Document And Entity Information
Document And Entity Information | 12 Months Ended |
Dec. 31, 2020 | |
Document And Entity Information | |
Document Type | S-1 |
Entity Registrant Name | GENERAL CANNABIS CORP |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business | true |
Entity Emerging Growth Company | false |
Entity Central Index Key | 0001477009 |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Current assets | ||
Cash and cash equivalents | $ 750,218 | $ 122,390 |
Accounts receivable, net of allowance of $54,000 and $27,000 as of March 31, 2021 and December 31, 2020, respectively | 327,790 | 85,204 |
Current portion of notes receivable, net of allowance of $41,608 and $125,000 as of March 31, 2021 and December 31, 2020, respectively | 350,000 | 375,000 |
Inventories, net | 371,799 | |
Prepaid expenses and other current assets | 744,396 | 546,970 |
Assets of discontinued operations | 5,551 | 422,671 |
Total current assets | 2,549,754 | 1,552,235 |
Note receivable, net | 93,333 | |
Right-of-use operating lease asset | 1,836,455 | |
Property and equipment, net | 455,222 | 1,507,327 |
Investment, held for sale | 208,761 | 250,000 |
Intangible assets, net | 984,375 | |
Goodwill | 2,484,200 | |
Assets of discontinued operations | 99,109 | |
Total assets | 8,518,767 | 3,502,004 |
Current liabilities | ||
Accounts payable and accrued expenses | 1,513,761 | 1,221,195 |
Interest payable | 16,790 | 93,375 |
Customer deposits | 517,931 | 562,803 |
Operating lease liability, current | 370,800 | |
Accrued stock payable | 94,861 | 80,657 |
Current portion of notes payable (net of discount) | 2,269,977 | |
Related party note payable (net of discount) | 60,374 | |
Warrant derivative liability | 561,368 | 4,620,593 |
Liabilities of discontinued operations | 54,641 | 357,242 |
Total current liabilities | 3,130,152 | 9,266,216 |
Operating lease liability, non-current | 1,499,280 | |
Long-term notes payable | 2,598,965 | |
Related party long-term notes payable (net of discount) | 289,579 | |
Total liabilities | 7,517,976 | 9,266,216 |
Commitments and contingencies (Note 9) | ||
Stockholders' equity | ||
Preferred stock, no par value; 5,000,000 shares authorized; no shares issued and outstanding as of March 31, 2021 and December 31, 2020 | ||
Common stock, $0.001 par value; 200,000,000 and 100,000,000 shares authorized; 62,146,515 shares and 60,813,673 shares issued and outstanding on March 31, 2021 and December 31, 2020, respectively | 60,813 | 39,498 |
Additional paid-in capital | 75,891,414 | 61,468,034 |
Accumulated deficit | (74,951,436) | (67,271,744) |
Total stockholders' equity | 1,000,791 | (5,764,212) |
Total liabilities & stockholders' equity | $ 8,518,767 | $ 3,502,004 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
CONSOLIDATED BALANCE SHEETS | ||
Accounts receivable, net of allowance | $ 27,000 | $ 111,000 |
Notes receivable, net of allowance | $ 125,000 | $ 0 |
Preferred stock, par value (in dollars per share) | $ 0 | $ 0 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 200,000,000 | 100,000,000 |
Common stock, shares issued | 60,813,673 | 39,497,480 |
Common stock, shares outstanding | 60,813,673 | 39,497,480 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Total revenue | $ 7,120,040 | $ 3,666,346 |
Costs and expenses | ||
Cost of sales | 5,467,197 | 2,467,100 |
Selling, general and administrative | 3,699,079 | 4,379,800 |
Stock-based compensation expense | 1,504,389 | 3,966,621 |
Professional fees | 2,299,693 | 1,598,818 |
Depreciation and amortization | 215,461 | 115,696 |
Total costs and expenses | 13,185,819 | 12,528,035 |
Operating loss | (6,065,779) | (8,861,689) |
Other expenses (income) | ||
Amortization of debt discount and equity issuance costs | 295,256 | 2,019,726 |
Interest expense | 453,522 | 345,371 |
Loss on extinguishment of debt | 1,638,009 | 377,300 |
Loss (gain) on derivative liability | (735,796) | 2,204,172 |
Other income, net | (97,948) | |
Total other expenses, net | 1,553,043 | 4,946,569 |
Net loss from continuing operations before income taxes | (7,618,822) | (13,808,258) |
Loss from discontinued operations | (60,870) | (1,675,539) |
Loss from operations before income taxes | (7,679,692) | (15,483,797) |
Net loss | (7,679,692) | (15,483,797) |
Deemed dividends | 830,494 | 2,341,000 |
Net loss attributable to common stockholders | $ (8,510,186) | $ (17,824,797) |
Per share data - basic and diluted | ||
Net loss from continuing operations per share | $ (0.15) | $ (0.36) |
Net loss from discontinued operations per share | (0.04) | |
Net loss attributable to common stockholders per share | $ (0.17) | $ (0.47) |
Weighted average number of common shares outstanding | 50,895,301 | 38,106,781 |
Service | ||
Total revenue | $ 1,081,291 | $ 1,787,863 |
Cultivation sales | ||
Total revenue | 2,279,867 | |
Product sales | ||
Total revenue | 3,655,045 | 1,783,046 |
Interest | ||
Total revenue | $ 103,837 | $ 95,437 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Cash flows from operating activities | ||
Net loss | $ (7,679,692) | $ (15,483,797) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Amortization of debt discount and equity issuance costs | 295,256 | 2,019,726 |
Depreciation and amortization | 217,635 | 196,247 |
Amortization of loan origination fees | (6,667) | (13,333) |
Loss on extinguishment of debt | 1,638,009 | 377,300 |
Non-cash lease expense | 286,228 | |
Bad debt expense | 134,059 | 174,249 |
Impairment of assets | 147,035 | |
Loss on disposal of property and equipment | 37,193 | 104,803 |
Loss (gain) on warrant derivative liability | (735,796) | 2,204,172 |
Stock-based compensation | 1,504,389 | 3,966,621 |
Loss on investment | 41,239 | |
Gain on sale of building | (139,187) | |
Changes in operating assets and liabilities, net of acquisitions | ||
Accounts receivable | 36,249 | (101,766) |
Prepaid expenses and other assets | (165,252) | (138,254) |
Inventories | (186,538) | (23,772) |
Accounts payable and accrued liabilities | (24,910) | 1,242,108 |
Operating lease liabilities | (252,603) | |
Net cash used in operating activities: | (5,000,388) | (5,328,661) |
Cash flows from investing activities | ||
Purchases of property and equipment | (314,771) | (318,639) |
Lending on notes receivable | (705,000) | |
Proceeds on notes receivable | 270,000 | |
Proceeds from sale of building | 1,421,934 | |
Net cash (used in) provided by investing activities | 1,107,163 | (753,639) |
Cash flows from financing activities | ||
Proceeds from sale of common stock and warrants | 3,000,000 | 2,604,355 |
Proceeds from the exercise of warrants | 90,000 | |
Proceeds from exercise of stock options | 188,770 | |
Proceeds from notes payable | 3,440,000 | 1,455,000 |
Payments on notes payable | (2,106,000) | (5,898,000) |
Net cash provided by financing activities | 4,424,000 | (1,649,875) |
Net increase in cash and cash equivalents | 530,775 | (7,732,175) |
Cash and cash equivalents, beginning of period | 224,994 | 7,957,169 |
Cash and cash equivalents, end of period | 755,769 | 224,994 |
Supplemental schedule of cash flow information | ||
Cash paid for interest | 530,107 | 305,195 |
Non-cash investing & financing activities | ||
Deemed dividend from warrant repricing | 830,494 | 2,341,000 |
Operating lease right-of-use asset/Operating lease liability | 2,721,069 | 154,200 |
Modification of warrants associated with debt | 320,673 | |
Cashless warrant and option exercises | 3,357,412 | |
Beneficial conversion feature | 233,500 | |
Debt converted to equity | 957,056 | |
Issuance of common stock to an employee | 100,000 | |
Stock issued in connection with SevenFive Farm acquisition | 3,366,464 | |
12% Warrants | ||
Non-cash investing & financing activities | ||
Warrants recorded as a debt discount and loss on extinguishment of debt | 392,000 | |
SBI Warrants [Member] | ||
Non-cash investing & financing activities | ||
Warrants recorded as a debt discount and loss on extinguishment of debt | 28,800 | |
10% Warrants | ||
Non-cash investing & financing activities | ||
Warrants recorded as a debt discount and additional paid-in capital | 221,601 | |
Warrants recorded as a loss on extinguishment of debt and additional paid-in capital | 163,800 | |
15% Warrants | ||
Non-cash investing & financing activities | ||
Warrants recorded as a debt discount and additional paid-in capital | 167,163 | $ 158,100 |
Warrants recorded as a loss on extinguishment of debt and additional paid-in capital | $ 668,336 |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) | Dec. 31, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
10% Warrants | |||
Interest rate (as a percent) | 10.00% | 10.00% | |
15% Warrants | |||
Interest rate (as a percent) | 15.00% | 15.00% | 15.00% |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' (DEFICIT) EQUITY - USD ($) | Common Stock | Additional Paid-in Capital10% Warrants | Additional Paid-in Capital12% Warrants | Additional Paid-in Capital15% Warrants | Additional Paid-in CapitalSBI Warrants [Member] | Additional Paid-in Capital | Accumulated Deficit | 10% Warrants | 12% Warrants | 15% Warrants | SBI Warrants [Member] | Total |
Balance at the beginning of the year at Dec. 31, 2018 | $ 36,223 | $ 56,303,061 | $ (51,787,947) | $ 4,551,337 | ||||||||
Balance at the beginning 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 | |||||||||||
Warrants issued with Notes | $ 392,000 | $ 158,100 | $ 28,800 | $ 392,000 | $ 158,100 | $ 28,800 | ||||||
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 | |||||||||||
Common stock issued for property and equipment | $ 5 | 7,995 | 8,000 | |||||||||
Common stock issued for property and equipment (in shares) | 5,000 | |||||||||||
Stock options granted to employees and consultants | 3,885,964 | 3,885,964 | ||||||||||
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 | |||||||||||
Warrants issued with Notes | $ 385,400 | $ 835,499 | $ 385,400 | $ 835,499 | ||||||||
Common stock issued upon exercise of warrants | $ 200 | 172,041 | 172,241 | |||||||||
Common stock issued upon exercise of warrants (in shares) | 200,000 | |||||||||||
Common stock issued to employees for services | $ 43 | 99,957 | 100,000 | |||||||||
Common stock issued to employees in services ( in shares) | 42,735 | |||||||||||
Common stock issued upon conversion of debt | $ 2,215 | 954,841 | 957,056 | |||||||||
Common stock issued upon conversion of debt (in shares) | 2,215,892 | |||||||||||
Beneficial conversion feature | 233,500 | 233,500 | ||||||||||
Cashless exercise of warrants | $ 2,466 | 3,204,763 | 3,207,229 | |||||||||
Cashless exercise of warrants (in shares) | 2,466,439 | |||||||||||
Sale of common stock, net of issuance costs | $ 7,532 | 2,992,468 | 3,000,000 | |||||||||
Sale of common stock, net of issuance costs (in shares) | 7,532,010 | |||||||||||
Common stock issued for acquisition of SevenFive Farms | $ 8,859 | 3,800,092 | 3,808,951 | |||||||||
Common stock issued for acquisition of SevenFive Farms (in shares) | 8,859,117 | |||||||||||
Stock options granted to employees and consultants | 1,424,146 | 1,424,146 | ||||||||||
Modification of warrants | 320,673 | 320,673 | ||||||||||
Net loss | (7,679,692) | (7,679,692) | ||||||||||
Balance at the end of the year at Dec. 31, 2020 | $ 60,813 | $ 75,891,414 | $ (74,951,436) | $ 1,000,791 | ||||||||
Balance at the end of the year(in Shares) at Dec. 31, 2020 | 60,813,673 |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' (DEFICIT) EQUITY (Parenthetical) | Dec. 31, 2020 | Dec. 31, 2019 |
12% Warrants | ||
Interest rate (as a percent) | 12.00% | 12.00% |
10% Warrants | ||
Interest rate (as a percent) | 10.00% | 10.00% |
15% Warrants | ||
Interest rate (as a percent) | 15.00% | 15.00% |
NATURE OF OPERATIONS, HISTORY A
NATURE OF OPERATIONS, HISTORY AND PRESENTATION | 12 Months Ended |
Dec. 31, 2020 | |
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. As of December 31, 2020, our operations are segregated into the following three 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 2020 and 2019, 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. NBC also provides operational support for our internal cultivation. Cultivation (“Cultivation Segment”) Through our acquisition of SevenFive Farm LLC ("SevenFive Farm") in May 2020, we operate a licensed 17,000 square foot light deprivation greenhouse cultivation facility. During 2020, 28% of SevenFive Farm’s revenue was from two customers. Capital Investments and Real Estate (“Investments Segment”) As a publicly traded company, we believe that 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 investing in businesses using cash or shares of our common stock. Basis of Presentation The accompanying consolidated financial statements include the results of GCC and its eight 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) SevenFive Farm LLC, a Colorado limited liability company formed in 2020; (g) SevenFive Farm Cultivation LLC, a Colorado limited liability company formed in 2020; (h) 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. Liquidity The Company incurred net losses of $7.7 million and $15.5 million in the years ended December 31, 2020 and 2019, respectively, and had an accumulated deficit of $75.0 million as of December 31, 2020. The Company had cash, cash equivalents, and short-term and long-term investments of $1.0 million and $0.4 million as of December 31, 2020 and 2019, respectively. The accompanying consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets, and the satisfaction of liabilities and commitments in the ordinary course of business. The Company has incurred recurring losses and negative cash flows from operations since inception and has primarily funded its operations with proceeds from the issuance of convertible debt. The Company expects its operating losses and negative operating cash flows to continue into the foreseeable future as it continues to execute its acquisition and growth strategy. The Company believes that its cash, cash equivalents, and short-term and long-term investments as of December 31, 2020 will be sufficient to fund its operating expenses and capital expenditure requirements for at least twelve months from the date of filing this Annual Report on Form 10-K due to the receipt of an additional $1.7 million of cash in February 2021 from the issuance of a convertible note offering (See Note 21 for further information). The Company will need additional funding to support its planned investing activities. If the Company is unable to obtain additional funding, it would be forced to delay, reduce or eliminate some or all of its acquisition efforts, which could adversely affect its business prospects. Reclassifications Certain prior year amounts have been reclassified for consistency with current year presentation. These reclassifications had no effect on the reported results of operations. 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. As of December 31, 2020, and 2019 there are $5,551 and $102,604 of cash and cash equivalents included in asset of discontinued operations on the balance sheet. Inventories Inventories consist of raw materials, supplies, growing and harvested plants (work-in-process), and finished goods, and are stated at the lower of cost or net realizable value. All direct and indirect costs of growing plants are accumulated until the time of harvest and allocated to the plants during the growing process. All direct and indirect costs of finished goods are accumulated and allocated to the products between the harvest and completion stages. The Company uses an average costing method to allocate costs. Net realizable value is determined as the estimated selling price in the ordinary course of business less the estimated costs of completion and estimated costs necessary to make the sale. The Company periodically reviews physical inventory for excess, obsolete, and potentially impaired items. Write-downs and write-offs are charged to cost of sales. 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. 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 Right of use (“ROU”) assets represent our right to use an underlying asset in which we obtain substantially all of the economic benefits and the right to direct the use of the asset during the lease term. Lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. We recognize ROU assets and lease liabilities on the balance sheet for leases with a lease term of greater than one year. Payments that are not fixed at the commencement of the lease are considered variable and are excluded from the ROU asset and lease liability calculations. In the measurement of our ROU assets and lease liabilities, the fixed lease payments in the agreement are discounted using a secured incremental borrowing rate for a term similar to the duration of the lease, as our leases do not provide implicit rates. Operating lease expense is recognized on a straight-line basis over the lease term. 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 ten years or the life of the lease for leasehold improvements, and one to fifteen years for furniture, fixtures and equipment, software, vehicles, and biological assets. 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. Goodwill and Intangibles Goodwill represents the excess of purchase price over the fair value of identifiable net assets acquired in a business combination. Goodwill and long-lived intangible assets are tested for impairment at least annually in accordance with the provisions of ASC No. 350, Intangibles-Goodwill and Other annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carry value. Application of the goodwill impairment test requires judgement, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. We test goodwill and long-lived intangible assets annually in April, unless an event occurs that would cause us to believe the value is impaired at an interim date. Intangible assets with finite useful lives are amortized over their respective estimated useful lives and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Impairment of Long-lived Assets We periodically evaluate whether the carrying value of property and equipment 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. Debt We issue debt that may have separate warrants, conversion features, or no equity-linked attributes. Debt with warrants 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 - Debt Modification and Extinguishment Convertible Debt - When we issue debt with a conversion feature, we must first assess whether the conversion feature meets the requirements to be treated as a derivative. If the conversion feature within convertible debt meets the requirements to be treated as a derivative, we estimate the fair value of the convertible debt derivative using Black-Scholes upon the date of issuance, using the stock price on the date of issuance, the risk free interest rate associated with the life of the debt, and the estimated volatility of our stock. If the conversion feature is not treated as a derivative, we assess whether it is a beneficial conversion feature (“BCF”). A BCF exists if the effective conversion price of the convertible debt instrument is less than the stock price on the commitment date. This typically occurs when the effective conversion price is less than the fair value of the stock on the date the instrument was issued. The value of a BCF is equal to the intrinsic value of the feature, the difference between the effective conversion price and the fair value of the common stock into which it is convertible. 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, 2020 and 2019. 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, 2020 and 2019. 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 14). 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. Warrant Instruments Warrants with derivative features Revenue Recognition We have three main revenue streams: (i) product sales; (ii) licensing and consulting services; and (iii) cultivation sales. Product sales are recorded at the time that control of the product 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 performance obligations in the contract are achieved. Revenue from cultivation sales is recognized when the products are delivered to the customer. ASU 2014-09, Revenue from Contracts with Customers (“ 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. Stock-based Payments Employee and non-employee awards , Compensation – Stock Compensation , Equity may Market price-based awards 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 sales. Shipping and handling for inventory are included as a component of inventory on the consolidated balance sheets, and in cost of sales in the consolidated statements of operations when the product is sold. 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, 2020 and 2019, determined that there were no material uncertain tax positions. In general, the tax returns for the years ending December 31, 2017 through 2019 are open to examination by federal and state authorities. Reportable Segments Our reporting segments consist of: a) Operations Consulting and Products; b) Cultivation; and c) Investments. Our Chief Executive Officer has been identified as the chief decision maker. Our operations are conducted within the United States of America. Recently Issued Accounting Standards FASB ASU 2018-013 – “Fair Value Measurement (Topic 820)”- 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. We adopted ASU 2018-13 as of January 1, 2020. There was no material impact to our consolidated financial statements or disclosures. FASB ASU 2020-06 – “Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”- FASB ASU 2019-12 – “Income Taxes (Topic 740)” – |
INVESTMENTS AND ACQUISITIONS
INVESTMENTS AND ACQUISITIONS | 12 Months Ended |
Dec. 31, 2020 | |
INVESTMENTS AND ACQUISITIONS | |
INVESTMENTS AND ACQUISITIONS | NOTE 2. INVESTMENTS AND ACQUISITIONS SevenFive Farm On May 13, 2020, we received approval of the transaction and transfer of the Dalton Adventures, LLC (“Seller”) license from the Colorado Marijuana Enforcement Division. On May 25, 2020, we finalized the acquisition, pursuant to which we acquired the assets of the Seller that constitute the business of SevenFive Farm, a cultivation facility in Boulder, Colorado, whereby we acquired fixed assets, inventory, a cultivation license and the tradename. The purchase price paid by the Company to the Seller was 8,859,117 shares of common stock. The shares issued have not been registered and are restricted shares under applicable U.S. federal and state securities laws and their resale may be made only pursuant to registration under the Securities Act or an available exemption from registration. The closing price of General Cannabis Corp’s common stock on May 13, 2020, the date of license transfer, was $0.38 per share, as such, fair value of consideration is $3,808,951. The purchase agreement had a provision whereby the Seller may require us to repurchase in cash 25% of the shares issued to the owner of Dalton Adventures, LLC at a repurchase price equal to the same volume weighted average price used to determine the number of shares issued to the owner of Dalton Adventures, LLC at closing. As a result, we recorded a liability using Black-Scholes in the amount of $442,487 and reduced additional paid-in capital. In December 2020, the Seller waived his right to this provision in the purchase agreement and no longer has the possibility of the buyback of the shares. Therefore, no stock put liability is recorded as of December 31, 2020 and the liability was reversed into equity. We have not completed the allocation of the purchase price. As of December 31, 2020, the consolidated balance sheet includes a preliminary allocation of fixed assets, inventory, intangible assets and goodwill. Management anticipates completing the purchase price allocation as soon as possible, but no later than one year from the acquisition date. The purchase price allocation is as follows: Inventories $ 185,261 Fixed assets 89,490 Tradename 1,050,000 Goodwill 2,484,200 $ 3,808,951 The accompanying consolidated financial statements include the results of SevenFive Farm from the date of acquisition for financial reporting purposes, May 13, 2020. The pro forma effects of the acquisition on the results of operations as if the transaction had been completed on January 1, 2019, are as follows: Year ended December 31, 2020 2019 Total revenues $ 8,074,268 $ 6,462,580 Net loss attributable to common stockholders $ (8,332,387) $ (17,204,805) Net loss per common share: $ (0.16) $ (0.37) Weighted average number of basic and diluted common shares outstanding 50,895,301 46,965,898 |
DISCONTINUED OPERATIONS
DISCONTINUED OPERATIONS | 12 Months Ended |
Dec. 31, 2020 | |
DISCONTINUED OPERATIONS. | |
DISCONTINUED OPERATIONS | NOTE 3. 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. On February 6, 2020 we cancelled all our security contracts in California. The assets and liabilities classified as discontinued operations for the Security Segment are presented separately in the balance sheet and the operating results for the years ended December 31, 2020 and 2019 are presented as discontinued operations. Assets and liabilities of discontinued operations for the Security Segment included the following: December 31, 2020 2019 Cash and cash equivalents $ 5,551 $ 77,380 Accounts receivable, net — 280,058 Prepaid expenses and other current assets — 17,780 Current assets discontinued operations 5,551 375,218 Property and equipment, net — 15,584 Noncurrent assets discontinued operations — 15,584 Accounts payable and accrued expenses 1,513 88,309 Customer deposits — 60,940 Current liabilities discontinued operations $ 1,513 $ 149,249 A breakdown of the discontinued operations for the Security Segment is presented as follows: Year ended December 31, 2020 2019 Service revenues $ 120,207 $ 2,118,732 Cost of sales 88,541 1,650,823 Selling, general and administrative 83,829 877,795 Professional fees — 4,219 Depreciation and amortization 2,174 51,654 Total costs and expenses 174,544 2,584,491 Operating loss (54,337) (465,759) Interest expense, net 984 3,422 Net loss from discontinued operations $ (55,321) $ (469,181) 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 the Security Segment for the years ended December 31, 2020 and 2019. Year ended December 31, 2020 2019 Receivables $ 280,058 $ (2,201) Prepaids and other 17,780 10,951 Depreciation and amortization 2,174 51,654 Capital expenditures — (2,556) Accounts payable and accrued expenses (86,796) 10,244 Customer deposits (60,940) (20,939) 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, 2020 and 2019 are presented as discontinued operations. Assets and liabilities of discontinued operations for the Consumer Goods Segment included the following: December 31, 2020 2019 Cash and cash equivalents $ — $ 25,223 Accounts receivable, net — 7,836 Prepaid expenses and other current assets — 14,394 Current assets discontinued operations — 47,453 Right to use asset — 83,525 Noncurrent assets discontinued operations — 83,525 Accounts payable and accrued expenses 53,128 124,468 Operating lease liability - current portion — 83,525 Current liabilities discontinued operations $ 53,128 $ 207,993 A breakdown of the discontinued operations for the Consumer Goods Segment is presented as follows: Year ended December 31, 2020 2019 Product $ 33 $ 222,220 Total Revenues 33 222,220 Cost of sales — 223,354 Selling, general and administrative 5,582 833,742 Professional fees — 110,064 Depreciation and amortization — 28,897 Impairment of assets — 232,521 Total costs and expenses 5,582 1,428,578 Operating loss (5,549) (1,206,358) Net loss from discontinued operations $ (5,549) $ (1,206,358) 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 2020 and 2019. Year ended December 31, 2020 2019 Receivables $ 7,836 $ 13,266 Prepaids and other 14,394 (14,394) Depreciation and amortization — 28,897 Capital expenditures — (114,384) Accounts payable and accrued expenses (71,340) 119,548 Customer deposits — (1,300) Loss on disposal of segment — 232,521 |
ACCOUNTS RECEIVABLE AND CUSTOME
ACCOUNTS RECEIVABLE AND CUSTOMER DEPOSITS | 12 Months Ended |
Dec. 31, 2020 | |
CUSTOMER DEPOSITS | |
ACCOUNTS RECEIVABLE AND CUSTOMER DEPOSITS | NOTE 4. ACCOUNTS RECEIVABLE AND CUSTOMER DEPOSITS Our accounts receivable consisted of the following: December 31, 2020 2019 Accounts receivable $ 354,790 $ 196,204 Less: Allowance for doubtful accounts (27,000) (111,000) Total $ 327,790 $ 85,204 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 $140,465, of which $15,465 was related to accounts receivable and the remaining amount is in relation to our notes receivable, and $103,182 respectively, during the years ended December 31, 2020 and 2019. Our customer deposit liability had the following activity: Amount Balance as of December 31, 2018 $ 308,111 Additional deposits received 2,252,416 Less: Deposits recognized as revenue (1,997,724) Balance as of December 31, 2019 562,803 Additional deposits received 4,316,761 Less: Deposits recognized as revenue (4,206,433) Less: Refunds to customers (155,200) Balance as of December 31, 2020 $ 517,931 |
NOTES RECEIVABLE
NOTES RECEIVABLE | 12 Months Ended |
Dec. 31, 2020 | |
NOTES RECEIVABLE | |
NOTES RECEIVABLE | NOTE 5. NOTES RECEIVABLE Our notes receivable consisted of the following: December 31, 2020 2019 CCR Note $ 375,000 $ 375,000 BB Note 100,000 100,000 Total Principal 475,000 475,000 Allowance for doubtful accounts (125,000) — Unamortized loan origination fee — (6,667) 350,000 468,333 Less: Current portion (350,000) (375,000) Long-term portion $ — $ 93,333 In March 2019, we agreed to loan an aggregate of up to $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 substantially all of the assets of CCR and subject to a maturity date of September 2020. As of May 30, 2019, we had loaned the entire available amount of $375,000 to CCR pursuant to the CCR Note. CCR is a vertically integrated medical cannabis company located in San Juan, Puerto Rico. As of December 31, 2020, the outstanding amount of the loan was $375,000. The CCR Note included a loan origination fee of $15,000, which is being recognized as interest income over the term of the agreement and has been fully amortized as of December 31, 2020. As of December 31, 2020, this loan is in default. Subsequent to year-end, we received a payment of $200,000 applied to interest and principal. A notice of default was sent to the borrower in April 2020, which increased the interest rate to 18% per annum. On January 3, 2019, the Company authorized an unsecured loan of $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, the Company agreed to extend the maturity date to January 3, 2021. As of December 31, 2020, this loan is in default due to unpaid interest. A notice of default was sent to the borrower in November 2020. We are currently in negotiations with BB for repayment of the note. 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. |
INVENTORIES, NET
INVENTORIES, NET | 12 Months Ended |
Dec. 31, 2020 | |
INVENTORIES, NET | |
INVENTORIES, NET | NOTE 6. INVENTORIES, NET Our inventories consistent of the following: December 31, December 31, 2020 2019 Raw materials $ 8,137 $ — Work-in-progress and finished goods 363,662 — Less: Inventory reserves — — Total inventories $ 371,799 $ — |
PREPAIDS AND OTHER CURRENT ASSE
PREPAIDS AND OTHER CURRENT ASSETS | 12 Months Ended |
Dec. 31, 2020 | |
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, 2020 2019 Prepaid insurance $ 73,827 $ 74,026 Prepaid product for resale 320,849 292,306 Contract asset 182,247 — Other 167,473 180,638 $ 744,396 $ 546,970 |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 12 Months Ended |
Dec. 31, 2020 | |
PROPERTY AND EQUIPMENT, NET | |
PROPERTY AND EQUIPMENT, NET | NOTE 8. PROPERTY AND EQUIPMENT, NET Property and equipment consisted of the following: December 31, 2020 2019 Furniture, fixtures and equipment $ 564,334 $ 331,467 Software 120,111 120,111 Biological assets 13,000 — Land — 800,000 Buildings — 508,104 Total 697,445 1,759,682 Less: Accumulated depreciation (242,223) (252,355) $ 455,222 $ 1,507,327 Depreciation expense was $149,836 and $115,696, respectively, for the years ended December 31, 2020 and 2019. |
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL | 12 Months Ended |
Dec. 31, 2020 | |
INTANGIBLE ASSETS AND GOODWILL | |
INTANGIBLE ASSETS AND GOODWILL | NOTE 9. INTANGIBLE ASSETS AND GOODWILL Intangible assets Intangible assets consisted of the following: Estimated Accumulated Life Gross Amortization Net (in years) Tradename $ 1,050,000 $ 65,625 $ 984,375 10 Estimated amortization expense for the next five years is as follows: Year ending December 31, Amount 2021 $ 105,000 2022 105,000 2023 105,000 2024 105,000 2025 105,000 Thereafter 459,375 Total $ 984,375 Amortization expense was $65,625 and $0 for the years ended December 31, 2020 and 2019, respectively. Goodwill In connection with our acquisition of SevenFive Farm in May 2020, we recorded goodwill of $2,484,200 that is included in our Cultivation Reporting Unit. We have not recognized any impairment as of December 31, 2020. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2020 | |
LEASES | |
LEASES | NOTE 10. LEASES On May 13, 2020, we entered into a commercial real estate lease with a related party (see Note 19) for 17,000 square feet of greenhouse space in Boulder, CO, with an initial term of five years and, at our option, two additional terms of five years each. Rent is $30,000 per month with 1.5% annual escalations. We also pay our portion of real estate taxes. In December 2020, we amended the lease to include a 3% rent escalation in 2021 and 2022. No other changes to the lease were made. We accounted for the amendment as a lease modification and remeasured the lease with an incremental borrowing rate of lease liability lease liability which are being applied ratably over the term of the lease. As of December 31, 2020, the balance of the right-of-use asset and lease liability was , respectively. We did not have any leases with terms greater than twelve months as of December 31, 2019. Future remaining minimum lease payments were as follows: Year ending December 31, Amount 2021 $ 370,800 2022 381,924 2023 387,653 2024 393,468 2025 399,370 Thereafter 4,048,779 Total 5,981,994 Less: Present value adjustment (4,111,914) Operating lease liability $ 1,870,080 |
ACCOUNTS PAYABLE AND ACCRUED EX
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 12 Months Ended |
Dec. 31, 2020 | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | NOTE 11. ACCOUNTS PAYABLE AND ACCRUED EXPENSES Our accounts payable and accrued expenses consist of the following: December 31, 2020 2019 Accounts payable $ 1,194,659 $ 879,347 Accrued payroll, taxes and vacation 202,339 305,259 Other 116,763 36,589 $ 1,513,761 $ 1,221,195 |
ACCRUED STOCK PAYABLE
ACCRUED STOCK PAYABLE | 12 Months Ended |
Dec. 31, 2020 | |
ACCRUED STOCK PAYABLE | |
ACCRUED STOCK PAYABLE | NOTE 12. ACCRUED STOCK PAYABLE The following tables summarize the changes in accrued common stock payable: Number of Amount Shares Balance as of December 31, 2019 $ 80,657 34,469 Employee stock award accrual 19,343 8,267 Consultant stock award 60,900 100,000 Investor stock award accrual 2,185,000 5,485,814 Warrant cashless exercises 33,961 259,415 Stock issued (2,285,000) (5,528,550) Balance as of December 31, 2020 $ 94,861 359,415 On February 18, 2020 we granted a consultant 100,000 fully vested shares for consulting services. Based on a stock price of $0.61 on the date of grant, the consultant will receive $60,900 worth of our common stock. As of December 31, 2020, none of the stock had been issued. On May 29, 2020, we entered into a subscription agreement with Hershey Strategic Capital, LP and Shore Ventures III, LP with respect to the sale of shares of common stock. We sold 5,485,814 shares of common stock during the second quarter 2020. As of December 31, 2020, all of the stock In December 2020, several warrant holders exercised their 2020 A warrants through cashless exercises and we issued 282,213 shares of common stock. 259,415 of those shares issued had not been transferred to the warrant holders as of December 31, 2020 and are included in accrued stock payable. See Note 13 for further details of the cashless exercises. As of December 31, 2019, employee stock awards made up the full balance of accrued stock payable. |
NOTES PAYABLE
NOTES PAYABLE | 12 Months Ended |
Dec. 31, 2020 | |
NOTES PAYABLE. | |
NOTES PAYABLE | NOTE 13. NOTES PAYABLE Our notes payable consisted of the following: December 31, December 31, 2020 2019 2020 10% Notes $ 2,600,000 $ — 2019 12% Notes — 1,506,000 SBI Note — 750,000 2019 15% Notes 200,000 200,000 Related party note payable 340,000 100,000 Unamortized debt discount (251,456) (225,649) 2,888,544 2,330,351 Less: Current portion — (2,330,351) Long-term portion $ 2,888,544 $ — Aggregate Maturities As of December 31, 2020, aggregate future contractual maturities of long-term debt (excluding issue discounts) are as follows: Year ending December 31, Amount 2021 $ — 2022 200,000 2023 2,940,000 $ 3,140,000 10% Notes In December 2020, we entered into a Securities Purchase Agreement (the “Securities Purchase Agreement’) with certain accredited investors (the “10% Investors”), pursuant to which we issued and sold senior convertible promissory notes (the “10% Notes”) with an aggregate principal amount of $2,940,000 in exchange for payment to us by certain 10% Investors of an aggregate amount of $1,940,000 in cash, as well as cancellation of outstanding indebtedness of the 15% Notes (defined below) in the aggregate amount of $1,000,000 . In connection with the issuance of the 10% Notes, the holders of the 10% notes received warrants (the “10% Warrants”) to purchase shares of our common stock equal to 20% coverage of the aggregate principal amount at $0.56 per share. In the aggregate, this equals 1,050,011 shares of our common stock. The 10% Notes will bear interest at an annual rate of 10 % and will mature on December 23, 2023. The 10% Investors have the option at any time to convert up to 50% of the outstanding unpaid principal and accrued interest of the Notes into Common Stock at a variable price of 80% of the market price but no less than $0.65 per share and no more than $1.00 per share. The 10% Warrants are exercisable at an exercise price of $0.56 per 10% Warrant. The relative fair value of the new funding on the 10% Warrants was recorded as a debt discount and additional paid-in capital of $254,400. The relative fair value of the cancellation of the outstanding indebtedness was recorded as an extinguishment of debt and additional paid-in capital of $131,000. For the years ended December 31, 2020 and 2019, amortization of debt discount expense was $2,944 and $0, respectively, from the 10% Notes. We determined there was no beneficial conversion feature on the 10% Notes. The For purposes of determining the debt discount, the underlying assumptions used in the binomial lattice model to determine the fair value of the 10% Warrants as of December 31, 2020, were: Current stock price $ 0.53 Exercise price $ 0.56 Risk-free interest rate 0.38 % Expected dividend yield — Expected term (in years) 5.0 Expected volatility 115% SBI Debt In July 2019, we completed a $855,000 private placement pursuant to a promissory note (“SBI Note”) with SBI Investments LLC, 2014-1 (“SBI”), bearing interest at 10% with principal due on October 18, 2019. On October 18, 2019, SBI agreed to an extension of the maturity date of the SBI Note to November 1, 2019. On November 1, 2019, SBI agreed to another extension of the maturity date to November 15, 2019. On November 15, 2019, SBI agreed to another extension of the maturity date 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 maturity date 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 SBI Note. On February 18, 2020, we entered into a promissory note exchange agreement with SBI 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. If at any time, the borrower issues or sells any shares of common stock for a consideration per share less than the conversion price in effect on the date of such issuance, the holder shall have the right to utilize the price per share of the dilutive issuance as the conversion price for such conversion. On May 29, 2020, we issued shares at $0.40 per share, and as such, the conversion price was decreased to a floor of $0.40 per share. The exchange of the SBI Note for the Convertible Note is treated as a debt extinguishment. The additional $184,000 of principal was treated as a debt extinguishment and included in our consolidated statement of operations. We determined that the Convertible Note should be accounted for in accordance with FASB ASC 470-20 which addresses “Accounting for Convertible Securities with Beneficial Conversion Features”. The beneficial conversion feature is calculated at its intrinsic value (that is, the difference between the effective conversion price of $0.49 at the date of the note issuance and the fair value of the common stock into which the debt is convertible at the commitment date, per share being $0.61, multiplied by the number of shares into which the debt is convertible). The valuation of the beneficial conversion feature recorded cannot be greater than the face value of the note issued. We recorded $233,500 as additional paid in capital and as a debt extinguishment and included in our consolidated statement of operations. As of December 31, 2020, SBI converted all of the $934,000 aggregate principal amount of the Convertible Note and approximately $23,000 of accrued interest into 2,215,892 shares of our common stock. 15% Notes In December 2019, we completed a private placement with certain accredited investors pursuant to an unsecured promissory note (the “15% Notes”) with an aggregate principal amount of $300,000. In February and March 2020, we completed private placements with certain accredited investors, including some holders of our 2019 12% Notes (as defined below), of 15% Notes with an aggregate principal amount of $2,031,000 in exchange for $525,000 of new funding and the cancellation of $1,506,000 aggregate principal amount of the 2019 12% Notes. The 15% Notes have an annual interest rate of 15% and mature on January 31, 2021. $1.0 million of the 15% Notes were exchanged for the 10% Notes (see above), $2.1 million was paid in full in December 2020 and the remaining $200,000 was paid in full in the first quarter 2021. The 15% Notes provide that they shall be repaid in full out of the proceeds of any new debt or equity capital raise with net proceeds of more than $5,000,000. In connection with the issuance of the 15% Notes, each holder of 15% 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, with the number of shares subject to each warrant equal to one share for each $1.00 of principal amount of 15% Notes issued to the noteholder. The 2020 A Warrants have an expiration date of December 31, 2020, the 2020 B Warrants have an expiration date of December 31, 2021, and the 2020 C Warrants have an expiration date of December 31, 2022 (collectively, the “15% Warrants”). By way of example, if an investor was issued a 15% Note with a principal amount of $250,000, such noteholder would receive a 2020 A Warrant to purchase 250,000 shares of common stock, a 2020 B Warrant to purchase 250,000 shares of common stock and a 2020 C Warrant to purchase 250,000 shares of common stock. Accordingly, as of March 31, 2020, the Company has issued 15% Warrants to purchase a total of 6,993,000 shares of common stock to the holders of 15% Notes. In December 2020, the warrant holders exercised shares of our common stock through cashless exercise. We recorded We received $300,000 of cash in December 2019 and an additional $525,000 of cash January 2020 through March 2020 for issuing the 15% Notes. The relative fair value of the new funding on the 15% Warrants was recorded as a debt discount and additional paid-in capital of $333,056. The relative fair value of the cancellation of the outstanding indebtedness was recorded as an extinguishment of debt and additional paid-in capital of $668,335. For the year ended December 31, 2020 and 2019, amortization of debt discount expense was $279,676 and $2,883, respectively, from the 15% Notes. The 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 March 2020, were: Current stock price $ 0.45 - 0.67 Exercise price $ 0.45 Risk-free interest rate 0.68 - 1.62 % Expected dividend yield — Expected term (in years) 0.83 - 3.06 Expected volatility 112 - 119 % Loan on Building On January 8, 2020 we entered into 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. 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 years ended December 31, 2020 and 2019, amortization of debt discount includes $12,635 and $23,432. The 2019 12% Notes are otherwise treated as conventional debt. In February 2020, we issued $1,506,000 aggregate principal amount of 15% Notes to the holders of the outstanding 12% Notes in exchange for the cancellation of the outstanding 12 % Notes. The exchange was treated as an extinguishment of 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. The debt modification was treated as an extinguishment of debt. 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, 2020 and 2019, amortization of debt discount expense was $0 and $1,575,094, 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 |
WARRANT DERIVATIVE LIABILITY
WARRANT DERIVATIVE LIABILITY | 12 Months Ended |
Dec. 31, 2020 | |
WARRANT DERIVATIVE LIABILITY. | |
WARRANT DERIVATIVE LIABILITY | NOTE 14. WARRANT DERIVATIVE LIABILITY 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 (“2019 Units”) in a registered direct offering for $1.00 per 2019 Unit (collectively defined as 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 the fourth quarter 2019, the exercise price of the 2019 Warrants decreased to $0.45 per share and the number of shares subject to the 2019 Warrants increased to 8,666,666 shares of common stock as of December 31, 2019. In May 2020, we issued securities at a price lower than the $0.45 per share above. As a result, the exercise price of the 2019 Warrants decreased to $0.40 per share and the number of shares subject to the 2019 Warrants increased to 9,591,614 shares of common stock. In February 2020, one of the warrant holders exercised 200,000 warrants. We received $90,000 in cash for the exercise and booked an adjustment to the derivative liability of $82,241 as a result of the transaction. During the year ended December 31, 2020 the warrant holders exercised 7,945,807 warrants into 2,443,641 shares of our common stock through cashless exercise. We booked an adjustment to the derivative liability of on the fair value of derivative liability, respectively, in the consolidated statements of operations. As of December 31, 2020, there were The following are the key assumptions that were used to determine the fair value of the 2019 Warrants: May 31, December 31, December 31, 2019 2019 2020 Number of shares underlying the warrants 3,000,000 8,666,667 1,645,807 Fair market value of stock $ 0.95 $ 0.63 $ 0.48 Exercise price $ 1.30 $ 0.45 $ 0.40 Volatility 133 % 124 % 108 % Risk-free interest rate 1.93 % 1.69 % 0.36 % Warrant life (years) 5.00 4.41 3.41 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, 2020 2019 Beginning balance $ 4,620,593 $ — Recognition of warrant derivative liability on May 31, 2019 — 2,416,421 Warrant exercise (3,323,429) — Change in fair value of warrants derivative liability (735,796) 2,204,172 Ending balance $ 561,368 $ 4,620,593 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2020 | |
COMMITMENTS AND CONTINGENCIES. | |
COMMITMENTS AND CONTINGENCIES | NOTE 15. COMMITMENTS AND CONTINGENCIES Legal In June 2020, Michael Feinsod resigned as our Executive Chairman, claiming that his resignation was for "Good Reason" under the terms of his employment agreement. If it is ultimately determined that his resignation was, in fact, for "Good Reason", rather than a voluntary act absent "Good Reason", it could enable certain potential claims for benefits under his employment agreement, including potential claims for severance, for the vesting of his unvested options and/or for the extension of the term within which he can exercise his options in the future. We do not believe that Mr. Feinsod's resignation was for "Good Reason." Accordingly, we believe that Mr. Feinsod's resignation was voluntary, and that any such potential claims, if asserted, would be without substantial merit. Although the outcome of legal proceedings is subject to uncertainty, the Company will vigorously defend any future claims made by Mr. Feinsod alleging a "Good Reason" resignation. 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, 2020 | |
DEFERRED TAXES | |
DEFERRED TAXES | NOTE 16. DEFERRED TAXES The income tax was $0 as of December 31, 2020 and 2019. Significant components of the Company’s deferred tax assets at December 31, 2020 and 2019 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 2020 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. As of December 31, 2020 and 2019, the Company had federal and state net operating loss carryforwards of approximately $34 million and $29 million, respectively. Of the current net operating loss carryforwards, $14 million expire starting in 2033 through 2037 and $20 million do not expire. The Company is currently evaluating whether there have been one or more ownership changes pursuant to IRC Sections 382 and 383. If the Company determines there were one or more ownership changes under these rules, the use of its U.S. federal and state net operating loss carryforwards may be limited and/or otherwise expire unused. The components of net deferred tax assets are as follows: December 31, 2020 2019 Net operating loss carryforwards $ 8,438,428 $ 7,116,767 Equity-based instruments 2,883,318 2,645,225 Long-lived assets and other 203,274 491,730 Capital loss carryforward 119,915 120,318 Deferred tax asset valuation allowance (11,644,935) (10,374,040) $ — $ — 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, 2020 2019 Income tax benefit at statutory rate $ (1,607,608) $ (3,251,597) State income tax benefit, net of Federal benefit (178,226) (566,351) Equity-based instruments 103,372 146,446 Fair market value adjustment/loss on extinguishment – derivative liabilities (154,517) 636,532 Amortization of debt discount 412,823 498,018 Other 142,124 (59,749) Valuation allowance 1,282,032 2,596,701 $ — $ — |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2020 | |
STOCKHOLDERS' EQUITY | |
STOCKHOLDERS' EQUITY | NOTE 17. STOCKHOLDERS’ EQUITY 2020 Capital Raise On May 29, 2020, we entered into a subscription agreement, as amended with Hershey Strategic Capital, LP and Shore Ventures III, LP with respect to the sale of shares of common stock and warrants to purchase common stock (collectively, the “securities”). The sales of the securities to the Hershey Investor consists of a minimum of $2,185,000 of securities and a maximum of $3,000,000 of securities, as described further below. The purchase price of the securities at each closing is as follows: (i) the purchase price of each share of common stock is $0.3983 per share, and (ii) for each one dollar invested by the Hershey Investor, the Hershey Investor receives a warrant to purchase a number of shares of common stock equal to 75% of the number of shares of common stock purchased by the Hershey Investor at an exercise price per share equal to $0.5565. The warrants have a term of five years. During the year ended December 31, 2020, we sold $3,000,000 of securities to the Hershey Investor, representing 7,532,010 shares of common stock and warrants to purchase 5,649,007 shares of common stock at an exercise price of $0.5565 per share. The warrants were recorded as equity and equity issuance costs in the amount of $2,173,074. Notwithstanding the foregoing, the Hershey Subscription Agreement provides that the Hershey Investor’s investment shall not exceed 20% or more of the common stock (or securities convertible into or exercisable for common stock) or the voting power of the Company on a post-transaction basis. The Hershey Subscription Agreement also provides the Hershey Investor with certain participation rights in future financings of the Company until the one-year anniversary of the second closing. The Hershey Subscription Agreement further provides that the Company shall, during a negotiation period ending October 4, 2020, endeavor to cause the existing holders of the promissory notes of the Company having an outstanding balance in the amount of approximately $2,331,000 as of June 1, 2020 that are due on or about January 31, 2021, to extend the maturity date of such notes to a date that is not earlier than January 31, 2022. As of October 4, 2020, $600,000 of the $2,331,000 outstanding notes have extended the maturity date. If, at the end of the negotiation period per the contract, all of the existing notes have not been amended to extend the maturity dates thereof, then the Company shall issue to the Hershey Investor additional warrants to purchase shares of common stock. Any such additional warrants will be for a number of shares of common stock based on the dollar amount of the outstanding balance of the existing notes that were not extended, with each one dollar of existing notes that were not extended representing one share subject to such additional warrant. The exercise price of any such additional warrants will be equal to 100% of the 30-day volume weighted average price of the Company’s common stock on the last day of the negotiation period, provided that such exercise price shall not be lower than $0.45 per share nor higher than $0.56 per share. The Hershey Investor extended the negotiation period to December 11, 2020. As of December 11, 2020, no existing holders had extended their promissory notes, therefore, we issued the Hershey Investor additional warrants in accordance with the agreement. On December 14, 2020 we issued an additional to the Hershey Investor. These warrants expire on December 11, 2025. The warrants were recorded as a deemed dividend in the amount of 2019 Capital Raise 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. In May 2020, we issued securities at a price lower than the $0.45 per share above. As a result, the exercise price of the 2019 Warrants decreased to $0.40 per share and the number of shares subject to the 2019 Warrants increased to 9,591,614 shares of common stock. This down round adjustment is recorded through the mark to market adjustment made on a quarterly basis and is recorded as a gain/loss on warrant derivative liability on the consolidated statement of operations. As of December 31, 2020, there were 1,645,807 of these warrants outstanding. We received cash of $2,604,355, which is net of $395,645 of issuance costs. Of the gross proceeds, we recorded $2,416,422 as a warrant derivative liability, as discussed in Note 14. Stock-based compensation Stock-based compensation expense consisted of the following: Year ended December 31, 2020 2019 Employee Awards $ 1,411,442 $ 3,880,938 Consulting Awards 92,947 85,683 $ 1,504,389 $ 3,966,621 Employee Stock Options In November 2020, the Board authorized the adoption of and, on November 23, 2020, our stockholders ratified our 2020 Omnibus Incentive Plan (the “2020 Plan”). The 2020 Plan became effective immediately and will expire on November 23, 2030, unless terminated earlier by the Board of Directors. The 2020 Plan will permit the Board of Directors, or a committee or subcommittee thereof, to grant to eligible employees, non-employee directors and consultants of the Company and its subsidiaries non-statutory and incentive stock options, stock appreciation rights, restricted stock awards, restricted stock units, deferred stock units, performance awards, non-employee director awards, and other stock-based awards. Subject to adjustment, the maximum number of shares of our common stock to be authorized for issuance under the 2020 Plan is 10 million shares. As of the date of this filing a Registration Statement on Form S-8 has not been filed. As of December 31, 2020, there have been no awards granted in the plan. 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, 2020, there were 5,320,330 shares available to issue under the Incentive Plan. Stock-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, 2020 2019 Exercise price $ 0.31 - 0.67 $ 0.55 - 2.37 Stock price on date of grant $ 0.27 - 0.67 $ 0.55 - 2.37 Volatility 111 - 114 % 119 - 130 % Risk-free interest rate 0.16 - 1.53 % 1.43 - 2.60 % 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 as of December 31, 2019 10,883,780 $ 1.28 5.4 $ 61,000 Granted 2,084,520 0.45 Exercised — — Forfeited or expired (5,701,880) 1.29 Outstanding as of December 31, 2020 7,266,420 $ 1.03 5.9 $ 176,000 Exercisable as of December 31, 2020 5,390,600 $ 1.28 5.8 $ 57,000 As of December 31, 2020, there was approximately $21,417 of total unrecognized compensation expense related to unvested Employee Awards, which is expected to be recognized over a weighted-average period of fifteen 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, 2020 2019 Exercise price $ 0.61 $ 0.71 - 2.37 Stock price, date of valuation $ 0.61 $ 0.71 - 2.37 Volatility 101 % 125 - 141 % Risk-free interest rate 1.47 % 1.64 - 2.62 % Expected life (years) 1.0 2.0 - 5.0 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 as of December 31, 2019 125,000 $ 1.79 Granted 10,000 0.61 Exercised — Forfeited or expired (35,000) 3.08 Outstanding and exercisable as of December 31, 2020 100,000 $ 1.22 2.2 $ — During 2020 we granted 10,000 options to a consultant with a fair value of $2,390. Feinsod Employment Agreement 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, 2020 and 2019, we recognized approximately $57,342 and $116,000 , respectively, of stock-based compensation expense related to these options. These options were forfeited in July 2020, with Mr. Feinsod’s resignation. The underlying assumptions used in the Monte Carlo simulations to determine the fair value of options were: August 6, 2020 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 % 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 as of December 31, 2018 5,992,214 $ 2.26 Granted 2,481,000 0.98 Exercised — — Expired — — Outstanding as of December 31, 2019 8,473,214 0.64 0.5 $ 1,169,583 Granted 7,143,011 0.42 Exercised (1,131,000) 0.40 Expired (7,064,214) 0.63 Outstanding and exercisable as of December 31, 2020 7,421,011 $ 0.46 2.0 $ 478,925 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 Warrants. In May 2020, we issued common stock at a price $0.3983 . These triggered the “downround” feature on the 2019 Units and the 15 % Notes. The 8.5% Warrants had expired at the time of issuance, so did not effect these warrants. The difference in fair value of the effect of the down round feature for the 8.5% Warrants and the 15 % Warrants 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 difference in the fair value of the effect of the down round feature for the 2019 Warrants are reflected in the gain/loss on derivative instrument in our consolidated statement of operations. 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 15% Warrants were: Pre-Trigger Post-Trigger Current stock price $ 0.55 $ 0.55 Exercise price $ 0.45 $ 0.40 Risk-free interest rate 0.18 - 0.22 % 0.18 - 0.22 % Expected dividend yield — — Expected term (in years) 0.60 - 2.60 0.60 - 2.60 Expected volatility 88 - % 88 - % 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 % |
NET LOSS PER SHARE
NET LOSS PER SHARE | 12 Months Ended |
Dec. 31, 2020 | |
NET LOSS PER SHARE | |
NET LOSS PER SHARE | NOTE 18. 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, 2020 2019 Stock options 7,366,420 12,833,780 Warrants 16,531,825 17,439,881 Accrued stock payable 359,415 42,736 Convertible notes 2,261,538 — 26,519,198 30,316,397 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2020 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 19. RELATED PARTY TRANSACTIONS On June 3, 2020, the Company entered into a consulting agreement with Adam Hershey, a board member and investor, pursuant to which he would act as a strategic consultant for the Company, including providing assistance with the sourcing and evaluation of merger and acquisition deals, strategic capital and strategic partnerships or joint ventures. Mr. Hershey is paid an initial monthly rate of $8,333 for the services, subject to certain adjustments. We paid We currently have a lease agreement with Dalton Adventures, LLC in which we rent 17,000 square foot of greenhouse space in Boulder, Colorado for $33,680 a month, of which $30,000 is base rent and $3,680 is property taxes. The owner of Dalton Adventures, LLC is a principal shareholder and board member of the Company. We incurred approximately On December 23, 2020, all five board members of the Company purchased senior convertible promissory notes from the Company for an aggregate amount of $340,000. These notes are included in the 10% Notes discussed in Note 13. Accrued interest earned and owed to the board members was $1,000 as of December 31, 2020. We had a note payable to a former board member who resigned in September 2020 in the amount of $100,000. This note is included in the 15% Notes discussed in Note 13. We have paid approximately $15,000 in interest for the year ended December 31, 2020. This note was paid in full in February 2021. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Dec. 31, 2020 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | NOTE 20. SEGMENT INFORMATION Our operations are organized into three segments: Operations; Cultivation; and Investments. All revenue originates, and all assets are located in the United States. Segment information is presented in accordance with ASC 280, Segments Reporting. Year ended December 31 2020 Operations Cultivation Investments Eliminations Total Revenues $ 5,195,000 $ 2,279,867 $ 103,837 $ (458,664) $ 7,120,040 Costs and expenses (5,312,427) (1,865,399) (125,000) 446,480 (6,856,346) Segment operating (loss) income $ (117,427) $ 414,468 $ (21,163) $ (12,184) 263,694 Corporate expenses (7,882,516) Net loss from continuing operations $ (7,618,822) 2019 Operations Cultivation Investments Total Revenues $ 3,570,909 $ — $ 95,437 $ 3,666,346 Costs and expenses (3,372,174) — (71,723) (3,443,897) Segment operating income $ 198,735 $ — $ 23,714 222,449 Corporate expenses (14,030,707) Net loss from continuing operations $ (13,808,258) December 31, Total assets 2020 2019 Operations $ 750,156 $ 441,841 Cultivation 6,208,223 — Investments 378,962 402,988 Corporate 1,188,059 2,135,395 Total assets - segments 8,525,400 2,980,224 Intercompany eliminations (12,183) — Total assets - consolidated $ 8,513,217 $ 2,980,224 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2020 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 21. SUBSEQUENT EVENTS On February 8, 2021, the Company, entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with an accredited investor, pursuant to which the Company issued and sold convertible notes with an aggregate principal amount of $1,660,000 to such investor. The notes are part of an over-allotment option exercised by the Company in connection with the convertible note offering consummated on December 23, 2020 and reported on a Current Report on Form 8-K filed on December 30, 2020. In connection with the issuance of the notes, the holder received warrants to purchase shares of the Company’s common stock equal to 20% coverage of the aggregate principal amount at $0.56 per share. In the aggregate, this equals 592,858 shares of the Company’s common stock with a par value $0.001 per share. The notes will bear interest at an annual rate of 10% and will mature on February 8, 2024. The investor has the option to convert up to 50% of the outstanding unpaid principal and accrued interest of the notes into common stock at a variable price of 80% of the market price but no less than $0.65 per share and no more than $1.00 per share. The warrants are exercisable at an exercise price of $0.56 per warrant, subject to adjustment as provided in the warrants, at any time prior to the earlier of the maturity date and an acquisition (as defined in the warrants). |
NATURE OF OPERATIONS, HISTORY_2
NATURE OF OPERATIONS, HISTORY AND PRESENTATION (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
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. As of December 31, 2020, our operations are segregated into the following three 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 2020 and 2019, 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. NBC also provides operational support for our internal cultivation. Cultivation (“Cultivation Segment”) Through our acquisition of SevenFive Farm LLC ("SevenFive Farm") in May 2020, we operate a licensed 17,000 square foot light deprivation greenhouse cultivation facility. During 2020, 28% of SevenFive Farm’s revenue was from two customers. Capital Investments and Real Estate (“Investments Segment”) As a publicly traded company, we believe that 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 investing in businesses using cash or shares of our common stock. |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements include the results of GCC and its eight 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) SevenFive Farm LLC, a Colorado limited liability company formed in 2020; (g) SevenFive Farm Cultivation LLC, a Colorado limited liability company formed in 2020; (h) 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. |
Liquidity | Liquidity The Company incurred net losses of $7.7 million and $15.5 million in the years ended December 31, 2020 and 2019, respectively, and had an accumulated deficit of $75.0 million as of December 31, 2020. The Company had cash, cash equivalents, and short-term and long-term investments of $1.0 million and $0.4 million as of December 31, 2020 and 2019, respectively. The accompanying consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets, and the satisfaction of liabilities and commitments in the ordinary course of business. The Company has incurred recurring losses and negative cash flows from operations since inception and has primarily funded its operations with proceeds from the issuance of convertible debt. The Company expects its operating losses and negative operating cash flows to continue into the foreseeable future as it continues to execute its acquisition and growth strategy. The Company believes that its cash, cash equivalents, and short-term and long-term investments as of December 31, 2020 will be sufficient to fund its operating expenses and capital expenditure requirements for at least twelve months from the date of filing this Annual Report on Form 10-K due to the receipt of an additional $1.7 million of cash in February 2021 from the issuance of a convertible note offering (See Note 21 for further information). The Company will need additional funding to support its planned investing activities. If the Company is unable to obtain additional funding, it would be forced to delay, reduce or eliminate some or all of its acquisition efforts, which could adversely affect its business prospects. |
Reclassifications | Reclassifications Certain prior year amounts have been reclassified for consistency with current year presentation. These reclassifications had no effect on the reported results of operations. |
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. As of December 31, 2020, and 2019 there are $5,551 and $102,604 of cash and cash equivalents included in asset of discontinued operations on the balance sheet. |
Inventories | Inventories Inventories consist of raw materials, supplies, growing and harvested plants (work-in-process), and finished goods, and are stated at the lower of cost or net realizable value. All direct and indirect costs of growing plants are accumulated until the time of harvest and allocated to the plants during the growing process. All direct and indirect costs of finished goods are accumulated and allocated to the products between the harvest and completion stages. The Company uses an average costing method to allocate costs. Net realizable value is determined as the estimated selling price in the ordinary course of business less the estimated costs of completion and estimated costs necessary to make the sale. The Company periodically reviews physical inventory for excess, obsolete, and potentially impaired items. Write-downs and write-offs are charged to cost of sales. |
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. |
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 Right of use (“ROU”) assets represent our right to use an underlying asset in which we obtain substantially all of the economic benefits and the right to direct the use of the asset during the lease term. Lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. We recognize ROU assets and lease liabilities on the balance sheet for leases with a lease term of greater than one year. Payments that are not fixed at the commencement of the lease are considered variable and are excluded from the ROU asset and lease liability calculations. In the measurement of our ROU assets and lease liabilities, the fixed lease payments in the agreement are discounted using a secured incremental borrowing rate for a term similar to the duration of the lease, as our leases do not provide implicit rates. Operating lease expense is recognized on a straight-line basis over the lease term. |
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 ten years or the life of the lease for leasehold improvements, and one to fifteen years for furniture, fixtures and equipment, software, vehicles, and biological assets. 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. |
Goodwill and Intangibles | Goodwill and Intangibles Goodwill represents the excess of purchase price over the fair value of identifiable net assets acquired in a business combination. Goodwill and long-lived intangible assets are tested for impairment at least annually in accordance with the provisions of ASC No. 350, Intangibles-Goodwill and Other annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carry value. Application of the goodwill impairment test requires judgement, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. We test goodwill and long-lived intangible assets annually in April, unless an event occurs that would cause us to believe the value is impaired at an interim date. Intangible assets with finite useful lives are amortized over their respective estimated useful lives and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. |
Impairment of Long-lived Assets | Impairment of Long-lived Assets We periodically evaluate whether the carrying value of property and equipment 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. |
Debt | Debt We issue debt that may have separate warrants, conversion features, or no equity-linked attributes. Debt with warrants 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 - Debt Modification and Extinguishment Convertible Debt - When we issue debt with a conversion feature, we must first assess whether the conversion feature meets the requirements to be treated as a derivative. If the conversion feature within convertible debt meets the requirements to be treated as a derivative, we estimate the fair value of the convertible debt derivative using Black-Scholes upon the date of issuance, using the stock price on the date of issuance, the risk free interest rate associated with the life of the debt, and the estimated volatility of our stock. If the conversion feature is not treated as a derivative, we assess whether it is a beneficial conversion feature (“BCF”). A BCF exists if the effective conversion price of the convertible debt instrument is less than the stock price on the commitment date. This typically occurs when the effective conversion price is less than the fair value of the stock on the date the instrument was issued. The value of a BCF is equal to the intrinsic value of the feature, the difference between the effective conversion price and the fair value of the common stock into which it is convertible. |
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, 2020 and 2019. 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, 2020 and 2019. 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 14). 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. |
Warrants Instruments | Warrant Instruments Warrants with derivative features |
Revenue Recognition | Revenue Recognition We have three main revenue streams: (i) product sales; (ii) licensing and consulting services; and (iii) cultivation sales. Product sales are recorded at the time that control of the product 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 performance obligations in the contract are achieved. Revenue from cultivation sales is recognized when the products are delivered to the customer. ASU 2014-09, Revenue from Contracts with Customers (“ 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. |
Stock-based Payments | Stock-based Payments Employee and non-employee awards , Compensation – Stock Compensation , Equity may Market price-based awards |
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 sales. Shipping and handling for inventory are included as a component of inventory on the consolidated balance sheets, and in cost of sales 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, 2020 and 2019, determined that there were no material uncertain tax positions. In general, the tax returns for the years ending December 31, 2017 through 2019 are open to examination by federal and state authorities. |
Reportable Segments | Reportable Segments Our reporting segments consist of: a) Operations Consulting and Products; b) Cultivation; and c) Investments. Our Chief Executive Officer has been identified as the chief decision maker. Our operations are conducted within the United States of America. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards FASB ASU 2018-013 – “Fair Value Measurement (Topic 820)”- 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. We adopted ASU 2018-13 as of January 1, 2020. There was no material impact to our consolidated financial statements or disclosures. FASB ASU 2020-06 – “Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”- FASB ASU 2019-12 – “Income Taxes (Topic 740)” – |
INVESTMENTS AND ACQUISITIONS (T
INVESTMENTS AND ACQUISITIONS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
BUSINESS ACQUISITION | |
Schedule of purchase price allocation | Inventories $ 185,261 Fixed assets 89,490 Tradename 1,050,000 Goodwill 2,484,200 $ 3,808,951 |
Schedule of pro forma results of operations | Year ended December 31, 2020 2019 Total revenues $ 8,074,268 $ 6,462,580 Net loss attributable to common stockholders $ (8,332,387) $ (17,204,805) Net loss per common share: $ (0.16) $ (0.37) Weighted average number of basic and diluted common shares outstanding 50,895,301 46,965,898 |
DISCONTINUED OPERATIONS (Tables
DISCONTINUED OPERATIONS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
DISCONTINUED OPERATIONS. | |
Schedule of asset and liabilities from discontinued operations | December 31, 2020 2019 Cash and cash equivalents $ 5,551 $ 77,380 Accounts receivable, net — 280,058 Prepaid expenses and other current assets — 17,780 Current assets discontinued operations 5,551 375,218 Property and equipment, net — 15,584 Noncurrent assets discontinued operations — 15,584 Accounts payable and accrued expenses 1,513 88,309 Customer deposits — 60,940 Current liabilities discontinued operations $ 1,513 $ 149,249 December 31, 2020 2019 Cash and cash equivalents $ — $ 25,223 Accounts receivable, net — 7,836 Prepaid expenses and other current assets — 14,394 Current assets discontinued operations — 47,453 Right to use asset — 83,525 Noncurrent assets discontinued operations — 83,525 Accounts payable and accrued expenses 53,128 124,468 Operating lease liability - current portion — 83,525 Current liabilities discontinued operations $ 53,128 $ 207,993 |
Schedule of net income (loss) from discontinued operations | Year ended December 31, 2020 2019 Service revenues $ 120,207 $ 2,118,732 Cost of sales 88,541 1,650,823 Selling, general and administrative 83,829 877,795 Professional fees — 4,219 Depreciation and amortization 2,174 51,654 Total costs and expenses 174,544 2,584,491 Operating loss (54,337) (465,759) Interest expense, net 984 3,422 Net loss from discontinued operations $ (55,321) $ (469,181) Year ended December 31, 2020 2019 Product $ 33 $ 222,220 Total Revenues 33 222,220 Cost of sales — 223,354 Selling, general and administrative 5,582 833,742 Professional fees — 110,064 Depreciation and amortization — 28,897 Impairment of assets — 232,521 Total costs and expenses 5,582 1,428,578 Operating loss (5,549) (1,206,358) Net loss from discontinued operations $ (5,549) $ (1,206,358) |
Schedule of selected information on cash flows related to discontinued operations | Year ended December 31, 2020 2019 Receivables $ 280,058 $ (2,201) Prepaids and other 17,780 10,951 Depreciation and amortization 2,174 51,654 Capital expenditures — (2,556) Accounts payable and accrued expenses (86,796) 10,244 Customer deposits (60,940) (20,939) Year ended December 31, 2020 2019 Receivables $ 7,836 $ 13,266 Prepaids and other 14,394 (14,394) Depreciation and amortization — 28,897 Capital expenditures — (114,384) Accounts payable and accrued expenses (71,340) 119,548 Customer deposits — (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, 2020 | |
CUSTOMER DEPOSITS | |
Schedule of accounts receivable | December 31, 2020 2019 Accounts receivable $ 354,790 $ 196,204 Less: Allowance for doubtful accounts (27,000) (111,000) Total $ 327,790 $ 85,204 |
Schedule of customer deposit liability | Amount Balance as of December 31, 2018 $ 308,111 Additional deposits received 2,252,416 Less: Deposits recognized as revenue (1,997,724) Balance as of December 31, 2019 562,803 Additional deposits received 4,316,761 Less: Deposits recognized as revenue (4,206,433) Less: Refunds to customers (155,200) Balance as of December 31, 2020 $ 517,931 |
NOTES RECEIVABLE (Tables)
NOTES RECEIVABLE (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
NOTES RECEIVABLE | |
Schedule of notes receivable | December 31, 2020 2019 CCR Note $ 375,000 $ 375,000 BB Note 100,000 100,000 Total Principal 475,000 475,000 Allowance for doubtful accounts (125,000) — Unamortized loan origination fee — (6,667) 350,000 468,333 Less: Current portion (350,000) (375,000) Long-term portion $ — $ 93,333 |
INVENTORIES, NET (Tables)
INVENTORIES, NET (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
INVENTORIES, NET | |
Schedule of inventories | December 31, December 31, 2020 2019 Raw materials $ 8,137 $ — Work-in-progress and finished goods 363,662 — Less: Inventory reserves — — Total inventories $ 371,799 $ — |
PREPAIDS AND OTHER CURRENT AS_2
PREPAIDS AND OTHER CURRENT ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
PREPAIDS AND OTHER CURRENT ASSETS | |
Schedule of prepaids and other current assets | December 31, 2020 2019 Prepaid insurance $ 73,827 $ 74,026 Prepaid product for resale 320,849 292,306 Contract asset 182,247 — Other 167,473 180,638 $ 744,396 $ 546,970 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
PROPERTY AND EQUIPMENT, NET | |
Schedule of property and equipment | December 31, 2020 2019 Furniture, fixtures and equipment $ 564,334 $ 331,467 Software 120,111 120,111 Biological assets 13,000 — Land — 800,000 Buildings — 508,104 Total 697,445 1,759,682 Less: Accumulated depreciation (242,223) (252,355) $ 455,222 $ 1,507,327 |
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
INTANGIBLE ASSETS AND GOODWILL | |
Schedule of intangible assets | Estimated Accumulated Life Gross Amortization Net (in years) Tradename $ 1,050,000 $ 65,625 $ 984,375 10 |
Schedule of estimated amortization expense of intangible assets | Year ending December 31, Amount 2021 $ 105,000 2022 105,000 2023 105,000 2024 105,000 2025 105,000 Thereafter 459,375 Total $ 984,375 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
LEASES | |
Schedule of future remaining minimum lease payments | Year ending December 31, Amount 2021 $ 370,800 2022 381,924 2023 387,653 2024 393,468 2025 399,370 Thereafter 4,048,779 Total 5,981,994 Less: Present value adjustment (4,111,914) Operating lease liability $ 1,870,080 |
ACCOUNTS PAYABLE AND ACCRUED _2
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | |
Schedule of accounts payable and accrued expenses | December 31, 2020 2019 Accounts payable $ 1,194,659 $ 879,347 Accrued payroll, taxes and vacation 202,339 305,259 Other 116,763 36,589 $ 1,513,761 $ 1,221,195 |
ACCRUED STOCK PAYABLE (Tables)
ACCRUED STOCK PAYABLE (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
ACCRUED STOCK PAYABLE | |
Schedule of accrued common stock payable | Number of Amount Shares Balance as of December 31, 2019 $ 80,657 34,469 Employee stock award accrual 19,343 8,267 Consultant stock award 60,900 100,000 Investor stock award accrual 2,185,000 5,485,814 Warrant cashless exercises 33,961 259,415 Stock issued (2,285,000) (5,528,550) Balance as of December 31, 2020 $ 94,861 359,415 |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Class of Warrant or Right [Line Items] | |
Schedule of notes payable | December 31, December 31, 2020 2019 2020 10% Notes $ 2,600,000 $ — 2019 12% Notes — 1,506,000 SBI Note — 750,000 2019 15% Notes 200,000 200,000 Related party note payable 340,000 100,000 Unamortized debt discount (251,456) (225,649) 2,888,544 2,330,351 Less: Current portion — (2,330,351) Long-term portion $ 2,888,544 $ — |
Schedule of maturities of long-term debt | Year ending December 31, Amount 2021 $ — 2022 200,000 2023 2,940,000 $ 3,140,000 |
10% Warrants | |
Class of Warrant or Right [Line Items] | |
Summary of underlying assumptions used in the binomial lattice model to determine the fair value of Warrants | Current stock price $ 0.53 Exercise price $ 0.56 Risk-free interest rate 0.38 % Expected dividend yield — Expected term (in years) 5.0 Expected volatility 115% |
15% Warrants | |
Class of Warrant or Right [Line Items] | |
Summary of underlying assumptions used in the binomial lattice model to determine the fair value of Warrants | Current stock price $ 0.45 - 0.67 Exercise price $ 0.45 Risk-free interest rate 0.68 - 1.62 % Expected dividend yield — Expected term (in years) 0.83 - 3.06 Expected volatility 112 - 119 % |
12% Warrants | |
Class of Warrant or Right [Line Items] | |
Summary of underlying assumptions used in the binomial lattice model to determine the fair value of Warrants | 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% Warrants | |
Class of Warrant or Right [Line Items] | |
Summary of underlying assumptions used in the binomial lattice model to determine the fair value of Warrants | 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 |
WARRANT DERIVATIVE LIABILITY (T
WARRANT DERIVATIVE LIABILITY (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
WARRANT DERIVATIVE LIABILITY. | |
Summary of key assumptions used to determine fair value of warrants | The following are the key assumptions that were used to determine the fair value of the 2019 Warrants: May 31, December 31, December 31, 2019 2019 2020 Number of shares underlying the warrants 3,000,000 8,666,667 1,645,807 Fair market value of stock $ 0.95 $ 0.63 $ 0.48 Exercise price $ 1.30 $ 0.45 $ 0.40 Volatility 133 % 124 % 108 % Risk-free interest rate 1.93 % 1.69 % 0.36 % Warrant life (years) 5.00 4.41 3.41 |
Summary of the changes in the fair value of the warrant derivative liability | 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, 2020 2019 Beginning balance $ 4,620,593 $ — Recognition of warrant derivative liability on May 31, 2019 — 2,416,421 Warrant exercise (3,323,429) — Change in fair value of warrants derivative liability (735,796) 2,204,172 Ending balance $ 561,368 $ 4,620,593 |
DEFERRED TAXES (Tables)
DEFERRED TAXES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
DEFERRED TAXES | |
Schedule of components of net deferred tax | December 31, 2020 2019 Net operating loss carryforwards $ 8,438,428 $ 7,116,767 Equity-based instruments 2,883,318 2,645,225 Long-lived assets and other 203,274 491,730 Capital loss carryforward 119,915 120,318 Deferred tax asset valuation allowance (11,644,935) (10,374,040) $ — $ — |
Schedule of reconciliation of income tax provision and the amounts computed by applying statutory rates to income before income taxes | Year ended December 31, 2020 2019 Income tax benefit at statutory rate $ (1,607,608) $ (3,251,597) State income tax benefit, net of Federal benefit (178,226) (566,351) Equity-based instruments 103,372 146,446 Fair market value adjustment/loss on extinguishment – derivative liabilities (154,517) 636,532 Amortization of debt discount 412,823 498,018 Other 142,124 (59,749) Valuation allowance 1,282,032 2,596,701 $ — $ — |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Stockholders Equity [Line Items] | |
Schedule of share-based compensation expense | Year ended December 31, 2020 2019 Employee Awards $ 1,411,442 $ 3,880,938 Consulting Awards 92,947 85,683 $ 1,504,389 $ 3,966,621 |
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 $ 0.55 $ 0.55 Exercise price $ 0.45 $ 0.40 Risk-free interest rate 0.18 - 0.22 % 0.18 - 0.22 % Expected dividend yield — — Expected term (in years) 0.60 - 2.60 0.60 - 2.60 Expected volatility 88 - % 88 - % 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 as of December 31, 2019 10,883,780 $ 1.28 5.4 $ 61,000 Granted 2,084,520 0.45 Exercised — — Forfeited or expired (5,701,880) 1.29 Outstanding as of December 31, 2020 7,266,420 $ 1.03 5.9 $ 176,000 Exercisable as of December 31, 2020 5,390,600 $ 1.28 5.8 $ 57,000 Weighted- Weighted- average average Remaining Number of Exercise Price Contractual Aggregate Shares per Share Term (in years) Intrinsic Value Outstanding as of December 31, 2019 125,000 $ 1.79 Granted 10,000 0.61 Exercised — Forfeited or expired (35,000) 3.08 Outstanding and exercisable as of December 31, 2020 100,000 $ 1.22 2.2 $ — Weighted- Weighted- average average Remaining Number of Exercise Price Contractual Aggregate Shares per Share Term (in years) Intrinsic Value Outstanding as of December 31, 2018 5,992,214 $ 2.26 Granted 2,481,000 0.98 Exercised — — Expired — — Outstanding as of December 31, 2019 8,473,214 0.64 0.5 $ 1,169,583 Granted 7,143,011 0.42 Exercised (1,131,000) 0.40 Expired (7,064,214) 0.63 Outstanding and exercisable as of December 31, 2020 7,421,011 $ 0.46 2.0 $ 478,925 |
Employee Awards [Member] | |
Stockholders Equity [Line Items] | |
Schedule of defined benefit plan, assumptions | Year ended December 31, 2020 2019 Exercise price $ 0.31 - 0.67 $ 0.55 - 2.37 Stock price on date of grant $ 0.27 - 0.67 $ 0.55 - 2.37 Volatility 111 - 114 % 119 - 130 % Risk-free interest rate 0.16 - 1.53 % 1.43 - 2.60 % Expected life (years) 3.0 3.0 Dividend yield — — Year ended December 31, 2020 2019 Exercise price $ 0.61 $ 0.71 - 2.37 Stock price, date of valuation $ 0.61 $ 0.71 - 2.37 Volatility 101 % 125 - 141 % Risk-free interest rate 1.47 % 1.64 - 2.62 % Expected life (years) 1.0 2.0 - 5.0 Dividend yield — — |
Feinsod Agreement [Member] | |
Stockholders Equity [Line Items] | |
Schedule of defined benefit plan, assumptions | August 6, 2020 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 % |
NET LOSS PER SHARE (Tables)
NET LOSS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
NET LOSS PER SHARE | |
Schedule of potentially dilutive securities | December 31, 2020 2019 Stock options 7,366,420 12,833,780 Warrants 16,531,825 17,439,881 Accrued stock payable 359,415 42,736 Convertible notes 2,261,538 — 26,519,198 30,316,397 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
SEGMENT INFORMATION | |
Schedule of segment reporting information, by segment | Year ended December 31 2020 Operations Cultivation Investments Eliminations Total Revenues $ 5,195,000 $ 2,279,867 $ 103,837 $ (458,664) $ 7,120,040 Costs and expenses (5,312,427) (1,865,399) (125,000) 446,480 (6,856,346) Segment operating (loss) income $ (117,427) $ 414,468 $ (21,163) $ (12,184) 263,694 Corporate expenses (7,882,516) Net loss from continuing operations $ (7,618,822) 2019 Operations Cultivation Investments Total Revenues $ 3,570,909 $ — $ 95,437 $ 3,666,346 Costs and expenses (3,372,174) — (71,723) (3,443,897) Segment operating income $ 198,735 $ — $ 23,714 222,449 Corporate expenses (14,030,707) Net loss from continuing operations $ (13,808,258) |
Reconciliation of assets from segment to consolidated | December 31, Total assets 2020 2019 Operations $ 750,156 $ 441,841 Cultivation 6,208,223 — Investments 378,962 402,988 Corporate 1,188,059 2,135,395 Total assets - segments 8,525,400 2,980,224 Intercompany eliminations (12,183) — Total assets - consolidated $ 8,513,217 $ 2,980,224 |
NATURE OF OPERATIONS, HISTORY_3
NATURE OF OPERATIONS, HISTORY AND PRESENTATION (Details) | 1 Months Ended | 12 Months Ended | ||
Feb. 28, 2021USD ($) | Dec. 31, 2020USD ($)customersegment | Dec. 31, 2019USD ($)customer | May 31, 2020ft² | |
NATURE OF OPERATIONS, HISTORY AND PRESENTATION | ||||
Number of operating segments | segment | 3 | |||
Net loss | $ (7,679,692) | $ (15,483,797) | ||
Accumulated deficit | (74,951,436) | (67,271,744) | ||
Cash, cash equivalents, and short-term and long-term investments | 1,000,000 | 400,000 | ||
Cash received from the issuance of a convertible note offering | $ 1,700,000 | |||
Cash and cash equivalents | 5,551 | 102,604 | ||
Tax positions, uncertain | 0 | $ 0 | ||
Long-term contract liabilities | $ 0 | |||
Building [Member] | ||||
NATURE OF OPERATIONS, HISTORY AND PRESENTATION | ||||
Property, plant and equipment, estimated useful lives | 30 years | |||
Leasehold Improvements [Member] | Minimum | ||||
NATURE OF OPERATIONS, HISTORY AND PRESENTATION | ||||
Property, plant and equipment, estimated useful lives | 10 years | |||
Furniture, fixtures and equipment [Member] | Minimum | ||||
NATURE OF OPERATIONS, HISTORY AND PRESENTATION | ||||
Property, plant and equipment, estimated useful lives | 1 year | |||
Furniture, fixtures and equipment [Member] | Maximum | ||||
NATURE OF OPERATIONS, HISTORY AND PRESENTATION | ||||
Property, plant and equipment, estimated useful lives | 15 years | |||
Next Big Crop [Member] | Revenue Benchmark | Customer Concentration Risk | ||||
NATURE OF OPERATIONS, HISTORY AND PRESENTATION | ||||
Concentration risk, percentage | 62.00% | 59.00% | ||
Number of customers | customer | 4 | 3 | ||
SevenFive Farm | Cultivation segment [Member] | ||||
NATURE OF OPERATIONS, HISTORY AND PRESENTATION | ||||
Leased space (in sq ft) | ft² | 17,000 | |||
SevenFive Farm | Cultivation segment [Member] | Revenue Benchmark | Customer Concentration Risk | ||||
NATURE OF OPERATIONS, HISTORY AND PRESENTATION | ||||
Concentration risk, percentage | 28.00% | |||
Number of customers | customer | 2 |
INVESTMENTS AND ACQUISITIONS -
INVESTMENTS AND ACQUISITIONS - Summary (Details) - Dalton Adventures, LLC - USD ($) | May 13, 2020 | Dec. 31, 2020 |
BUSINESS ACQUISITION | ||
Stock issued in exchange for purchase of assets (in shares) | 8,859,117 | |
Share price on acquisition date (in dollars per share) | $ 0.38 | |
Fair value of consideration transferred | $ 3,808,951 | |
Percentage of total shares issued for purchase of assets which the Company may be required to repurchase | 25.00% | |
Stock put liability | $ 442,487 | $ 0 |
INVESTMENTS AND ACQUISITIONS _2
INVESTMENTS AND ACQUISITIONS - Purchase Price Allocation (Details) - USD ($) | Dec. 31, 2020 | May 13, 2020 |
Preliminary purchase price allocation | ||
Goodwill | $ 2,484,200 | |
Dalton Adventures, LLC | ||
Preliminary purchase price allocation | ||
Inventories | $ 185,261 | |
Fixed assets | 89,490 | |
Tradename | 1,050,000 | |
Goodwill | 2,484,200 | |
Preliminary purchase price | $ 3,808,951 |
INVESTMENTS AND ACQUISITIONS _3
INVESTMENTS AND ACQUISITIONS - Pro Forma (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Pro forma effects of the acquisition on the results of operations | ||
Total revenues | $ 8,074,268 | $ 6,462,580 |
Net loss attributable to common stockholders | $ (8,332,387) | $ (17,204,805) |
Net loss per common share: | $ (0.16) | $ (0.37) |
Weighted average number of basic and diluted common shares outstanding | 50,895,301 | 46,965,898 |
DISCONTINUED OPERATIONS - Asset
DISCONTINUED OPERATIONS - Assets and Liabilities of Discontinued Operations (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
DISCONTINUED OPERATIONS | ||
Cash and cash equivalents | $ 5,551 | $ 102,604 |
Current assets discontinued operations | 5,551 | 422,671 |
Current liabilities discontinued operations | 54,641 | 357,242 |
Security Segment [Member] | ||
DISCONTINUED OPERATIONS | ||
Cash and cash equivalents | 5,551 | 77,380 |
Accounts receivable, net | 280,058 | |
Prepaid expenses and other current assets | 17,780 | |
Current assets discontinued operations | 5,551 | 375,218 |
Property and equipment, net | 15,584 | |
Noncurrent assets discontinued operations | 15,584 | |
Accounts payable and accrued expenses | 1,513 | 88,309 |
Customer deposits | 60,940 | |
Current liabilities discontinued operations | 1,513 | 149,249 |
Consumer Goods Segment [Member] | ||
DISCONTINUED OPERATIONS | ||
Cash and cash equivalents | 25,223 | |
Accounts receivable, net | 7,836 | |
Prepaid expenses and other current assets | 14,394 | |
Current assets discontinued operations | 47,453 | |
Right to use asset | 83,525 | |
Noncurrent assets discontinued operations | 83,525 | |
Accounts payable and accrued expenses | 53,128 | 124,468 |
Operating lease liability, current portion | 83,525 | |
Current liabilities discontinued operations | $ 53,128 | $ 207,993 |
DISCONTINUED OPERATIONS - Summa
DISCONTINUED OPERATIONS - Summary of the Discontinued Operations (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Security Segment [Member] | ||
DISCONTINUED OPERATIONS | ||
Cost of sales | $ 88,541 | $ 1,650,823 |
Selling, general and administrative | 83,829 | 877,795 |
Professional fees | 4,219 | |
Depreciation and amortization | 2,174 | 51,654 |
Total costs and expenses | 174,544 | 2,584,491 |
Operating loss | (54,337) | (465,759) |
Interest expense, net | 984 | 3,422 |
Net loss from discontinued operations | (55,321) | (469,181) |
Security Segment [Member] | Service | ||
DISCONTINUED OPERATIONS | ||
Revenues | 120,207 | 2,118,732 |
Consumer Goods Segment [Member] | ||
DISCONTINUED OPERATIONS | ||
Revenues | 33 | 222,220 |
Cost of goods sold | 223,354 | |
Selling, general and administrative | 5,582 | 833,742 |
Professional fees | 110,064 | |
Depreciation and amortization | 28,897 | |
Impairment of assets | 232,521 | |
Total costs and expenses | 5,582 | 1,428,578 |
Operating loss | (5,549) | (1,206,358) |
Net loss from discontinued operations | (5,549) | (1,206,358) |
Consumer Goods Segment [Member] | Product sales | ||
DISCONTINUED OPERATIONS | ||
Revenues | $ 33 | $ 222,220 |
DISCONTINUED OPERATIONS - Cash
DISCONTINUED OPERATIONS - Cash Flows Related to Discontinued Operations (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
DISCONTINUED OPERATIONS | ||
Receivables | $ 36,249 | $ (101,766) |
Prepaids and other | (165,252) | (138,254) |
Inventories | (186,538) | (23,772) |
Accounts payable and accrued expenses | (24,910) | 1,242,108 |
Loss on disposal of segment | 139,187 | |
Discontinued Operations | Security Segment [Member] | ||
DISCONTINUED OPERATIONS | ||
Receivables | 280,058 | (2,201) |
Prepaids and other | 17,780 | 10,951 |
Depreciation and amortization | 2,174 | 51,654 |
Capital expenditures | (2,556) | |
Accounts payable and accrued expenses | (86,796) | 10,244 |
Customer deposits | (60,940) | (20,939) |
Discontinued Operations | Consumer Goods Segment [Member] | ||
DISCONTINUED OPERATIONS | ||
Receivables | 7,836 | 13,266 |
Prepaids and other | 14,394 | (14,394) |
Depreciation and amortization | 28,897 | |
Capital expenditures | (114,384) | |
Accounts payable and accrued expenses | $ (71,340) | 119,548 |
Customer deposits | (1,300) | |
Loss on disposal of segment | $ 232,521 |
ACCOUNTS RECEIVABLE AND CUSTO_3
ACCOUNTS RECEIVABLE AND CUSTOMER DEPOSITS (Details) - USD ($) | Dec. 01, 2019 | Dec. 31, 2020 | Dec. 31, 2019 |
Concentration Risk [Line Items] | |||
Bad debt expense | $ 30,000 | $ 140,465 | $ 103,182 |
Accounts Receivable [Member] | |||
Concentration Risk [Line Items] | |||
Bad debt expense | $ 15,465 |
ACCOUNTS RECEIVABLE AND CUSTO_4
ACCOUNTS RECEIVABLE AND CUSTOMER DEPOSITS - Schedule of Accounts Receivable and Customer Deposits (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
CUSTOMER DEPOSITS | ||
Accounts receivable | $ 354,790 | $ 196,204 |
Less: Allowance for doubtful accounts | (27,000) | (111,000) |
Total | $ 327,790 | $ 85,204 |
ACCOUNTS RECEIVABLE AND CUSTO_5
ACCOUNTS RECEIVABLE AND CUSTOMER DEPOSITS - Customer Deposit Liability (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Changes in deferred revenue and customer deposit liability | ||
Balance, beginning of year | $ 562,803 | $ 308,111 |
Additional deposits received | 4,316,761 | 2,252,416 |
Less: Deposits recognized as revenue | (1,997,724) | |
Less: Deposits recognized as revenue | (4,206,433) | |
Less: Refunds to customers | (155,200) | |
Balance, end of year | $ 517,931 | $ 562,803 |
NOTES RECEIVABLE (Details)
NOTES RECEIVABLE (Details) - USD ($) | Dec. 01, 2019 | Jun. 06, 2018 | Dec. 31, 2020 | Dec. 31, 2019 | May 30, 2019 | Mar. 31, 2019 | Jan. 19, 2019 | Jan. 03, 2019 | Dec. 13, 2018 |
NOTES RECEIVABLE | |||||||||
Bad debt expense | $ 30,000 | $ 140,465 | $ 103,182 | ||||||
Less: Current portion | $ (350,000) | (375,000) | |||||||
Long-term portion | $ 93,333 | ||||||||
CCR Note | |||||||||
NOTES RECEIVABLE | |||||||||
Loan amount | $ 375,000 | ||||||||
Interest rate, percentage | 18.00% | 12.00% | |||||||
Aggregate principal amount | $ 375,000 | ||||||||
Amount outstanding | $ 375,000 | ||||||||
Proceeds from loan origination fee | 15,000 | ||||||||
BB Note | |||||||||
NOTES RECEIVABLE | |||||||||
Interest rate, percentage | 11.00% | ||||||||
Aggregate principal amount | $ 100,000 | ||||||||
BRB Realty [Member] | |||||||||
NOTES RECEIVABLE | |||||||||
Interest rate, percentage | 15.00% | 13.00% | 13.00% | ||||||
Aggregate principal amount | $ 250,000 | $ 50,000 | |||||||
Debt instrument, decrease, forgiven amount | $ 30,000 | ||||||||
Origination fee for loan | $ 5,000 | ||||||||
CCR Note | |||||||||
NOTES RECEIVABLE | |||||||||
Payment of interest and principal | $ 200,000 |
NOTES RECEIVABLE - Schedule of
NOTES RECEIVABLE - Schedule of Notes Receivable (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes receivable | $ 350,000 | $ 468,333 |
Less: Current portion | (350,000) | (375,000) |
Long-term portion | 93,333 | |
Allowance for doubtful accounts | (125,000) | |
Unamortized loan origination fee | (6,667) | |
CCR Note | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes receivable | 375,000 | 375,000 |
BB Note | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes receivable | 100,000 | 100,000 |
Total Principal [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Notes receivable | $ 475,000 | $ 475,000 |
INVENTORIES, NET (Details)
INVENTORIES, NET (Details) | Dec. 31, 2020USD ($) |
INVENTORIES, NET | |
Raw materials | $ 8,137 |
Work-in-progress and finished goods | 363,662 |
Total inventories | $ 371,799 |
PREPAIDS AND OTHER CURRENT AS_3
PREPAIDS AND OTHER CURRENT ASSETS (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
PREPAIDS AND OTHER CURRENT ASSETS | ||
Prepaid insurance | $ 73,827 | $ 74,026 |
Prepaid product for resale | 320,849 | 292,306 |
Contract asset | 182,247 | |
Other | 167,473 | 180,638 |
Total | $ 744,396 | $ 546,970 |
PROPERTY AND EQUIPMENT, NET - D
PROPERTY AND EQUIPMENT, NET - Depreciation Expense (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
PROPERTY AND EQUIPMENT, NET | ||
Depreciation expense | $ 149,836 | $ 115,696 |
PROPERTY AND EQUIPMENT, NET - S
PROPERTY AND EQUIPMENT, NET - Schedule of Property and Equipment (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
PROPERTY AND EQUIPMENT, NET | ||
Furniture, fixtures and equipment | $ 564,334 | $ 331,467 |
Software | 120,111 | 120,111 |
Biological assets | 13,000 | |
Land | 800,000 | |
Buildings | 508,104 | |
Total | 697,445 | 1,759,682 |
Less: Accumulated depreciation | (242,223) | (252,355) |
Total, Net | $ 455,222 | $ 1,507,327 |
INTANGIBLE ASSETS AND GOODWIL_2
INTANGIBLE ASSETS AND GOODWILL - Schedule of Intangible Assets (Details) | 12 Months Ended |
Dec. 31, 2020USD ($) | |
INTANGIBLE ASSETS | |
Intangible Assets, net | $ 984,375 |
Tradename | |
INTANGIBLE ASSETS | |
Intangible Assets, Gross | 1,050,000 |
Accumulated Amortization | 65,625 |
Intangible Assets, net | $ 984,375 |
Estimated Life (in years) | 10 years |
INTANGIBLE ASSETS AND GOODWIL_3
INTANGIBLE ASSETS AND GOODWILL - Estimated Amortization Expense (Details) | Dec. 31, 2020USD ($) |
Estimated amortization expense | |
2021 | $ 105,000 |
2022 | 105,000 |
2023 | 105,000 |
2024 | 105,000 |
2025 | 105,000 |
Thereafter | 459,375 |
Intangible Assets, net | $ 984,375 |
INTANGIBLE ASSETS AND GOODWIL_4
INTANGIBLE ASSETS AND GOODWILL - Amortization Expense (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
INTANGIBLE ASSETS AND GOODWILL | ||
Amortization expense | $ 65,625 | $ 0 |
INTANGIBLE ASSETS AND GOODWIL_5
INTANGIBLE ASSETS AND GOODWILL - Goodwill (Details) | 12 Months Ended |
Dec. 31, 2020USD ($) | |
INTANGIBLE ASSETS AND GOODWILL | |
Goodwill | $ 2,484,200 |
Impairment of goodwill | $ 0 |
LEASES (Details)
LEASES (Details) | May 13, 2020USD ($)ft²item | Dec. 31, 2020USD ($) | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
OPERATING LEASE RIGHT-OF-USE ASSET / OPERATING LEASE LIABILITY | |||||
Right-of-use asset | $ 1,836,455 | ||||
Lease liability | $ 1,870,080 | ||||
Lease, Greenhouse in Boulder, CO | |||||
OPERATING LEASE RIGHT-OF-USE ASSET / OPERATING LEASE LIABILITY | |||||
Leased space (in sq ft) | ft² | 17,000 | ||||
Initial term of lease (in years) | 5 years | ||||
Number of options to renew lease | item | 2 | ||||
Lease renewal term (in years) | 5 years | ||||
Monthly lease payments | $ 30,000 | ||||
Percentage of annual escalation | 1.50% | ||||
Incremental borrowing rate | 22.80% | 20.00% | |||
Increase in right-of-use asset | $ 246,250 | ||||
Increase in operating lease liability | 246,250 | ||||
Discount rate | 20.00% | ||||
Borrowing term | 15 years | ||||
Right-of-use asset | $ 1,877,423 | 1,836,455 | |||
Lease liability | $ 1,877,423 | $ 1,870,080 | |||
Lease, Greenhouse in Boulder, CO | Forecast | |||||
OPERATING LEASE RIGHT-OF-USE ASSET / OPERATING LEASE LIABILITY | |||||
Percentage of annual escalation | 3.00% | 3.00% |
LEASES - Future Remaining Minim
LEASES - Future Remaining Minimum Lease Payments (Details) | Dec. 31, 2020USD ($) |
Future remaining minimum lease payments | |
2022 | $ 370,800 |
2023 | 381,924 |
2024 | 387,653 |
2025 | 393,468 |
2025 | 399,370 |
Thereafter | 4,048,779 |
Total | 5,981,994 |
Less: Present value adjustment | (4,111,914) |
Operating lease liability | $ 1,870,080 |
ACCOUNTS PAYABLE AND ACCRUED _3
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | ||
Accounts payable | $ 1,194,659 | $ 879,347 |
Accrued payroll, taxes and vacation | 202,339 | 305,259 |
Other | 116,763 | 36,589 |
Total | $ 1,513,761 | $ 1,221,195 |
ACCRUED STOCK PAYABLE (Details)
ACCRUED STOCK PAYABLE (Details) - USD ($) | Feb. 18, 2020 | Dec. 31, 2020 | Jun. 30, 2020 | Dec. 31, 2020 |
ACCRUED STOCK PAYABLE | ||||
Balance at beginning of the period, Shares | 42,736 | |||
Balance at end of the period, Shares | 359,415 | 359,415 | ||
Warrant cashless exercises, Shares | 259,415 | |||
Common Stock awards | ||||
ACCRUED STOCK PAYABLE | ||||
Consultant stock award, Amount | $ 60,900 | |||
Consultant stock award, Shares | 100,000 | |||
Warrant cashless exercises, Amount | $ 33,961 | |||
Stock price on date of grant (in dollars per share) | $ 0.61 | |||
Consultant stock award, shares issued | 0 | 0 | ||
Warrant cashless exercises, Shares | 259,415 | |||
Number of common shares issued | 5,485,814 | |||
Common stock subscription, shares issued | 5,485,814 | 5,485,814 | ||
Common Stock awards | Common Stock | ||||
ACCRUED STOCK PAYABLE | ||||
Balance at beginning of the period, Amount | $ 80,657 | |||
Balance at beginning of the period, Shares | 34,469 | |||
Employee stock award - accrual, Amount | $ 19,343 | $ 19,343 | ||
Employee stock award - accrual, Shares | 8,267 | |||
Consultant stock award, Amount | $ 60,900 | |||
Consultant stock award, Shares | 100,000 | |||
Investor stock award - accrual, Amount | $ 2,185,000 | |||
Investor stock award - accrual, Shares | 5,485,814 | |||
Warrant cashless exercises, Amount | $ 33,961 | |||
Stock issued, Amount | $ (2,285,000) | |||
Stock issued, Shares | (5,528,550) | |||
Balance at end of the period, Amount | $ 94,861 | $ 94,861 | ||
Balance at end of the period, Shares | 359,415 | 359,415 | ||
Warrant cashless exercises, Shares | 259,415 | |||
2020 A warrants | ||||
ACCRUED STOCK PAYABLE | ||||
Cashless exercise of warrants (in shares) | 282,213 |
NOTES PAYABLE - Schedule of Not
NOTES PAYABLE - Schedule of Notes Payable (Details) - USD ($) | Dec. 31, 2020 | Dec. 23, 2020 | Dec. 31, 2019 | Sep. 30, 2019 |
NOTES PAYABLE | ||||
Unamortized debt discount | $ (251,456) | $ (225,649) | ||
Total | 2,888,544 | 2,330,351 | ||
Less: Current portion | (2,330,351) | |||
Long-term portion | 2,888,544 | |||
10% Notes | ||||
NOTES PAYABLE | ||||
Note of Debt Carrying Amount | $ 2,600,000 | |||
Interest rate (as a percent) | 10.00% | 10.00% | ||
12% Notes 2019 [Member] | ||||
NOTES PAYABLE | ||||
Note of Debt Carrying Amount | 1,506,000 | |||
Interest rate (as a percent) | 12.00% | |||
SBI Note [Member] | ||||
NOTES PAYABLE | ||||
Note of Debt Carrying Amount | 750,000 | |||
15% Notes [Member] | ||||
NOTES PAYABLE | ||||
Note of Debt Carrying Amount | $ 200,000 | $ 200,000 | ||
Interest rate (as a percent) | 15.00% | 15.00% | ||
Related party note payable | ||||
NOTES PAYABLE | ||||
Note of Debt Carrying Amount | $ 340,000 | $ 340,000 | $ 100,000 |
NOTES PAYABLE - Aggregate Futur
NOTES PAYABLE - Aggregate Future Contractual Maturities of Long-Term Debt (Details) | Dec. 31, 2020USD ($) |
Aggregate maturities of long-term debt | |
2022 | $ 200,000 |
2023 | 2,940,000 |
Total | $ 3,140,000 |
NOTES PAYABLE - 2020 10% Notes
NOTES PAYABLE - 2020 10% Notes (Details) - USD ($) | 2 Months Ended | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 23, 2020 | |
Debt Instrument [Line Items] | |||||
Exercise price of warrants | $ 1 | $ 1 | |||
Additional paid-in capital | $ 75,891,414 | $ 61,468,034 | |||
Beneficial conversion feature | $ 233,500 | ||||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | |||
10% Warrants | |||||
Debt Instrument [Line Items] | |||||
Percentage of aggregate principal amount coverage | 20.00% | ||||
Exercise price of warrants | $ 0.56 | ||||
Interest rate (as a percent) | 10.00% | 10.00% | |||
10% Notes | |||||
Debt Instrument [Line Items] | |||||
Aggregate principal amount | $ 2,940,000 | ||||
Stock issued | 1,050,011 | ||||
Interest rate (as a percent) | 10.00% | 10.00% | |||
Amortization of debt discount | $ 2,944 | $ 0 | |||
Beneficial conversion feature | 0 | ||||
10% Investors | |||||
Debt Instrument [Line Items] | |||||
Proceeds from debt | $ 1,940,000 | ||||
Interest rate (as a percent) | 10.00% | ||||
Conversion price trigger (as a percent) | 80.00% | ||||
10% Investors | Minimum | |||||
Debt Instrument [Line Items] | |||||
Conversion price (in dollars per share) | $ 0.65 | ||||
10% Investors | Maximum | |||||
Debt Instrument [Line Items] | |||||
Percentage of aggregate principal amount coverage | 50.00% | ||||
Conversion price (in dollars per share) | $ 1 | ||||
15% Notes [Member] | |||||
Debt Instrument [Line Items] | |||||
Aggregate principal amount | $ 2,031,000 | $ 2,031,000 | 300,000 | ||
Proceeds from debt | $ 525,000 | $ 525,000 | $ 300,000 | ||
Aggregate indebtedness amount | $ 1,000,000 | ||||
Interest rate (as a percent) | 15.00% | 15.00% | |||
Additional paid-in capital | $ 3,653 | ||||
Amortization of debt discount | 279,676 | $ 2,883 | |||
Debt discount | 10% Warrants | |||||
Debt Instrument [Line Items] | |||||
Additional paid-in capital | 254,400 | ||||
Extinguishment of debt | 10% Notes | |||||
Debt Instrument [Line Items] | |||||
Additional paid-in capital | 131,000 | ||||
Extinguishment of debt | 15% Notes [Member] | |||||
Debt Instrument [Line Items] | |||||
Additional paid-in capital | $ 668,335 |
NOTES PAYABLE - SBI Debt (Detai
NOTES PAYABLE - SBI Debt (Details) - USD ($) | Feb. 18, 2020 | Dec. 30, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | May 29, 2020 | Nov. 15, 2019 | Nov. 14, 2019 | Jul. 31, 2019 |
NOTES PAYABLE | ||||||||
Repayment of notes | $ 2,106,000 | $ 5,898,000 | ||||||
Outstanding principal | 2,888,544 | 2,330,351 | ||||||
Share price (in dollars per share) | $ 0.40 | |||||||
Debt extinguishment | (1,638,009) | (377,300) | ||||||
Additional paid-in capital | 75,891,414 | $ 61,468,034 | ||||||
Debt principal amount converted | $ 957,056 | |||||||
SBI Note [Member] | ||||||||
NOTES PAYABLE | ||||||||
Notes issued | $ 905,000 | $ 855,000 | $ 855,000 | |||||
Interest rate (as a percent) | 10.00% | |||||||
Repayment of notes | $ 195,911 | |||||||
Accrued interest | 40,911 | |||||||
Outstanding principal | $ 155,000 | |||||||
Convertible Note | ||||||||
NOTES PAYABLE | ||||||||
Notes issued | $ 934,000 | |||||||
Interest rate (as a percent) | 10.00% | |||||||
Accrued interest | $ 23,000 | |||||||
Conversion price trigger (as a percent) | 80.00% | |||||||
Conversion price (in dollars per share) | $ 0.49 | |||||||
Debt extinguishment | $ 184,000 | |||||||
Conversion price trigger (in dollars per share) | $ 0.61 | |||||||
Debt principal amount converted | $ 934,000 | |||||||
Shares issued upon conversion | 2,215,892 | |||||||
Convertible Note | Minimum | ||||||||
NOTES PAYABLE | ||||||||
Conversion price (in dollars per share) | $ 0.45 | $ 0.40 | ||||||
Extinguishment of debt | Convertible Note | ||||||||
NOTES PAYABLE | ||||||||
Additional paid-in capital | $ 233,500 |
NOTES PAYABLE - 15% Notes (Deta
NOTES PAYABLE - 15% Notes (Details) | 1 Months Ended | 2 Months Ended | 3 Months Ended | 12 Months Ended | |||||
Dec. 31, 2020USD ($)shares | Mar. 31, 2020USD ($)EquityInstruments$ / sharesshares | Mar. 31, 2021USD ($) | Mar. 31, 2020USD ($)$ / sharesshares | Dec. 31, 2020USD ($)shares | Dec. 31, 2019USD ($) | Dec. 23, 2020 | Jan. 08, 2020USD ($) | Sep. 30, 2019 | |
NOTES PAYABLE | |||||||||
Repayment of notes | $ 2,106,000 | $ 5,898,000 | |||||||
Exercise price of warrants | $ / shares | $ 1 | $ 1 | |||||||
Number of shares issued by each warrant | shares | 1 | 1 | |||||||
Debt principal amount converted | 957,056 | ||||||||
Additional paid-in capital | $ 75,891,414 | 75,891,414 | 61,468,034 | ||||||
Deemed dividends | $ 830,494 | 2,341,000 | |||||||
Warrant cashless exercises, Shares | shares | 259,415 | ||||||||
Mortgage Loan | |||||||||
NOTES PAYABLE | |||||||||
Aggregate principal amount | $ 975,000 | ||||||||
15% Notes [Member] | |||||||||
NOTES PAYABLE | |||||||||
Aggregate principal amount | $ 2,031,000 | $ 2,031,000 | $ 300,000 | ||||||
Interest rate (as a percent) | 15.00% | 15.00% | 15.00% | ||||||
Face amount of debt exchanged | $ 1,000,000 | ||||||||
Repayment of notes | $ 2,100,000 | $ 200,000 | |||||||
Proceeds from debt | 525,000 | 525,000 | 300,000 | ||||||
Repayment limit for full payment | $ 5,000,000 | ||||||||
Number of warrants issued | EquityInstruments | 3 | ||||||||
Debt principal amount converted | $ 250,000 | ||||||||
Number of warrants issued upon conversion | shares | 6,993,000 | ||||||||
Additional paid-in capital | 3,653 | 3,653 | |||||||
Amortization of debt discount | 279,676 | 2,883 | |||||||
15% Notes [Member] | Extinguishment of debt | |||||||||
NOTES PAYABLE | |||||||||
Additional paid-in capital | 668,335 | 668,335 | |||||||
10% Notes | |||||||||
NOTES PAYABLE | |||||||||
Aggregate principal amount | $ 2,940,000 | $ 2,940,000 | |||||||
Interest rate (as a percent) | 10.00% | 10.00% | 10.00% | ||||||
Amortization of debt discount | $ 2,944 | 0 | |||||||
10% Notes | Extinguishment of debt | |||||||||
NOTES PAYABLE | |||||||||
Additional paid-in capital | $ 131,000 | 131,000 | |||||||
12% Notes 2019 [Member] | |||||||||
NOTES PAYABLE | |||||||||
Aggregate principal amount | $ 1,506,000 | $ 1,506,000 | |||||||
Interest rate (as a percent) | 12.00% | ||||||||
Amortization of debt discount | $ 12,635 | $ 23,432 | |||||||
Warrant A 2020 | |||||||||
NOTES PAYABLE | |||||||||
Number of warrants issued upon conversion | shares | 250,000 | ||||||||
Warrants exercised | shares | 1,131,000 | 1,131,000 | |||||||
Shares issued in cashless exercise of warrants | shares | 282,813 | ||||||||
Warrant B 2020 | |||||||||
NOTES PAYABLE | |||||||||
Number of warrants issued upon conversion | shares | 250,000 | ||||||||
Warrant C 2020 | |||||||||
NOTES PAYABLE | |||||||||
Number of warrants issued upon conversion | shares | 250,000 | ||||||||
15% Warrants | |||||||||
NOTES PAYABLE | |||||||||
Interest rate (as a percent) | 15.00% | 15.00% | 15.00% | 15.00% | 15.00% | ||||
Exercise price of warrants | $ / shares | $ 0.45 | $ 0.45 | |||||||
15% Warrants | Debt discount | |||||||||
NOTES PAYABLE | |||||||||
Additional paid-in capital | $ 333,056 | $ 333,056 | |||||||
Common Stock awards | |||||||||
NOTES PAYABLE | |||||||||
Warrant cashless exercises, Amount | $ 33,961 | ||||||||
Warrant cashless exercises, Shares | shares | 259,415 |
NOTES PAYABLE - 2019 12% Notes
NOTES PAYABLE - 2019 12% Notes (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |||
Feb. 29, 2020 | Sep. 30, 2019 | Apr. 30, 2018 | Dec. 31, 2020 | Dec. 31, 2019 | |
NOTES PAYABLE (Details) - 2019 12% Notes [Line Items] | |||||
Gain (loss) on extinguishment of debt | $ (1,638,009) | $ (377,300) | |||
12% Notes 2019 [Member] | |||||
NOTES PAYABLE (Details) - 2019 12% Notes [Line Items] | |||||
Debt instrument, interest rate, percentage | 12.00% | 12.00% | 12.00% | ||
Conversion price trigger (in dollars per share) | $ 1.30 | ||||
Minimum interest payment period | 1 year 1 month 6 days | ||||
Notes issued | $ 1,506,000 | $ 1,506,000 | |||
Common stock subject to purchase (in shares) | 1,506,000 | ||||
Proceeds from issuance of warrants | $ 400,000 | ||||
Gain on restructuring of debt | 1,106,000 | ||||
Gain (loss) on extinguishment of debt | 298,500 | ||||
Warrants recorded as a debt discount and additional paid-in capital | $ 93,500 | ||||
Amortization of debt discount | 12,635 | $ 23,432 | |||
15% Notes [Member] | |||||
NOTES PAYABLE (Details) - 2019 12% Notes [Line Items] | |||||
Debt instrument, interest rate, percentage | 15.00% | ||||
Amortization of debt discount | 279,676 | 2,883 | |||
8.5% April 2018 [Member] | |||||
NOTES PAYABLE (Details) - 2019 12% Notes [Line Items] | |||||
Debt instrument, interest rate, percentage | 8.50% | ||||
Proceeds from issuance of warrants | $ 7,500,000 | ||||
Warrants recorded as a debt discount and additional paid-in capital | $ 5,366,000 | ||||
Amortization of debt discount | $ 0 | $ 1,575,094 |
NOTES PAYABLE - 8.5% Notes (Det
NOTES PAYABLE - 8.5% Notes (Details) $ / shares in Units, shares in Millions | Jun. 06, 2019USD ($) | Sep. 30, 2019USD ($) | Apr. 30, 2018USD ($)D$ / sharesshares | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Apr. 30, 2020 | Mar. 31, 2020$ / shares |
NOTES PAYABLE (Details) - 8.5% Notes [Line Items] | |||||||
Debt converted to equity | $ 957,056 | ||||||
Exercise price of warrants | $ / shares | $ 1 | ||||||
SBI Note [Member] | |||||||
NOTES PAYABLE (Details) - 8.5% Notes [Line Items] | |||||||
Interest rate (as a percent) | 10.00% | ||||||
8.5% April 2018 [Member] | |||||||
NOTES PAYABLE (Details) - 8.5% Notes [Line Items] | |||||||
Convertible debt | $ 5,700,000 | $ 7,500,000 | |||||
Debt converted to equity | $ 1,100,000 | ||||||
Proceeds from Issuance of Warrants | $ 7,500,000 | ||||||
Number of warrants issued upon conversion | shares | 6 | ||||||
Exercise price of warrants | $ / shares | $ 2.35 | ||||||
Warrant conversion rate (as a percent) | 18.00% | 80.00% | |||||
Increase (decrease) in notes payable, current | $ 0.01 | ||||||
Threshold, consecutive trading days | D | 15 | ||||||
Warrants recorded as a debt discount and additional paid-in capital | $ 5,366,000 | ||||||
Amortization of debt discount | $ 0 | $ 1,575,094 | |||||
Interest rate (as a percent) | 8.50% | 8.50% | |||||
8.5% April 2018 [Member] | WarrantCallThresholdStockPrice [Member] | |||||||
NOTES PAYABLE (Details) - 8.5% Notes [Line Items] | |||||||
Exercise price of warrants | $ / shares | $ 8 | ||||||
12% Notes 2019 [Member] | |||||||
NOTES PAYABLE (Details) - 8.5% Notes [Line Items] | |||||||
Proceeds from Issuance of Warrants | $ 400,000 | ||||||
Warrants recorded as a debt discount and additional paid-in capital | $ 93,500 | ||||||
Amortization of debt discount | $ 12,635 | $ 23,432 | |||||
Interest rate (as a percent) | 12.00% |
NOTES PAYABLE - Assumptions Use
NOTES PAYABLE - Assumptions Used to Calculate Fair Value of Warrants (Details) | Jan. 08, 2020 | Dec. 31, 2020$ / sharesY | Mar. 31, 2020$ / shares | Sep. 30, 2019Y$ / shares | Apr. 30, 2018Y$ / sharesitem |
10% Warrants | Current stock price | |||||
NOTES PAYABLE | |||||
Measurement input used to calculate fair value of warrants | 0.53 | ||||
10% Warrants | Exercise price | |||||
NOTES PAYABLE | |||||
Measurement input used to calculate fair value of warrants | 0.56 | ||||
10% Warrants | Risk-free interest rate | |||||
NOTES PAYABLE | |||||
Measurement input used to calculate fair value of warrants | 0.38 | ||||
10% Warrants | Expected term (in years) | |||||
NOTES PAYABLE | |||||
Measurement input used to calculate fair value of warrants | Y | 5 | ||||
10% Warrants | Expected volatility | |||||
NOTES PAYABLE | |||||
Measurement input used to calculate fair value of warrants | 115 | ||||
15% Warrants | Current stock price | Minimum | |||||
NOTES PAYABLE | |||||
Measurement input used to calculate fair value of warrants | 0.45 | ||||
15% Warrants | Current stock price | Maximum | |||||
NOTES PAYABLE | |||||
Measurement input used to calculate fair value of warrants | 0.67 | ||||
15% Warrants | Exercise price | |||||
NOTES PAYABLE | |||||
Measurement input used to calculate fair value of warrants | 0.45 | ||||
15% Warrants | Risk-free interest rate | Minimum | |||||
NOTES PAYABLE | |||||
Measurement input used to calculate fair value of warrants | 0.68 | ||||
15% Warrants | Risk-free interest rate | Maximum | |||||
NOTES PAYABLE | |||||
Measurement input used to calculate fair value of warrants | 1.62 | ||||
15% Warrants | Expected term (in years) | Minimum | |||||
NOTES PAYABLE | |||||
Measurement input used to calculate fair value of warrants | 0.83 | ||||
15% Warrants | Expected term (in years) | Maximum | |||||
NOTES PAYABLE | |||||
Measurement input used to calculate fair value of warrants | 3.06 | ||||
15% Warrants | Expected volatility | Minimum | |||||
NOTES PAYABLE | |||||
Measurement input used to calculate fair value of warrants | 112 | ||||
15% Warrants | Expected volatility | Maximum | |||||
NOTES PAYABLE | |||||
Measurement input used to calculate fair value of warrants | 119 | ||||
12% Warrants | Current stock price | Minimum | |||||
NOTES PAYABLE | |||||
Measurement input used to calculate fair value of warrants | 0.82 | ||||
12% Warrants | Current stock price | Maximum | |||||
NOTES PAYABLE | |||||
Measurement input used to calculate fair value of warrants | 0.92 | ||||
12% Warrants | Exercise price | |||||
NOTES PAYABLE | |||||
Measurement input used to calculate fair value of warrants | 1.30 | ||||
12% Warrants | Risk-free interest rate | Minimum | |||||
NOTES PAYABLE | |||||
Measurement input used to calculate fair value of warrants | 1.63 | ||||
12% Warrants | Risk-free interest rate | Maximum | |||||
NOTES PAYABLE | |||||
Measurement input used to calculate fair value of warrants | 1.68 | ||||
12% Warrants | Expected term (in years) | |||||
NOTES PAYABLE | |||||
Measurement input used to calculate fair value of warrants | Y | 1.10 | ||||
12% Warrants | Expected volatility | |||||
NOTES PAYABLE | |||||
Measurement input used to calculate fair value of warrants | 124 | ||||
8.5% Warrants | Current stock price | |||||
NOTES PAYABLE | |||||
Measurement input used to calculate fair value of warrants | 4.18 | ||||
8.5% Warrants | Exercise price | |||||
NOTES PAYABLE | |||||
Measurement input used to calculate fair value of warrants | 2.35 | ||||
8.5% Warrants | Risk-free interest rate | |||||
NOTES PAYABLE | |||||
Measurement input used to calculate fair value of warrants | 2.46 | ||||
8.5% Warrants | Expected term (in years) | |||||
NOTES PAYABLE | |||||
Measurement input used to calculate fair value of warrants | Y | 2 | ||||
8.5% Warrants | Expected volatility | |||||
NOTES PAYABLE | |||||
Measurement input used to calculate fair value of warrants | 134 | ||||
8.5% Warrants | Number of iterations | |||||
NOTES PAYABLE | |||||
Measurement input used to calculate fair value of warrants | item | 5 | ||||
Mortgage Loan | |||||
NOTES PAYABLE | |||||
Spread on variable rate | 10.00% | ||||
Mortgage Loan | Prime rate | |||||
NOTES PAYABLE | |||||
Spread on variable rate | 5.25% |
WARRANT DERIVATIVE LIABILITY -
WARRANT DERIVATIVE LIABILITY - Summary (Details) | May 31, 2019USD ($)$ / sharesshares | May 31, 2020$ / shares | Feb. 29, 2020USD ($)itemshares | Dec. 31, 2019$ / sharesshares | Dec. 31, 2020USD ($)$ / sharesshares | Dec. 31, 2019USD ($)shares | Mar. 31, 2020$ / shares |
WARRANT DERIVATIVE LIABILITY | |||||||
Common stock, shares issued | 39,497,480 | 60,813,673 | 39,497,480 | ||||
Exercise price of warrants | $ / shares | $ 1 | ||||||
Common stock, other shares, outstanding | 1,645,807 | ||||||
Gain (loss) on warrant derivative liability | $ | $ 735,796 | $ (2,204,172) | |||||
2019 Warrants [Member} | |||||||
WARRANT DERIVATIVE LIABILITY | |||||||
Proceeds from issuance of common stock and warrants | $ | $ 3,000,000 | $ 90,000 | |||||
Shares issued in cashless exercise of warrants | 2,443,641 | ||||||
Common stock, shares issued | 3,000,000 | ||||||
Number of warrants issued | 3,000,000 | ||||||
Share price | $ / shares | $ 1 | ||||||
Exercise price of warrants | $ / shares | $ 1.30 | ||||||
Warrant exercise price, price after decrease | $ / shares | $ 0.45 | $ 0.45 | $ 0.40 | ||||
Common stock, other shares, outstanding | 8,666,666 | 9,591,614 | 8,666,666 | ||||
Warrants exercised | 200,000 | 7,945,807 | |||||
Adjustment to derivative liability | $ | $ 82,241 | $ 3,241,188 | |||||
Gain (loss) on warrant derivative liability | $ | $ 735,796 | $ (2,204,172) | |||||
Number of warrant holders | item | 1 |
WARRANT DERIVATIVE LIABILITY _2
WARRANT DERIVATIVE LIABILITY - Assumptions Used to Calculate Fair Value of 2019 Warrants (Details) - 2019 Warrants [Member} | Dec. 31, 2020USD ($)Y$ / shares | Dec. 31, 2019$ / sharesUSD ($)Y | May 31, 2019$ / sharesYUSD ($) |
Number of shares underlying the warrants | |||
WARRANT DERIVATIVE LIABILITY | |||
Measurement input used to calculate fair value of warrants | $ | 1,645,807 | 8,666,667 | 3,000,000 |
Current stock price | |||
WARRANT DERIVATIVE LIABILITY | |||
Measurement input used to calculate fair value of warrants | 0.48 | 0.63 | 0.95 |
Exercise price | |||
WARRANT DERIVATIVE LIABILITY | |||
Measurement input used to calculate fair value of warrants | 0.40 | 0.45 | 1.30 |
Expected volatility | |||
WARRANT DERIVATIVE LIABILITY | |||
Measurement input used to calculate fair value of warrants | 108 | 124 | 133 |
Risk-free interest rate | |||
WARRANT DERIVATIVE LIABILITY | |||
Measurement input used to calculate fair value of warrants | 0.36 | 1.69 | 1.93 |
Expected term (in years) | |||
WARRANT DERIVATIVE LIABILITY | |||
Measurement input used to calculate fair value of warrants | Y | 3.41 | 4.41 | 5 |
WARRANT DERIVATIVE LIABILITY _3
WARRANT DERIVATIVE LIABILITY - Schedule of Level 3 Financial Liabilities (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Changes in the fair value of the warrant derivative liability | ||
Beginning balance | $ 4,620,593 | |
Recognition of warrant derivative liability on issuance dates | $ 2,416,421 | |
Warrant exercise | (3,323,429) | |
Change in fair value of warrants derivative liability | (735,796) | 2,204,172 |
Ending balance | $ 561,368 | $ 4,620,593 |
DEFERRED TAXES (Details)
DEFERRED TAXES (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
DEFERRED TAXES | ||
Deferred tax asset net | $ 0 | $ 0 |
Net operating loss carryforwards, domestic | 34,000,000 | $ 29,000,000 |
Net operating loss carryforward amount, subject to expiration | 14,000,000 | |
Net operating loss carryforward amount, not subject to expiration | $ 20,000,000 |
DEFERRED TAXES - Schedule of De
DEFERRED TAXES - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
DEFERRED TAXES | ||
Net operating loss carryforwards | $ 8,438,428 | $ 7,116,767 |
Equity-based instruments | 2,883,318 | 2,645,225 |
Long-lived assets and other | 203,274 | 491,730 |
Capital loss carryforward | 119,915 | 120,318 |
Deferred tax asset valuation allowance | (11,644,935) | (10,374,040) |
Total | $ 0 | $ 0 |
DEFERRED TAXES - Schedule of In
DEFERRED TAXES - Schedule of Income Tax Reconciliation (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
DEFERRED TAXES | ||
Income tax benefit at statutory rate | $ (1,607,608) | $ (3,251,597) |
State income tax benefit, net of Federal benefit | (178,226) | (566,351) |
Equity-based instruments | 103,372 | 146,446 |
Fair market value adjustment/loss on extinguishment derivative liabilities | (154,517) | 636,532 |
Amortization of debt discount | 412,823 | 498,018 |
Other | 142,124 | (59,749) |
Valuation allowance | $ 1,282,032 | $ 2,596,701 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) | Dec. 14, 2020USD ($)$ / sharesshares | May 29, 2020USD ($)$ / shares | May 31, 2019USD ($)$ / sharesshares | Dec. 31, 2020USD ($)$ / sharesshares | Dec. 31, 2019USD ($)$ / sharesshares | Oct. 04, 2020USD ($) | Jun. 01, 2020USD ($) | May 31, 2020$ / shares | Mar. 31, 2020$ / shares |
STOCKHOLDERS' EQUITY | |||||||||
Value of shares issued during the period | $ 3,000,000 | $ 506,614 | |||||||
Exercise price of warrants | $ / shares | $ 1 | ||||||||
Warrants | shares | 16,531,825 | 17,439,881 | |||||||
Deemed dividends | $ 830,494 | $ 2,341,000 | |||||||
2020 Capital Raise | |||||||||
STOCKHOLDERS' EQUITY | |||||||||
Conversion ratio | 0.75 | ||||||||
Exercise price of warrants | $ / shares | $ 0.4917 | $ 0.5565 | |||||||
Warrants and rights outstanding, term | 5 years | ||||||||
Debt issuance costs, net | $ 2,173,074 | ||||||||
Deemed dividends | $ 732,494 | ||||||||
Proceeds from sale of securities | $ 3,000,000 | ||||||||
Shares of common stock sold | shares | 7,532,010 | ||||||||
Sale of stock, purchase price per share | $ / shares | $ 0.3983 | $ 0.5565 | |||||||
Warrants to purchase | shares | 1,631,000 | 5,649,007 | |||||||
Maximum percentage of common stock or voting power | 20.00% | ||||||||
Outstanding balances of existing holders for which the Company will seek an extended maturity date | $ 2,331,000 | $ 2,331,000 | |||||||
Amount of notes with extended maturity date | $ 600,000 | ||||||||
Exercise price, as a percentage of common stock price | 100.00% | ||||||||
2020 Capital Raise | Minimum | |||||||||
STOCKHOLDERS' EQUITY | |||||||||
Proceeds from sale of securities | $ 2,185,000 | ||||||||
Exercise price, as a percentage of common stock price | 0.45% | ||||||||
2020 Capital Raise | Maximum | |||||||||
STOCKHOLDERS' EQUITY | |||||||||
Proceeds from sale of securities | $ 3,000,000 | ||||||||
Exercise price, as a percentage of common stock price | 0.56% | ||||||||
2019 Capital Raise [Member] | |||||||||
STOCKHOLDERS' EQUITY | |||||||||
Value of shares issued during the period | $ 3,000,000 | ||||||||
Number of common shares issued | shares | 3,000,000 | ||||||||
Warrants to purchase | shares | 9,591,614 | 8,666,666 | |||||||
Share price | $ / shares | $ 1 | ||||||||
Exercise price of warrants | $ / shares | $ 1.30 | $ 0.40 | $ 0.45 | $ 0.45 | |||||
Warrants and rights outstanding, term | 5 years | ||||||||
Warrants | shares | 1,645,807 | ||||||||
Proceeds from sale of stock, net of issuance costs | $ 2,604,355 | ||||||||
Debt issuance costs, net | 395,645 | ||||||||
Warrant derivative liability | $ 2,416,422 | ||||||||
Warrants to purchase | shares | 3,000,000 |
STOCKHOLDERS' EQUITY - Schedule
STOCKHOLDERS' EQUITY - Schedule of Stock-Based Compensation Expense (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
STOCKHOLDERS' EQUITY (Details) Schedule of Share-Based Compensation Expense [Line Items] | ||
Stock-based compensation expense | $ 1,504,389 | $ 3,966,621 |
Employee Awards [Member] | ||
STOCKHOLDERS' EQUITY (Details) Schedule of Share-Based Compensation Expense [Line Items] | ||
Stock-based compensation expense | 1,411,442 | 3,880,938 |
Consulting Awards [Member] | ||
STOCKHOLDERS' EQUITY (Details) Schedule of Share-Based Compensation Expense [Line Items] | ||
Stock-based compensation expense | $ 92,947 | $ 85,683 |
STOCKHOLDERS' EQUITY - Employee
STOCKHOLDERS' EQUITY - Employee Stock Options (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Apr. 30, 2018 | Dec. 31, 2020 | Dec. 31, 2019 | Oct. 29, 2014 | |
STOCKHOLDERS' EQUITY (Details) - Employee Stock Options [Line Items] | ||||
Number of shares authorized for issuance | 15,000,000 | |||
Unrecognized compensation expense | $ 21,417 | |||
Recognition period related to unvested Employee Awards | 15 months | |||
2020 Plan | ||||
STOCKHOLDERS' EQUITY (Details) - Employee Stock Options [Line Items] | ||||
Number of shares authorized for issuance | 10,000,000 | |||
Number of shares, granted | 0 | |||
Incentive Plan [Member] | ||||
STOCKHOLDERS' EQUITY (Details) - Employee Stock Options [Line Items] | ||||
Share-based compensation arrangement. Description | 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, 2020, there were 5,320,330 shares available to issue under the Incentive Plan. | |||
Number of shares authorized for issuance | 10,000,000 | |||
Number of shares available for grant, increase | 5,000,000 | 900,000 | ||
Number of shares, available to issue | 5,320,330 |
STOCKHOLDERS' EQUITY - Schedu_2
STOCKHOLDERS' EQUITY - Schedule of Stock-Based Compensation Assumptions Employee Awards (Details) - $ / shares | Aug. 06, 2019 | Dec. 31, 2020 | Dec. 31, 2019 |
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 | $ 0.31 | $ 0.55 | |
Stock price | $ 0.27 | $ 0.55 | |
Volatility | 111.00% | 119.00% | |
Risk-free interest rate | 0.16% | 1.43% | |
Employee Awards [Member] | Maximum | |||
STOCKHOLDERS' EQUITY (Details) - Schedule of Share-based Compensation Assumptions Employee Awards [Line Items] | |||
Exercise price | $ 0.67 | $ 2.37 | |
Stock price | $ 0.67 | $ 2.37 | |
Volatility | 114.00% | 130.00% | |
Risk-free interest rate | 1.53% | 2.60% | |
Consulting Awards [Member] | |||
STOCKHOLDERS' EQUITY (Details) - Schedule of Share-based Compensation Assumptions Employee Awards [Line Items] | |||
Exercise price | $ 0.61 | ||
Stock price | $ 0.61 | ||
Volatility | 101.00% | ||
Risk-free interest rate | 1.47% | ||
Expected life (years) | 1 year | ||
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 ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Aug. 06, 2019 | |
STOCKHOLDERS' EQUITY | |||
Value of shares issued during the period | $ 3,000,000 | $ 506,614 | |
Exercise price | $ 0.83 |
STOCKHOLDERS' EQUITY - Feinsod
STOCKHOLDERS' EQUITY - Feinsod Employment Agreement (Details) | Aug. 06, 2019USD ($)$ / sharesshares | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Mar. 31, 2020$ / shares |
STOCKHOLDERS' EQUITY (Details) Feinsod Employment Agreement [Line Items] | ||||
Exercise price of warrants | $ / shares | $ 1 | |||
Stock-based compensation expense | $ | $ 1,504,389 | $ 3,966,621 | ||
Feinsod Agreement 2019 [Member] | ||||
STOCKHOLDERS' EQUITY (Details) Feinsod Employment Agreement [Line Items] | ||||
Number of shares, granted | shares | 1,000,000 | |||
Exercise price of warrants | $ / shares | $ 4.51 | |||
Threshold, consecutive trading days | $ | 5 | |||
Discontinued Operation, Income (Loss) from Discontinued Operation, Net of Tax, Per Basic and Diluted Share | $ / shares | $ 0.83 | |||
Stock-based compensation expense | $ | $ 57,342 | $ 116,000 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 10 years |
STOCKHOLDERS' EQUITY - Schedu_3
STOCKHOLDERS' EQUITY - Schedule of Employee and Consulting Awards Activity (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Employee Awards [Member] | |||
Class of Warrant or Right [Line Items] | |||
Outstanding, Number of Shares | 7,266,420 | 10,883,780 | |
Outstanding, Weighted-Average Exercise Price per Share | $ 1.03 | $ 1.28 | |
Outstanding, Weighted-Average Remaining Contractual Term | 5 years 10 months 24 days | ||
Outstanding, Aggregate Intrinsic Value | $ 176,000 | ||
Granted | 2,084,520 | ||
Granted | $ 0.45 | ||
Forfeited or expired | (5,701,880) | ||
Forfeited or expired, Weighted-Average Exercise Price per Share | $ 1.29 | ||
Exercisable, Number of Shares | 5,390,600 | ||
Exercisable, Weighted-Average Exercise Price per Share | $ 1.28 | ||
Exercisable, Weighted-Average Remaining Contractual Term | 5 years 9 months 18 days | 5 years 4 months 24 days | |
Exercisable, Aggregate Intrinsic Value | $ 57,000 | $ 61,000 | |
Consulting Awards [Member] | |||
Class of Warrant or Right [Line Items] | |||
Outstanding, Number of Shares | 125,000 | ||
Outstanding, Weighted-Average Exercise Price per Share | $ 1.79 | ||
Granted | 10,000 | ||
Granted | $ 0.61 | ||
Forfeited or expired | (35,000) | ||
Forfeited or expired, Weighted-Average Exercise Price per Share | $ 3.08 | ||
Outstanding and exercisable, Number of Shares | 100,000 | ||
Outstanding and exercisable, Weighted-Average Exercise Price per Share | $ 1.22 | ||
Outstanding and exercisable, Weighted-Average Remaining Contractual Term | 2 years 2 months 12 days | ||
Exercisable, Aggregate Intrinsic Value | $ 2,390 | ||
Warrants with Debt [Member] | |||
Class of Warrant or Right [Line Items] | |||
Outstanding, Number of Shares | 8,473,214 | 5,992,214 | |
Outstanding, Weighted-Average Exercise Price per Share | $ 0.64 | $ 2.26 | |
Outstanding, Weighted-Average Remaining Contractual Term | 6 months | ||
Outstanding, Aggregate Intrinsic Value | $ 1,169,583 | ||
Granted | 7,143,011 | 2,481,000 | |
Granted | $ 0.42 | $ 0.98 | |
Exercised, Number of Shares | (1,131,000) | ||
Exercised, Weighted-Average Exercise Price per Share | $ 0.40 | ||
Forfeited or expired | (7,064,214) | ||
Forfeited or expired, Weighted-Average Exercise Price per Share | $ 0.63 | ||
Outstanding and exercisable, Number of Shares | 7,421,011 | ||
Outstanding and exercisable, Weighted-Average Exercise Price per Share | $ 0.46 | ||
Outstanding and exercisable, Weighted-Average Remaining Contractual Term | 2 years | ||
Outstanding and exercisable, Aggregate Intrinsic Value | $ 478,925 |
STOCKHOLDERS' EQUITY - Schedu_4
STOCKHOLDERS' EQUITY - Schedule of Stock-Based Compensation Assumptions Monte Carlo Simulations (Details) | Aug. 06, 2019$ / shares |
Schedule of Share-based Compensation Assumptions Monte Carlo simulations [Abstract] | |
Current stock price | $ 0.83 |
Exercise price | 0.83 |
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 Stock-Based Compensation Assumptions (Details) - $ / shares | Dec. 11, 2019 | Nov. 01, 2019 | Oct. 18, 2019 | Aug. 06, 2019 | Dec. 31, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
STOCKHOLDERS' EQUITY (Details) Schedule Of Share-based Compensation Assumptions [Line Items] | |||||||
Current stock price | $ 0.83 | ||||||
Exercise price | $ 0.83 | ||||||
Risk-free interest rate | 1.73% | ||||||
Expected volatility | 123.00% | ||||||
8.5% Warrants [Member] | |||||||
STOCKHOLDERS' EQUITY (Details) Schedule Of Share-based Compensation Assumptions [Line Items] | |||||||
Interest rate (as a percent) | 8.50% | ||||||
15% Warrants | |||||||
STOCKHOLDERS' EQUITY (Details) Schedule Of Share-based Compensation Assumptions [Line Items] | |||||||
Interest rate (as a percent) | 15.00% | 15.00% | 15.00% | ||||
Pre-Trigger [Member] | 8.5% Warrants [Member] | |||||||
STOCKHOLDERS' 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% | ||||||
Risk-free interest rate | 1.55% | 2.21% | |||||
Expected term (in years) | 4 months 9 days | 5 months 19 days | 10 months 20 days | ||||
Expected volatility | 113.00% | 114.00% | 123.00% | ||||
Pre-Trigger [Member] | 15% Warrants | |||||||
STOCKHOLDERS' EQUITY (Details) Schedule Of Share-based Compensation Assumptions [Line Items] | |||||||
Current stock price | $ 0.67 | $ 0.70 | $ 0.55 | ||||
Exercise price | $ 0.68 | $ 1 | $ 0.45 | ||||
Risk-free interest rate | 1.61% | 1.55% | |||||
Expected term (in years) | 4 years 5 months 19 days | 4 years 6 months 29 days | |||||
Expected volatility | 113.00% | 114.00% | |||||
Pre-Trigger [Member] | 15% Warrants | Minimum | |||||||
STOCKHOLDERS' EQUITY (Details) Schedule Of Share-based Compensation Assumptions [Line Items] | |||||||
Risk-free interest rate | 0.18% | ||||||
Expected term (in years) | 7 months 6 days | ||||||
Expected volatility | 88.00% | ||||||
Pre-Trigger [Member] | 15% Warrants | Maximum | |||||||
STOCKHOLDERS' EQUITY (Details) Schedule Of Share-based Compensation Assumptions [Line Items] | |||||||
Risk-free interest rate | 0.22% | ||||||
Expected term (in years) | 2 years 7 months 6 days | ||||||
Expected volatility | 116.00% | ||||||
Post-Trigger [Member] | 8.5% Warrants [Member] | |||||||
STOCKHOLDERS' 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% | ||||||
Risk-free interest rate | 1.55% | 2.21% | |||||
Expected term (in years) | 4 months 9 days | 5 months 19 days | 10 months 20 days | ||||
Expected volatility | 113.00% | 114.00% | 123.00% | ||||
Post-Trigger [Member] | 15% Warrants | |||||||
STOCKHOLDERS' EQUITY (Details) Schedule Of Share-based Compensation Assumptions [Line Items] | |||||||
Current stock price | $ 0.67 | $ 0.70 | $ 0.55 | ||||
Exercise price | $ 0.45 | $ 0.68 | $ 0.40 | ||||
Risk-free interest rate | 1.61% | 1.55% | |||||
Expected term (in years) | 4 years 5 months 19 days | 4 years 6 months 29 days | |||||
Expected volatility | 113.00% | 114.00% | |||||
Post-Trigger [Member] | 15% Warrants | Minimum | |||||||
STOCKHOLDERS' EQUITY (Details) Schedule Of Share-based Compensation Assumptions [Line Items] | |||||||
Risk-free interest rate | 0.18% | ||||||
Expected term (in years) | 7 months 6 days | ||||||
Expected volatility | 88.00% | ||||||
Post-Trigger [Member] | 15% Warrants | Maximum | |||||||
STOCKHOLDERS' EQUITY (Details) Schedule Of Share-based Compensation Assumptions [Line Items] | |||||||
Risk-free interest rate | 0.22% | ||||||
Expected term (in years) | 2 years 7 months 6 days | ||||||
Expected volatility | 116.00% |
NET LOSS PER SHARE (Details)
NET LOSS PER SHARE (Details) - shares | Dec. 31, 2020 | Dec. 31, 2019 |
NET LOSS PER SHARE | ||
Stock options | 7,366,420 | 12,833,780 |
Warrants | 16,531,825 | 17,439,881 |
Accrued stock payable | 359,415 | 42,736 |
Convertible notes | 2,261,538 | |
Possibly dilutive equity instruments | 26,519,198 | 30,316,397 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) | Dec. 23, 2020USD ($)item | Jun. 03, 2020USD ($) | Dec. 31, 2020USD ($)ft² | Jun. 01, 2020USD ($) | Dec. 31, 2019USD ($) |
RELATED PARTY TRANSACTIONS | |||||
Number of board members | item | 5 | ||||
Accrued interest earned and owed | $ 1,000 | ||||
Related party note payable | |||||
RELATED PARTY TRANSACTIONS | |||||
Aggregate amount | $ 340,000 | 340,000 | $ 100,000 | ||
10% Notes | |||||
RELATED PARTY TRANSACTIONS | |||||
Aggregate amount | $ 2,600,000 | ||||
Interest rate (as a percent) | 10.00% | 10.00% | |||
15% Notes [Member] | |||||
RELATED PARTY TRANSACTIONS | |||||
Aggregate amount | $ 200,000 | $ 200,000 | |||
Interest rate (as a percent) | 15.00% | 15.00% | |||
Consulting agreement | |||||
RELATED PARTY TRANSACTIONS | |||||
Initial monthly consulting fees paid | $ 8,333 | ||||
Aggregate amount of consulting fees paid | $ 58,333 | ||||
Subscription agreement | |||||
RELATED PARTY TRANSACTIONS | |||||
Outstanding balances of existing holders for which the Company will seek an extended maturity date | $ 2,331,000 | ||||
Lease agreement | |||||
RELATED PARTY TRANSACTIONS | |||||
Leased space (in sq ft) | ft² | 17,000 | ||||
Monthly rent expenses | $ 33,680 | ||||
Monthly rent attributable to base rent | 30,000 | ||||
Monthly rent attributable to property taxes | 3,680 | ||||
Aggregate rent expense | 286,000 | ||||
Notes payable | |||||
RELATED PARTY TRANSACTIONS | |||||
Notes payable amount included in 15% Notes | 100,000 | ||||
Interest paid on notes payable to related party | $ 15,000 | ||||
Notes payable | 15% Notes [Member] | |||||
RELATED PARTY TRANSACTIONS | |||||
Interest rate (as a percent) | 15.00% |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) | 12 Months Ended | |
Dec. 31, 2020USD ($)segment | Dec. 31, 2019USD ($) | |
Segment Reporting Information | ||
Number of operating segments | segment | 3 | |
Revenues | $ 7,120,040 | $ 3,666,346 |
Costs and expenses | (6,856,346) | (3,443,897) |
Segment operating (loss) income | 263,694 | 222,449 |
Corporate expenses | (7,882,516) | (14,030,707) |
Net loss from continuing operations | (7,618,822) | (13,808,258) |
Operating segments | Operations [Member] | ||
Segment Reporting Information | ||
Revenues | 5,195,000 | 3,570,909 |
Costs and expenses | (5,312,427) | (3,372,174) |
Segment operating (loss) income | (117,427) | 198,735 |
Operating segments | Cultivation | ||
Segment Reporting Information | ||
Revenues | 2,279,867 | |
Costs and expenses | (1,865,399) | |
Segment operating (loss) income | 414,468 | |
Operating segments | Investments | ||
Segment Reporting Information | ||
Revenues | 103,837 | 95,437 |
Costs and expenses | (125,000) | (71,723) |
Segment operating (loss) income | (21,163) | 23,714 |
Eliminations | ||
Segment Reporting Information | ||
Revenues | (458,664) | |
Costs and expenses | 446,480 | |
Segment operating (loss) income | (12,184) | |
Service | ||
Segment Reporting Information | ||
Revenues | 1,081,291 | 1,787,863 |
Product sales | ||
Segment Reporting Information | ||
Revenues | $ 3,655,045 | $ 1,783,046 |
SEGMENT INFORMATION - Total Ass
SEGMENT INFORMATION - Total Assets by Segment (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
SEGMENT INFORMATION | ||
Total assets | $ 8,513,217 | $ 2,980,224 |
Corporate | ||
SEGMENT INFORMATION | ||
Total assets | 1,188,059 | 2,135,395 |
Operating segments | ||
SEGMENT INFORMATION | ||
Total assets | 8,525,400 | 2,980,224 |
Operating segments | Operations [Member] | ||
SEGMENT INFORMATION | ||
Total assets | 750,156 | 441,841 |
Operating segments | Cultivation | ||
SEGMENT INFORMATION | ||
Total assets | 6,208,223 | |
Operating segments | Investments | ||
SEGMENT INFORMATION | ||
Total assets | 378,962 | $ 402,988 |
Eliminations | ||
SEGMENT INFORMATION | ||
Total assets | $ (12,183) |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) | Feb. 08, 2021 | Feb. 18, 2020 | Dec. 31, 2020 | May 29, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
SUBSEQUENT EVENTS | ||||||
Class of warrant or right, exercise price of warrants or rights (in dollars per share) | $ 1 | |||||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | ||||
Convertible Note | ||||||
SUBSEQUENT EVENTS | ||||||
Aggregate principal amount | $ 934,000 | |||||
Interest rate, percentage | 10.00% | |||||
Debt Instrument, Convertible, Threshold Percentage of Stock Price Trigger | 80.00% | |||||
Conversion price (in dollars per share) | $ 0.49 | |||||
Convertible Note | Subsequent Event | ||||||
SUBSEQUENT EVENTS | ||||||
Aggregate principal amount | $ 1,660,000 | |||||
Percentage of aggregate principal amount coverage | 20.00% | |||||
Class of warrant or right, exercise price of warrants or rights (in dollars per share) | $ 0.56 | |||||
Common stock, par value (in dollars per share) | $ 0.001 | |||||
Interest rate, percentage | 10.00% | |||||
Debt Instrument, Convertible, Threshold Percentage of Stock Price Trigger | 80.00% | |||||
Number of warrants issued | 592,858 | |||||
Convertible Note | Minimum | ||||||
SUBSEQUENT EVENTS | ||||||
Conversion price (in dollars per share) | $ 0.45 | $ 0.40 | ||||
Convertible Note | Minimum | Subsequent Event | ||||||
SUBSEQUENT EVENTS | ||||||
Conversion price (in dollars per share) | $ 0.65 | |||||
Convertible Note | Maximum | Subsequent Event | ||||||
SUBSEQUENT EVENTS | ||||||
Percentage of aggregate principal amount coverage | 50.00% | |||||
Conversion price (in dollars per share) | $ 1 |