a) 250,000 shares of our common stock at $4.50 per share, (the “IPG $4.50 Warrants”), and b) 250,000 shares of our common stock at $5.00 per share (the “IPG $5.00 Warrants”) (collectively, the “IPG Warrants”). All of these warrants expired unexercised during the quarter ended March 31, 2018. Warrants with Debt The following summarizes warrants issued with debt activity: Weighted- Weighted- average average Remaining Number of Exercise Price Contractual Aggregate Shares per Share Term (in years) Intrinsic Value Outstanding at December 31, 2017 3,351,700 $ 0.65 Granted 6,000,000 2.35 Exercised (3,316,786) 0.77 Expired (42,700) 5.00 Outstanding at December 31, 2018 5,992,214 2.26 Granted 2,481,000 0.98 Exercised — — Expired — — Outstanding and exercisable at December 31, 2019 0.64 0.5 $ 1,169,583 On May 31, 2019, we issued the 2019 Units at $1.00, which triggered the “down round” feature specified in the 8.5% Warrants. We calculated the difference between the 8.5% Warrants’ fair value on the date the down round feature was triggered using the original exercise price and the new exercise price. On October 18, 2019, November 1, 2019 and again on December 11, 2019, we issued additional warrants at $1.00, $0.68 and $0.45, respectively. These triggered the “down round” feature on both the 8.5% warrants and the 2019 Units. The difference in fair value of the effect of the down round feature is reflected in our consolidated financial statements as a deemed dividend and as a reduction to income available to common stockholders in the basic earnings per share calculation. The underlying assumptions used in the binomial lattice model to determine the fair value of the 8.5% Warrants were: Pre-Trigger Post-Trigger Current stock price $ 0.95 $ 0.95 Exercise price $ 2.35 $ 1.00 Risk-free interest rate 2.21 % 2.21 % Expected dividend yield — — Expected term (in years) 0.89 0.89 Expected volatility 123 % 123 % Pre-Trigger Post-Trigger Current stock price $ 0.70 $ 0.70 Exercise price $ 1.00 $ 0.68 Risk-free interest rate 1.55 % 1.55 % Expected dividend yield — — Expected term (in years) 0.47 0.47 Expected volatility 114 % 114 % Pre-Trigger Post-Trigger Current stock price $ 0.67 $ 0.67 Exercise price $ 0.68 $ 0.45 Risk-free interest rate 1.61 % 1.61 % Expected dividend yield — — Expected term (in years) 0.36 0.36 Expected volatility 113 % 113 % The underlying assumptions used in the binomial lattice model to determine the fair value of the 2019 Warrants were: Pre-Trigger Post-Trigger Current stock price $ 0.63 $ 0.63 Exercise price $ 1.30 $ 1.00 Risk-free interest rate 1.56 % 1.56 % Expected dividend yield — — Expected term (in years) 4.62 4.62 Expected volatility 115 % 115 % Pre-Trigger Post-Trigger Current stock price $ 0.70 $ 0.70 Exercise price $ 1.00 $ 0.68 Risk-free interest rate 1.55 % 1.55 % Expected dividend yield — — Expected term (in years) 4.58 4.58 Expected volatility 114 % 114 % Pre-Trigger Post-Trigger Current stock price $ 0.67 $ 0.67 Exercise price $ 0.68 $ 0.45 Risk-free interest rate 1.61 % 1.61 % Expected dividend yield — — Expected term (in years) 4.47 4.47 Expected volatility 113 % 113 % Fall 2017 Capital Raise During the year ended December 31, 2017, in a private placement we raised $4 million of equity by issuing four million shares of our common stock and four million warrants (“Fall 2017 Warrants”) to purchase shares of our common stock (together “Units”) for $1.00 per Unit. The Fall 2017 Warrants had an exercise price of $0.50 per share and were exercisable for two years. If our common stock closed above $5.00 for ten consecutive days, we could call the warrants, giving the warrant holders 10 days to exercise. During the quarter ended March 31, 2018, we called the warrants and all were exercised. In consideration for the sale of the Units, we received $3,750,000 in cash and extinguished $250,000 of 12% Notes. |
NET LOSS PER SHARE
NET LOSS PER SHARE | 12 Months Ended |
Dec. 31, 2019 | |
NET LOSS PER SHARE | |
NET LOSS PER SHARE | NOTE 16. NET LOSS PER SHARE Basic net loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the reporting period. Diluted net loss per share is computed similarly to basic loss per share, except that it includes the potential dilution that could occur if dilutive securities are exercised. Outstanding stock options and common stock warrants are considered anti-dilutive because we are in a net loss position. Accordingly, the number of weighted average shares outstanding for basic and fully diluted net loss per share are the same. The following summarizes equity instruments that may, in the future, have a dilutive effect on earnings per share: December 31, 2019 2018 (Restated) Stock options 12,833,780 10,073,380 Warrants 17,439,881 6,217,214 Accrued stock payable 42,736 — 30,316,397 16,290,594 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2019 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 17. SUBSEQUENT EVENTS Beginning in early 2020, there has been an outbreak of coronavirus (COVID‑19), initially in China and which has spread to other jurisdictions, including locations where we do business. The full extent of the outbreak, related business and travel restrictions and changes to behavior intended to reduce its spread are uncertain as of the date of the Report as this continues to evolve globally. Therefore, the full extent to which coronavirus may impact our results of operations, liquidity or financial position is uncertain. Management continues to monitor the impact that the COVID‑19 pandemic is having on the Company and the economies in which we operate. We anticipate that our liquidity may be materially impacted by the coronavirus outbreak. On January 8, 2020 we entered a $975,000 deed of trust (the “Mortgage Loan”) secured by a first mortgage lien on the property located in Denver, Colorado. The Mortgage Loan matures on December 31, 2020 and accrues interest at a rate of equal to the greater of 5.25% in excess of the Prime Rate or 10% per annum, payable on a monthly basis. This loan was paid in full on March 20, 2020 with the sale of our building. On January 24, 2020, we entered into an asset purchase agreement with Dalton Adventures, LLC (the “Seller”), pursuant to which we agreed to acquire the assets of the Seller and which constitutes the business of SevenFive Farm, a cultivation facility in Boulder, Colorado. The purchase price to be paid for the assets is equal to 1.4 times the Seller’s gross revenue for the 12‑month period prior to the closing; provided that the purchase price will not be lower than $3,000,000. The purchase price will be paid by issuing to the Seller shares of common stock of the Company equal to the purchase price divided by the volume weighted average per share price of our shares for 30 consecutive trading days ending on the second trading day prior to the closing (the “VWAP”); provided that if the VWAP exceeds $0.85 per share, then the VWAP will equal $0.85 per share for purposes of the forgoing calculation. The Seller may require us to repurchase in cash 25% of the shares issued to the Seller at the closing at a repurchase price equal to the same VWAP used to determine the number of shares issued to the Seller at closing. The closing is subject to approval of the transaction by the Colorado Marijuana Enforcement Division, which was received on May 13, 2020, as well as other customary closing conditions. On February 18, 2020, we entered into a promissory note exchange agreement (the “Exchange Agreement”) pursuant to which the original SBI Note was exchanged for a new convertible promissory note (the “Convertible Note”). The Convertible Note has a principal amount of $934,000, an interest rate of 10% per annum and a maturity date of February 18, 2021. The Convertible Note may be converted at the option of SBI into shares of Common Stock at a conversion price equal to 80% of the Market Price; provided that the conversion price shall in no event be less than $0.45 per share. In February and March 2020, we issued and sold unsecured promissory notes (the “Unsecured Notes”) with an aggregate principal amount of $2,031,000 to certain investors in exchange for $525,000 of new funding and the cancellation of outstanding indebtedness of $1,506,000 represented by prior promissory notes issued by us in September 2019. The Unsecured Notes have an annual interest rate of 15% and mature on January 31, 2021 and March 1, 2021. Interest is due on a quarterly basis. In connection with the issuance of the Unsecured notes, each holder of Unsecured Notes received three warrants (i.e., a 2020 A Warrant, a 2020 B Warrant and a 2020 C Warrant) to acquire shares of Common Stock at an exercise price equal to $0.45 per share. On March 20, 2020 we sold our greenhouse office building located in Denver, Colorado, to certain individuals for a sale price of $1,499,000 and net proceeds of approximately $600,000. On April 7, 2020, we entered into an Asset Purchase Agreement (the “Agreement”) with The Organic Seed, LLC, doing business under the name Cannasseur (the “Seller”), pursuant to which we agreed to acquire the assets of the Seller which includes a recreational retail dispensary, a 12,000 square foot light deprivation greenhouse, and a manufacturing facility based in Pueblo West, Colorado. The Agreement provides the purchase price to acquire Cannasseur is $2,350,000 (the “Purchase Price”). The purchase price will be paid by issuing to the Seller shares of common stock of the Company equal to the purchase price divided by the volume weighted average per share price of the Company’s shares for 30 consecutive trading days ending on the second trading day prior to the closing (the “VWAP”); provided that if the VWAP exceeds $0.55 per share, then the VWAP will equal $0.55 per share for purposes of the foregoing calculation; and if the VWAP is less than $0.45 per share, then the VWAP will be adjusted to equal $0.45 for the purposes of the foregoing calculation. The closing is subject to approval of the transaction by the Colorado Marijuana Enforcement Division, as well as other customary closing conditions. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Dec. 31, 2019 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | NOTE 18. SEGMENT INFORMATION Our operations are organized into two segments: Operations Consulting and Products; and Capital Investments and Real Estate. All revenue originates, and all assets are located in the United States. Segment information is presented in accordance with ASC 280, " Segments Reporting." This standard is based on a management approach that requires segmentation based upon the Company’s internal organization and disclosure of revenue and certain expenses based upon internal accounting methods. The Company’s financial reporting systems present various data for management to run the business, including internal profit and loss statements prepared on a basis not consistent with GAAP. The following information is presented net of discontinued operations. For more information see Note 3. Year ended December 31 2019 Operations Investments Total Services $ 1,787,863 $ — $ 1,787,863 Rent and interest — 95,437 95,437 Product 1,783,046 — 1,783,046 Total Revenues 3,570,909 95,437 3,666,346 Costs and expenses (3,372,174) (71,723) (3,443,897) $ 198,735 $ 23,714 222,449 Corporate (Restated) (14,030,707) Net loss $ (13,808,258) 2018 Operations Investments Total Service $ 1,186,624 $ — $ 1,186,624 Rent and interest — 18,749 18,749 Product 531,883 — 531,883 Total revenue 1,718,507 18,749 1,737,256 Costs and expenses (1,932,598) — (1,932,598) Investment in Desert Created — (1,005,955) (1,005,955) $ (214,091) $ (987,206) (1,201,297) Corporate (14,934,013) Net loss $ (16,135,310) December 31, Total assets 2019 2018 Operations $ 441,841 $ 134,786 Investments 402,988 300,000 Corporate 2,135,395 9,447,044 $ 2,980,224 $ 9,881,830 |
NATURE OF OPERATIONS, HISTORY_2
NATURE OF OPERATIONS, HISTORY AND PRESENTATION (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
NATURE OF OPERATIONS, HISTORY AND PRESENTATION | |
Nature of Operations | Nature of Operations General Cannabis Corp, a Colorado Corporation (the “Company,” “we,” “us,” “our,” or “GCC”) (formerly, Advanced Cannabis Solutions, Inc.), was incorporated on June 3, 2013, and provides services and products to the regulated cannabis industry. On June 6, 2018 we began trading on the OTCQX® Best Market after upgrading from the OTCQB® Venture Market. As of December 31, 2019, our operations are segregated into the following two segments: Operations Consulting and Products (“Operations Segment”) Through Next Big Crop (“NBC”), we deliver comprehensive consulting services to the cannabis industry that include obtaining licenses, compliance, cultivation, retail operations, logistical support, facility design and construction, and expansion of existing operations. During 2019 and 2018, 59% and 60% of NBC’s revenue was with three customers and one customer, respectively. NBC oversees our wholesale equipment and supply business, operated under the name “GC Supply,” which provides turnkey sourcing and stocking services to cultivation, retail and infused products manufacturing facilities. Our products include building materials, equipment, consumables and compliance packaging. There are generally multiple suppliers for the products we sell; however, there are a limited number of manufacturers of certain high-tech cultivation equipment. Capital Investments and Real Estate (“Investments Segment”) As a publicly traded company, we have access to capital that may not be available to businesses operating in the cannabis industry. Accordingly, we may provide debt or equity capital through (a) loans or revolving lines of credit, (b) leasing real estate we own, or (c) investing in businesses using cash or shares of our common stock. Held for Sale - Security and Cash Transportation Services (“Security Segment”) We provide advanced security, including on-site professionals and cash transport, to licensed cannabis cultivators, cannabis processing facilities and retail shops, under the business name Iron Protection Group (“IPG”) in California and Colorado, and security services to non-cannabis customers in Colorado, such as hotels, apartment buildings and retail. On December 26, 2019, the board of directors and management made the strategic decision to investigate a possible buyer for the security segment and if no buyer could be found, cease operations of the security segment. We transferred all our Colorado security contracts and employees to a company on January 16, 2020. We will receive $1.00 per man hour worked on existing contracts for a period of one year. On February 6, 2020 we cancelled all our security contracts in California. Discontinued Operations - Consumer Goods and Marketing Consulting (“Consumer Goods Segment”) Our apparel business, Chiefton, has two primary revenue streams. Chiefton Supply strives to create innovative, unique t-shirts, hats, hoodies and accessories. Our apparel is sold through our on-line shop, cannabis retailers, non-cannabis retailers, and specialty t-shirt and gift shops. Chiefton Design provides design, branding and marketing strategy consulting services to the cannabis industry, which frequently includes sourcing and selling customer-specific apparel and accessories. On December 26, 2019, the board of directors and management made the strategic move to cease operations of Chiefton. All operations of Chiefton were abandoned on December 31, 2019. Our CBD retail business, STOA Wellness, opened in July of 2019. STOA Wellness offers a curated collection of high quality CBD products for athletes and general wellness. On December 26, 2019, the board of directors committed to a plan to cease operations of STOA Wellness. We transferred all assets of STOA Wellness to an individual on January 10, 2020, in exchange for the release on the outstanding lease. |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements include the results of GCC and its ten wholly-owned subsidiary companies: (a) 6565 E. Evans Owner LLC, a Colorado limited liability company formed in 2014; (b) General Cannabis Capital Corporation, a Colorado corporation formed in 2015; (c) GC Security LLC (“GCS”), a Colorado limited liability company formed in 2015; (d) GC-NY Health, LLC, a New York limited liability company formed in 2019; (e) Standard Cann, Inc., a Colorado corporation formed in 2019; (f) Cannasseur, LLC, a Colorado limited liability company formed in 2019; (g) Cannasseur Dispensary, LLC, a limited liability company formed in 2019; (h) Cannasseur Cultivation, LLC, a limited liability company formed in 2019; (i) Cannasseur Extraction, LLC, a limited liability company formed in 2019 and (j) GC Corp., a Colorado corporation, originally formed in 2013 under the name ACS Corp. In 2015, the name was changed to GC Corp. Intercompany accounts and transactions have been eliminated. The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Although these estimates are based on our knowledge of current events and actions we may undertake in the future, actual results may ultimately differ from these estimates and assumptions. Furthermore, when testing assets for impairment in future periods, if management uses different assumptions or if different conditions occur, impairment charges may result. |
Going Concern | Going Concern The consolidated financial statements have been prepared on a going concern basis, which assumes we will be able to realize our assets and discharge our liabilities in the normal course of business for the foreseeable future. Our cash of approximately $225,000 as of December 31, 2019, is not sufficient to absorb our operating losses and retire our debt of approximately $2,330,000. The warrants associated with this debt, if exercised, would provide sufficient funds to retire the debt; however, there is no guarantee that these warrants will be exercised. Our ability to continue as a going concern is dependent upon our generating profitable operations in the future and / or obtaining the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Management believes that (a) we will be successful obtaining additional capital and (b) actions presently being taken to further implement our business plan and generate additional revenues provide opportunity for the Company to continue as a going concern. While we believe in the viability of our strategy to generate additional revenues and our ability to raise additional funds, there can be no assurances to that effect. Accordingly, there is substantial doubt about our ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include cash on hand, deposits with banks, and investments that are highly liquid and have maturities of three months or less at the date of purchase. We maintain our cash balances in financial institutions that, from time to time, may exceed amounts insured by the Federal Deposit Insurance Corporation ($250,000 as of December 31, 2019). |
Inventory | Inventory Our inventory consists of finished goods, including apparel and supplies for the cannabis market. Inventory is stated at the lower of cost (net realizable value), using average cost to determine cost. We monitor inventory cost compared to selling price in order to determine if a write down to net realizable value is necessary. In December 2019, we ceased all operations of Chiefton and determined we would be ceasing operations of STOA in January 2020. As a result, we wrote down all of the remaining inventory to $0 as of December 31, 2019. We recognized $147,035 in expense as a result of this write down of inventory and is included in loss on discontinued operations on the statement of operations. |
Accounts Receivable, net | Accounts Receivable, net Accounts receivable are recorded at the original invoiced amount due from our customers less an allowance for any potential uncollectible amounts. We control credit risk related to accounts receivable through credit approvals, credit limits and monitoring processes. In making the determination of the appropriate allowance for doubtful accounts, management considers prior experience with customers, analysis of accounts receivable aging reports, changes in customer payment patterns, and historical write-offs. The allowance for doubtful accounts totaled $111,000 and $9,000 as of December 31, 2019 and 2018, respectively. The amounts charged to operations and write-offs were immaterial for the periods presented. |
Notes Receivable | Notes Receivable Notes receivable consist primarily of amounts due to us related to the financing of different business ventures. Direct loan origination costs we incur are netted with loan origination fees we receive and the net amount, loan origination fees or costs, is included in notes receivable on the consolidated balance sheets. The loan origination fees or costs are amortized over the term of the underlying note receivable and included in interest income in the consolidated statements of operations. We report notes receivable at the principal balance outstanding less an allowance for losses. We monitor the financial condition of the notes receivable and record provisions for estimated losses when we believe it is probable that the holders of the notes receivable will be unable to make their required payments. We charge interest at a fixed rate and interest income is calculated by applying the effective rate to the outstanding principal balance. |
Right-of-use Asset / Lease Liability | Right-of-use Asset / Lease Liability We adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2016‑02 “Leases (Topic 842)” on January 1, 2019, which requires all assets and liabilities arising from leases to be recognized in our consolidated balance sheets. In July 2018, the FASB added an optional transition method which the Company elected upon adoption of the new standard. This allowed us to recognize and measure leases existing at January 1, 2019 without restating comparative information. In addition, the Company elected to apply the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allows us to carry forward the historical lease classification. We first evaluated our leases to determine whether they are classified as a finance lease or as an operating lease. A lease is a finance lease if any of the following criteria are met: (a) ownership transfers, (b) the lease includes an option to purchase the underlying asset, (c) the lease term is for the major part of the remaining economic life of the underlying asset, (d) the present value of the lease payments equals or exceeds the fair value of the underlying asset, or (e) the underlying asset is of a specialized nature that is expected to have no alternative use to the lessor at the end of the lease term. All of our leases are classified as operating leases. We then determined whether the short-term exemption applies; that is, is the lease term 12 months or less and does not include a purchase option whose exercise is reasonably certain. If the short-term exemption applies then lease payments are recognized as expense and no asset or liability is recorded. If the short-term exemption does not apply, then we recorded an operating lease right-of-use asset and a corresponding operating lease liability equal to the present value of the lease payments. All of our leases entered into prior to 2019 met the short-term exemption, so modification to prior period financial position was is not required. The two-year commercial real estate lease we entered into in February 2019 did not meet the short-term exemption and, accordingly, we recorded the present value of the lease payments of $83,525, as a right-of-use asset and a lease liability in the consolidated balance sheet. We recognize operating lease expense on a straight-line basis over the life of the lease. |
Property and Equipment, net | Property and Equipment, net Property and equipment are recorded at historical cost, less accumulated depreciation. Major additions and improvements are capitalized, while replacements, maintenance and repairs, which do not improve or extend the life of the respective assets, are expensed as incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the assets: thirty years for buildings, the lesser of five years or the life of the lease for leasehold improvements, and three to five years for furniture, fixtures and equipment, software and vehicles. Land is not depreciated. When property or equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the respective accounts with the resulting gain or loss reflected in operations. |
Business Combinations | Business Combinations Amounts paid for acquisitions are allocated to the assets acquired and liabilities assumed based on their estimated fair value at the date of acquisition. The fair value of identifiable intangible assets is based on detailed valuations that use information and assumptions provided by management, including expected future cash flows. We allocate any excess purchase price over the fair value of the net assets and liabilities acquired to goodwill. Identifiable intangible assets with finite lives are amortized over their useful lives. Acquisition-related costs, including advisory, legal, accounting, valuation and other costs, are expensed in the periods in which the costs are incurred. The results of operations of acquired businesses are included in the consolidated financial statements from the acquisition date. |
Intangible Assets | Intangible Assets Intangible assets consist primarily of customer relationships and marketing-related intangibles. Our intangible assets are being amortized on a straight-line basis over a period of two years and are fully amortized as of December 31, 2019. |
Impairment of Long-lived Assets | Impairment of Long-lived Assets We periodically evaluate whether the carrying value of property, equipment and intangible assets has been impaired when circumstances indicate the carrying value of those assets may not be recoverable. The carrying amount is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If the carrying value is not recoverable, the impairment loss is measured as the excess of the asset’s carrying value over its fair value. Our impairment analyses require management to apply judgment in estimating future cash flows as well as asset fair values, including forecasting useful lives of the assets, assessing the probability of different outcomes, and selecting the discount rate that reflects the risk inherent in future cash flows. If the carrying value is not recoverable, we assess the fair value of long-lived assets using commonly accepted techniques, and may use more than one method, including, but not limited to, recent third-party comparable sales and undiscounted cash flow models. If actual results are not consistent with our assumptions and estimates, or our assumptions and estimates change due to new information, we may be exposed to an impairment charge in the future. |
Investments | Investments We use the equity method for investments when we are able to exercise significant influence over, but do not control, the investee, and are not the primary beneficiary of the investee’s activities. We include our portion of an equity-method investee’s net income or loss within other expense on the consolidated statements of operations. In the event that the cost basis in an investment exceeds the fair value of the underlying business, we record an impairment charge to reduce our carrying value to the estimated fair value. We record investments that do not qualify for treatment under the equity method at fair value, unless there is no readily determinable fair value. We record at cost equity investments that do not have readily determinable fair value and assess for impairment at each reporting period. We are able to switch to fair value at our option. |
Debt | Debt We issue debt that may have separate warrants, conversion features, or no equity-linked attributes. Debt with warrants – When we issue debt with warrants, we treat the warrants as a debt discount, record as a contra-liability against the debt, and amortize the balance over the life of the underlying debt as amortization of debt discount expense in the consolidated statements of operations. The offset to the contra-liability is recorded as additional paid in capital in our consolidated balance sheets. If the debt is retired early, the associated debt discount is then recognized immediately as amortization of debt discount expense in the consolidated statement of operations. The debt is treated as conventional debt. We determine the value of the non-complex warrants using the Black-Scholes Option Pricing Model (“Black-Scholes”) using the stock price on the date of issuance, the risk-free interest rate associated with the life of the debt, and the volatility of our stock. For warrants with complex terms, we use the binomial lattice model to estimate their fair value. Modification of Debt - When we change the terms of existing notes payable, we evaluate the amendments under ASC 470-50, Debt Modification and Extinguishment to determine whether the change should be treated as a modification or as a debt extinguishment. This evaluation includes analyzing whether there are significant and consequential changes to the economic substance of the note. If the change is deemed insignificant then the change is considered a debt modification, whereas if the change is substantial the change is reflected as a debt extinguishment. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments U.S. generally accepted accounting principles (“GAAP”) requires disclosing the fair value of financial instruments to the extent practicable for financial instruments which are recognized or unrecognized in the consolidated balance sheet. The fair value of the financial instruments disclosed herein is not necessarily representative of the amount that could be realized or settled, nor does the fair value amount consider the tax consequences of realization or settlement. In assessing the fair value of financial instruments, the Company uses a variety of methods and assumptions, which are based on estimates of market conditions and risks existing at the time. For certain instruments, including accounts receivable and accounts payable, the Company estimated that the carrying amount approximated fair value because of the short maturities of these instruments. All debt is based on current rates at which the Company could borrow funds with similar remaining maturities and approximates fair value. GAAP establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use on unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs consist of items that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is described below: Level 1 – Quoted prices in active markets for identical assets or liabilities. There are no fair valued assets or liabilities classified under Level 1 as of December 31, 2019 and 2018. Level 2 – Observable prices that are based on inputs not quoted on active markets but corroborated by market data. There are no fair valued assets or liabilities classified under Level 2 as of December 31, 2019 and 2018. Level 3 – Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs (see Note 12). Level 3 liabilities are valued using unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the liabilities. For fair value measurements categorized within Level 3 of the fair value hierarchy, the Company’s accounting and finance department, which reports to the Chief Financial Officer, determines its valuation policies and procedures. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s accounting and finance department and are approved by the Chief Financial Officer. Level 3 Valuation Techniques: Level 3 financial liabilities consist of the derivative liabilities for which there is no current market for these securities such that the determination of fair value requires significant judgment or estimation. Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate. The Company deems financial instruments which do not have fixed settlement provisions to be derivative instruments. In accordance with GAAP the fair value of these warrants is classified as a liability on the Company’s consolidated balance sheets because, according to the terms of the warrants, a fundamental transaction could give rise to an obligation of the Company to pay cash to its warrant holders. Such instruments do not have fixed settlement provisions and have also been recorded as derivative liabilities. Corresponding changes in the fair value of the derivative liabilities are recognized in earnings on the Company’s consolidated statements of operations in each subsequent period. The Company’s derivative liabilities are carried at fair value and were classified as Level 3 in the fair value hierarchy due to the use of significant unobservable inputs. |
Extinguishment of Notes Payable | Extinguishment of Notes Payable When we change the terms of existing notes payable subsequent to the maturity date, we evaluate the amendments under ASC 470-50, Debt Modification and Extinguishment to determine whether the change should be treated as a debt extinguishment or as a debt modification. This evaluation includes analyzing whether there are significant and consequential changes to the economic substance of the note. If the change is deemed insignificant then the change is considered a debt modification, whereas if the change is substantial the change is reflected as a debt extinguishment. If determined to be a debt extinguishment, the difference between the fair value of the new instrument compared to the original instrument is reflected as a gain or loss on extinguishment of debt. |
Warrants Instruments | Warrants Instruments Warrants with derivative features – When we raise capital by issuing warrants that do not have complex terms, they are recorded as additional paid in capital in our consolidated balance sheet. When we issue warrants that have complex terms, such as a clause in which the warrant agreements contain a cash settlement provision whereby the holders could settle the warrants for cash upon a fundamental transaction that is considered outside of the control of management, such as a change of control, the warrants are considered to be a derivative that are recorded as a liability at fair value. The warrant derivative liability is adjusted to its fair value at the end of each reporting period, with the change being recorded as other expense or gain. |
Revenue Recognition | Revenue Recognition We have two main revenue streams: (i) product sales; and (ii) licensing and consulting. Product sales are recorded at the time that control of the products is transferred to customers. In evaluating the timing of the transfer of control of products to customers, we consider several indicators, including significant risks and rewards of products, our right to payment, and the legal title of the products. Based on the assessment of control indicators, sales are generally recognized when products are delivered to customers. Revenue from licensing and consulting services is recognized when our obligations to our client are fulfilled which is determined when milestones in the contract are achieved. ASC Topic 606 is a comprehensive revenue recognition model that requires revenue to be recognized when control of the promised goods or services are transferred to our customers at an amount that reflects the consideration that we expect to receive. Application of ASC Topic 606 requires us to use more judgment and make more estimates than under former guidance. Application of ASC Topic 606 requires a five-step model applicable to all product offerings revenue streams as follows: Identification of the contract, or contracts, with a customer A contract with a customer exists when (i) we enter into an enforceable contract with a customer that defines each party’s rights regarding the goods or services to be transferred and identifies the payment terms related to these goods or services, (ii) the contract has commercial substance and, (iii) we determine that collection of substantially all consideration for goods or services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. We apply judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit or financial information pertaining to the customer. Identification of the performance obligations in the contract Performance obligations promised in a contract are identified based on the goods or services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the goods or service either on its own or together with other resources that are readily available from third parties or from us, and are distinct in the context of the contract, whereby the transfer of the goods or services is separately identifiable from other promises in the contract. When a contract includes multiple promised goods or services, we apply judgment to determine whether the promised goods or services are capable of being distinct and are distinct within the context of the contract. If these criteria are not met, the promised goods or services are accounted for as a combined performance obligation. Determination of the transaction price The transaction price is determined based on the consideration to which we will be entitled to receive in exchange for transferring goods or services to our customer. We estimate any variable consideration included in the transaction price using the expected value method that requires the use of significant estimates for discounts, cancellation periods, refunds and returns. Variable consideration is described in detail below. Allocation of the transaction price to the performance obligations in the contract If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative Stand-Alone Selling Price (“SSP,”) basis. We determine SSP based on the price at which the performance obligation would be sold separately. If the SSP is not observable, we estimate the SSP based on available information, including market conditions and any applicable internally approved pricing guidelines. Recognition of revenue when, or as, we satisfy a performance obligation We recognize revenue at the point in time that the related performance obligation is satisfied by transferring the promised goods or services to our customer. Principal versus Agent Considerations When another party is involved in providing goods or services to our customer, we apply the principal versus agent guidance in ASC Topic 606 to determine if we are the principal or an agent to the transaction. When we control the specified goods or services before they are transferred to our customer, we report revenue gross, as principal. If we do not control the goods or services before they are transferred to our customer, revenue is reported net of the fees paid to the other party, as agent. Our evaluation to determine if we control the goods or services within ASC Topic 606 includes the following indicators: We are primarily responsible for fulfilling the promise to provide the specified good or service. When we are primarily responsible for providing the goods and services, such as when the other party is acting on our behalf, we have indication that we are the principal to the transaction. We consider if we may terminate our relationship with the other party at any time without penalty or without permission from our customer. We have risk before the specified good or service have been transferred to a customer or after transfer of control to the customer. We may commit to obtaining the services of another party with or without an existing contract with our customer. In these situations, we have risk of loss as principal for any amount due to the other party regardless of the amount(s) we earn as revenue from our customer. The entity has discretion in establishing the price for the specified good or service. We have discretion in establishing the price our customer pays for the specified goods or services. Contract Liabilities Contract liabilities consist of customer advance payments and billings in excess of revenue recognized. We may receive payments from our customers in advance of completing our performance obligations. We record contract liabilities equal to the amount of payments received in excess of revenue recognized, including payments that are refundable if the customer cancels the contract according to the contract terms. Contract liabilities have been historically recorded as current liabilities on our consolidated financial statements when the time to fulfill the performance obligations under terms of our contracts is less than one year. We have no Long-term contract liabilities which would represent the amount of payments received in excess of revenue earned, including those that are refundable, when the time to fulfill the performance obligation is greater than one year. |
Share-based Payments | Share-based Payments Employee and non-employee awards – We account for share-based compensation in accordance with the fair value recognition provisions of ASC 718, Compensation – Stock Compensation , and ASC 505, Equity , which require all share-based payments to employees and non-employees, including grants of employee stock options, to be recognized as an expense in the consolidated financial statements based on their fair values. The fair value of stock options is estimated using the Black-Scholes option pricing formula that requires assumptions for expected volatility, expected dividends, the risk-free interest rate and the expected term of the option. Stock options generally vest in one year. The Company accounts for forfeitures of share-based grants as they occur. If any of the assumptions used in the Black-Scholes model or the anticipated number of shares to be awarded change significantly, share-based compensation expense may differ materially in the future from that recorded in the current period. Market price-based awards – We may issue share-based payments that vest when certain market conditions are met, such as our common stock trading above a certain value for a specific number of days. We recognize expense for market price-based options at the estimated fair value of the options using the binomial lattice model over the estimated life of the options used in the model, or immediately upon the market conditions being met. We use historical data to estimate the expected price volatility, the expected stock option life and expected forfeiture rate. The risk-free interest rate is based on the United States Treasury yield curve in effect at the time of grant for the estimated life of the stock option. |
Shipping and Handling | Shipping and Handling Payments by customers to us for shipping and handling costs are included in revenue on the consolidated statements of operations, while our expense is included in cost of goods sold. Shipping and handling for inventory are included as a component of inventory on the consolidated balance sheets, and in cost of goods sold in the consolidated statements of operations when the product is sold. |
Income Taxes | Income Taxes We recognize deferred income tax assets and liabilities for the expected future tax consequences of temporary differences between the income tax and financial reporting carrying amount of our assets and liabilities. We monitor our deferred tax assets and evaluate the need for a valuation allowance based on the estimate of the amount of such deferred tax assets that we believe do not meet the more-likely-than-not recognition criteria. We also evaluate whether we have any uncertain tax positions and would record a reserve if we believe it is more-likely-than-not our position would not prevail with the applicable tax authorities and would be recorded in income tax expense. Our assessment of tax positions as of December 31, 2019 and 2018, determined that there were no material uncertain tax positions. In general, the tax returns for the years ending December 31, 2016 through 2018 are open to examination by federal and state authorities. |
Reportable Segments | Reportable Segments Our reporting segments consist of: a) Operations Consulting and Products; and b) Capital Investments and Real Estate. Our Chief Executive Officer has been identified as the chief decision maker. Our operations are conducted primarily within the United States of America. |
Related Parties | Related Parties Related parties are any entities or individuals that, through employment, ownership or other means, possess the ability to direct or cause the direction of the management and policies of the Company. We disclose related party transactions that are outside of normal compensatory agreements, such as salaries or board of director fees. We consider the following individuals / companies to be related parties: · Michael Feinsod – Executive Chairman of our Board of Directors (“Board”). · Infinity Capital West, LLC (“Infinity Capital”) – An investment management company that was founded and is controlled by Michael Feinsod. · Peter Boockvar – Audit committee chairman. · Seth Oster – Board member DB Arizona – A company that borrowed $825,000 from GC Finance Arizona. Prior to our purchase in June 2017, we did not possess the ability to influence DB Arizona and DB Arizona did not have the ability to influence us. We include DB Arizona as a related party due to our relationship with Michael Feinsod and Infinity Capital, and their relationship with DB Arizona. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards FASB ASU 2019‑12 – “Income Taxes (Topic 740)” – In December 2019, the FASB issued guidance which simplifies certain aspects of accounting for income taxes. The guidance is effective for interim and annual reporting periods beginning after December 15, 2020, and early adoption is permitted. We do not expect adoption of this ASU to have a material effect on our consolidated financial statements. FASB ASU 2018‑013 – “Fair Value Measurement (Topic 820)”- In August 2018, the FASB issued new disclosure guidance on fair value measurement. This new guidance modifies the disclosure requirements on fair value measurements, including removal and modifications of various current disclosures as well as some additional disclosure requirements for Level 3 fair value measurements. Some of these disclosure changes must be applied prospectively while others retrospectively depending on requirement. This guidance is required to be adopted by the Company beginning in fiscal year 2020, with early adoption permitted. We did not early adopt this guidance. The adoption of these changes is not expected to have an impact on our consolidated financial statements other than disclosures. |
RESTATEMENT OF CONSOLIDATED F_2
RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS | |
Schedule of effects of the restatement on the consolidated financial statements | The effects of the restatement on the consolidated balance sheets are summarized in the following table: December 31, 2019 As Originally Reported Adjustments As Restated ASSETS Current Assets Cash and Cash Equivalents $ 122,390 $ — $ 122,390 Accounts receivable, net 85,204 — 85,204 Note receivable, net – current portion 375,000 — 375,000 Prepaid expenses and other current assets 546,970 — 546,970 Assets held for sale 375,218 — 375,218 Assets of discontinued operations 47,453 — 47,453 Total Current Assets $ 1,552,235 — $ 1,552,235 Note receivable, net 93,333 — 93,333 Property and equipment, net 1,507,327 — 1,507,327 Investment 250,000 — 250,000 Assets held for sale 15,584 — 15,584 Assets of discontinued operations 83,525 — 83,525 Total Assets $ 3,502,004 $ — $ 3,502,004 LIABILITIES & STOCKHOLDERS’ EQUITY (DEFICIT) Current Liabilities Accounts payable and accrued expenses $ 1,221,194 $ — $ 1,221,194 Interest payable 93,375 — 93,375 Customer deposits 562,803 — 562,803 Accrued stock payable 80,657 — 80,657 Notes payable (net of discount) 2,230,684 — 2,230,684 Related party note payable (net of discount) 99,667 — 99,667 Warrant derivative liability 1,599,436 3,201,157 4,620,593 Liabilities held for sale 149,249 — 149,249 Liabilities of discontinued operations 207,993 — 207,993 Total current liabilities $ 6,245,058 $ 3,201,157 $ 9,266,216 Stockholders’ Equity (Deficit) Common Stock 39,498 — 39,498 Additional paid-in capital 61,468,034 — 61,468,034 Accumulated deficit (64,250,586) (3,201,157) (67,271,744) Total Stockholders’ Equity (Deficit) $ (2,743,054) $ (3,201,157) $ (5,764,212) Total Liabilities & Stockholders’ Equity (Deficit) $ 3,502,004 $ — $ 3,502,004 The effects of the restatement on the consolidated statements of operations and comprehensive income/loss are summarized in the following table: Year Ended December 31, 2019 As Originally Reported Adjustments As Restated Revenues Services $ 1,787,863 $ — $ 1,787,863 Rent and interest 95,437 — 95,437 Product sale 1,783,046 — 1,783,046 Total revenues 3,666,346 — 3,666,346 Costs and Expenses Cost of service revenues 858,714 — 858,714 Cost of goods sold 1,608,386 — 1,608,386 Selling, general, and administrative 4,379,800 — 4,379,800 Share-based expense 3,966,621 — 3,966,621 Professional fees 1,598,818 — 1,598,818 Depreciation and amortization 115,696 — 115,696 Total costs and expenses 12,528,035 — 12,528,035 Operating Loss (8,861,689) — (8,861,689) Other (Income) Expense Amortization of debt discount and equity issuance costs 2,019,726 — 2,019,726 Loss on extinguishment of debt 377,300 — 377,300 Interest expense, net 345,371 — 345,371 (Gain) loss on warrant derivative liability (816,916) 3,201,157 2,204,172 Total other expense, net 1,925,411 3,201,157 4,946,569 Net Loss from Continuing Operations $ (10,787,100) $ (3,201,157) $ (13,808,258) Loss from discontinued operations (1,675,539) — (1,675,539) Net Loss $ (12,462,639) $ (3,201,157) $ (15,483,797) Deemed dividend (2,341,000) — (2,341,000) Net Loss Attributable to Common Stockholders $ (14,803,639) $ (3,201,157) $ (17,824,797) Per Share Data – Basic and diluted Net loss from continuing operations $ (0.28) $ (0.08) $ (0.36) Net loss from discontinued operations $ (0.04) $ — $ (0.04) Net loss attributable to common stockholders per share $ (0.39) $ (0.08) $ (0.47) Weighted average number of common shares outstanding — The effects of the restatement on the consolidated statement of cash flows are summarized in the following table: December 31, 2019 As Originally Reported Adjustments As Restated Operating Activities Net loss $ (12,462,639) $ (3,201,157) $ (15,483,797) Adjustments to reconcile net loss to net cash used in operating activities: Amortization of debt discount and equity issuance costs 2,019,726 — 2,019,726 Loss on extinguishment of debt 377,300 — 377,300 Depreciation and amortization expense 196,247 — 196,247 Amortization of loan origination fees (13,333) — (13,333) Bad debt expense 174,249 — 174,249 Impairment of assets 147,035 — 147,035 Loss on disposal of property and equipment 104,803 — 104,803 (Gain) loss on warrant derivative liability (816,986) 3,201,157 2,204,172 Share-based payments 3,966,621 — 3,966,621 Changes in operating assets and liabilities: Accounts receivable (101,766) — (101,766) Prepaid expenses and other assets (138,254) — (138,254) Inventory (23,772) — (23,772) Accounts payable and accrued liabilities 1,242,108 — 1,242,108 Net cash used in operating activities: (5,328,661) — (5,328,661) INVESTING ACTIVITIES Purchase of property and equipment (318,639) — (318,639) Lending on notes receivable (705,000) — (705,000) Proceeds on notes receivable 270,000 — 270,000 Net cash used in investing activities (753,639) — (753,639) FINANCING ACTIVITIES Proceeds from sale of common stock and warrants 2,604,355 — 2,604,355 Proceeds from exercise of stock options 188,770 — 188,770 Proceeds from notes payable 1,455,000 — 1,455,000 Payments on notes payable (5,898,000) — (5,898,000) Payments on Infinity Note - related party — — — Net cash provided by (used in) financing activities (1,649,875) — (1,649,875) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (7,732,175) — (7,732,175) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 7,957,169 — 7,957,169 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 224,994 $ — $ 224,994 SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION Cash paid for interest $ 305,195 $ — $ 305,195 NON-CASH INVESTING & FINANCING ACTIVITIES Deemed dividend from warrant repricing $ 2,603,000 $ — $ 2,603,000 Operating lease right-of-use asset/Operating lease liability 154,200 — 154,200 12% Warrants recorded as a debt discount and loss on extinguishment of debt 392,000 — 392,000 SBI Warrants recorded as a debt discount and loss on extinguishment of debt 28,800 — 28,800 15% Warrants recorded as a debt discount and additional paid-in capital 158,100 — 158,100 |
INVESTMENTS AND ACQUISITIONS (T
INVESTMENTS AND ACQUISITIONS (Tables) - Desert Created [Member] | 12 Months Ended |
Dec. 31, 2019 | |
Investments And Acquisitions [Line Items] | |
Schedule of purchase price allocation | Common Stock $ 461,000 Warrants 518,000 Initial investment in Desert Created $ 979,000 Fair value of Desert Created $ 347,000 Percentage ownership 50 % Fair value of 50% of Desert Created 173,500 Initial investment in Desert Created 979,000 Initial impairment $ 805,500 |
Schedule of the investment and is included in prepaid expenses and other current | Initial investment in Desert Created $ 979,000 Initial impairment (805,500) Additional investment 50,000 Net loss (182,136) Additional impairment (18,319) Proceeds from sale of investment (23,045) December 31, 2018 $ — |
DISCONTINUED OPERATIONS (Tables
DISCONTINUED OPERATIONS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
DISCONTINUED OPERATIONS | |
Schedule of Asset and Liabilities From Discontinued Operations [Table Text Block] | December 31, 2019 2018 Cash and cash equivalents $ 77,380 $ 352,607 Accounts receivable, net 280,058 277,857 Prepaid expenses and other current assets 17,780 19,311 Current assets held for sale $ 375,218 $ 649,775 Property and equipment, net $ 15,584 $ 24,008 Intangibles — 42,247 Noncurrent assets held for sale $ 15,584 $ 66,255 Accounts payable and accrued expenses $ 88,309 $ 78,065 Customer deposits 60,940 81,879 Current liabilities held for sale $ 149,249 $ 159,944 December 31, 2019 2018 Cash and cash equivalents $ 25,223 $ — Accounts receivable, net 7,836 21,102 Prepaid expenses and other current assets 14,394 — Inventory — 123,263 Current assets discontinued operations $ 47,453 $ 144,365 Right to use asset $ 83,525 $ — Noncurrent assets discontinued operations $ 83,525 $ — Accounts payable and accrued expenses $ 124,468 $ 4,920 Customer deposits — 1,300 Operating lease liability – current portion 83,525 — Current liabilities discontinued operations $ 207,993 $ 6,220 |
Disposal Groups, Including Discontinued Operations [Table Text Block] | Year ended December 31, 2019 2018 Service revenues $ 2,118,732 $ 2,602,365 Cost of service revenues 1,650,823 2,033,544 Cost of goods sold — 4,373 Selling, general and administrative 877,795 795,381 Professional fees 4,219 104,730 Depreciation and amortization 51,654 87,061 Total costs and expenses 2,584,491 3,025,089 OPERATING LOSS (465,759) (422,724) Interest expense, net 3,422 2,421 NET LOSS FROM DISCONTINUED OPERATIONS $ (469,181) $ (425,145) Year ended December 31, 2019 2018 Service $ — $ 145,079 Product 222,220 134,012 Total Revenues 222,220 279,091 Cost of service revenues — 59,227 Cost of goods sold 223,354 186,120 Selling, general and administrative 833,742 410,529 Professional fees 110,064 36,518 Depreciation and amortization 28,897 — Impairment of assets 232,521 — Total costs and expenses 1,428,578 692,394 OPERATING LOSS (1,206,358) (413,303) NET LOSS FROM DISCONTINUED OPERATIONS $ (1,206,358) $ (413,303) |
Schedule of selected information on cash flows related to discontinued operations | Year ended December 31, 2019 2018 Receivables (2,201) (86,373) Prepaids and other 10,951 (7,715) Depreciation and amortization 51,654 87,061 Capital expenditures (2,556) (11,139) Accounts payable and accrued expenses 10,244 2,479 Customer deposits (20,939) 60,878 Year ended December 31, 2019 2018 Receivables 13,266 1,962 Prepaids and other (14,394) — Inventory — (88,494) Depreciation and amortization 28,897 — Capital expenditures (114,384) — Accounts payable and accrued expenses 119,548 4,920 Customer deposits (1,300) 1,300 Loss on disposal of segment 232,521 — |
ACCOUNTS RECEIVABLE AND CUSTO_2
ACCOUNTS RECEIVABLE AND CUSTOMER DEPOSITS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
ACCOUNTS RECEIVABLE AND CUSTOMER DEPOSITS | |
Schedule of accounts receivable | December 31, 2019 2018 Accounts receivable $ 196,204 $ 125,622 Less: Allowance for doubtful accounts (111,000) (9,000) Total $ 85,204 $ 116,622 |
Schedule of customer deposit liability | Amount December 31, 2018 $ 308,111 Additional deposits received 2,252,416 Less: Deposits recognized as revenue (1,997,724) December 31, 2019 $ 562,803 |
NOTE RECEIVABLE (Tables)
NOTE RECEIVABLE (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
NOTES RECEIVABLE | |
Schedule of notes receivable | December 31, December 31, 2019 2018 CCR Note $ 375,000 $ — BB Note 100,000 — BRB Realty — 50,000 Total Principal 475,000 50,000 Unamortized loan origination fee (6,667) — 468,333 50,000 Less: Current portion (375,000) (50,000) Long-term portion $ 93,333 $ — |
PREPAIDS AND OTHER CURRENT AS_2
PREPAIDS AND OTHER CURRENT ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
PREPAIDS AND OTHER CURRENT ASSETS | |
Schedule of prepaids and other current assets | December 31, 2019 2018 Prepaid insurance $ 74,026 $ 81,667 Prepaid product for resale 292,306 173,852 Other 180,638 166,060 $ 546,970 $ 421,579 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
PROPERTY AND EQUIPMENT, NET | |
Schedule of property and equipment | December 31, 2019 2018 Land $ 800,000 $ 800,000 Buildings 508,104 508,104 Furniture, fixtures and equipment 331,467 274,380 Software 120,111 — 1,759,682 1,582,484 Less: Accumulated depreciation (252,355) (143,417) $ 1,507,327 $ 1,439,067 |
ACCOUNTS PAYABLE AND ACCRUED _2
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | |
Schedule of accounts payable and accrued expenses | December 31, 2019 2018 Accounts payable $ 879,347 $ 125,151 Accrued payroll, taxes and vacation 305,259 232,313 Property taxes and other 36,588 85,243 $ 1,221,194 $ 442,707 |
ACCRUED STOCK PAYABLE (Tables)
ACCRUED STOCK PAYABLE (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
ACCRUED STOCK PAYABLE | |
Schedule of accrued common stock payable | Number of Amount Shares December 31, 2018 $ — — Employee stock award – accrual 80,657 34,469 December 31, 2019 $ 80,657 34,469 |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
NOTES PAYABLE | |
Schedule of Long-term Debt Instruments | December 31, December 31, 2019 2018 2019 12% Notes $ 1,506,000 $ — 8.5% Notes — 6,849,000 SBI Note 750,000 — 2019 15% Notes 200,000 — Related party note payable 100,000 — Unamortized debt discount (225,649) (1,575,094) 2,330,351 5,273,906 Less: Current portion (2,330,351) (5,273,906) Long-term portion $ — $ — |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | Current stock price $ 0.82 - 0.92 Exercise price $ 1.30 Risk-free interest rate 1.63 - 1.68 % Expected dividend yield — Expected term (in years) 1.10 Expected volatility 124 % Current stock price $ 4.18 Exercise price $ 2.35 Risk-free interest rate 2.46 % Expected dividend yield — Expected term (in years) 2.0 Expected volatility 134 % Number of iterations 5 Current stock price $ 0.54 - 0.67 Exercise price $ 0.45 Risk-free interest rate 1.60 - 1.62 % Expected dividend yield — Expected term (in years) 1.01 - 3.06 Expected volatility 118 - 119 % |
WARRANT DERIVATIVE LIABILITY _2
WARRANT DERIVATIVE LIABILITY RESTATED (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Warrant Derivative Liability [Line Items] | |
Schedule of prepaids and other current assets | December 31, 2019 2018 Prepaid insurance $ 74,026 $ 81,667 Prepaid product for resale 292,306 173,852 Other 180,638 166,060 $ 546,970 $ 421,579 |
Schedule of Derivative Instruments [Table Text Block] | December 31, 2019 2018 (Restated) Beginning balance $ — $ — Recognition of warrant derivative liability on May 31, 2019 2,416,421 — Change in fair value of warrants derivative liability 2,204,172 — Ending balance $ 4,620,593 $ — |
2019 Warrants | |
Warrant Derivative Liability [Line Items] | |
Schedule of prepaids and other current assets | May 31, December 31, 2019 2019 (Restated) Number of shares underlying the warrants 3,000,000 8,666,666 Fair market value of stock $ 0.95 $ 0.63 Exercise price $ 1.30 $ 0.45 Volatility 133 % 124 % Risk-free interest rate 1.93 % 1.69 % Warrant life (years) 5.00 4.41 |
DEFERRED TAXES (Tables)
DEFERRED TAXES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
DEFERRED TAXES | |
Schedule of Deferred Tax Assets and Liabilities [Table Text Block] | December 31, 2019 2018 (Restated) Net operating loss carryforwards $ 7,116,767 $ 5,383,012 Equity-based instruments 5,810,660 5,004,624 Long-lived assets and other 491,730 555,138 Capital loss carryforward 120,318 — Deferred tax asset valuation allowance (13,539,475) (10,942,774) $ — $ — |
Schedule of Effective Income Tax Rate Reconciliation [Table Text Block] | Year ended December 31, 2019 2018 (Restated) Income tax benefit at statutory rate $ (3,251,597) $ (3,564,489) State income tax benefit, net of Federal benefit (566,351) (620,849) Equity-based instruments 146,446 (326,242) Fair market value adjustment/loss on extinguishment – derivative liabilities 636,532 — Amortization of debt discount 498,018 1,044,210 Other (59,749) 47,895 Valuation allowance 2,596,701 3,419,475 $ — $ — |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Stockholders Equity [Line Items] | |
Schedule of share-based compensation expense | Year ended December 31, 2019 2018 Employee Awards $ 3,040,497 $ 3,626,271 Consulting Awards 85,683 306,466 Feinsod Agreement 840,441 2,062,270 $ 3,966,621 $ 5,995,007 |
Schedule of Defined Benefit Plan, Assumptions | Pre-Trigger Post-Trigger Current stock price $ 0.95 $ 0.95 Exercise price $ 2.35 $ 1.00 Risk-free interest rate 2.21 % 2.21 % Expected dividend yield — — Expected term (in years) 0.89 0.89 Expected volatility 123 % 123 % Pre-Trigger Post-Trigger Current stock price $ 0.70 $ 0.70 Exercise price $ 1.00 $ 0.68 Risk-free interest rate 1.55 % 1.55 % Expected dividend yield — — Expected term (in years) 0.47 0.47 Expected volatility 114 % 114 % Pre-Trigger Post-Trigger Current stock price $ 0.67 $ 0.67 Exercise price $ 0.68 $ 0.45 Risk-free interest rate 1.61 % 1.61 % Expected dividend yield — — Expected term (in years) 0.36 0.36 Expected volatility 113 % 113 % Pre-Trigger Post-Trigger Current stock price $ 0.63 $ 0.63 Exercise price $ 1.30 $ 1.00 Risk-free interest rate 1.56 % 1.56 % Expected dividend yield — — Expected term (in years) 4.62 4.62 Expected volatility 115 % 115 % Pre-Trigger Post-Trigger Current stock price $ 0.70 $ 0.70 Exercise price $ 1.00 $ 0.68 Risk-free interest rate 1.55 % 1.55 % Expected dividend yield — — Expected term (in years) 4.58 4.58 Expected volatility 114 % 114 % Pre-Trigger Post-Trigger Current stock price $ 0.67 $ 0.67 Exercise price $ 0.68 $ 0.45 Risk-free interest rate 1.61 % 1.61 % Expected dividend yield — — Expected term (in years) 4.47 4.47 Expected volatility 113 % 113 % |
Schedule of Stockholders' Equity Note, Warrants or Rights | Weighted- Weighted- average average Remaining Number of Exercise Price Contractual Aggregate Shares per Share Term (in years) Intrinsic Value Outstanding at December 31, 2018 9,173,380 1.68 Granted 5,927,390 0.98 Exercised (269,728) 0.70 Forfeited or expired (3,947,262) 1.80 Outstanding at December 31, 2019 10,883,780 1.28 5.4 $ 61,000 Exercisable at December 31, 2019 7,331,365 $ 1.51 5.8 $ 8,000 Weighted- Weighted- average average Remaining Number of Exercise Price Contractual Aggregate Shares per Share Term (in years) Intrinsic Value Outstanding at December 31, 2018 50,000 2.53 Granted 85,000 1.31 Exercised — — Forfeited or expired (10,000) 1.40 Outstanding and exercisable at December 31, 2019 1.79 1.1 $ 0.00 Weighted- Weighted- average average Remaining Number of Exercise Price Contractual Aggregate Shares per Share Term (in years) Intrinsic Value Outstanding at December 31, 2017 3,351,700 $ 0.65 Granted 6,000,000 2.35 Exercised (3,316,786) 0.77 Expired (42,700) 5.00 Outstanding at December 31, 2018 5,992,214 2.26 Granted 2,481,000 0.98 Exercised — — Expired — — Outstanding and exercisable at December 31, 2019 0.64 0.5 $ 1,169,583 |
Feinsod Agreement [Member] | |
Stockholders Equity [Line Items] | |
Schedule of Defined Benefit Plan, Assumptions | August 6,2019 Current stock price $ 0.83 Exercise price $ 0.83 Vesting goal $ 4.51 Risk-free interest rate 1.73 % Expected term (in years) 10 Expected volatility 123 % |
Employee Awards [Member] | |
Stockholders Equity [Line Items] | |
Schedule of Defined Benefit Plan, Assumptions | year ended December 31, 2019 2018 Exercise price $ 0.55 - 2.37 $ 1.71 - 7.17 Stock price on date of grant $ 0.55 - 2.37 $ 1.71 - 7.17 Volatility 119 - 130 % 131 - 140 % Risk-free interest rate 1.43 - 2.60 % 2.1 - 2.9 % Expected life (years) 3.0 3.0 Dividend yield — — year ended December 31, 2019 2018 Exercise price $ 0.71 - 2.37 $ 3.08 Stock price, date of valuation $ 0.71 - 2.37 $ 3.08 Volatility 125 - 141 % 134 % Risk-free interest rate 1.64 - 2.62 % 2.3 % Expected life (years) 2.0 - 5.0 2.0 Dividend yield — — |
NET LOSS PER SHARE (Tables)
NET LOSS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
NET LOSS PER SHARE | |
Schedule Of Potentially Dilutive Securities | December 31, 2019 2018 (Restated) Stock options 12,833,780 10,073,380 Warrants 17,439,881 6,217,214 Accrued stock payable 42,736 — 30,316,397 16,290,594 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
SEGMENT INFORMATION | |
Schedule of Segment Reporting Information, by Segment | Year ended December 31 2019 Operations Investments Total Services $ 1,787,863 $ — $ 1,787,863 Rent and interest — 95,437 95,437 Product 1,783,046 — 1,783,046 Total Revenues 3,570,909 95,437 3,666,346 Costs and expenses (3,372,174) (71,723) (3,443,897) $ 198,735 $ 23,714 222,449 Corporate (Restated) (14,030,707) Net loss $ (13,808,258) 2018 Operations Investments Total Service $ 1,186,624 $ — $ 1,186,624 Rent and interest — 18,749 18,749 Product 531,883 — 531,883 Total revenue 1,718,507 18,749 1,737,256 Costs and expenses (1,932,598) — (1,932,598) Investment in Desert Created — (1,005,955) (1,005,955) $ (214,091) $ (987,206) (1,201,297) Corporate (14,934,013) Net loss $ (16,135,310) |
Reconciliation of Assets from Segment to Consolidated | December 31, Total assets 2019 2018 Operations $ 441,841 $ 134,786 Investments 402,988 300,000 Corporate 2,135,395 9,447,044 $ 2,980,224 $ 9,881,830 |
NATURE OF OPERATIONS, HISTORY_3
NATURE OF OPERATIONS, HISTORY AND PRESENTATION (Details) | 12 Months Ended | |
Dec. 31, 2019USD ($)item | Dec. 31, 2018USD ($) | |
Nature Of Operations, History And Presentation [Line Items] | ||
Number of Reporting Units | item | 2 | |
Debt, Current | $ 2,330,000 | |
Cost of labor per hour | $ 1 | |
Term of contract (in years) | 1 year | |
Cash | $ 225,000 | |
Cash, FDIC Insured Amount | 250,000 | |
Inventory, Finished Goods and Work in Process, Gross | 0 | |
Inventory Write-down | 147,035 | |
Allowance for Loan and Lease Loss, Recovery of Bad Debts | 111,000 | $ 9,000 |
Present value lease payments | 83,525 | |
Liability for Uncertainty in Income Taxes, Current | 0 | $ 0 |
GC Finance Arizona [Member] | ||
Nature Of Operations, History And Presentation [Line Items] | ||
Debt Instrument, Face Amount | $ 825,000 | |
Building [Member] | ||
Nature Of Operations, History And Presentation [Line Items] | ||
Property, Plant and Equipment, Useful Life | 30 years | |
Leasehold Improvements [Member] | Minimum | ||
Nature Of Operations, History And Presentation [Line Items] | ||
Property, Plant and Equipment, Useful Life | 5 years | |
Furniture, fixtures and equipment [Member] | Minimum | ||
Nature Of Operations, History And Presentation [Line Items] | ||
Property, Plant and Equipment, Useful Life | 3 years | |
Furniture, fixtures and equipment [Member] | Maximum | ||
Nature Of Operations, History And Presentation [Line Items] | ||
Property, Plant and Equipment, Useful Life | 5 years | |
Next Big Crop [Member] | ||
Nature Of Operations, History And Presentation [Line Items] | ||
Concentration Risk, Percentage | 59.00% | 60.00% |
RESTATEMENT OF CONSOLIDATED F_3
RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Aug. 06, 2019 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Number of shares underlying the warrants | 3,000,000 | |
Exercise price (in Dollars per share) | $ 1.30 | $ 0.83 |
Warrant derivative liability | $ 4,620,593 | |
Adjustments | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Number of shares underlying the warrants | 8,666,666 | |
Exercise price (in Dollars per share) | $ 0.45 | |
Warrant derivative liability | $ 3,201,157 |
RESTATEMENT OF CONSOLIDATED F_4
RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS - Effects of the restatement on the consolidated balance sheets (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Current Assets | |||
Cash and cash equivalents | $ 122,390 | $ 7,604,562 | |
Accounts receivable, net | 85,204 | 116,622 | |
Note receivable, net current portion | 375,000 | ||
Prepaid expenses and other current assets | 546,970 | 421,579 | |
Assets held for sale | 375,218 | 649,775 | |
Assets of discontinued operations | 47,453 | 144,365 | |
Total current assets | 1,552,235 | 8,986,903 | |
Note receivable, net | 93,333 | ||
Property and equipment, net | 1,507,327 | 1,439,067 | |
Investment | 250,000 | 250,000 | |
Assets held for sale | 15,584 | 66,255 | |
Assets of discontinued operations | 83,525 | ||
Total Assets | 3,502,004 | 10,742,225 | |
Current Liabilities | |||
Accounts payable and accrued expenses | 1,221,194 | 442,707 | |
Interest payable | 93,375 | ||
Customer deposits | 562,803 | 308,111 | |
Accrued stock payable | 80,657 | ||
Notes payable (net of discount) | 2,230,684 | 5,273,906 | |
Related party note payable (net of discount) | 99,667 | ||
Warrant derivative liability | 4,620,593 | ||
Liabilities held for sale | 149,249 | 159,944 | |
Liabilities of discontinued operations | 207,993 | 6,220 | |
Total current liabilities | 9,266,216 | 6,190,888 | |
Commitments and Contingencies (Note 13) | |||
Stockholders? Equity (Deficit) | |||
Common Stock | 39,498 | 36,223 | |
Additional paid-in capital | 61,468,034 | 56,303,061 | |
Accumulated deficit | (67,271,744) | (51,787,947) | |
Total Stockholders? Equity (Deficit) | (5,764,212) | 4,551,337 | $ 3,505,997 |
Total Liabilities & Stockholders? Equity (Deficit) | 3,502,004 | $ 10,742,225 | |
As Originally Reported | |||
Current Assets | |||
Cash and cash equivalents | 122,390 | ||
Accounts receivable, net | 85,204 | ||
Note receivable, net current portion | 375,000 | ||
Prepaid expenses and other current assets | 546,970 | ||
Assets held for sale | 375,218 | ||
Assets of discontinued operations | 47,453 | ||
Total current assets | 1,552,235 | ||
Note receivable, net | 93,333 | ||
Property and equipment, net | 1,507,327 | ||
Investment | 250,000 | ||
Assets held for sale | 15,584 | ||
Assets of discontinued operations | 83,525 | ||
Total Assets | 3,502,004 | ||
Current Liabilities | |||
Accounts payable and accrued expenses | 1,221,194 | ||
Interest payable | 93,375 | ||
Customer deposits | 562,803 | ||
Accrued stock payable | 80,657 | ||
Notes payable (net of discount) | 2,230,684 | ||
Related party note payable (net of discount) | 99,667 | ||
Warrant derivative liability | 1,599,436 | ||
Liabilities held for sale | 149,249 | ||
Liabilities of discontinued operations | 207,993 | ||
Total current liabilities | 6,245,058 | ||
Stockholders? Equity (Deficit) | |||
Common Stock | 39,498 | ||
Additional paid-in capital | 61,468,034 | ||
Accumulated deficit | (64,250,586) | ||
Total Stockholders? Equity (Deficit) | (2,743,054) | ||
Total Liabilities & Stockholders? Equity (Deficit) | 3,502,004 | ||
Adjustments | |||
Current Liabilities | |||
Warrant derivative liability | 3,201,157 | ||
Total current liabilities | 3,201,157 | ||
Stockholders? Equity (Deficit) | |||
Accumulated deficit | (3,201,157) | ||
Total Stockholders? Equity (Deficit) | $ (3,201,157) |
RESTATEMENT OF CONSOLIDATED F_5
RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS - Effects of the restatement on the consolidated statements of operations and comprehensive income/loss (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
REVENUES | ||
Rent and interest | $ 95,437 | $ 18,749 |
Total revenues | 3,666,346 | 1,737,256 |
COSTS AND EXPENSES | ||
Cost of service revenues | 858,714 | |
Cost of goods sold | 1,608,386 | 400,097 |
Selling, general and administrative | 4,379,800 | 3,411,724 |
Share-based expense | 3,966,621 | 5,995,007 |
Professional fees | 1,598,818 | 1,383,367 |
Depreciation and amortization | 115,696 | 62,443 |
Total costs and expenses | 12,528,035 | 12,308,231 |
OPERATING LOSS | (8,861,689) | (10,570,975) |
OTHER (INCOME) EXPENSE | ||
Amortization of debt discount and equity issuance costs | 2,019,726 | |
Loss on extinguishment of debt | 377,300 | |
Interest expense, net | 345,371 | 323,557 |
(Gain) loss on warrant derivative liability | 2,204,172 | |
Total other expense, net | 4,946,569 | 5,564,335 |
NET LOSS FROM CONTINUING OPERATIONS | (13,808,258) | (16,135,310) |
Loss from discontinued operations | (1,675,539) | (838,448) |
NET LOSS | (15,483,797) | (16,973,758) |
Deemed dividend | (2,341,000) | |
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ (17,824,797) | $ (16,973,758) |
PER SHARE DATA ? Basic and diluted | ||
Net loss from continuing operations per share (in Dollars per share) | $ (0.36) | $ (0.46) |
Net loss from discontinued operations per share (in Dollars per share) | (0.04) | (0.02) |
Net loss attributable to common stockholders per share (in Dollars per share) | $ (0.47) | $ (0.49) |
Weighted average number of common shares outstanding (in Shares) | 38,106,781 | 34,938,978 |
Services | ||
REVENUES | ||
Revenues | $ 1,787,863 | $ 1,186,624 |
Product | ||
REVENUES | ||
Revenues | 1,783,046 | $ 531,883 |
Total revenues | 1,783,046 | |
As Originally Reported | ||
REVENUES | ||
Rent and interest | 95,437 | |
Total revenues | 3,666,346 | |
COSTS AND EXPENSES | ||
Cost of service revenues | 858,714 | |
Cost of goods sold | 1,608,386 | |
Selling, general and administrative | 4,379,800 | |
Share-based expense | 3,966,621 | |
Professional fees | 1,598,818 | |
Depreciation and amortization | 115,696 | |
Total costs and expenses | 12,528,035 | |
OPERATING LOSS | (8,861,689) | |
OTHER (INCOME) EXPENSE | ||
Amortization of debt discount and equity issuance costs | 2,019,726 | |
Loss on extinguishment of debt | 377,300 | |
Interest expense, net | 345,371 | |
(Gain) loss on warrant derivative liability | (816,916) | |
Total other expense, net | 1,925,411 | |
NET LOSS FROM CONTINUING OPERATIONS | (10,787,100) | |
Loss from discontinued operations | (1,675,539) | |
NET LOSS | (12,462,639) | |
Deemed dividend | (2,341,000) | |
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ (14,803,639) | |
PER SHARE DATA ? Basic and diluted | ||
Net loss from continuing operations per share (in Dollars per share) | $ (0.28) | |
Net loss from discontinued operations per share (in Dollars per share) | (0.04) | |
Net loss attributable to common stockholders per share (in Dollars per share) | $ (0.39) | |
Weighted average number of common shares outstanding (in Shares) | 38,106,781 | |
As Originally Reported | Services | ||
REVENUES | ||
Revenues | $ 1,787,863 | |
As Originally Reported | Product | ||
REVENUES | ||
Revenues | 1,783,046 | |
Adjustments | ||
OTHER (INCOME) EXPENSE | ||
(Gain) loss on warrant derivative liability | 3,201,157 | |
Total other expense, net | 3,201,157 | |
NET LOSS FROM CONTINUING OPERATIONS | (3,201,157) | |
NET LOSS | (3,201,157) | |
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ (3,201,157) | |
PER SHARE DATA ? Basic and diluted | ||
Net loss from continuing operations per share (in Dollars per share) | $ (0.08) | |
Net loss attributable to common stockholders per share (in Dollars per share) | $ (0.08) |
RESTATEMENT OF CONSOLIDATED F_6
RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS - Effects of the restatement on the consolidated statement of cash flows (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |
May 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
OPERATING ACTIVITIES | |||
Net loss | $ (15,483,797) | $ (16,973,758) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Amortization of debt discount and equity issuance costs | 2,019,726 | ||
Loss on extinguishment of debt | 377,300 | ||
Depreciation and amortization expense | 196,247 | 149,504 | |
Amortization of loan origination fees | (13,333) | ||
Bad debt expense | 174,249 | 87,592 | |
Impairment of assets | 147,035 | 823,819 | |
Loss on disposal of property and equipment | 104,803 | ||
Loss on warrant derivative liability | 2,204,172 | ||
Share-based payments | 3,966,621 | 5,995,007 | |
Changes in operating assets and liabilities: | |||
Accounts receivable | (101,766) | (56,954) | |
Prepaid expenses and other assets | (138,254) | 231,746 | |
Inventory | (23,772) | (88,494) | |
Accounts payable and accrued liabilities | 1,242,108 | (311,628) | |
Net cash used in operating activities: | (5,328,661) | (5,726,207) | |
INVESTING ACTIVITIES | |||
Purchase of property and equipment | (318,639) | (241,311) | |
Lending on notes receivable | (705,000) | (650,000) | |
Proceeds on notes receivable | 270,000 | 600,000 | |
Net cash used in investing activities | (753,639) | (568,266) | |
FINANCING ACTIVITIES | |||
Proceeds from sale of common stock and warrants | 2,604,355 | ||
Note principal used to exercise warrants | 3,985,197 | ||
Proceeds from exercise of stock options | 188,770 | 721,034 | |
Proceeds from notes payable | 1,455,000 | 7,500,000 | |
Payments on notes payable | (5,898,000) | (1,621,250) | |
Payments on Infinity Note ? related party | (1,370,126) | ||
Net cash provided by (used in) financing activities | (1,649,875) | 9,214,855 | |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (7,732,175) | 2,920,382 | |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (7,732,175) | ||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 7,957,169 | ||
CASH AND CASH EQUIVALENTS, END OF PERIOD | 224,994 | 7,957,169 | |
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION | |||
Cash paid for interest | 305,195 | 637,586 | |
NON-CASH INVESTING & FINANCING ACTIVITIES | |||
Deemed dividend from warrant repricing | 2,603,000 | ||
Operating lease right-of-use asset/Operating lease liability | 154,200 | ||
Issuance of common stock for accrued stock payable | 321,860 | ||
Issuance of common stock and warrants for investment in Desert Created | $ 3,000,000 | 979,000 | |
SBI Warrants [Member] | |||
NON-CASH INVESTING & FINANCING ACTIVITIES | |||
Securities recorded as a debt discount and loss on extinguishment of debt | 28,800 | ||
12% Warrants [Member] | |||
NON-CASH INVESTING & FINANCING ACTIVITIES | |||
Securities recorded as a debt discount and loss on extinguishment of debt | 392,000 | ||
8.5% Warrants [Member] | |||
FINANCING ACTIVITIES | |||
Note principal used to exercise warrants | 651,000 | ||
NON-CASH INVESTING & FINANCING ACTIVITIES | |||
Securities recorded as a debt discount and loss on extinguishment of debt | 5,366,000 | ||
15% Warrants | |||
NON-CASH INVESTING & FINANCING ACTIVITIES | |||
Securities recorded as a debt discount and loss on extinguishment of debt | 158,100 | ||
Discontinued Operations | |||
FINANCING ACTIVITIES | |||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 7,957,169 | 5,036,787 | |
CASH AND CASH EQUIVALENTS, END OF PERIOD | 224,994 | 7,957,169 | |
As Originally Reported | |||
OPERATING ACTIVITIES | |||
Net loss | (12,462,639) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Amortization of debt discount and equity issuance costs | 2,019,726 | ||
Loss on extinguishment of debt | 377,300 | ||
Depreciation and amortization expense | 196,247 | ||
Amortization of loan origination fees | (13,333) | ||
Bad debt expense | 174,249 | ||
Impairment of assets | 147,035 | ||
Loss on disposal of property and equipment | 104,803 | ||
Loss on warrant derivative liability | (816,986) | ||
Share-based payments | 3,966,621 | ||
Changes in operating assets and liabilities: | |||
Accounts receivable | (101,766) | ||
Prepaid expenses and other assets | (138,254) | ||
Inventory | (23,772) | ||
Accounts payable and accrued liabilities | 1,242,108 | ||
Net cash used in operating activities: | (5,328,661) | ||
INVESTING ACTIVITIES | |||
Purchase of property and equipment | (318,639) | ||
Lending on notes receivable | (705,000) | ||
Proceeds on notes receivable | 270,000 | ||
Net cash used in investing activities | (753,639) | ||
FINANCING ACTIVITIES | |||
Proceeds from sale of common stock and warrants | 2,604,355 | ||
Proceeds from exercise of stock options | 188,770 | ||
Proceeds from notes payable | 1,455,000 | ||
Payments on notes payable | (5,898,000) | ||
Net cash provided by (used in) financing activities | (1,649,875) | ||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (7,732,175) | ||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 7,957,169 | ||
CASH AND CASH EQUIVALENTS, END OF PERIOD | 224,994 | $ 7,957,169 | |
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION | |||
Cash paid for interest | 305,195 | ||
NON-CASH INVESTING & FINANCING ACTIVITIES | |||
Deemed dividend from warrant repricing | 2,603,000 | ||
Operating lease right-of-use asset/Operating lease liability | 154,200 | ||
As Originally Reported | SBI Warrants [Member] | |||
NON-CASH INVESTING & FINANCING ACTIVITIES | |||
Securities recorded as a debt discount and loss on extinguishment of debt | 28,800 | ||
As Originally Reported | 12% Warrants [Member] | |||
NON-CASH INVESTING & FINANCING ACTIVITIES | |||
Securities recorded as a debt discount and loss on extinguishment of debt | 392,000 | ||
As Originally Reported | 15% Warrants | |||
NON-CASH INVESTING & FINANCING ACTIVITIES | |||
Securities recorded as a debt discount and loss on extinguishment of debt | 158,100 | ||
Adjustments | |||
OPERATING ACTIVITIES | |||
Net loss | (3,201,157) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Loss on warrant derivative liability | $ 3,201,157 |
INVESTMENTS AND ACQUISITIONS (D
INVESTMENTS AND ACQUISITIONS (Details) - USD ($) | Aug. 06, 2019 | Nov. 07, 2018 | Oct. 31, 2018 | Jan. 31, 2018 | Dec. 31, 2019 | May 31, 2019 | Jan. 29, 2019 | Dec. 31, 2018 |
Investments And Acquisition [Line Items] | ||||||||
Common Stock, Shares, Issued (in Shares) | 39,497,480 | 3,000,000 | 42,736 | 36,222,752 | ||||
Class of Warrant or Right, Outstanding (in Shares) | 17,439,881 | 6,217,214 | ||||||
Share Price (in Dollars per share) | $ 1 | $ 2.34 | ||||||
Common Stock, Value, Issued | $ 39,498 | $ 36,223 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate, Maximum | 1.73% | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 123.00% | |||||||
Flowhub Holdings, LLC [Member] | ||||||||
Investments And Acquisition [Line Items] | ||||||||
Payments to Acquire Equity Method Investments | $ 250,000 | |||||||
Flowhub Holdings, LLC [Member] | Equal To Investment Amount Divided By Price Per Share | ||||||||
Investments And Acquisition [Line Items] | ||||||||
Valuation Cap for SAFE Agreement | 35,000,000 | |||||||
Flowhub Holdings, LLC [Member] | Purchase Price Divided By Valuation Cap | ||||||||
Investments And Acquisition [Line Items] | ||||||||
Valuation Cap for SAFE Agreement | $ 35,000,000 | |||||||
Desert Created [Member] | ||||||||
Investments And Acquisition [Line Items] | ||||||||
Equity Method Investment, Ownership Percentage | 50.00% | 50.00% | ||||||
Common Stock, Shares, Issued (in Shares) | 75,000 | |||||||
Class of Warrant or Right, Outstanding (in Shares) | 75,000 | |||||||
Share Price (in Dollars per share) | $ 2 | |||||||
Equity Method Investment, Ownership PercentageSold | 50.00% | |||||||
Noncash or Part Noncash Divestiture, Amount of Consideration Received | $ 23,045 | |||||||
Common Stock, Value, Issued | $ 461,000 | $ 461,000 | ||||||
Shares Issued, Price Per Share (in Dollars per share) | $ 7.23 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Discount from Market Price, Offering Date | 15.00% | |||||||
Stock and Warrants Issued During Period, Value, Preferred Stock and Warrants | $ 518,000 | $ 518,000 | ||||||
Expected term (in years) | 5 years | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate, Maximum | 1.20% | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 150.00% |
INVESTMENTS AND ACQUISITIONS -
INVESTMENTS AND ACQUISITIONS - Desert Created Company, Purchase Price Allocation (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |
Jan. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Purchase price allocation | |||
Common Stock | $ 39,498 | $ 36,223 | |
Impairment of Desert Created investment | 147,035 | 823,819 | |
Desert Created [Member] | |||
Purchase price allocation | |||
Common Stock | $ 461,000 | 461,000 | |
Warrants | $ 518,000 | 518,000 | |
Initial investment in Desert Created | 979,000 | 979,000 | |
Fair value of Desert Created | $ 347,000 | ||
Percentage ownership | 50.00% | 50.00% | |
Fair value of 50% of Desert Created | $ 173,500 | ||
Impairment of Desert Created investment | $ 805,500 | $ 805,500 |
INVESTMENTS AND ACQUISITIONS _2
INVESTMENTS AND ACQUISITIONS - Desert Created Company, Income (Loss) Recognized (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Schedule of equity method investments | ||
Initial impairment | $ (147,035) | $ (823,819) |
Net loss | 182,136 | |
Proceeds from sale of investment | (292,306) | (173,852) |
Desert Created [Member] | ||
Schedule of equity method investments | ||
Investment in Desert Created | 979,000 | |
Initial impairment | $ (805,500) | (805,500) |
Additional investment | 50,000 | |
Net loss | (182,136) | |
Additional impairment | (18,319) | |
Proceeds from sale of investment | $ (23,045) |
DISCONTINUED OPERATIONS (Detail
DISCONTINUED OPERATIONS (Details) | 12 Months Ended |
Dec. 31, 2019USD ($) | |
DISCONTINUED OPERATIONS | |
Cost of labor per hour | $ 1 |
Term of contract (in years) | 1 year |
DISCONTINUED OPERATIONS - Sched
DISCONTINUED OPERATIONS - Schedule of Asset and Liabilities From Discontinued Operations (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Discontinued Operations [Line Items] | ||
Inventory | $ 23,772 | $ 88,494 |
Current assets discontinued operations | 47,453 | 144,365 |
Right to use asset | 154,200 | |
Property and equipment, net | 1,507,327 | 1,439,067 |
Current liabilities held for sale | 207,993 | 6,220 |
Security Segment [Member] | ||
Discontinued Operations [Line Items] | ||
Cash and cash equivalents | 77,380 | 352,607 |
Accounts receivable, net | 280,058 | 277,857 |
Prepaid expenses and other current assets | 17,780 | 19,311 |
Current assets held for sale | 375,218 | 649,775 |
Property and equipment, net | 15,584 | 24,008 |
Intangibles | 42,247 | |
Noncurrent assets held for sale | 15,584 | 66,255 |
Accounts payable and accrued expenses | 88,309 | 78,065 |
Customer deposits | 60,940 | 81,879 |
Current liabilities held for sale | 149,249 | 159,944 |
Consumer Goods Segment [Member] | ||
Discontinued Operations [Line Items] | ||
Cash and cash equivalents | 25,223 | |
Accounts receivable, net | 7,836 | 21,102 |
Prepaid expenses and other current assets | 14,394 | |
Inventory | 123,263 | |
Inventory | 88,494 | |
Current assets discontinued operations | 47,453 | 144,365 |
Right to use asset | 83,525 | |
Noncurrent assets held for sale | 83,525 | |
Accounts payable and accrued expenses | 124,468 | 4,920 |
Customer deposits | $ 1,300 | |
Operating lease liability ? current portion | $ 83,525 |
DISCONTINUED OPERATIONS - Sch_2
DISCONTINUED OPERATIONS - Schedule of Discontinued Operations (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Security Segment [Member] | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Cost of service revenues | $ 1,650,823 | $ 2,033,544 |
Cost of goods sold | 4,373 | |
Selling, general and administrative | 877,795 | 795,381 |
Professional fees | 4,219 | 104,730 |
Depreciation and amortization | 51,654 | 87,061 |
Total costs and expenses | 2,584,491 | 3,025,089 |
OPERATING LOSS | (465,759) | (422,724) |
Interest expense, net | 3,422 | 2,421 |
NET LOSS FROM DISCONTINUED OPERATIONS | (469,181) | (425,145) |
Consumer Goods Segment [Member] | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Revenues | 222,220 | 279,091 |
Cost of service revenues | 59,227 | |
Cost of goods sold | 223,354 | 186,120 |
Selling, general and administrative | 833,742 | 410,529 |
Professional fees | 110,064 | 36,518 |
Depreciation and amortization | 28,897 | |
Impairment of assets | 232,521 | |
Total costs and expenses | 1,428,578 | 692,394 |
OPERATING LOSS | (1,206,358) | (413,303) |
NET LOSS FROM DISCONTINUED OPERATIONS | (1,206,358) | (413,303) |
Service Revenue [Member] | Security Segment [Member] | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Revenues | 2,118,732 | 2,602,365 |
Service Revenue [Member] | Consumer Goods Segment [Member] | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Revenues | 145,079 | |
Product Revenue [Member] | Consumer Goods Segment [Member] | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Revenues | $ 222,220 | $ 134,012 |
DISCONTINUED OPERATIONS - Sch_3
DISCONTINUED OPERATIONS - Schedule of Cash Flow from Discontinued Operations (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Discontinued Operations [Line Items] | ||
Receivables | $ (101,766) | $ (56,954) |
Prepaids and other | 138,254 | (231,746) |
Inventory | 23,772 | 88,494 |
Accounts payable and accrueds | 1,242,108 | (311,628) |
Loss on disposal of segment | (2,204,172) | |
Security Segment [Member] | ||
Discontinued Operations [Line Items] | ||
Receivables | (2,201) | (86,373) |
Prepaids and other | 10,951 | (7,715) |
Depreciation and amortization | 51,654 | 87,061 |
Capital expenditures | (2,556) | (11,139) |
Accounts payable and accrueds | 10,244 | 2,479 |
Customer deposits | (20,939) | 60,878 |
Consumer Goods Segment [Member] | ||
Discontinued Operations [Line Items] | ||
Receivables | 13,266 | 1,962 |
Prepaids and other | (14,394) | |
Inventory | 88,494 | |
Depreciation and amortization | 28,897 | |
Capital expenditures | (114,384) | |
Accounts payable and accrueds | 119,548 | 4,920 |
Customer deposits | (1,300) | $ 1,300 |
Loss on disposal of segment | $ 232,521 |
ACCOUNTS RECEIVABLE AND CUSTO_3
ACCOUNTS RECEIVABLE AND CUSTOMER DEPOSITS (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
ACCOUNTS RECEIVABLE AND CUSTOMER DEPOSITS | ||
Bad debt expense | $ 103,182 | $ 15,864 |
Unbilled revenue | $ 0 | $ 18,164 |
ACCOUNTS RECEIVABLE AND CUSTO_4
ACCOUNTS RECEIVABLE AND CUSTOMER DEPOSITS - Accounts receivable (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
ACCOUNTS RECEIVABLE AND CUSTOMER DEPOSITS | ||
Accounts receivable | $ 196,204 | $ 125,622 |
Less: Allowance for doubtful accounts | (111,000) | (9,000) |
Total | $ 85,204 | $ 116,622 |
ACCOUNTS RECEIVABLE AND CUSTO_5
ACCOUNTS RECEIVABLE AND CUSTOMER DEPOSITS - Customer deposit liability (Details) | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Customer deposit liability | |
December 31, 2018 | $ 308,111 |
Additional deposits received | 2,252,416 |
Less: Deposits recognized as revenue | (1,997,724) |
December 31, 2019 | $ 562,803 |
NOTE RECEIVABLE (Details)
NOTE RECEIVABLE (Details) - USD ($) | Dec. 03, 2019 | Dec. 31, 2019 | Mar. 31, 2019 | Jul. 15, 2019 | Jan. 19, 2019 | Jan. 03, 2019 | Dec. 13, 2018 |
Note Receivable [Line Items] | |||||||
Bad Debt Expense | $ 30,000 | ||||||
CCR [Member] | |||||||
Note Receivable [Line Items] | |||||||
Notes Payable | $ 375,000 | ||||||
Debt Instrument, Interest Rate, Stated Percentage | 12.00% | ||||||
Debt Instrument, Face Amount | $ 375,000 | $ 155,000 | |||||
Proceeds from Loan Originations | $ 15,000 | ||||||
BB [Member] | |||||||
Note Receivable [Line Items] | |||||||
Debt Instrument, Interest Rate, Stated Percentage | 11.00% | ||||||
Debt Instrument, Face Amount | $ 100,000 | ||||||
BRB Realty [Member] | |||||||
Note Receivable [Line Items] | |||||||
Debt Instrument, Interest Rate, Stated Percentage | 15.00% | 13.00% | 13.00% | ||||
Debt Instrument, Face Amount | $ 250,000 | $ 50,000 | |||||
Debt Instrument, Decrease, Forgiveness | $ 30,000 | ||||||
Origination of Loan to Purchase Common Stock | $ 5,000 |
NOTE RECEIVABLE - Schedule of n
NOTE RECEIVABLE - Schedule of notes receivable (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unamortized loan origination fee | $ (6,667) | |
Notes receivable | 468,333 | $ 50,000 |
Less: Current portion | (375,000) | (50,000) |
Long-term portion | 93,333 | |
CCR [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes receivable | 375,000 | |
BB [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes receivable | 100,000 | |
BRB Realty [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes receivable | 50,000 | |
Total Principal [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes receivable | $ 475,000 | $ 50,000 |
PREPAIDS AND OTHER CURRENT AS_3
PREPAIDS AND OTHER CURRENT ASSETS (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
PREPAIDS AND OTHER CURRENT ASSETS | ||
Prepaid insurance | $ 74,026 | $ 81,667 |
Prepaid product for resale | 292,306 | 173,852 |
Other | 180,638 | 166,060 |
Total | $ 546,970 | $ 421,579 |
PROPERTY AND EQUIPMENT, NET - D
PROPERTY AND EQUIPMENT, NET - Depreciation expense (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
PROPERTY AND EQUIPMENT, NET | ||
Depreciation expense | $ 115,696 | $ 62,443 |
PROPERTY AND EQUIPMENT, NET - S
PROPERTY AND EQUIPMENT, NET - Schedule of Property and Equipment (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
PROPERTY AND EQUIPMENT, NET | ||
Land | $ 800,000 | $ 800,000 |
Buildings | 508,104 | 508,104 |
Furniture, fixtures and equipment | 331,467 | 274,380 |
Software | 120,111 | |
Total, gross | 1,759,682 | 1,582,484 |
Less: Accumulated depreciation | (252,355) | (143,417) |
Total | $ 1,507,327 | $ 1,439,067 |
ACCOUNTS PAYABLE AND ACCRUED _3
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | ||
Accounts payable | $ 879,347 | $ 125,151 |
Accrued payroll, taxes and vacation | 305,259 | 232,313 |
Property taxes and other | 36,588 | 85,243 |
Total | $ 1,221,194 | $ 442,707 |
ACCRUED STOCK PAYABLE (Details)
ACCRUED STOCK PAYABLE (Details) - $ / shares | Jan. 29, 2019 | Dec. 31, 2019 | May 31, 2019 | Dec. 31, 2018 |
ACCRUED STOCK PAYABLE | ||||
Stock Issued During Period, Shares, Restricted Stock Award, Gross | 100,000 | |||
Share Price (in Dollars per share) | $ 2.34 | $ 1 | ||
Common Stock, Shares, Issued | 42,736 | 39,497,480 | 3,000,000 | 36,222,752 |
ACCRUED STOCK PAYABLE - ACCRUED
ACCRUED STOCK PAYABLE - ACCRUED STOCK PAYABLE (Details) | 12 Months Ended |
Dec. 31, 2019USD ($)shares | |
Accrued Stock Payable [Line Items] | |
Balance at end of the period, in Shares | 42,736 |
Common Stock | |
Accrued Stock Payable [Line Items] | |
Employee stock award ? accrual, Amount | $ | $ 80,657 |
Employee stock award ? accrual, Shares | 34,469 |
Balance at end of the period, in Amount | $ | $ 80,657 |
Balance at end of the period, in Shares | 34,469 |
NOTES PAYABLE - 2019 12% Notes
NOTES PAYABLE - 2019 12% Notes (Details) - USD ($) | Nov. 15, 2019 | Jul. 31, 2019 | Dec. 31, 2019 |
NOTES PAYABLE (Details) - 2019 12% Notes [Line Items] | |||
Gain (Loss) on Extinguishment of Debt | $ 377,300 | ||
Amortization of Debt Discount (Premium) | 2,019,726 | ||
SBI Note [Member] | |||
NOTES PAYABLE (Details) - 2019 12% Notes [Line Items] | |||
Notes Issued | $ 905,000 | $ 855,000 | |
Proceeds from Issuance of Warrants | 195,911 | ||
Gains (Losses) on Restructuring of Debt | 155,000 | ||
Gain (Loss) on Extinguishment of Debt | 50,000 | ||
Amortization of Debt Discount (Premium) | $ 100,000 | ||
12% Notes 2019 [Member] | |||
NOTES PAYABLE (Details) - 2019 12% Notes [Line Items] | |||
Debt Instrument, Interest Rate, Effective Percentage | 12.00% | ||
Debt Instrument, Convertible, Stock Price Trigger (in Dollars per share) | $ 1.30 | ||
Debt Instrument, Minimum Interest Payment Period | 1 year 1 month 6 days | ||
Notes Issued | $ 1,506,000 | ||
Weighted Average Number of Shares, Common Stock Subject to Repurchase or Cancellation (in Shares) | 1,506,000 | ||
Proceeds from Issuance of Warrants | $ 400,000 | ||
Gains (Losses) on Restructuring of Debt | 1,106,000 | ||
Gain (Loss) on Extinguishment of Debt | 298,500 | ||
Adjustments to Additional Paid in Capital, Equity Component of Convertible Debt | 93,500 | ||
Amortization of Debt Discount (Premium) | $ 23,432 |
NOTES PAYABLE - 8.5% Notes (Det
NOTES PAYABLE - 8.5% Notes (Details) $ / shares in Units, shares in Thousands | Jun. 06, 2019USD ($) | Dec. 31, 2019USD ($)D$ / sharesshares | Dec. 31, 2018USD ($) | May 31, 2019$ / shares | Jan. 29, 2019$ / shares | Apr. 30, 2018USD ($) |
NOTES PAYABLE (Details) - 8.5% Notes [Line Items] | ||||||
Share Price (in Dollars per share) | $ / shares | $ 1 | $ 2.34 | ||||
Amortization of Debt Discount (Premium) | $ 2,019,726 | |||||
15% Notes [Member] | ||||||
NOTES PAYABLE (Details) - 8.5% Notes [Line Items] | ||||||
Proceeds from Issuance of Warrants | $ 300,000 | |||||
Debt Conversion, Converted Instrument, Warrants or Options Issued (in Shares) | shares | 9 | |||||
Warrants recorded as a debt discount and additional paid-in capital | $ 158,100 | |||||
Amortization of Debt Discount (Premium) | 2,519 | $ 0 | ||||
SBI Note [Member] | ||||||
NOTES PAYABLE (Details) - 8.5% Notes [Line Items] | ||||||
Proceeds from Issuance of Warrants | 195,911 | |||||
Amortization of Debt Discount (Premium) | 100,000 | |||||
8.5% April 2018 [Member] | ||||||
NOTES PAYABLE (Details) - 8.5% Notes [Line Items] | ||||||
Convertible Debt | $ 5,700,000 | $ 7,500,000 | ||||
Debt amount outstanding | 1,100,000 | |||||
Proceeds from Issuance of Warrants | $ 18 | $ 7,500,000 | ||||
Debt Conversion, Converted Instrument, Warrants or Options Issued (in Shares) | shares | 6,000 | |||||
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per share) | $ / shares | $ 2.35 | |||||
Warrant conversion rate (as a percent) | 80.00% | |||||
Increase (Decrease) in Notes Payable, Current | $ 0.01 | |||||
Debt Instrument, Convertible, Threshold Consecutive Trading Days | D | 15 | |||||
Warrants recorded as a debt discount and additional paid-in capital | $ 5,366,000 | |||||
Amortization of Debt Discount (Premium) | $ 1,575,094 | $ 3,790,906 | ||||
8.5% April 2018 [Member] | WarrantCallThresholdStockPrice [Member] | ||||||
NOTES PAYABLE (Details) - 8.5% Notes [Line Items] | ||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per share) | $ / shares | $ 8 |
NOTES PAYABLE - SBI Debt (Detai
NOTES PAYABLE - SBI Debt (Details) - USD ($) | Nov. 15, 2019 | Jul. 31, 2019 | Dec. 31, 2019 |
NOTES PAYABLE (Details) - SBI Debt [Line Items] | |||
Gain (Loss) on Extinguishment of Debt | $ 377,300 | ||
Debt Instrument, Cash Received | 755,000 | ||
Amortization of Debt Discount (Premium) | 2,019,726 | ||
SBI Note [Member] | |||
NOTES PAYABLE (Details) - SBI Debt [Line Items] | |||
Notes Issued | $ 905,000 | $ 855,000 | |
Debt Instrument, Interest Rate, Stated Percentage | 10.00% | ||
Proceeds from Issuance of Warrants | 195,911 | ||
Accrued interest | 40,911 | ||
Outstanding principal | 155,000 | ||
Gain (Loss) on Extinguishment of Debt | 50,000 | ||
Amortization of Debt Discount (Premium) | $ 100,000 |
NOTES PAYABLE - 15% Notes (Deta
NOTES PAYABLE - 15% Notes (Details) - USD ($) $ / shares in Units, shares in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
NOTES PAYABLE (Details) - 15% Notes [Line Items] | ||
Amortization of Debt Discount (Premium) | $ 2,019,726 | |
15% Notes [Member] | ||
NOTES PAYABLE (Details) - 15% Notes [Line Items] | ||
Notes and Loans Payable | $ 300,000 | |
Debt Conversion, Converted Instrument, Warrants or Options Issued (in Shares) | 9 | |
Prepayment amount to board member, related party | $ 100,000 | |
Number of shares lying (in shares) | 9 | |
Warrant, Exercise Price, Increase (in Dollars per share) | $ 0.45 | |
Proceeds from Issuance of Warrants | $ 300,000 | |
Adjustments to Additional Paid in Capital, Equity Component of Convertible Debt | 158,100 | |
Amortization of Debt Discount (Premium) | $ 2,519 | $ 0 |
NOTES PAYABLE - Schedule of Not
NOTES PAYABLE - Schedule of Notes Payable (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Debt Instrument [Line Items] | ||
Unamortized debt discount | $ (225,649) | $ (1,575,094) |
Total | 2,330,351 | 5,273,906 |
Less: Current portion | (2,330,351) | (5,273,906) |
12% Notes 2019 [Member] | ||
Debt Instrument [Line Items] | ||
Note of Debt Carrying Amount | 1,506,000 | |
8.5% Notes | ||
Debt Instrument [Line Items] | ||
Note of Debt Carrying Amount | $ 6,849,000 | |
SBI Warrants [Member] | ||
Debt Instrument [Line Items] | ||
Note of Debt Carrying Amount | 750,000 | |
15% Notes [Member] | ||
Debt Instrument [Line Items] | ||
Note of Debt Carrying Amount | 200,000 | |
Related Party Note Payable [Member] | ||
Debt Instrument [Line Items] | ||
Note of Debt Carrying Amount | $ 100,000 |
NOTES PAYABLE - Schedule of Und
NOTES PAYABLE - Schedule of Underlying Assumptions In Fair Value (Details) - $ / shares | Aug. 06, 2019 | Apr. 30, 2018 | Dec. 31, 2019 |
NOTES PAYABLE Details Schedule Of Underlying Assumptions In Fair Value Line Items | |||
Current stock price (in Dollars per share) | $ 0.83 | ||
Exercise price (in Dollars per share) | $ 0.83 | $ 1.30 | |
Risk-free interest rate | 1.73% | ||
Expected volatility | 123.00% | ||
12% Warrants [Member] | |||
NOTES PAYABLE Details Schedule Of Underlying Assumptions In Fair Value Line Items | |||
Exercise price (in Dollars per share) | $ 1.30 | ||
Expected term (in years) | 1 year 1 month 6 days | ||
Expected volatility | 124.00% | ||
12% Warrants [Member] | Lower Range [Member] | |||
NOTES PAYABLE Details Schedule Of Underlying Assumptions In Fair Value Line Items | |||
Current stock price (in Dollars per share) | $ 0.82 | ||
Risk-free interest rate | 1.63% | ||
12% Warrants [Member] | Upper Range [Member] | |||
NOTES PAYABLE Details Schedule Of Underlying Assumptions In Fair Value Line Items | |||
Current stock price (in Dollars per share) | $ 0.92 | ||
Risk-free interest rate | 1.68% | ||
8.5% Notes [Member] | |||
NOTES PAYABLE Details Schedule Of Underlying Assumptions In Fair Value Line Items | |||
Current stock price (in Dollars per share) | $ 4.18 | ||
Exercise price (in Dollars per share) | $ 2.35 | ||
Risk-free interest rate | 2.46% | ||
Expected term (in years) | 2 years | ||
Expected volatility | 134.00% | ||
Number of iterations | 5 | ||
15% Notes [Member] | |||
NOTES PAYABLE Details Schedule Of Underlying Assumptions In Fair Value Line Items | |||
Exercise price (in Dollars per share) | $ 0.45 | ||
15% Notes [Member] | Lower Range [Member] | |||
NOTES PAYABLE Details Schedule Of Underlying Assumptions In Fair Value Line Items | |||
Current stock price (in Dollars per share) | $ 0.54 | ||
Risk-free interest rate | 1.60% | ||
Expected term (in years) | 1 year 4 days | ||
Expected volatility | 118.00% | ||
15% Notes [Member] | Upper Range [Member] | |||
NOTES PAYABLE Details Schedule Of Underlying Assumptions In Fair Value Line Items | |||
Current stock price (in Dollars per share) | $ 0.67 | ||
Risk-free interest rate | 1.62% | ||
Expected term (in years) | 3 years 22 days | ||
Expected volatility | 119.00% |
WARRANT DERIVATIVE LIABILITY _3
WARRANT DERIVATIVE LIABILITY RESTATED (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |||
May 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Aug. 06, 2019 | Jan. 29, 2019 | |
WARRANT DERIVATIVE LIABILITY RESTATED | |||||
(in Dollars) | $ 3,000,000 | $ 979,000 | |||
Common Stock, shares issued | 3,000,000 | 39,497,480 | 36,222,752 | 42,736 | |
Warrants issued | 3,000,000 | ||||
Share Price (in Dollars per share) | $ 1 | $ 2.34 | |||
Number of shares underlying the warrants | 3,000,000 | ||||
Exercise price | $ 1.30 | $ 0.83 |
WARRANT DERIVATIVE LIABILITY _4
WARRANT DERIVATIVE LIABILITY RESTATED - Schedule of Underlying Assumptons In Fair Value of 2019 Warrants (Details) - $ / shares | Aug. 06, 2019 | Dec. 31, 2019 | May 31, 2019 | Dec. 31, 2019 |
WARRANT DERIVATIVE LIABILITY Details Schedule Of Underlying Assumptions In Fair Value Of 2019 Warrants Line Items | ||||
Number of shares underlying the warrants | 3,000,000 | |||
Exercise price | $ 0.83 | $ 1.30 | $ 1.30 | |
Volatility | 123.00% | |||
2019 Warrants [Member} | ||||
WARRANT DERIVATIVE LIABILITY Details Schedule Of Underlying Assumptions In Fair Value Of 2019 Warrants Line Items | ||||
Number of shares underlying the warrants | 8,666,666 | 3,000,000 | ||
Fair market value of stock | $ 0.63 | $ 0.95 | ||
Exercise price | $ 0.45 | $ 1.30 | $ 0.45 | |
Volatility | 124.00% | 133.00% | ||
Risk-free interest rate | 1.69% | 1.93% | ||
Warrant life (years) | P4Y4M28D | P5Y |
WARRANT DERIVATIVE LIABILITY _5
WARRANT DERIVATIVE LIABILITY RESTATED - Schedule of Level 3 Financial Liabilities (Details) | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Schedule of Level 3 Financial Liabilities [Abstract] | |
Recognition Of Warrant Liability On Issuance Dates | $ 2,416,421 |
Change in fair value of warrants derivative liability | 2,204,172 |
Ending balance | $ 4,620,593 |
DEFERRED TAXES (Details)
DEFERRED TAXES (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
DEFERRED TAXES | ||
Deferred tax asset net | $ 0 | |
Deferred Tax Assets, Operating Loss Carryforwards, Domestic | 22 | $ 29 |
Deferred Tax Assets, Operating Loss Carryforwards, Subject to Expiration | 14 | |
Deferred Tax Assets, Operating Loss Carryforwards, Not Subject to Expiration | $ 15 |
DEFERRED TAXES - Schedule of De
DEFERRED TAXES - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
DEFERRED TAXES | ||
Net operating loss carryforwards | $ 7,116,767 | $ 5,383,012 |
Equity-based instruments | 5,810,660 | 5,004,624 |
Long-lived assets and other | 491,730 | 555,138 |
Capital loss carryforward | 120,318 | |
Deferred tax asset valuation allowance | (13,539,475) | $ (10,942,774) |
Total | $ 0 |
DEFERRED TAXES - Schedule of In
DEFERRED TAXES - Schedule of Income Tax Reconciliation (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
DEFERRED TAXES | ||
Income tax benefit at statutory rate | $ (3,251,597) | $ (3,564,489) |
State income tax benefit, net of Federal benefit | (566,351) | (620,849) |
Equity-based instruments | 146,446 | (326,242) |
Fair market value adjustment/loss on extinguishment derivative liabilities | 636,532 | |
Amortization of debt discount | 498,018 | 1,044,210 |
Other | (59,749) | 47,895 |
Valuation allowance | $ 2,596,701 | $ 3,419,475 |
STOCKHOLDERS' EQUITY - 2019 Cap
STOCKHOLDERS' EQUITY - 2019 Capital Raise (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |
May 31, 2019 | Dec. 31, 2019 | Jan. 29, 2019 | |
STOCKHOLDERS' EQUITY (Details) - 2019 Capital Raise [Line Items] | |||
Stock Issued During Period, Value, New Issues | $ 506,614 | ||
Share Price | $ 1 | $ 2.34 | |
2019 Capital Raise [Member] | |||
STOCKHOLDERS' EQUITY (Details) - 2019 Capital Raise [Line Items] | |||
Stock Issued During Period, Value, New Issues | $ 3,000,000 | ||
Stock Issued During Period, Shares, New Issues | 8,666,666 | ||
Share Price | $ 1 | ||
Exercise price of warrants | $ 1.30 | $ 0.45 | |
Warrants and Rights Outstanding, Term | 5 years | ||
Debt Issuance Costs, Net | $ 395,645 | ||
Adjustments to Additional Paid in Capital, Share-based Compensation and Exercise of Stock Options, per year | 318,681 | ||
Adjustments to Additional Paid in Capital, Other | 76,964 | ||
Warrant Derivative Liability | 2,416,422 | ||
2019 Capital Raise [Member] | 8.5% Notes | |||
STOCKHOLDERS' EQUITY (Details) - 2019 Capital Raise [Line Items] | |||
Proceeds from Debt, Net of Issuance Costs | 5,743,000 | ||
Other than Temporary Impairment Losses, Investments, Portion in Other Comprehensive Loss, Net of Tax, Including Portion Attributable to Noncontrolling Interest, Held-to-maturity Securities | 1,106,000 | ||
Time-based option [Member] | 2019 Capital Raise [Member] | |||
STOCKHOLDERS' EQUITY (Details) - 2019 Capital Raise [Line Items] | |||
Preferred Stock, Including Additional Paid in Capital, Net of Discount | $ 2,604,355 |
STOCKHOLDERS' EQUITY - Schedule
STOCKHOLDERS' EQUITY - Schedule of Share-based Compensation Expense (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
STOCK HOLDERS EQUITY Details Schedule Of Share-Based Compensation Expense Line Items | ||
Share-based expense | $ 3,966,621 | $ 5,995,007 |
Employee Awards [Member] | ||
STOCK HOLDERS EQUITY Details Schedule Of Share-Based Compensation Expense Line Items | ||
Share-based expense | 3,040,497 | 3,626,271 |
Consulting Awards [Member] | ||
STOCK HOLDERS EQUITY Details Schedule Of Share-Based Compensation Expense Line Items | ||
Share-based expense | 85,683 | 306,466 |
Feinsod Agreement [Member] | ||
STOCK HOLDERS EQUITY Details Schedule Of Share-Based Compensation Expense Line Items | ||
Share-based expense | $ 840,441 | $ 2,062,270 |
STOCKHOLDERS' EQUITY - Employee
STOCKHOLDERS' EQUITY - Employee Stock Options (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |
Apr. 30, 2018 | Dec. 31, 2019 | Oct. 29, 2014 | |
STOCKHOLDERS' EQUITY (Details) - Employee Stock Options [Line Items] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 15,000,000 | ||
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount | $ 838,267 | ||
Incentive Plan [Member] | |||
STOCKHOLDERS' EQUITY (Details) - Employee Stock Options [Line Items] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 10,000,000 | ||
Share Based Compensation Arrangement By Share Based Payment Award Number Of Shares Available For Grant Period Increase Decrease | 5,000,000 | 900,000 | |
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 986,442 |
STOCKHOLDERS' EQUITY - Schedu_2
STOCKHOLDERS' EQUITY - Schedule of Share-based Compensation Assumptions Employee Awards (Details) - $ / shares | Aug. 06, 2019 | Dec. 31, 2019 | Dec. 31, 2018 |
STOCKHOLDERS' EQUITY (Details) - Schedule of Share-based Compensation Assumptions Employee Awards [Line Items] | |||
Volatility | 123.00% | ||
Employee Awards [Member] | |||
STOCKHOLDERS' EQUITY (Details) - Schedule of Share-based Compensation Assumptions Employee Awards [Line Items] | |||
Expected life (years) | 3 years | 3 years | |
Employee Awards [Member] | Minimum | |||
STOCKHOLDERS' EQUITY (Details) - Schedule of Share-based Compensation Assumptions Employee Awards [Line Items] | |||
Exercise price | $ 0.55 | $ 1.71 | |
Stock price | $ 0.55 | $ 1.71 | |
Volatility | 119.00% | 131.00% | |
Risk-free interest rate | 1.43% | 2.10% | |
Employee Awards [Member] | Maximum | |||
STOCKHOLDERS' EQUITY (Details) - Schedule of Share-based Compensation Assumptions Employee Awards [Line Items] | |||
Exercise price | $ 2.37 | $ 7.17 | |
Stock price | $ 2.37 | $ 7.17 | |
Volatility | 130.00% | 140.00% | |
Risk-free interest rate | 2.60% | 2.90% | |
Consulting Awards [Member] | |||
STOCKHOLDERS' EQUITY (Details) - Schedule of Share-based Compensation Assumptions Employee Awards [Line Items] | |||
Exercise price | $ 3.08 | ||
Stock price | $ 3.08 | ||
Volatility | 134.00% | ||
Risk-free interest rate | 2.30% | ||
Expected life (years) | 2 years | ||
Consulting Awards [Member] | Minimum | |||
STOCKHOLDERS' EQUITY (Details) - Schedule of Share-based Compensation Assumptions Employee Awards [Line Items] | |||
Exercise price | $ 0.71 | ||
Stock price | $ 0.71 | ||
Volatility | 125.00% | ||
Risk-free interest rate | 1.64% | ||
Expected life (years) | 2 years | ||
Consulting Awards [Member] | Maximum | |||
STOCKHOLDERS' EQUITY (Details) - Schedule of Share-based Compensation Assumptions Employee Awards [Line Items] | |||
Exercise price | $ 2.37 | ||
Stock price | $ 2.37 | ||
Volatility | 141.00% | ||
Risk-free interest rate | 2.62% | ||
Expected life (years) | 5 years |
STOCKHOLDERS' EQUITY - Consulti
STOCKHOLDERS' EQUITY - Consulting Services (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Oct. 31, 2018 | Jul. 31, 2018 | Dec. 31, 2019 | Aug. 06, 2019 | |
STOCKHOLDERS' EQUITY (Details) - Consulting Services [Line Items] | ||||
Stock Issued During Period, Value, New Issues | $ 506,614 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Exercise Price | $ 1.30 | $ 0.83 | ||
Consulting Awards [Member] | ||||
STOCKHOLDERS' EQUITY (Details) - Consulting Services [Line Items] | ||||
Stock Issued During Period, Shares, New Issues | 47,933 | 25,000 | ||
Stock Issued During Period, Value, New Issues | $ 142,500 | $ 92,500 | $ 93,614 | |
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 85,000 |
STOCKHOLDERS' EQUITY - Feinsod
STOCKHOLDERS' EQUITY - Feinsod Emplyment Agreement (Details) | Aug. 06, 2019USD ($)$ / sharesshares | Dec. 08, 2017$ / sharesshares | Mar. 31, 2016$ / sharesshares | Mar. 31, 2018$ / sharesshares | Dec. 31, 2019USD ($)shares | Dec. 31, 2018USD ($) |
STOCK HOLDERS EQUITY Details Feinsod Employment Agreement Line Items | ||||||
Share-based Payment Arrangement, Expense | $ | $ 3,966,621 | $ 5,995,007 | ||||
Feinsod Agreement 2017 [Member] | ||||||
STOCK HOLDERS EQUITY Details Feinsod Employment Agreement Line Items | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | shares | 600,000 | |||||
Exercise price of warrants | $ 3.45 | |||||
Feinson Agreement 2019 [Member] | ||||||
STOCK HOLDERS EQUITY Details Feinsod Employment Agreement Line Items | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | shares | 1,000,000 | |||||
Exercise price of warrants | $ 4.51 | |||||
Debt Instrument, Convertible, Threshold Consecutive Trading Days | $ | 5 | |||||
Discontinued Operation, Income (Loss) from Discontinued Operation, Net of Tax, Per Basic and Diluted Share | $ 0.83 | |||||
Share-based Payment Arrangement, Expense | $ | $ 116,000 | |||||
DB Option Agreement [Member] | ||||||
STOCK HOLDERS EQUITY Details Feinsod Employment Agreement Line Items | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | shares | 100,000 | 100,000 | ||||
Exercise price of warrants | $ 0.67 | |||||
IPG $4.50 Warrants [Member] | ||||||
STOCK HOLDERS EQUITY Details Feinsod Employment Agreement Line Items | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | shares | 250,000 | |||||
Exercise price of warrants | $ 4.50 | |||||
IPG $5.00 Warrants [Member] | ||||||
STOCK HOLDERS EQUITY Details Feinsod Employment Agreement Line Items | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | shares | 250,000 | |||||
Exercise price of warrants | $ 5 | |||||
Time-based option [Member] | Feinsod Agreement 2017 [Member] | ||||||
STOCK HOLDERS EQUITY Details Feinsod Employment Agreement Line Items | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | shares | 200,000 | |||||
Market-based option [Member] | Feinsod Agreement 2017 [Member] | ||||||
STOCK HOLDERS EQUITY Details Feinsod Employment Agreement Line Items | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | shares | 100,000 | |||||
Market-based option [Member] | Feinsod Agreement 2017 [Member] | Tranche 1 | ||||||
STOCK HOLDERS EQUITY Details Feinsod Employment Agreement Line Items | ||||||
Exercise price of warrants | $ 3.50 | |||||
Market-based option [Member] | Feinsod Agreement 2017 [Member] | Tranche 2 | ||||||
STOCK HOLDERS EQUITY Details Feinsod Employment Agreement Line Items | ||||||
Exercise price of warrants | 5 | |||||
Market-based option [Member] | Feinsod Agreement 2017 [Member] | Tranche 3 | ||||||
STOCK HOLDERS EQUITY Details Feinsod Employment Agreement Line Items | ||||||
Exercise price of warrants | $ 6.50 |
STOCKHOLDERS' EQUITY - Schedu_3
STOCKHOLDERS' EQUITY - Schedule of Employee and Consulting Awards Activity (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Employee Awards [Member] | |||
Class of Warrant or Right [Line Items] | |||
Outstanding, Number of Shares | 10,883,780 | 9,173,380 | |
Outstanding, Weighted-average Exercise Price per Share | $ 1.28 | $ 1.68 | |
Outstanding, Weighted-average Remaining Contractual Term | 5 years 4 months 24 days | ||
Outstanding, Aggregate Intrinsic Value | $ 61,000 | ||
Granted, Number of Shares | 5,927,390 | ||
Granted, Weighted-average Exercise Price per Share | $ 0.98 | ||
Exercised, Number of Shares | (269,728) | ||
Exercised, Weighted-average Exercise Price per Share | $ 0.70 | ||
Forfeited or expired, Number of Shares | (3,947,262) | ||
Forfeited or expired, Weighted-average Exercise Price per Share | $ 1.80 | ||
Exercisable, Number of Shares | 7,331,365 | ||
Exercisable, Weighted-average Exercise Price per Share | $ 1.51 | ||
Exercisable, Weighted-average Remaining Contractual Term | 5 years 9 months 18 days | ||
Exercisable, Aggregate Intrinsic Value | $ 8,000 | ||
Consulting Awards [Member] | |||
Class of Warrant or Right [Line Items] | |||
Outstanding, Number of Shares | 50,000 | ||
Outstanding, Weighted-average Exercise Price per Share | $ 2.53 | ||
Granted, Number of Shares | 85,000 | ||
Granted, Weighted-average Exercise Price per Share | $ 1.31 | ||
Forfeited or expired, Number of Shares | (10,000) | ||
Forfeited or expired, Weighted-average Exercise Price per Share | $ 1.40 | ||
Outstanding and exercisable, Number of Shares | 125,000 | ||
Outstanding and exercisable, Weighted-average Exercise Price per Share | $ 1.79 | ||
Outstanding and exercisable, Weighted-average Remaining Contractual Term | 1 year 1 month 6 days | ||
Outstanding and exercisable, Aggregate Intrinsic Value | $ 0 | ||
Warrants with Debt [Member] | |||
Class of Warrant or Right [Line Items] | |||
Outstanding, Number of Shares | 5,992,214 | 3,351,700 | |
Outstanding, Weighted-average Exercise Price per Share | $ 2.26 | $ 0.65 | |
Granted, Number of Shares | 2,481,000 | 6,000,000 | |
Granted, Weighted-average Exercise Price per Share | $ 0.98 | $ 2.35 | |
Exercised, Number of Shares | (3,316,786) | ||
Exercised, Weighted-average Exercise Price per Share | $ 0.77 | ||
Forfeited or expired, Number of Shares | (42,700) | ||
Forfeited or expired, Weighted-average Exercise Price per Share | $ 5 | ||
Outstanding and exercisable, Number of Shares | 8,473,214 | ||
Outstanding and exercisable, Weighted-average Exercise Price per Share | $ 0.64 | ||
Outstanding and exercisable, Weighted-average Remaining Contractual Term | 6 months | ||
Outstanding and exercisable, Aggregate Intrinsic Value | $ 1,169,583 |
STOCKHOLDERS' EQUITY - Schedu_4
STOCKHOLDERS' EQUITY - Schedule of Share-based Compensation Assumptions Monte Carlo simulations (Details) - $ / shares | Aug. 06, 2019 | Dec. 31, 2019 |
Schedule of Share-based Compensation Assumptions Monte Carlo simulations [Abstract] | ||
Current stock price | $ 0.83 | |
Exercise price | 0.83 | $ 1.30 |
Vesting goal | $ 4.51 | |
Risk-free interest rate | 1.73% | |
Expected term (in years) | 10 years | |
Expected volatility | 123.00% |
STOCKHOLDERS' EQUITY - Schedu_5
STOCKHOLDERS' EQUITY - Schedule of Share-based Compensation Assumptions (Details) - $ / shares | Dec. 11, 2019 | Nov. 01, 2019 | Oct. 18, 2019 | Aug. 06, 2019 | Dec. 31, 2019 |
STOCK HOLDERS EQUITY Details Schedule Of Share-based Compensation Assumptions Line Items | |||||
Current stock price | $ 0.83 | ||||
Exercise price | $ 0.83 | $ 1.30 | |||
Risk-free interest rate | 1.73% | ||||
Expected volatility | 123.00% | ||||
Pre-Trigger [Member] | 8.5% Warrants [Member] | |||||
STOCK HOLDERS EQUITY Details Schedule Of Share-based Compensation Assumptions Line Items | |||||
Current stock price | $ 0.67 | $ 0.70 | $ 0.95 | ||
Exercise price | $ 0.68 | $ 1 | $ 2.35 | ||
Risk-free interest rate | 1.61% | 1.55% | 2.21% | ||
Expected term (in years) | 4 months 10 days | 5 months 19 days | 10 months 21 days | ||
Expected volatility | 113.00% | 114.00% | 123.00% | ||
Pre-Trigger [Member] | 2019 Units [Member] | |||||
STOCK HOLDERS EQUITY Details Schedule Of Share-based Compensation Assumptions Line Items | |||||
Current stock price | $ 0.67 | $ 0.70 | $ 0.63 | ||
Exercise price | $ 0.68 | $ 1 | $ 1.30 | ||
Risk-free interest rate | 1.61% | 1.55% | 1.56% | ||
Expected term (in years) | 4 years 5 months 19 days | 4 years 6 months 29 days | 4 years 7 months 13 days | ||
Expected volatility | 113.00% | 114.00% | 115.00% | ||
Post-Trigger [Member] | 8.5% Warrants [Member] | |||||
STOCK HOLDERS EQUITY Details Schedule Of Share-based Compensation Assumptions Line Items | |||||
Current stock price | $ 0.67 | $ 0.70 | $ 0.95 | ||
Exercise price | $ 0.45 | $ 0.68 | $ 1 | ||
Risk-free interest rate | 1.61% | 1.55% | 2.21% | ||
Expected term (in years) | 4 months 10 days | 5 months 19 days | 10 months 21 days | ||
Expected volatility | 113.00% | 114.00% | 123.00% | ||
Post-Trigger [Member] | 2019 Units [Member] | |||||
STOCK HOLDERS EQUITY Details Schedule Of Share-based Compensation Assumptions Line Items | |||||
Current stock price | $ 0.67 | $ 0.70 | $ 0.63 | ||
Exercise price | $ 0.45 | $ 0.68 | $ 1 | ||
Risk-free interest rate | 1.61% | 1.55% | 1.56% | ||
Expected term (in years) | 4 years 5 months 19 days | 4 years 6 months 29 days | 4 years 7 months 13 days | ||
Expected volatility | 113.00% | 114.00% | 115.00% |
STOCKHOLDERS' EQUITY - Fall 201
STOCKHOLDERS' EQUITY - Fall 2017 Capital Raise (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2017 | May 31, 2019 | Jan. 29, 2019 | |
STOCKHOLDERS' EQUITY (Details) - Fall 2017 Capital Raise [Line Items] | |||||
Stock Issued During Period, Value, New Issues | $ 506,614 | ||||
Share Price | $ 1 | $ 2.34 | |||
Fall 2017 Capital Raise [Member] | |||||
STOCKHOLDERS' EQUITY (Details) - Fall 2017 Capital Raise [Line Items] | |||||
Stock Issued During Period, Value, New Issues | $ 4,000,000 | ||||
Share Price | $ 1 | ||||
Exercise price of warrants | $ 0.50 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period | 2 years | ||||
Fall 2017 Capital Raise [Member] | 12% Convertible Notes [Member] | |||||
STOCKHOLDERS' EQUITY (Details) - Fall 2017 Capital Raise [Line Items] | |||||
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI for Sale of Securities, Net of Tax | $ 3,750,000 | ||||
Extinguishment of Debt, Amount | $ 250,000 |
NET LOSS PER SHARE (Details)
NET LOSS PER SHARE (Details) - shares | Dec. 31, 2019 | Dec. 31, 2018 |
NET LOSS PER SHARE | ||
Stock options | 12,833,780 | 10,073,380 |
Warrants | 17,439,881 | 6,217,214 |
Accrued stock payable | 42,736 | |
Possibly dilutive equity instruments | 30,316,397 | 16,290,594 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - Subsequent event | Jan. 24, 2020USD ($)item$ / shares | Jan. 08, 2020USD ($) |
Dalton Adventures, LLC | ||
Subsequent Event [Line Items] | ||
Purchase price multiple | 1.4 | |
Consecutive trading days to determine volume weighted average per share price | item | 30 | |
Threshold VWAP per share calculated | $ / shares | $ 0.85 | |
VWAP per share | $ / shares | $ 0.85 | |
Repurchase of percentage of shares issued at closing | 25.00% | |
Minimum | Dalton Adventures, LLC | ||
Subsequent Event [Line Items] | ||
Purchase price | $ | $ 3,000,000 | |
Mortgage Loan | ||
Subsequent Event [Line Items] | ||
Debt instrument, face amount | $ | $ 975,000 | |
Interest rate | 10.00% | |
Mortgage Loan | Prime rate | ||
Subsequent Event [Line Items] | ||
Spread on variable rate | 5.25% |
SUBSEQUENT EVENTS - Promissory
SUBSEQUENT EVENTS - Promissory Note, Exchange Agreement (Details) - Subsequent event | Mar. 20, 2020USD ($) | Feb. 18, 2020USD ($)$ / shares | Mar. 31, 2020USD ($)item$ / shares |
Subsequent Event [Line Items] | |||
Sale price of building | $ 1,499,000 | ||
Net proceeds from sale of building | $ 600,000 | ||
Convertible Note | |||
Subsequent Event [Line Items] | |||
Debt instrument, face amount | $ 934,000 | ||
Interest rate | 10.00% | ||
Conversion price as a percentage of market price | 80.00% | ||
Convertible Note | Minimum | |||
Subsequent Event [Line Items] | |||
Conversion price | $ / shares | $ 0.45 | ||
Unsecured Note | |||
Subsequent Event [Line Items] | |||
Debt instrument, face amount | $ 2,031,000 | ||
Interest rate | 15.00% | ||
Amount of new funding | $ 525,000 | ||
Cancellation of outstanding indebtedness | $ 1,506,000 | ||
Number of warrants per holder of unsecured note | item | 3 | ||
Exercise price of warrants | $ / shares | $ 0.45 |
SUBSEQUENT EVENTS - Asset Purch
SUBSEQUENT EVENTS - Asset Purchase Agreement (Details) - Subsequent event - Organic Seed LLC | Apr. 07, 2020USD ($)ft²item$ / shares |
Subsequent Event [Line Items] | |
Square foot light deprivation greenhouse acquired | ft² | 12,000 |
Purchase price | $ | $ 2,350,000 |
Consecutive trading days to determine volume weighted average per share price | item | 30 |
Threshold VWAP per share calculated | $ 0.55 |
VWAP per share | 0.55 |
Minimum | |
Subsequent Event [Line Items] | |
Threshold VWAP per share calculated | 0.45 |
Maximum | |
Subsequent Event [Line Items] | |
VWAP per share | $ 0.45 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Segment Reporting Information [Line Items] | ||
Rent and interest | $ 95,437 | $ 18,749 |
Total Revenues | 3,666,346 | 1,737,256 |
Costs and expenses | (3,443,897) | (1,932,598) |
Investment in Desert Created | (1,005,955) | |
Non-corporate | 222,449 | (1,201,297) |
Corporate | (14,030,707) | (14,934,013) |
Net loss | (13,808,258) | (16,135,310) |
Operations [Member] | ||
Segment Reporting Information [Line Items] | ||
Total Revenues | 3,570,909 | 1,718,507 |
Costs and expenses | (3,372,174) | (1,932,598) |
Non-corporate | 198,735 | (214,091) |
Investments | ||
Segment Reporting Information [Line Items] | ||
Rent and interest | 95,437 | 18,749 |
Total Revenues | 95,437 | 18,749 |
Costs and expenses | (71,723) | |
Investment in Desert Created | (1,005,955) | |
Non-corporate | 23,714 | (987,206) |
Services | ||
Segment Reporting Information [Line Items] | ||
Revenue | 1,787,863 | 1,186,624 |
Services | Operations [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenue | 1,787,863 | 1,186,624 |
Product | ||
Segment Reporting Information [Line Items] | ||
Revenue | 1,783,046 | 531,883 |
Total Revenues | 1,783,046 | |
Product | Operations [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenue | $ 531,883 | |
Total Revenues | $ 1,783,046 |
SEGMENT INFORMATION - Total Ass
SEGMENT INFORMATION - Total Assets by Segment (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | $ 2,980,224 | $ 9,881,830 |
Operations [Member] | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 441,841 | 134,786 |
Investments | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 402,988 | 300,000 |
Corporate | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | $ 2,135,395 | $ 9,447,044 |