Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2023 | Nov. 14, 2023 | |
Document And Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 000-54457 | |
Entity Registrant Name | TREES CORPORATION | |
Entity Incorporation, State or Country Code | CO | |
Entity Tax Identification Number | 90-1072649 | |
Entity Address, Address Line One | 215 Union Boulevard | |
Entity Address, Address Line Two | Suite 415 | |
Entity Address, City or Town | Lakewood | |
Entity Address, State or Province | CO | |
Entity Address, Postal Zip Code | 80228 | |
City Area Code | 303 | |
Local Phone Number | 759-1300 | |
Title of 12(b) Security | N/A | |
Security Exchange Name | NONE | |
No Trading Symbol Flag | true | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 118,664,094 | |
Entity Central Index Key | 0001477009 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Current assets | ||
Cash and cash equivalents | $ 251,691 | $ 2,583,833 |
Accounts receivable, net of allowance of $42,000 and $42,000, respectively | 205,178 | 41,373 |
Inventories, net | 1,578,253 | 2,066,662 |
Prepaid expenses and other current assets | 441,728 | 259,598 |
Total current assets | 2,476,850 | 4,951,466 |
Right-of-use operating lease asset | 2,957,548 | 3,866,406 |
Property and equipment, net | 1,734,375 | 1,947,969 |
Intangible assets, net | 1,947,887 | 2,543,898 |
Goodwill | 18,384,974 | 18,384,974 |
Total assets | 27,501,634 | 31,694,713 |
Current liabilities | ||
Accounts payable and accrued expenses | 2,594,173 | 1,899,450 |
Interest payable | 1,275,617 | 488,813 |
Income tax payable | 290,659 | 204,917 |
Operating lease liability, current | 1,245,724 | 1,433,184 |
Finance lease liability, current | 50,000 | 55,777 |
Accrued stock payable | 60,900 | 60,900 |
Accrued dividends | 106,200 | 88,500 |
Warrant derivative liability | 3,149 | 5,508 |
Accrued legal fees | 114,000 | |
Notes payable - current | 4,414,157 | 1,903,344 |
Total current liabilities | 10,154,579 | 6,140,393 |
Operating lease liability, non-current | 1,860,192 | 2,541,590 |
Finance lease liability, non-current | 671,285 | 706,653 |
Notes payable - non-current (net of unamortized discount) | 13,110,406 | 15,899,588 |
Total liabilities | 25,796,462 | 25,288,224 |
Commitments and contingencies (Note 12) | ||
Stockholders' equity | ||
Preferred stock, no par value; 5,000,000 shares authorized; 1,180 issued and outstanding | 1,073,446 | 1,073,446 |
Common stock, $0.001 par value; 200,000,000 shares authorized; 118,664,094 shares issued and outstanding | 118,664 | 118,664 |
Additional paid-in capital | 98,652,956 | 98,598,761 |
Accumulated deficit | (98,139,894) | (93,384,382) |
Total stockholders' equity | 1,705,172 | 6,406,489 |
Total liabilities and stockholders' equity | $ 27,501,634 | $ 31,694,713 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Accounts receivable, net of allowance | $ 42,000 | $ 42,000 |
Preferred stock, par value (in dollars per share) | $ 0 | $ 0 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 1,180 | 1,180 |
Preferred stock, shares outstanding | 1,180 | 1,180 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 118,664,094 | 118,664,094 |
Common stock, shares outstanding | 118,664,094 | 118,664,094 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Total revenue | $ 4,111,583 | $ 3,177,177 | $ 14,320,196 | $ 9,986,212 |
Costs and expenses | ||||
Cost of sales | 2,442,541 | 2,036,532 | 8,731,032 | 5,856,995 |
Selling, general and administrative | 1,962,641 | 1,462,902 | 6,744,632 | 4,001,816 |
Stock-based compensation | 8,745 | 38,460 | 54,195 | 156,961 |
Professional fees | 53,259 | 197,565 | 1,204,369 | 716,410 |
Depreciation and amortization | 251,605 | 98,915 | 835,026 | 190,770 |
Total costs and expenses | 4,718,791 | 3,834,374 | 17,569,254 | 10,922,952 |
Operating loss | (607,208) | (657,197) | (3,249,058) | (936,740) |
Other expenses (income) | ||||
Amortization of debt discount | 219,785 | 1,285,392 | 621,539 | 1,716,334 |
Interest expense | 296,242 | 213,833 | 1,462,281 | 564,229 |
Loss on extinguishment of debt | 218,237 | 310,622 | 218,237 | 310,622 |
Loss (gain) on derivative liability | 2,860 | (16,365) | (2,359) | (14,959) |
Loss on transfer of license | (2,400) | (13,000) | ||
Other income and expense, net | (526,809) | (896,680) | ||
Total other expenses, net | 207,915 | 1,793,482 | 1,403,018 | 2,563,226 |
Net loss from continuing operations before income taxes | (815,123) | (2,450,679) | (4,652,076) | (3,499,966) |
Provision for income taxes | 254,000 | 85,736 | 254,000 | |
Loss from continuing operations | (815,123) | (2,704,679) | (4,737,812) | (3,753,966) |
Income from discontinued operations, net of tax | 195 | 5,478 | ||
Net loss | (815,123) | (2,704,484) | (4,737,812) | (3,748,488) |
Accrued preferred stock dividend | (70,800) | (17,700) | (70,800) | |
Net loss attributable to common stockholders | $ (815,123) | $ (2,775,284) | $ (4,755,512) | $ (3,819,288) |
Per share data - basic and diluted | ||||
Net loss from continuing operations basic per share | $ (0.01) | $ (0.03) | $ (0.04) | $ (0.04) |
Net loss from continuing operations diluted per share | (0.01) | (0.03) | (0.04) | (0.04) |
Net loss from discontinued operations basic per share | 0 | 0 | 0 | 0 |
Net loss from discontinued operations diluted per share | 0 | 0 | 0 | 0 |
Net loss attributable to common stockholders basic per share | (0.01) | (0.03) | (0.04) | (0.04) |
Net loss attributable to common stockholders diluted per share | $ (0.01) | $ (0.03) | $ (0.04) | $ (0.04) |
Weighted average number of common shares outstanding, basic | 118,664,094 | 96,192,184 | 118,664,094 | 96,046,246 |
Weighted average number of common shares outstanding, diluted | 118,664,094 | 96,192,184 | 118,664,094 | 96,046,246 |
Retail sales | ||||
Total revenue | $ 4,038,019 | $ 3,080,778 | $ 14,228,202 | $ 9,536,659 |
Cultivation sales | ||||
Total revenue | $ 73,564 | $ 96,399 | $ 91,994 | $ 449,553 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Cash flows from operating activities | ||
Net loss | $ (4,737,812) | $ (3,748,488) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||
Amortization of debt discount | 621,539 | 1,716,334 |
Depreciation and amortization | 835,026 | 190,770 |
Loss on extinguishment of debt | 202,397 | 310,622 |
Non-cash lease expense | 42,762 | 670,685 |
Bad debt recovery | (10,280) | |
Loss (gain) on disposal of property and equipment | 15,840 | (13,000) |
Gain on derivative liability | (2,359) | (14,959) |
Stock-based compensation | 54,195 | 156,961 |
Changes in operating assets and liabilities, net of acquisitions | ||
Accounts receivable | (163,805) | (76,749) |
Prepaid expenses and other assets | (182,130) | (19,478) |
Inventories | 488,409 | (78,210) |
Income taxes | 85,742 | 254,000 |
Accounts payable, accrued liabilities, and interest payable | 1,595,527 | 466,744 |
Operating lease liabilities | (2,763) | (699,595) |
Net cash used in operating activities | (1,147,432) | (894,643) |
Cash flows from investing activities | ||
Purchase of property and equipment | (9,277) | (33,903) |
Proceeds for sale of equipment | 13,000 | |
Proceeds on notes receivable | 75,000 | |
Net cash used in investing activities | (265,858) | (202,485) |
Cash flows from financing activities | ||
Proceeds from notes payable | 9,912,250 | |
Payments on notes payable and finance lease | (918,852) | (4,867,012) |
Net cash (used in) provided by financing activities | (918,852) | 5,045,238 |
Net (decrease) increase in cash and cash equivalents | (2,332,142) | 3,948,110 |
Cash and cash equivalents, beginning of period | 2,583,833 | 2,054,050 |
Cash and cash equivalents, end of period | 251,691 | 6,002,160 |
Supplemental schedule of cash flow information | ||
Cash paid for interest | 675,477 | 1,122,314 |
Cash paid for taxes | 6 | |
Non-cash investing & financing activities | ||
Operating lease right-of-use asset obtained in exchange for new operating lease liabilities | 348,825 | 172,053 |
Issuance of accrued stock | 383,994 | |
Non-cash debt issuance for acquisition of Station 2 assets | 333,953 | |
Non-cash extinguishment of debt for the surrender of Station 2 assets | (356,152) | |
Accrued dividends on preferred stock | 17,700 | 70,800 |
Station 2 Assets Acquisition | ||
Cash flows from investing activities | ||
Acquisition of Station 2 assets | $ (256,581) | |
TREES MLK | ||
Cash flows from investing activities | ||
Acquisition of Station 2 assets | (256,582) | |
12% Warrants | ||
Non-cash investing & financing activities | ||
12% Warrants recorded as a debt discount and additional paid-in capital | 569,223 | |
12% Warrants recorded as a loss on extinguishment of debt and additional paid-in capital | $ 103,577 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) | Sep. 30, 2022 | Sep. 15, 2022 |
12% Warrants | ||
Interest rate (as a percent) | 12% | 12% |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) | Preferred Stock | Common Stock Trees Waterfront LLC | Common Stock Trees MLK LLC | Common Stock | Additional Paid-in Capital Trees Waterfront LLC | Additional Paid-in Capital Trees MLK LLC | Additional Paid-in Capital 12% Warrants | Additional Paid-in Capital | Accumulated Deficit | Trees Waterfront LLC | Trees MLK LLC | 12% Warrants | Total |
Balance at the beginning of the year at Dec. 31, 2021 | $ 1,073,446 | $ 89,551 | $ 92,265,391 | $ (83,820,815) | $ 9,607,573 | ||||||||
Balance at the beginning of the year (in Shares) at Dec. 31, 2021 | 1,180 | 89,551,993 | |||||||||||
Common Stock issued for acquisition | $ 1,670 | $ 4,971 | $ 382,324 | $ 1,337,105 | $ 383,994 | $ 1,342,076 | |||||||
Common Stock issued for acquisition (in shares) | 1,669,537 | 4,970,654 | |||||||||||
Warrants issued with 12% Notes | $ 672,802 | $ 672,802 | |||||||||||
Share-based compensation | 156,961 | 156,961 | |||||||||||
Dividends on preferred stock | (70,800) | (70,800) | |||||||||||
Net loss | (3,748,488) | (3,748,488) | |||||||||||
Balance at the end of the year at Sep. 30, 2022 | $ 1,073,446 | $ 96,192 | 94,814,583 | (87,640,103) | 8,344,118 | ||||||||
Balance at the end of the year(in Shares) at Sep. 30, 2022 | 1,180 | 96,192,184 | |||||||||||
Balance at the beginning of the year at Jun. 30, 2022 | $ 1,073,446 | $ 96,192 | 94,103,321 | (84,864,819) | 10,408,140 | ||||||||
Balance at the beginning of the year (in Shares) at Jun. 30, 2022 | 1,180 | 96,192,184 | |||||||||||
Warrants issued with 12% Notes | $ 672,802 | $ 672,802 | |||||||||||
Share-based compensation | 38,460 | 38,460 | |||||||||||
Dividends on preferred stock | (70,800) | (70,800) | |||||||||||
Net loss | (2,704,484) | (2,704,484) | |||||||||||
Balance at the end of the year at Sep. 30, 2022 | $ 1,073,446 | $ 96,192 | 94,814,583 | (87,640,103) | 8,344,118 | ||||||||
Balance at the end of the year(in Shares) at Sep. 30, 2022 | 1,180 | 96,192,184 | |||||||||||
Balance at the beginning of the year at Dec. 31, 2022 | $ 1,073,446 | $ 118,664 | 98,598,761 | (93,384,382) | 6,406,489 | ||||||||
Balance at the beginning of the year (in Shares) at Dec. 31, 2022 | 1,180 | 118,664,094 | |||||||||||
Share-based compensation | 54,195 | 54,195 | |||||||||||
Dividends on preferred stock | (17,700) | (17,700) | |||||||||||
Net loss | (4,737,812) | (4,737,812) | |||||||||||
Balance at the end of the year at Sep. 30, 2023 | $ 1,073,446 | $ 118,664 | 98,652,956 | (98,139,894) | 1,705,172 | ||||||||
Balance at the end of the year(in Shares) at Sep. 30, 2023 | 1,180 | 118,664,094 | |||||||||||
Balance at the beginning of the year at Jun. 30, 2023 | $ 1,073,446 | $ 118,664 | 98,644,211 | (97,324,771) | 2,511,550 | ||||||||
Balance at the beginning of the year (in Shares) at Jun. 30, 2023 | 1,180 | 118,664,094 | |||||||||||
Share-based compensation | 8,745 | 8,745 | |||||||||||
Net loss | (815,123) | (815,123) | |||||||||||
Balance at the end of the year at Sep. 30, 2023 | $ 1,073,446 | $ 118,664 | $ 98,652,956 | $ (98,139,894) | $ 1,705,172 | ||||||||
Balance at the end of the year(in Shares) at Sep. 30, 2023 | 1,180 | 118,664,094 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) | Sep. 30, 2022 | Sep. 15, 2022 |
12% Warrants | ||
Interest rate (as a percent) | 12% | 12% |
NATURE OF OPERATIONS, HISTORY,
NATURE OF OPERATIONS, HISTORY, AND PRESENTATION | 9 Months Ended |
Sep. 30, 2023 | |
NATURE OF OPERATIONS, HISTORY, AND PRESENTATION | |
NATURE OF OPERATIONS, HISTORY, AND PRESENTATION | NOTE 1. NATURE OF OPERATIONS, HISTORY, AND PRESENTATION Nature of Operations TREES Corporation, a Colorado Corporation (the “Company,” “we,” “us,” or “our,”) is a cannabis retailer and cultivator in the States of Colorado and Oregon. We presently operate six (6) cannabis dispensaries as follows: ● Englewood, Colorado o 5005 S. Federal Boulevard – Recreational license only ● Denver, Colorado o East Hampden Avenue (formerly Green Man) – Recreational license only ● Longmont, Colorado o 12626 N. 107 th Street (formerly Green Tree/Ancient Alternatives) – Medical and Recreational licenses ● Three (3) in Oregon o SW Corbett Avenue, Portland, OR – Medical and Recreational licenses o NE 102 nd Avenue, Portland, OR – Medical and Recreational licenses o 7050 NE MLK, Portland, OR – Medical and Recreational licenses We also operate two (2) cultivation facilities in Colorado as follows: ● SevenFive Farm – 3705 N. 75 th Street, Boulder – Retail cultivation license only ● 6859 N. Foothills Highway E-100 (formerly Green Tree/Hillside Enterprises) – Retail cultivation license only Our principal business model is to acquire, integrate and optimize cannabis companies in the retail and cultivation segments utilizing the combined experience of entrepreneurs and synergistic operations of our vertically integrated network. Discontinued Operations - Operations Consulting and Products (“Operations Segment”) Through Next Big Crop (“NBC”), we delivered comprehensive consulting services to the cannabis industry that included obtaining licenses, compliance, cultivation, retail operations, logistical support, facility design and construction, and expansion of existing operations. NBC oversaw our wholesale equipment and supply business, operating under the name “GC Supply,” which provided turnkey sourcing and stocking services to cultivation, retail, and infused products manufacturing facilities. Our products included building materials, equipment, consumables, and compliance packaging. NBC also provided operational support for our internal cultivation. On July 16, 2021, we entered into an Asset Purchase Agreement with an individual to sell substantially all the assets of NBC for a total of $150,000 and 10% of profits generated by the buyer in the states of Michigan, Mississippi, and Massachusetts for a period of twelve months from the closing. On August 2, 2021, the sale of NBC was completed. Pursuant to an amendment to the Asset Purchase Agreement, the buyer paid an additional $75,000 in March 2022, and the 10% profit share described above was eliminated. Basis of Presentation The accompanying unaudited condensed consolidated financial statements include all accounts of the Company and its wholly owned subsidiaries. All inter-company accounts and transactions have been eliminated in consolidation. These unaudited condensed consolidated financial statements have been prepared following the requirements of the Securities and Exchange Commission for interim reporting. As permitted under those rules, certain footnotes and other financial information that are normally required by accounting principles generally accepted in the United States of America ("U.S. GAAP") can be condensed or omitted. The condensed consolidated balance sheet for the year ended December 31, 2022, was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. The information included in this quarterly report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and notes thereto of the Company for the year ended December 31, 2022, which were included in the annual report on Form 10-K filed by the Company on April 17, 2023. In the opinion of management, these unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and notes thereto of the Company and include all adjustments, consisting only of normal recurring adjustments, considered necessary for the fair presentation of the Company's financial position and operating results. The results for the three and nine months ended September 30, 2023, are not necessarily indicative of the operating results for the year ending December 31, 2023, or any other interim or future periods. Since the date of the Annual Report, there have been no material changes to the Company’s significant accounting policies. Reclassifications Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations. Use of Estimates The preparation of our unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management 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. Concentrations of Credit Risk Financial instruments that potentially subject us to significant concentrations of credit risk consisted primarily of cash and accounts receivable. Customer and Revenue Concentrations – Cultivation Segment During the three months ended September 30, 2023 and 2022, 89% of SevenFive’s revenue was with five customers and 79% was with one customer, respectively. During the nine months ended September 30, 2023 and 2022, 50% of SevenFive’s revenue was with one customer and 66% was with one customer, respectively. Two of the customers with sales in the three months ended September 30, 2023 are related party dispensaries and the revenues associated with these customers are eliminated in consolidation. During the three months ended September 30, 2023, 84% of Green Tree’s revenue was with four customers. During the nine months ended September 30, 2023, 78% of Green Tree’s revenue was with three customers. The customers in 2023 are related party dispensaries and the revenues associated with these customers are eliminated in consolidation. Going Concern We incurred net losses of $815,123 and $4,737,812 during the three and nine months ended September 30, 2023, respectively and $2,704,484 and $3,748,488 for the three and nine months ended September 30, 2022, respectively, and had an accumulated deficit of $98,139,894 as of September 30, 2023. We had cash and cash equivalents of $251,691 and The accompanying unaudited condensed 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. We have incurred recurring losses and negative cash flows from operations since inception and have primarily funded our operations with proceeds from the issuance of debt and equity. We expect our operating losses to continue into the foreseeable future as we continue to execute our acquisition and growth strategy. As a result, we have concluded that there is substantial doubt about our ability to continue as a going concern. Our unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our ability to continue as a going concern is dependent upon our ability to raise additional capital to fund operations, support our planned investing activities, and repay our debt obligations as they become due. If we are unable to obtain additional funding, we would be forced to delay, reduce, or eliminate some or all of our acquisition efforts, which could adversely affect our growth plans. Summary of Significant Accounting Policies See our Annual Report on Form 10-K for the year ended December 31, 2022, for discussion of the Company's significant accounting policies. Recently Issued Accounting Standards 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”- the derivative scope exception and simplifies the diluted earnings per share calculation in certain areas. The amendments in this ASU are effective for annual and interim periods beginning after December 15, 2023, although early adoption is permitted. We adopted this ASU in the first quarter of 2022, and the adoption did not have a material effect on our financial statements. FASB ASU 2016-13 – “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”- FASB ASU 2017-04 – “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” |
BUSINESS ACQUISITION
BUSINESS ACQUISITION | 9 Months Ended |
Sep. 30, 2023 | |
BUSINESS ACQUISITION | |
BUSINESS ACQUISITION | NOTE 2. BUSINESS ACQUISITION On December 12, 2022, we completed the Green Tree Acquisition which consisted of the acquisition of substantially all of the assets of Ancient Alternatives LLC, Natural Alternatives For Life, LLC, Mountainside Industries, LLC, Hillside Enterprises, LLC, and GT Creations, LLC, each a Colorado limited liability company (collectively, the "Green Tree Entities”). We assumed certain operating obligations at closing, including certain manufacturing agreements between GT Creations and affiliates of the Green Tree Entities. Allyson Feiler, a principal owner of the Green Tree Entities, was also elected to our Board of Directors effective the date of acquisition. We paid cash in the amount of $500,000 and stock consideration of 17,977,528 shares of our Common Stock. The closing price of our Common Stock on December 12, 2022, the date of license transfer, was $0.165 per share, as such, fair value of the equity consideration is $2,966,292. An additional $3,500,000 in cash will be paid to the sellers in fifteen The table below reflects the Company’s preliminary estimates of the acquisition date fair values of the assets acquired. Cash $ 3,928 Inventory 1,588,454 Fixed assets 688,655 Tradename 950,000 Goodwill 3,255,679 $ 6,486,716 We have not completed the allocation of the purchase price for the Green Tree Acquisition. As of September 30, 2023, 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 accompanying consolidated financial statements include the results of the Green Tree Entities from the date of acquisition for financial reporting purposes, December 12, 2022. The pro forma effects of the acquisition on the results of operations as if the transaction had been completed on January 1, 2022, are as follows: Three months ended Nine months ended September 30, September 30, 2022 2022 Total revenues $ 5,781,150 $ 17,196,773 Net income (loss) attributable to Common Stockholders $ (3,273,476) $ (3,798,897) Net income (loss) per common share $ (0.03) $ (0.03) Weighted average number of basic and diluted common shares outstanding 113,727,033 113,727,033 The unaudited pro-forma results of operations are presented for information purposes only. The unaudited pro-forma results are not intended to present actual results that would have been attained had the acquisition been completed as of January 1, 2022, or to project potential operating results as of any future date or for any future periods. In July 2023, the Company entered into an agreement to transfer the Green Tree Entities back to the original owners of these entities (see Note 5). On December 19, 2022, we completed the Green Man Acquisition, consisting of the acquisition of substantially all of the assets of Green Man. We paid cash in the amount of $1,225,000 and stock consideration of 4,494,382 shares of Common Stock. The closing price of our Common Stock on December 19, 2022, the date of license transfer, was $0.18 per share, as such, fair value of the equity consideration is $808,989. An additional $1,500,000 in cash will be paid to the sellers in eighteen The table below reflects the Company’s preliminary estimates of the acquisition date fair values of the assets acquired: Cash $ 8,594 Inventory 108,543 Fixed assets 23,500 Tradename 150,000 Goodwill 2,968,198 $ 3,258,835 We have not completed the allocation of the purchase price for the Green Man Acquisition. As of September 30, 2023, 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 accompanying consolidated financial statements include the results of Green Man from the date of acquisition for financial reporting purposes, December 19, 2022. The pro forma effects of the acquisition on the results of operations as if the transaction had been completed on January 1, 2022, are as follows: Three months ended Nine months ended September 30, September 30, 2022 2022 Total revenues $ 4,464,409 $ 14,093,905 Net income (loss) attributable to Common Stockholders $ (2,706,386) $ (3,294,030) Net income (loss) per common share $ (0.03) $ (0.03) Weighted average number of basic and diluted common shares outstanding 100,243,887 100,243,887 The unaudited pro-forma results of operations are presented for information purposes only. The unaudited pro-forma results are not intended to present actual results that would have been attained had the acquisition been completed as of January 1, 2022, or to project potential operating results as of any future date or for any future periods. |
ASSET ACQUISITION
ASSET ACQUISITION | 9 Months Ended |
Sep. 30, 2023 | |
ASSET ACQUISITION | |
ASSET ACQUISITION | NOTE 3. ASSET ACQUISITION In February 2023, we completed the acquisition of the assets of Station 2, LLC (“Station 2”). The assets consist of a medical and retail cannabis license for a dispensary located in Denver, CO. We also assumed responsibility of the operating lease for the dispensary and recorded the relating ROU asset which is disclosed separately on the accompanying consolidated balance sheets. The consideration paid by the Company consists of cash at closing equal to $256,582 plus an additional note equal to $384,873 . As the dispensary was not in operation and there was no assembled workforce at the time of acquisition, the acquisition was accounted for as an asset acquisition of a license. As of September 30, 2023, the balance of the license was nil , which is recorded within Intangible assets, net in our condensed consolidated balance sheets as a result of the transfer of the license (see Note 5). |
DISCONTINUED OPERATIONS
DISCONTINUED OPERATIONS | 9 Months Ended |
Sep. 30, 2023 | |
DISCONTINUED OPERATIONS | |
DISCONTINUED OPERATIONS | NOTE 4. DISCONTINUED OPERATIONS On July 16, 2021, we entered into an Asset Purchase Agreement with an individual to sell substantially all of the assets of NBC for a total of $150,000 and 10% of profits generated by the buyer in the states of Michigan, Mississippi, and Massachusetts for a period of twelve months from the closing. On August 2, 2021, the sale of NBC was completed. Pursuant to an amendment to the Asset Purchase Agreement, the buyer paid an additional $75,000 in March 2022, and the 10% profit share described above was eliminated. A summary of the discontinued operations for the Operations Segment is presented as follows: Three months ended Nine months ended September 30, September 30, 2023 2022 2023 2022 Product revenues $ — $ — $ — $ 3,438 Service revenues — — — — Total revenues — — — 3,438 Cost of sales — — — — Selling, general and administrative — (195) — (2,040) Professional fees — — — — Depreciation and amortization — — — — Total costs and expenses — (195) — (2,040) Income from discontinued operations $ — $ 195 $ — $ 5,478 |
LICENSE TRANSFER AGREEMENTS
LICENSE TRANSFER AGREEMENTS | 9 Months Ended |
Sep. 30, 2023 | |
LICENSE TRANSFER AGREEMENTS | |
LICENSE TRANSFER AGREEMENTS | NOTE 5. LICENSE TRANSFER AGREEMENTS In August 2023, we entered into an Assignment of Assets (“Assignment”), pursuant to which we agreed to transfer and assign to Station 2 and Timothy Brown (“Brown” and collectively with Station 2, “Assignees”), a board member, shareholder, and executive level employee of the Company, a State of Colorado and corresponding City and County of Denver retail marijuana store cannabis license and related assets owned related to the licensed cannabis dispensary located at 468 S. Federal Boulevard (collectively, the “Transferred Assets”). In exchange for the transfer to Assignees of the Transferred Assets, the Assignees agreed to extinguishment and satisfaction of, and unconditional waiver by each of Station 2 and Brown of any claims in respect of, any and all debt or other obligations of the Company, Trees Colorado, and any of their respective affiliates, directors, officers or agents, pursuant to that certain Asset Purchase Agreement dated October 14, 2022, as amended, by and among the Company, Trees Colorado and Assignees. This transaction closed in October 2023, and the Company recognized a loss on this transfer of $202,397 , located in loss on extinguishment of debt on the condensed consolidated statements of operations. A summary of the license transfer is presented as follows: Balance as of August 17, 2023 Asset to be transferred: Intangible assets - License 590,536 Accumulated amortization - License (31,987) Consideration: Extinguishment of 468 debt 356,152 In July 2023, we and our subsidiaries Green Tree Colorado, LLC, Green Tree Cultivation LLC, GT Retail LLC, and Green Tree MIP LLC, entered into a settlement agreement (“Settlement Agreement”), (“GT Retail”), (“GT MIP”), with Allyson Feiler Downing (“Downing”) and Loree Schwartz (“Schwartz” and together with Downing, “Green Tree Parties”), pursuant to which the Company and the Green Tree Parties agreed to transfer and assign to new entities controlled by the Green Tree Parties, cannabis licenses and related assets owned by (i) GT Retail relating to a cultivation facility and a retail dispensary located in Berthoud, Colorado; (ii) GT MIP relating to a ‘marijuana infused product’ dispensary located in Boulder County, Colorado; and (iii) certain intellectual property in respect thereof (collectively, the “Transferred Assets”). The Company retained accounts payable and certain cannabis inventory in respect of the Transferred Assets. Closing of the transaction is subject to approval of the license transfers by the Colorado Marijuana Enforcement Division as well as local regulatory authorities. In exchange for the transfer to the Green Tree Parties of the Transferred Assets, the Company and the Green Tree Parties agreed that upon closing, the Green Tree Parties shall transfer and assign to the Company, and the Company shall redeem, 9,917,574 shares of the Company’s Common Stock owned by the Green Tree Parties and originally issued to the Green Tree Parties in the acquisition consummated in December 2022 pursuant to that certain Asset Purchase Agreement dated September 13, 2022, as amended, by and among the Company, Downing, Schwartz and various other parties thereto (the “APA”). As of September 30, 2023, the license has not yet been transferred and therefore, the Company still holds these assets as of the balance sheet date. |
INVENTORIES, NET
INVENTORIES, NET | 9 Months Ended |
Sep. 30, 2023 | |
INVENTORIES, NET | |
INVENTORIES, NET | NOTE 6. INVENTORIES, NET Our inventories consisted of the following: September 30, December 31, 2023 2022 Raw materials $ 8,883 $ 8,883 Work-in-progress and finished goods 1,622,510 2,057,779 Less: Inventory reserves (53,140) — Inventories, net $ 1,578,253 $ 2,066,662 |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2023 | |
LEASES | |
LEASES | NOTE 7. LEASES The Company’s leases consist primarily of real estate leases for retail, cultivation, and manufacturing facilities. All but one of the Company’s leases are classified as operating leases. The lease for the retail dispensary acquired in the Green Man Transaction is classified as a finance lease. The current and non-current portions of the operating lease liabilities and finance lease liabilities are disclosed separately on the accompanying consolidated balance sheets. The finance lease ROU asset is included in property and equipment, net and the operating lease ROU asset is disclosed separately on the accompanying consolidated balance sheets. As the rate implicit in the Company’s leases is not readily determinable, we used an estimated incremental borrowing rate of 20% in determining the present value of lease payments. The operating lease expense for the three and nine months ended September 30, 2023, and September 30, 2022, is as follows: For the three months ended September 30, For the nine months ended September 30, 2023 2022 2023 2022 Straight-line operating lease expense $ 197,513 $ 164,103 $ 929,241 $ 548,135 Variable lease cost 44,239 169,368 502,413 326,105 Total operating lease expense $ 241,752 $ 333,471 $ 1,431,654 $ 874,240 The finance lease expense for the three months ended September 30, 2023, and September 30, 2022, was approximately $41,823 and nil, respectively. The finance lease expense for the nine months ended September 30, 2023, and September 30, 2022, was approximately $125,470 and nil, respectively. Related party lease s During the three months and nine months ended September 30, 2023, three of the Company’s operating leases, one retail dispensary lease, one cultivation facility lease, and one lease that includes both cultivation and retail, are related party leases as the landlords are current, and former, board members, principal shareholders, or employees. During the three months and nine months ended September 30, 2022, the related party operating leases consisted of one dispensary and one cultivation facility. The retail dispensary lease was with a related party through May 2022, when the building was sold to an unaffiliated third-party. As of September 30, 2023, the ROU asset, operating lease liability, current, and operating lease liability, non-current for the related party leases were $845,234, $535,143, and $368,715, respectively. For the three months ended September 30, 2023 and 2022, the total lease expense for related party leases was $127,790 and $75,849, respectively. For the nine months ended September 30, 2023 and 2022, the total lease expense for related party leases was $383,371 and $151,698, respectively. Lease Maturities Future remaining minimum lease payments were as follows: Year ending December 31, Operating leases Finance lease 2023 (remaining three months) $ 307,735 $ 50,000 2024 1,252,825 205,400 2025 1,033,857 171,043 2026 764,190 136,940 2027 507,871 143,102 Thereafter 965,359 818,100 Total 4,831,837 1,524,585 Less: Present value adjustment (1,725,921) (803,300) Lease liability 3,105,916 721,285 Less: Lease liability, current (1,245,724) (50,000) Lease liability, non-current $ 1,860,192 $ 671,285 The total remaining lease payments in the table above include $1,219,188 related to renewal option periods that management is reasonably certain will be exercised. The majority of this amount relates to the flagship Trees location in Englewood, Colorado and the retail and certain cultivation facilities that were acquired in the Green Tree Acquisition. As of September 30, 2023, the weighted average remaining term of the Company’s operating leases is 4.54 years, and the remaining term on the finance lease is 9.25 years. None of the Company’s leases contain residual value guarantees or restrictive covenants. Supplemental cash flow information For the nine months ended September 30, 2023 2022 Supplemental cash flow information Cash paid for amounts included in operating lease liability $ 957,153 $ 193,523 Cash paid for amounts included in finance lease liability $ 150,000 $ — Supplemental lease disclosures of non-cash transactions: ROU assets obtained in exchange for operating lease liabilities $ 348,825 $ 172,053 |
ACCRUED STOCK PAYABLE
ACCRUED STOCK PAYABLE | 9 Months Ended |
Sep. 30, 2023 | |
ACCRUED STOCK PAYABLE | |
ACCRUED STOCK PAYABLE | NOTE 8. The following tables summarize the changes in accrued common stock payable: Number of Amount Shares Balance as of December 31, 2021 $ 444,894 1,769,537 Stock issued (383,994) (1,669,537) Balance as of December 31, 2022 $ 60,900 100,000 Stock issued — — Balance as of September 30, 2023 $ 60,900 100,000 In December 2021, we completed the acquisition of Trees Waterfront. As part of the transaction, we granted 1,669,537 shares of our common stock. The stock was issued on January 6, 2022. The outstanding balance of accrued stock payable as of September 30, 2023 relates to a February 18, 2020 grant of 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 September 30, 2023, none of the stock has been issued. |
NOTES PAYABLE
NOTES PAYABLE | 9 Months Ended |
Sep. 30, 2023 | |
NOTES PAYABLE. | |
NOTES PAYABLE | NOTE 9. NOTES PAYABLE Our notes payable consisted of the following: September 30, 2023 December 31, 2022 Third-party Related-party Total Third-party Related-party Total 2022 12% Notes $ 13,167,796 332,204 13,500,000 $ 13,167,796 $ 332,204 $ 13,500,000 Trees Transaction Notes — 314,154 314,154 — 1,191,865 1,191,865 Green Tree Acquisition Notes 774,750 2,725,250 3,500,000 774,750 2,725,250 3,500,000 Green Man Acquisition Notes 1,500,000 — 1,500,000 1,500,000 — 1,500,000 Unamortized debt discount (1,123,845) (165,746) (1,289,591) (1,527,346) (361,587) (1,888,933) Total debt 14,318,701 3,205,862 17,524,563 13,915,200 3,887,732 17,802,932 Less: Current portion (1,556,433) (2,857,724) (4,414,157) (179,827) (1,723,517) (1,903,344) Long-term portion $ 12,762,268 $ 348,138 $ 13,110,406 $ 13,735,373 $ 2,164,215 $ 15,899,588 Trees Transaction Notes In January 2022, with the completion of the Trees MLK acquisition, we are obligated to pay the Seller cash equal to $384,873 in equal month installments over a period of 24 months. The payments began on June 15, 2022 and the payment is equal to $16,036 per month. In December 2022, with the completion of the Green Tree Acquisition, we are obligated to pay the Seller cash equal to $3,500,000 in equal month installments over a period of 15 months. Payments of $233,333 are due monthly beginning in September 2023. The relative fair value of this obligation resulted in a debt discount of $512,367. We recorded amortization of debt discount expense from this obligation of $251,520 and nil for the nine months ended September 30, 2023 and September 30, 2022, respectively, and $96,672 and nil for the three months ended September, 2023 and September 30, 2022, respectively. In December 2022, with the completion of the Green Man Acquisition, we are obligated to pay the Seller cash equal to $1,500,000 in equal month installments over a period of 18 months. The payments begin in December 2023 and the payment is equal to $83,333 per month. The relative fair value of this obligation resulted in a debt discount of $275,154. We recorded amortization of debt discount expense from this obligation of $115,171 and nil for the nine months ended September 30, 2023 and September 30, 2022, respectively, and $39,545 and nil for the three months ended September 30, 2023 and September 30, 2022, respectively. 12% Notes On September 15, 2022, we entered into a Securities Purchase Agreement with certain accredited investors (the “12% Investors”), pursuant to which we agreed to issue and sell senior secured convertible notes (the “12% Notes”) with an aggregate principal amount of $13,500,000 to such 12% Investors, in exchange for payment by certain 12% Investors of an aggregate amount of $10,587,250 in cash, as well as cancellation of outstanding indebtedness in the aggregate amount of $2,912,750 represented by the 10% Notes discussed below. In connection with the 12% Notes, the 12% Investors received warrants (the “12% Warrants”) to purchase shares of our common stock equal to 20% coverage of the aggregate principal amount with an exercise price of $0.70 per share, which equals an aggregate of warrants to purchase 3,857,150 shares of Common Stock. The lead 12% Investor received an additional 10% warrant coverage on the aggregate principal amount of 12% Notes for total additional warrants to purchase 1,928,571 shares of Common Stock. The lead 12% Investor also will receive a five percent fee on the aggregate principal amount of the 12% Notes. This total fee in the amount of $675,000 was recorded as a debt discount and will be amortized over the life of the loan. The 12% Notes bear interest at an annual rate of 12% and will mature on September 16, 2026. The 12% Investors have the option to convert up to 50% of the outstanding unpaid principal and accrued interest of the 12% Notes into Common Stock at a fixed conversion price equal to $1.00 per share. The relative fair value of the new funding on the 12% Warrants was recorded as a debt discount and additional paid-in capital of $569,223. The relative fair value of the cancellation of the outstanding indebtedness was recorded as an extinguishment of debt and additional paid-in capital of $103,577. We recorded amortization of debt discount expense from the 12% Notes of $232,651 and $11,931 for the nine months ended September 30, 2023 and 2022, respectively, and $78,404 and $11,931 for the three months ended September 30, 2023 and September 30, 2022, respectively. We determined there was no beneficial conversion feature on the 12% Notes issued. The 12% Notes are treated as conventional debt. For purposes of determining the debt discount, the underlying assumptions used in the Black-Scholes model to determine the fair value of the 12% Warrants as of September 15, 2022, were: Current stock price $ 0.20 Exercise price $ 0.70 Risk-free interest rate 3.66% Expected dividend yield — Expected term (in years) 5.0 Expected volatility 107% In connection with the acquisition of Station 2, LLC in February 2023, we agreed to issue and sell an additional 12% Note with an aggregate principal amount of $384,873. The relative fair value of this 12% Note resulted in a debt discount of $50,918. We recorded amortization of debt discount expense from this Note of $22,197 for the nine months ended September 30, 2023, and $5,164 for the three months ended September 30, 2023. This 12% Note is treated as conventional debt and was relieved as part of the Station 2 license transfer (see Note 5). 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 previously issued 15% notes 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 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 10% 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 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. We recorded amortization of debt discount expense from the 10% Notes of nil and $84,375 for the nine months ended September 30, 2023 and 2022, and nil and $41,352 for the three months ended September 30, 2023 and September 30, 2022, respectively. We determined there was no beneficial conversion feature on the 10% Notes issued in December 2020. The 10% Notes are treated as conventional debt. For purposes of determining the debt discount, the underlying assumptions used in the Black-Scholes model to determine the fair value of the 10% Warrants as of December 23, 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% On February 8, 2021, we entered into a Securities Purchase Agreement with an accredited 10% Investor, pursuant to which we issued and sold 10% Notes with an aggregate principal amount of $1,660,000 to such 10% Investor. The 10% Notes are part of an over-allotment option exercised by us in connection with the convertible note offering consummated on December 23, 2020, as discussed above. In connection with the issuance of the 10% Notes, the holder received 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 592,858 shares of our common stock with a par value $0.001 per share. 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 relative fair value of the new funding on the 10% Warrants was recorded as a debt discount and additional paid-in capital of $429,300. We determined that this 10% Note had a beneficial conversion feature and is calculated at its intrinsic value (that is, the difference between the effective conversion price of $0.66 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 $0.90, 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 $417,539 as additional paid in capital and a debt discount and included in our consolidated statement of operations. We recorded amortization of debt discount expense from the February 2021 10% Notes of nil and $594,721 for the nine months ended September 30, 2023 and 2022, respectively, and nil and $454,741 for the three months ended September 30, 2023 and September 30, 2022, respectively. The 10% Notes are treated as conventional debt. For purposes of determining the debt discount, the underlying assumptions used in the Black-Scholes model to determine the fair value of the 10% Warrants as of February 8, 2021, were: Current stock price $ 1.12 Exercise price $ 0.56 Risk-free interest rate 0.48% Expected dividend yield — Expected term (in years) 5.0 Expected volatility 118% On April 20, 2021, we entered into a Securities Purchase Agreement with accredited 10% Investors, pursuant to which we issued and sold 10% Notes with an aggregate principal amount of $2,300,000 to such 10% Investors. The 10% Notes are part of an over-allotment approved by the existing noteholders in connection with the original convertible note offering of $4,600,000 consummated on December 23, 2020, and February 8, 2021. In connection with the issuance of the 10% Notes, each holder received warrants to purchase shares of our common stock equal to 20% coverage of the aggregate principal amount at $0.56 per share, except that the warrants coverage to one Investor acting as lead investor in the raise received approximately 35.5% of the aggregate principal amount invested. The 10% Notes bear interest at an annual rate of 10% and will mature on April 20, 2024. The 10% Investors have the option to convert up to 50% of the outstanding unpaid principal and accrued interest of the 10% 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 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 $810,000. We determined that these 10% Notes had a beneficial conversion feature and 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 $0.83, 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 $692,500 as additional paid in capital and a debt discount and included in our consolidated statement of operations. We recorded amortization of debt discount expense from the April 2021 10% Notes of nil and $1,023,577 for the nine months ended September 30, 2023 and 2022, respectively, and nil and $775,638 for the three months ended September 30, 2023 and 2022, respectively. The 10% Notes are treated as conventional debt. For purposes of determining the debt discount, the underlying assumptions used in the Black-Scholes model to determine the fair value of the 10% Warrants as of April 20, 2021, were: Current stock price $ 0.83 Exercise price $ 0.56 Risk-free interest rate 0.81% Expected dividend yield — Expected term (in years) 5.0 Expected volatility 115% In September 2022, $2,912,750 of the 10% Notes were exchanged for the 12% Notes (see above) and the remaining $3,987,250 was paid in full. Of the remaining debt discount, $207,045 was expensed to extinguishment of debt and $1,125,844 was expensed to amortization of debt discount. |
WARRANT DERIVATIVE LIABILITY
WARRANT DERIVATIVE LIABILITY | 9 Months Ended |
Sep. 30, 2023 | |
WARRANT DERIVATIVE LIABILITY. | |
WARRANT DERIVATIVE LIABILITY | NOTE 10. 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, which 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 $0.3983 per share and the number of shares subject to the 2019 Warrants increased to 9,591,614 shares of common stock. During the first quarter of 2021 the warrant holders exercised 1,323,000 warrants into 747,208 shares of our common stock through cashless exercise. We recorded an adjustment to the derivative liability of $1,523,117 as a result. During the nine months ended September 30, 2023, and 2022, we recognized a $2,359 gain and $14,959 gain on the change in fair value of the derivative liability, respectively. During the three months ended September 30, 2023, and 2022, we recognized a $2,860 loss and $16,364 gain on the change in fair value of the derivative liability, respectively. As of September 30, 2023, there were 322,807 of the 2019 Warrants outstanding. The following are the key assumptions that were used to determine the fair value of the 2019 Warrants: September 30, December 31, 2023 2022 Number of shares underlying the warrants 322,807 322,807 Fair market value of stock $ 0.16 $ 0.15 Exercise price $ 0.40 $ 0.40 Volatility 90 % 78 % Risk-free interest rate 5.53 % 3.99 % Warrant life (years) 0.66 1.41 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: Three months ended September 30, Nine months ended September 30, 2023 2022 2023 2022 Beginning balance $ 289 $ 29,723 $ 5,508 $ 28,318 Warrant exercise — — — — Change in fair value of warrants derivative liability 2,860 (16,364) (2,359) (14,959) Ending balance $ 3,149 $ 13,359 $ 3,149 $ 13,359 |
OTHER INCOME
OTHER INCOME | 9 Months Ended |
Sep. 30, 2023 | |
OTHER INCOME. | |
OTHER INCOME | NOTE 11. OTHER INCOME Under the provisions of the Coronavirus Aid Relief, and Economic Security Act (the “CARES Act”) signed into law on March 27, 2020 and the subsequent extension of the CARES Act, the Company, with the guidance from a third-party specialist, determined it was eligible for a refundable employee retention credit (“ERC”) subject to certain criteria. The Company applied for ERC for the last three quarters’ wages paid in calendar year 2020 and the first three quarters’ wages paid in calendar year 2021. The Company recognized an ERC benefit of $1,085,939, net of third-party specialist fees of $217,188, which is included in Other Income on the accompanying Condensed Consolidated Statement of Operations for the nine-month period ended September 30, 2023. As of September 30, 2023, the Company received $909,282 in ERC payments reducing the receivable within Other current assets on the Condensed Consolidated Balance Sheet to $176,657. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2023 | |
COMMITMENTS AND CONTINGENCIES. | |
COMMITMENTS AND CONTINGENCIES | NOTE 12. COMMITMENTS AND CONTINGENCIES 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, except as set forth below. In July 2021, we were served with a Complaint in the District Court, County of Denver, Colorado, by plaintiff 2353 SB, LLC (“Plaintiff”). We entered into a lease with Plaintiff for the premises at 2353 South Broadway, Denver, CO with a term of three In June 2023, via mediation conducted through the Judicial Arbiter Group and a duly executed settlement agreement, we settled this litigation. As part of the settlement, Plaintiff agreed to waive and release the Company et. al from all claims relating to the litigation; and in exchange, the Company has agreed to pay to Plaintiff an aggregate amount of $150,000, payable as follows: (i) one initial installment payment of $30,000 payable on August 1, 2023; and (ii) twenty (20) subsequent monthly payments of $6,000 each. In the event of default under the settlement agreement, the non-defaulting party must provide written notice and the defaulting party has a 7-day right of cure. The settlement agreement also provides for a ‘paper judgment’ in the event of an uncured default by the Company; in which event the full amount of $345,000 becomes due and payable. The parties will file a stipulated motion to administratively close the case and request that the court retain jurisdiction until completion of the settlement payments. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2023 | |
STOCKHOLDERS' EQUITY | |
STOCKHOLDERS' EQUITY | NOTE 13. STOCKHOLDERS’ EQUITY 2021 Preferred stock offering On September 10, 2021, we entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with various accredited investors (the “2021 Investors), pursuant to which we issued and sold Units consisting of Series A Convertible Preferred Stock (“Series A Preferred”) and warrants (the “Preferred Warrants”) to purchase shares of our common stock with a par value of $0.001 per share. The total number of Units sold was 1,180. Each Unit consists of one share of Series A Preferred and 354,000 Preferred Warrants. The purchase price of each Unit was $1,000, for an aggregate amount sold of $1,180,000. Each share of Series A Preferred is convertible into 1,000 shares of common stock upon the consummation of a capital raise of not less than $5,000,000. The Certificate of Designation of the Series A Preferred Stock (“Certificate of Designation”) was filed with the Secretary of the State of Colorado on September 14, 2021. The Certificate of Designations established the new preferred series entitled “Series A Convertible Preferred Stock” with no par value pers share, and sets forth the rights, restrictions, preferences and privileges of the Series A Preferred, summarized as follows: ● Authorized Number of Shares – 5,000 ● Voting Rights – None ● Dividends – 6% per annum, ‘paid in kind’ in shares of Series A Preferred ● Conversion – Each share of Series A Preferred is mandatorily convertible into 1,000 shares of common stock upon a minimum capital raise of $5,000,000 ; sale, merger or business combination of the Company; or the Company listing on an exchange ● Redemption – No rights of redemption by 2021 Investors, nor mandatory redemption The Preferred Warrants have a five-year term and an exercise price per Preferred Warrant share of $1.05. The warrants contain an anti-dilution provision pursuant to which upon a future capital raise at less than $1.00 per share, each Preferred Investor will be granted additional Preferred Warrants on a ‘full-ratchet’ basis. The proceeds received in the sale of the Series A Preferred totaled $1,180,000, for the issuance of 1,180 Series A Preferred, plus 354,000 warrants. The warrants were valued using a Black Scholes model, at $117,131 and per the relative fair value allocation, $1,073,446 was allocated to the Series A proceeds. As of September 30, 2023 we have recorded accrued dividends of $106,200. As of December 31, 2022 we have recorded accrued dividends of $88,500. Stock-based compensation We use the fair value method to account for stock-based compensation on the grant date. This expense also includes stock-based compensation expense related to Restricted Stock Units (“RSU”). On April 1, 2022 we entered into a Restricted Stock Unit Agreement with four participants. The RSU’s were granted pursuant to our 2020 Omnibus Incentive Plan. Four separate executives were each granted 300,000 RSU’s, for a total grant of 1,200,000 RSU’s. The 300,000 RSU’s are divided into three equal tranches of tranche RSU During the year ended December 31, 2022, we granted options to purchase 250,000 common shares to directors. The options expire five years from the date of grant and vest over a period of one year. Fair value of the awards at the date of grants totaled $56,348. 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, 2022 4,936,825 $ 1.08 4.4 $ 22,000 Granted — — Forfeited or expired — — Outstanding as of September 30, 2023 4,936,825 $ 1.08 4.4 $ 22,000 Exercisable as of September 30, 2023 4,936,825 $ 1.08 4.4 $ 22,000 As of September 30, 2023, there was no unrecognized compensation expense related to unvested employee awards. We recorded $8,745 and $38,460 in compensation expense for the three months ended September 30, 2023 and 2022, respectively and $54,195 and $156,961 for the nine months ended September 30, 2023 and 2022, respectively. This includes expense related to options issued in prior years for which the requisite service period for those options includes the current period as well as options issued in the current period. Forfeited options result in a reversal in the period forfeited. The fair value of these instruments was calculated using the Black-Scholes option pricing method. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2023 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 14. RELATED PARTY TRANSACTIONS On September 16, 2022, the Company entered into a new consulting agreement with Adam Hershey, its Interim Chief Executive Officer, pursuant to which Mr. Hershey will continue to serve as the Company’s Interim Chief Executive Officer with compensation equal to $200,000 per annum, payable by the Company, monthly. The term of the consulting agreement is for a period of one year, with automatic six-month renewals thereafter unless terminated by either party. The Company has also agreed to extend warrants to purchase 7,280,007 shares of Common Stock, held by an affiliate of Mr. Hershey, for an additional two years until, May 29, 2027. The exercise price and all other terms and conditions of such warrants remain unchanged. We paid $50,000 and $24,999 for the three months ended September 30, 2023 and 2022, respectively, and $150,000 and $74,997 for the nine months ended September 30, 2023 and 2022, respectively. In February 2023, the Company completed the acquisition of Station 2, LLC’s assets. Station 2, LLC is owned by a board member, who is also a shareholder and executive level employee of the Company. See Note 3 for additional information regarding the Station 2 asset acquisition and Note 5 for the license transfer. On July 7, 2023, the Company entered into a Transaction Services Agreement with Allyson Feiler Downing and Loree Schwartz as a result of the Settlement Agreement entered into with the Green Tree Parties as described in Note 3. Ms. Downing was a former officer of the Company and member of the Board of Directors, however, she continues to serve on the Board under the Transaction Services Agreement. Under this Agreement, Ms. Downing and Ms. Schwartz provide certain administrative and management services related to the Transferred Assets in exchange for all revenue generated by the Transferred Assets. The Transaction Services Agreement is effective until the Transferred Assets are officially transferred to the Green Tree Parties. On August 3, 2023, Ms. Downing resigned from the Company’s Board of Directors. The Company currently has a lease agreement with Dalton Adventures, LLC in which the Company leases 17,000 square feet of greenhouse space in Boulder, Colorado for $29,691 a month, of which $27,000 is base rent and $2,691 is property taxes. The base rent increased to $27,405 per month starting in January 2023. The owner of Dalton Adventures, LLC is a principal shareholder and former board member of the Company. We have incurred $75,849 and $75,849 in related party lease expense for the three months ended September 30, 2023 and 2022, respectively, and $227,547 and $151,698 for the nine months ended September 30, 2023 and 2022, respectively. See Note 7 for further discussion of the Company’s obligations associated with related party leases. The Company currently has a lease agreement with JLA Enterprises, LLC in which the Company leases a retail dispensary in Longmont, Colorado. A board member and an executive level employee of the Company are owners of JLA Enterprises, LLC. The Company also has a lease agreement with ALJ 1090, LLC in which the Company leases a building that has a retail dispensary and cultivation facility in Berthoud, Colorado. The same board member is an owner of ALJ 1090, LLC. These leases were assumed as part of the Green Tree Acquisition on December 12, 2022. We have incurred $51,942 and nil in related party lease expense for the three months ended September 30, 2023 and 2022, respectively, and $155,826 and nil for the nine months ended September 30, 2023 and 2022, respectively. See Note 7 for further discussion of the Company’s obligations associated with related party leases. The Company had a lease agreement with Bellewood Holdings, LLC in which the Company leased retail space for the Trees Englewood retail store in Englewood, Colorado for $11,287 per month, of which $10,000 is base rent and $1,287 is property taxes. The owner of Bellewood Holdings, LLC is a principal shareholder and board member of the Company. In June 2022, the building was sold to an unrelated party. We incurred nil of related party lease expense for the three months ended September 30, 2023 and 2022, respectively, and nil and $52,287 for the nine months ended September 30, 2023 and 2022, respectively. See Note 7 for further discussion of the Company’s obligations associated with related-party leases. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 9 Months Ended |
Sep. 30, 2023 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | NOTE 15. SEGMENT INFORMATION Our operations are organized into two segments: Retail and Cultivation. All revenue originates, and all assets are located in the United States. Segment information is presented in accordance with ASC 280, "Segments Reporting." Three months ended September 30, 2023 Retail Cultivation Eliminations Total Revenues $ 4,038,019 $ 415,963 $ (342,399) $ 4,111,583 Costs and expenses (3,403,102) (1,272,117) 342,399 (4,332,820) Segment operating loss $ 634,917 $ (856,154) $ — (221,237) Corporate expenses (1,490,565) ERC Credits 896,679 Net loss from continuing operations before income taxes $ (815,123) 2022 Retail Cultivation Eliminations Total Revenues $ 3,080,778 $ 448,623 $ (352,224) $ 3,177,177 Costs and expenses (2,413,190) (849,269) 352,224 (2,910,235) Segment operating income (loss) $ 667,588 $ (400,646) $ — 266,942 Corporate expenses (2,971,621) Net loss from continuing operations before income taxes $ (2,704,679) Nine months ended September 30, 2023 Retail Cultivation Eliminations Total Total revenues $ 14,228,202 $ 2,044,810 $ (1,952,816) $ 14,320,196 Costs and expenses (13,285,938) (3,457,964) 1,952,816 (14,791,086) Segment operating income (loss) $ 942,264 $ (1,413,154) $ — (470,890) Corporate expenses (5,163,601) ERC Credits 896,679 Net loss from continuing operations before income taxes $ (4,737,812) 2022 Retail Cultivation Eliminations Total Total revenues $ 9,536,657 $ 1,316,241 (866,686) $ 9,986,212 Costs and expenses (7,169,103) (1,971,550) 866,686 (8,273,967) Segment operating income (loss) $ 2,367,554 $ (655,309) $ — 1,712,245 Corporate expenses (5,466,211) Net loss from continuing operations before income taxes $ (3,753,966) September 30, December 31, Total assets 2023 2022 Retail $ 23,904,244 $ 25,212,245 Cultivation 3,058,175 4,628,452 Corporate 539,215 1,985,455 Total assets - segments 27,501,634 31,826,152 Intercompany eliminations — (131,439) Total assets - consolidated $ 27,501,634 $ 31,694,713 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2023 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 16. SUBSEQUENT EVENTS The Company evaluated the impact of subsequent events through the date that the accompanying financial statements were issued. Subsequent to September 30, 2023 and prior to the issuance of these financial statements, the Company completed the transfer of the Transferred Assets to the Green Tree Parties in November 2023. |
NATURE OF OPERATIONS, HISTORY A
NATURE OF OPERATIONS, HISTORY AND PRESENTATION (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
NATURE OF OPERATIONS, HISTORY, AND PRESENTATION | |
Nature of Operations | Nature of Operations TREES Corporation, a Colorado Corporation (the “Company,” “we,” “us,” or “our,”) is a cannabis retailer and cultivator in the States of Colorado and Oregon. We presently operate six (6) cannabis dispensaries as follows: ● Englewood, Colorado o 5005 S. Federal Boulevard – Recreational license only ● Denver, Colorado o East Hampden Avenue (formerly Green Man) – Recreational license only ● Longmont, Colorado o 12626 N. 107 th Street (formerly Green Tree/Ancient Alternatives) – Medical and Recreational licenses ● Three (3) in Oregon o SW Corbett Avenue, Portland, OR – Medical and Recreational licenses o NE 102 nd Avenue, Portland, OR – Medical and Recreational licenses o 7050 NE MLK, Portland, OR – Medical and Recreational licenses We also operate two (2) cultivation facilities in Colorado as follows: ● SevenFive Farm – 3705 N. 75 th Street, Boulder – Retail cultivation license only ● 6859 N. Foothills Highway E-100 (formerly Green Tree/Hillside Enterprises) – Retail cultivation license only Our principal business model is to acquire, integrate and optimize cannabis companies in the retail and cultivation segments utilizing the combined experience of entrepreneurs and synergistic operations of our vertically integrated network. Discontinued Operations - Operations Consulting and Products (“Operations Segment”) Through Next Big Crop (“NBC”), we delivered comprehensive consulting services to the cannabis industry that included obtaining licenses, compliance, cultivation, retail operations, logistical support, facility design and construction, and expansion of existing operations. NBC oversaw our wholesale equipment and supply business, operating under the name “GC Supply,” which provided turnkey sourcing and stocking services to cultivation, retail, and infused products manufacturing facilities. Our products included building materials, equipment, consumables, and compliance packaging. NBC also provided operational support for our internal cultivation. On July 16, 2021, we entered into an Asset Purchase Agreement with an individual to sell substantially all the assets of NBC for a total of $150,000 and 10% of profits generated by the buyer in the states of Michigan, Mississippi, and Massachusetts for a period of twelve months from the closing. On August 2, 2021, the sale of NBC was completed. Pursuant to an amendment to the Asset Purchase Agreement, the buyer paid an additional $75,000 in March 2022, and the 10% profit share described above was eliminated. |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements include all accounts of the Company and its wholly owned subsidiaries. All inter-company accounts and transactions have been eliminated in consolidation. These unaudited condensed consolidated financial statements have been prepared following the requirements of the Securities and Exchange Commission for interim reporting. As permitted under those rules, certain footnotes and other financial information that are normally required by accounting principles generally accepted in the United States of America ("U.S. GAAP") can be condensed or omitted. The condensed consolidated balance sheet for the year ended December 31, 2022, was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. The information included in this quarterly report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and notes thereto of the Company for the year ended December 31, 2022, which were included in the annual report on Form 10-K filed by the Company on April 17, 2023. In the opinion of management, these unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and notes thereto of the Company and include all adjustments, consisting only of normal recurring adjustments, considered necessary for the fair presentation of the Company's financial position and operating results. The results for the three and nine months ended September 30, 2023, are not necessarily indicative of the operating results for the year ending December 31, 2023, or any other interim or future periods. Since the date of the Annual Report, there have been no material changes to the Company’s significant accounting policies. |
Reclassifications | Reclassifications Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations. |
Use of Estimates | Use of Estimates The preparation of our unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management 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. |
Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments that potentially subject us to significant concentrations of credit risk consisted primarily of cash and accounts receivable. Customer and Revenue Concentrations – Cultivation Segment During the three months ended September 30, 2023 and 2022, 89% of SevenFive’s revenue was with five customers and 79% was with one customer, respectively. During the nine months ended September 30, 2023 and 2022, 50% of SevenFive’s revenue was with one customer and 66% was with one customer, respectively. Two of the customers with sales in the three months ended September 30, 2023 are related party dispensaries and the revenues associated with these customers are eliminated in consolidation. During the three months ended September 30, 2023, 84% of Green Tree’s revenue was with four customers. During the nine months ended September 30, 2023, 78% of Green Tree’s revenue was with three customers. The customers in 2023 are related party dispensaries and the revenues associated with these customers are eliminated in consolidation. |
Going Concern | Going Concern We incurred net losses of $815,123 and $4,737,812 during the three and nine months ended September 30, 2023, respectively and $2,704,484 and $3,748,488 for the three and nine months ended September 30, 2022, respectively, and had an accumulated deficit of $98,139,894 as of September 30, 2023. We had cash and cash equivalents of $251,691 and The accompanying unaudited condensed 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. We have incurred recurring losses and negative cash flows from operations since inception and have primarily funded our operations with proceeds from the issuance of debt and equity. We expect our operating losses to continue into the foreseeable future as we continue to execute our acquisition and growth strategy. As a result, we have concluded that there is substantial doubt about our ability to continue as a going concern. Our unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our ability to continue as a going concern is dependent upon our ability to raise additional capital to fund operations, support our planned investing activities, and repay our debt obligations as they become due. If we are unable to obtain additional funding, we would be forced to delay, reduce, or eliminate some or all of our acquisition efforts, which could adversely affect our growth plans. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards 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”- the derivative scope exception and simplifies the diluted earnings per share calculation in certain areas. The amendments in this ASU are effective for annual and interim periods beginning after December 15, 2023, although early adoption is permitted. We adopted this ASU in the first quarter of 2022, and the adoption did not have a material effect on our financial statements. FASB ASU 2016-13 – “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”- FASB ASU 2017-04 – “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” |
BUSINESS ACQUISITION (Tables)
BUSINESS ACQUISITION (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Green Tree LLC | |
Schedule of purchase price allocation | Cash $ 3,928 Inventory 1,588,454 Fixed assets 688,655 Tradename 950,000 Goodwill 3,255,679 $ 6,486,716 |
Schedule of pro forma results of operations | Three months ended Nine months ended September 30, September 30, 2022 2022 Total revenues $ 5,781,150 $ 17,196,773 Net income (loss) attributable to Common Stockholders $ (3,273,476) $ (3,798,897) Net income (loss) per common share $ (0.03) $ (0.03) Weighted average number of basic and diluted common shares outstanding 113,727,033 113,727,033 |
Green Man Corp | |
Schedule of purchase price allocation | Cash $ 8,594 Inventory 108,543 Fixed assets 23,500 Tradename 150,000 Goodwill 2,968,198 $ 3,258,835 |
Schedule of pro forma results of operations | Three months ended Nine months ended September 30, September 30, 2022 2022 Total revenues $ 4,464,409 $ 14,093,905 Net income (loss) attributable to Common Stockholders $ (2,706,386) $ (3,294,030) Net income (loss) per common share $ (0.03) $ (0.03) Weighted average number of basic and diluted common shares outstanding 100,243,887 100,243,887 |
DISCONTINUED OPERATIONS (Tables
DISCONTINUED OPERATIONS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
DISCONTINUED OPERATIONS | |
Schedule of net income (loss) from discontinued operations | Three months ended Nine months ended September 30, September 30, 2023 2022 2023 2022 Product revenues $ — $ — $ — $ 3,438 Service revenues — — — — Total revenues — — — 3,438 Cost of sales — — — — Selling, general and administrative — (195) — (2,040) Professional fees — — — — Depreciation and amortization — — — — Total costs and expenses — (195) — (2,040) Income from discontinued operations $ — $ 195 $ — $ 5,478 |
LICENSE TRANSFER AGREEMENTS (Ta
LICENSE TRANSFER AGREEMENTS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
LICENSE TRANSFER AGREEMENTS | |
Summary of the license transfer | Balance as of August 17, 2023 Asset to be transferred: Intangible assets - License 590,536 Accumulated amortization - License (31,987) Consideration: Extinguishment of 468 debt 356,152 |
INVENTORIES, NET (Tables)
INVENTORIES, NET (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
INVENTORIES, NET | |
Schedule of inventories | September 30, December 31, 2023 2022 Raw materials $ 8,883 $ 8,883 Work-in-progress and finished goods 1,622,510 2,057,779 Less: Inventory reserves (53,140) — Inventories, net $ 1,578,253 $ 2,066,662 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
LEASES | |
Schedule of operating lease expense | For the three months ended September 30, For the nine months ended September 30, 2023 2022 2023 2022 Straight-line operating lease expense $ 197,513 $ 164,103 $ 929,241 $ 548,135 Variable lease cost 44,239 169,368 502,413 326,105 Total operating lease expense $ 241,752 $ 333,471 $ 1,431,654 $ 874,240 |
Schedule of future remaining minimum operating lease payments | Year ending December 31, Operating leases Finance lease 2023 (remaining three months) $ 307,735 $ 50,000 2024 1,252,825 205,400 2025 1,033,857 171,043 2026 764,190 136,940 2027 507,871 143,102 Thereafter 965,359 818,100 Total 4,831,837 1,524,585 Less: Present value adjustment (1,725,921) (803,300) Lease liability 3,105,916 721,285 Less: Lease liability, current (1,245,724) (50,000) Lease liability, non-current $ 1,860,192 $ 671,285 |
Supplemental cash flow information | For the nine months ended September 30, 2023 2022 Supplemental cash flow information Cash paid for amounts included in operating lease liability $ 957,153 $ 193,523 Cash paid for amounts included in finance lease liability $ 150,000 $ — Supplemental lease disclosures of non-cash transactions: ROU assets obtained in exchange for operating lease liabilities $ 348,825 $ 172,053 |
ACCRUED STOCK PAYABLE (Tables)
ACCRUED STOCK PAYABLE (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
ACCRUED STOCK PAYABLE | |
Schedule of accrued common stock payable | Number of Amount Shares Balance as of December 31, 2021 $ 444,894 1,769,537 Stock issued (383,994) (1,669,537) Balance as of December 31, 2022 $ 60,900 100,000 Stock issued — — Balance as of September 30, 2023 $ 60,900 100,000 |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Class of Warrant or Right [Line Items] | |
Schedule of notes payable | September 30, 2023 December 31, 2022 Third-party Related-party Total Third-party Related-party Total 2022 12% Notes $ 13,167,796 332,204 13,500,000 $ 13,167,796 $ 332,204 $ 13,500,000 Trees Transaction Notes — 314,154 314,154 — 1,191,865 1,191,865 Green Tree Acquisition Notes 774,750 2,725,250 3,500,000 774,750 2,725,250 3,500,000 Green Man Acquisition Notes 1,500,000 — 1,500,000 1,500,000 — 1,500,000 Unamortized debt discount (1,123,845) (165,746) (1,289,591) (1,527,346) (361,587) (1,888,933) Total debt 14,318,701 3,205,862 17,524,563 13,915,200 3,887,732 17,802,932 Less: Current portion (1,556,433) (2,857,724) (4,414,157) (179,827) (1,723,517) (1,903,344) Long-term portion $ 12,762,268 $ 348,138 $ 13,110,406 $ 13,735,373 $ 2,164,215 $ 15,899,588 |
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 | For purposes of determining the debt discount, the underlying assumptions used in the Black-Scholes model to determine the fair value of the 10% Warrants as of December 23, 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% For purposes of determining the debt discount, the underlying assumptions used in the Black-Scholes model to determine the fair value of the 10% Warrants as of February 8, 2021, were: Current stock price $ 1.12 Exercise price $ 0.56 Risk-free interest rate 0.48% Expected dividend yield — Expected term (in years) 5.0 Expected volatility 118% For purposes of determining the debt discount, the underlying assumptions used in the Black-Scholes model to determine the fair value of the 10% Warrants as of April 20, 2021, were: Current stock price $ 0.83 Exercise price $ 0.56 Risk-free interest rate 0.81% Expected dividend yield — Expected term (in years) 5.0 Expected volatility 115% |
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 | For purposes of determining the debt discount, the underlying assumptions used in the Black-Scholes model to determine the fair value of the 12% Warrants as of September 15, 2022, were: Current stock price $ 0.20 Exercise price $ 0.70 Risk-free interest rate 3.66% Expected dividend yield — Expected term (in years) 5.0 Expected volatility 107% |
WARRANT DERIVATIVE LIABILITY (T
WARRANT DERIVATIVE LIABILITY (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
WARRANT DERIVATIVE LIABILITY. | |
Summary of key assumptions used to determine fair value of warrants | September 30, December 31, 2023 2022 Number of shares underlying the warrants 322,807 322,807 Fair market value of stock $ 0.16 $ 0.15 Exercise price $ 0.40 $ 0.40 Volatility 90 % 78 % Risk-free interest rate 5.53 % 3.99 % Warrant life (years) 0.66 1.41 |
Summary of the changes in the fair value of the warrant derivative liability | Three months ended September 30, Nine months ended September 30, 2023 2022 2023 2022 Beginning balance $ 289 $ 29,723 $ 5,508 $ 28,318 Warrant exercise — — — — Change in fair value of warrants derivative liability 2,860 (16,364) (2,359) (14,959) Ending balance $ 3,149 $ 13,359 $ 3,149 $ 13,359 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
STOCKHOLDERS' EQUITY | |
Summary of 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, 2022 4,936,825 $ 1.08 4.4 $ 22,000 Granted — — Forfeited or expired — — Outstanding as of September 30, 2023 4,936,825 $ 1.08 4.4 $ 22,000 Exercisable as of September 30, 2023 4,936,825 $ 1.08 4.4 $ 22,000 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
SEGMENT INFORMATION | |
Schedule of segment reporting information, by segment | Three months ended September 30, 2023 Retail Cultivation Eliminations Total Revenues $ 4,038,019 $ 415,963 $ (342,399) $ 4,111,583 Costs and expenses (3,403,102) (1,272,117) 342,399 (4,332,820) Segment operating loss $ 634,917 $ (856,154) $ — (221,237) Corporate expenses (1,490,565) ERC Credits 896,679 Net loss from continuing operations before income taxes $ (815,123) 2022 Retail Cultivation Eliminations Total Revenues $ 3,080,778 $ 448,623 $ (352,224) $ 3,177,177 Costs and expenses (2,413,190) (849,269) 352,224 (2,910,235) Segment operating income (loss) $ 667,588 $ (400,646) $ — 266,942 Corporate expenses (2,971,621) Net loss from continuing operations before income taxes $ (2,704,679) Nine months ended September 30, 2023 Retail Cultivation Eliminations Total Total revenues $ 14,228,202 $ 2,044,810 $ (1,952,816) $ 14,320,196 Costs and expenses (13,285,938) (3,457,964) 1,952,816 (14,791,086) Segment operating income (loss) $ 942,264 $ (1,413,154) $ — (470,890) Corporate expenses (5,163,601) ERC Credits 896,679 Net loss from continuing operations before income taxes $ (4,737,812) 2022 Retail Cultivation Eliminations Total Total revenues $ 9,536,657 $ 1,316,241 (866,686) $ 9,986,212 Costs and expenses (7,169,103) (1,971,550) 866,686 (8,273,967) Segment operating income (loss) $ 2,367,554 $ (655,309) $ — 1,712,245 Corporate expenses (5,466,211) Net loss from continuing operations before income taxes $ (3,753,966) |
Reconciliation of assets from segment to consolidated | September 30, December 31, Total assets 2023 2022 Retail $ 23,904,244 $ 25,212,245 Cultivation 3,058,175 4,628,452 Corporate 539,215 1,985,455 Total assets - segments 27,501,634 31,826,152 Intercompany eliminations — (131,439) Total assets - consolidated $ 27,501,634 $ 31,694,713 |
NATURE OF OPERATIONS, HISTORY_2
NATURE OF OPERATIONS, HISTORY AND PRESENTATION (Details) | 3 Months Ended | 9 Months Ended | |||||
Aug. 02, 2021 USD ($) | Jul. 16, 2021 USD ($) | Sep. 30, 2023 USD ($) customer item | Sep. 30, 2022 USD ($) customer | Sep. 30, 2023 USD ($) item customer | Sep. 30, 2022 USD ($) customer | Dec. 31, 2022 USD ($) | |
NATURE OF OPERATIONS, HISTORY AND PRESENTATION | |||||||
Number of cannabis dispensaries the company operates | item | 6 | 6 | |||||
Number of cultivation facilities the company operates | item | 2 | 2 | |||||
Number of customers who are related party dispensaries | customer | 2 | ||||||
Cash and cash equivalents | $ 251,691 | $ 251,691 | $ 2,583,833 | ||||
Net loss | (815,123) | $ (2,704,484) | (4,737,812) | $ (3,748,488) | |||
Accumulated deficit | $ (98,139,894) | $ (98,139,894) | $ (93,384,382) | ||||
Oregon | |||||||
NATURE OF OPERATIONS, HISTORY AND PRESENTATION | |||||||
Number of cannabis dispensaries the company operates | item | 3 | 3 | |||||
Next Big Crop | Discontinued Operations, Held-for-sale | |||||||
NATURE OF OPERATIONS, HISTORY AND PRESENTATION | |||||||
Total of consideration | $ 150,000 | ||||||
Percentage of profits generated | 10% | ||||||
Period for percentage of profit | twelve months | ||||||
Additional consideration | $ 75,000 | ||||||
Percentage of profit eliminated | 10% | ||||||
SevenFive Farm | Cultivation segment | Revenue Benchmark | Customer Concentration Risk | |||||||
NATURE OF OPERATIONS, HISTORY AND PRESENTATION | |||||||
Concentration risk, percentage | 89% | 79% | 50% | 66% | |||
Number of customers | customer | 5 | 1 | 1 | 1 | |||
Green Trees Farm | Cultivation segment | Revenue Benchmark | Customer Concentration Risk | |||||||
NATURE OF OPERATIONS, HISTORY AND PRESENTATION | |||||||
Concentration risk, percentage | 84% | 78% | |||||
Number of customers | customer | 4 | 3 |
BUSINESS ACQUISITION - Summary
BUSINESS ACQUISITION - Summary (Details) - USD ($) | 1 Months Ended | ||
Dec. 19, 2022 | Dec. 12, 2022 | Dec. 31, 2022 | |
Green Man Corp | |||
BUSINESS ACQUISITION | |||
Stock issued in exchange for purchase of assets (in shares) | 4,494,382 | ||
Cash paid for acquisition | $ 1,225,000 | ||
Consideration payable in equal monthly installments | $ 1,500,000 | $ 1,500,000 | |
Term of consideration payable in equal monthly installments | 18 months | 18 months | |
Share price on acquisition date (in dollars per share) | $ 0.18 | ||
Fair value of consideration transferred | $ 808,989 | ||
Discount Rate | 12% | ||
Fair Value | $ 1,224,846 | ||
Green Tree LLC | |||
BUSINESS ACQUISITION | |||
Stock issued in exchange for purchase of assets (in shares) | 17,977,528 | ||
Cash paid for acquisition | $ 500,000 | ||
Consideration payable in equal monthly installments | $ 3,500,000 | $ 3,500,000 | |
Term of consideration payable in equal monthly installments | 15 months | 15 months | |
Share price on acquisition date (in dollars per share) | $ 0.165 | ||
Fair value of consideration transferred | $ 2,966,292 | ||
Trees MLK, Inc. | |||
BUSINESS ACQUISITION | |||
Discount Rate | 12% | ||
Fair Value | $ 3,017,510 |
BUSINESS ACQUISITION - Purchase
BUSINESS ACQUISITION - Purchase Price Allocation (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 | Dec. 19, 2022 | Dec. 12, 2022 |
Preliminary purchase price allocation | ||||
Goodwill | $ 18,384,974 | $ 18,384,974 | ||
Green Tree LLC | ||||
Preliminary purchase price allocation | ||||
Cash | $ 3,928 | |||
Inventories | 1,588,454 | |||
Fixed assets | 688,655 | |||
Tradename | 950,000 | |||
Goodwill | 3,255,679 | |||
Preliminary purchase price | $ 6,486,716 | |||
Green Man Corp | ||||
Preliminary purchase price allocation | ||||
Cash | $ 8,594 | |||
Inventories | 108,543 | |||
Fixed assets | 23,500 | |||
Tradename | 150,000 | |||
Goodwill | 2,968,198 | |||
Preliminary purchase price | $ 3,258,835 |
BUSINESS ACQUISITION - Pro Form
BUSINESS ACQUISITION - Pro Forma (Details) - USD ($) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2022 | Sep. 30, 2022 | |
Green Tree LLC | ||
Pro forma effects of the acquisition on the results of operations | ||
Total revenues | $ 5,781,150 | $ 17,196,773 |
Net income (loss) attributable to Common Stockholders | $ (3,273,476) | $ (3,798,897) |
Net income (loss) per common share, basic | $ (0.03) | $ (0.03) |
Net income (loss) per common share, diluted | $ (0.03) | $ (0.03) |
Weighted average number of basic common shares outstanding | 113,727,033 | 113,727,033 |
Weighted average number of diluted common shares outstanding | 113,727,033 | 113,727,033 |
Green Man Corp | ||
Pro forma effects of the acquisition on the results of operations | ||
Total revenues | $ 4,464,409 | $ 14,093,905 |
Net income (loss) attributable to Common Stockholders | $ (2,706,386) | $ (3,294,030) |
Net income (loss) per common share, basic | $ (0.03) | $ (0.03) |
Net income (loss) per common share, diluted | $ (0.03) | $ (0.03) |
Weighted average number of basic common shares outstanding | 100,243,887 | 100,243,887 |
Weighted average number of diluted common shares outstanding | 100,243,887 | 100,243,887 |
ASSET ACQUISITION (Details)
ASSET ACQUISITION (Details) - USD ($) | 1 Months Ended | ||
Feb. 28, 2023 | Sep. 30, 2023 | Dec. 31, 2022 | |
Asset Acquisition [Line Items] | |||
Intangible assets, net | $ 1,947,887 | $ 2,543,898 | |
Denver CO | |||
Asset Acquisition [Line Items] | |||
Cash paid for acquisition | $ 256,582 | ||
Consideration payable in equal monthly amounts | $ 384,873 | ||
Intangible assets, net | $ 0 |
DISCONTINUED OPERATIONS (Detail
DISCONTINUED OPERATIONS (Details) - Discontinued Operations, Held-for-sale - Next Big Crop [Member] - USD ($) | Aug. 02, 2021 | Jul. 16, 2021 |
DISCONTINUED OPERATIONS | ||
Total of consideration | $ 150,000 | |
Percentage of profits generated | 10% | |
Period for percentage of profit | twelve months | |
Additional consideration | $ 75,000 | |
Percentage of profit eliminated | 10% |
DISCONTINUED OPERATIONS - Summa
DISCONTINUED OPERATIONS - Summary of the Discontinued Operations (Details) - Operations Segment - USD ($) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2022 | Sep. 30, 2022 | |
DISCONTINUED OPERATIONS | ||
Total revenues | $ 3,438 | |
Selling, general and administrative | $ (195) | (2,040) |
Total costs and expenses | (195) | (2,040) |
Income from discontinued operations | $ 195 | 5,478 |
Product revenues | ||
DISCONTINUED OPERATIONS | ||
Total revenues | $ 3,438 |
LICENSE TRANSFER AGREEMENTS (De
LICENSE TRANSFER AGREEMENTS (Details) - USD ($) | 1 Months Ended | 9 Months Ended | |||
Sep. 13, 2023 | Aug. 17, 2023 | Oct. 31, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||
Loss on extinguishment of debt | $ 202,397 | $ 310,622 | |||
Assignees | |||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||
Intangible assets - License | $ 590,536 | ||||
Accumulated amortization - License | (31,987) | ||||
Loss on extinguishment of debt | $ 202,397 | ||||
Extinguishment of 468 debt | $ 356,152 | ||||
Asset Purchase Agreement | Green Tree Parties | |||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||
Number of shares agreed to be redeemable | 9,917,574 |
INVENTORIES, NET (Details)
INVENTORIES, NET (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
INVENTORIES, NET | ||
Raw materials | $ 8,883 | $ 8,883 |
Work-in-progress and finished goods | 1,622,510 | 2,057,779 |
Less: Inventory reserves | (53,140) | |
Inventories, net | $ 1,578,253 | $ 2,066,662 |
LEASES (Details)
LEASES (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 USD ($) lease | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) lease | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | |
OPERATING LEASE RIGHT-OF-USE ASSET / OPERATING LEASE LIABILITY | |||||
Right-of-use asset | $ 2,957,548 | $ 2,957,548 | $ 3,866,406 | ||
Operating lease liability, current | 1,245,724 | 1,245,724 | 1,433,184 | ||
Operating lease liability, non-current | 1,860,192 | 1,860,192 | $ 2,541,590 | ||
Rent expense | $ 241,752 | $ 333,471 | $ 1,431,654 | $ 874,240 | |
Number of Operating Leases | lease | 1 | ||||
Discount rate | 20% | 20% | |||
Finance lease expense | $ 41,823 | 0 | $ 125,470 | 0 | |
Related party leases | |||||
OPERATING LEASE RIGHT-OF-USE ASSET / OPERATING LEASE LIABILITY | |||||
Right-of-use asset | 845,234 | 845,234 | |||
Operating lease liability, current | 535,143 | 535,143 | |||
Operating lease liability, non-current | 368,715 | 368,715 | |||
Rent expense | $ 127,790 | $ 75,849 | $ 383,371 | $ 151,698 | |
Number of operating lease | lease | 3 | 3 |
LEASES - Operating Lease Expens
LEASES - Operating Lease Expense (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
LEASES | ||||
Straight-line operating lease expense | $ 197,513 | $ 164,103 | $ 929,241 | $ 548,135 |
Variable lease cost | 44,239 | 169,368 | 502,413 | 326,105 |
Total operating lease expense | $ 241,752 | $ 333,471 | $ 1,431,654 | $ 874,240 |
LEASES - Future Remaining Minim
LEASES - Future Remaining Minimum Lease Payments (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Operating leases future remaining minimum lease payments | ||
2023 (remaining three months) | $ 307,735 | |
2024 | 1,252,825 | |
2025 | 1,033,857 | |
2026 | 764,190 | |
2027 | 507,871 | |
Thereafter | 965,359 | |
Total | 4,831,837 | |
Less: Present value adjustment | (1,725,921) | |
Lease liability | 3,105,916 | |
Less: Lease liability, current | (1,245,724) | $ (1,433,184) |
Lease liability, non-current | 1,860,192 | 2,541,590 |
Finance leases future remaining minimum lease payments | ||
2023 (remaining three months) | 50,000 | |
2024 | 205,400 | |
2025 | 171,043 | |
2026 | 136,940 | |
2027 | 143,102 | |
Thereafter | 818,100 | |
Total | 1,524,585 | |
Less: Present value adjustment | (803,300) | |
Lease liability | 721,285 | |
Less: Lease liability, current | (50,000) | (55,777) |
Lease liability, non-current | 671,285 | $ 706,653 |
Lease, Renewal Options Exercise, Remaining Minimum Lease Payments Due | $ 1,219,188 | |
Operating Lease, Weighted Average Remaining Lease Term | 4 years 6 months 14 days | |
Finance Lease, Weighted Average Remaining Lease Term | 9 years 3 months |
LEASES - Supplemental Cash Flow
LEASES - Supplemental Cash Flow Information (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
LEASES | ||
Cash paid for amounts included in operating lease liability | $ 957,153 | $ 193,523 |
Cash paid for amounts included in finance lease liability | 150,000 | |
ROU assets obtained in exchange for operating lease liabilities | $ 348,825 | $ 172,053 |
ACCRUED STOCK PAYABLE (Details)
ACCRUED STOCK PAYABLE (Details) - USD ($) | 1 Months Ended | 9 Months Ended | 12 Months Ended | |
Feb. 18, 2020 | Dec. 31, 2021 | Sep. 30, 2023 | Dec. 31, 2022 | |
Trees Waterfront LLC | ||||
ACCRUED STOCK PAYABLE | ||||
Number of shares granted | 1,669,537 | |||
Common Stock awards | ||||
ACCRUED STOCK PAYABLE | ||||
Consultant stock award, Amount | $ 60,900 | |||
Consultant stock award, Shares | 100,000 | |||
Stock price on date of grant (in dollars per share) | $ 0.61 | |||
Consultant stock award, shares issued | 0 | |||
Common Stock awards | Common Stock | ||||
ACCRUED STOCK PAYABLE | ||||
Balance at beginning of the period, Amount | $ 60,900 | $ 444,894 | ||
Balance at beginning of the period, Shares | 100,000 | 1,769,537 | ||
Stock issued, Amount | $ (383,994) | |||
Stock issued, Shares | (1,669,537) | |||
Balance at end of the period, Amount | $ 444,894 | $ 60,900 | $ 60,900 | |
Balance at end of the period, Shares | 1,769,537 | 100,000 | 100,000 |
NOTES PAYABLE - Schedule of Not
NOTES PAYABLE - Schedule of Notes Payable (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 | Sep. 15, 2022 |
NOTES PAYABLE | |||
Unamortized debt discount | $ (1,289,591) | $ (1,888,933) | |
Total | 17,524,563 | 17,802,932 | |
Less: Current portion | (4,414,157) | (1,903,344) | |
Long-term portion | 13,110,406 | 15,899,588 | |
2022 12% Notes | |||
NOTES PAYABLE | |||
Debt carrying amount | 13,500,000 | 13,500,000 | |
Unamortized debt discount | $ (675,000) | ||
Trees Transaction Notes | |||
NOTES PAYABLE | |||
Debt carrying amount | 314,154 | 1,191,865 | |
Green Tree Acquisition Notes | |||
NOTES PAYABLE | |||
Debt carrying amount | 3,500,000 | 3,500,000 | |
Green Man Acquisition Notes | |||
NOTES PAYABLE | |||
Debt carrying amount | 1,500,000 | 1,500,000 | |
Related Party | |||
NOTES PAYABLE | |||
Unamortized debt discount | (165,746) | (361,587) | |
Total | 3,205,862 | 3,887,732 | |
Less: Current portion | (2,857,724) | (1,723,517) | |
Long-term portion | 348,138 | 2,164,215 | |
Related Party | 2022 12% Notes | |||
NOTES PAYABLE | |||
Debt carrying amount | 332,204 | 332,204 | |
Related Party | Trees Transaction Notes | |||
NOTES PAYABLE | |||
Debt carrying amount | 314,154 | 1,191,865 | |
Related Party | Green Tree Acquisition Notes | |||
NOTES PAYABLE | |||
Debt carrying amount | 2,725,250 | 2,725,250 | |
Third Party Member | |||
NOTES PAYABLE | |||
Unamortized debt discount | (1,123,845) | (1,527,346) | |
Total | 14,318,701 | 13,915,200 | |
Less: Current portion | (1,556,433) | (179,827) | |
Long-term portion | 12,762,268 | 13,735,373 | |
Third Party Member | 2022 12% Notes | |||
NOTES PAYABLE | |||
Debt carrying amount | 13,167,796 | 13,167,796 | |
Third Party Member | Green Tree Acquisition Notes | |||
NOTES PAYABLE | |||
Debt carrying amount | 774,750 | 774,750 | |
Third Party Member | Green Man Acquisition Notes | |||
NOTES PAYABLE | |||
Debt carrying amount | $ 1,500,000 | $ 1,500,000 |
NOTES PAYABLE - Trees Transacti
NOTES PAYABLE - Trees Transaction Notes (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||
Dec. 19, 2022 | Dec. 12, 2022 | Dec. 31, 2022 | Jan. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Debt Instrument [Line Items] | ||||||||
Debt discount | $ 1,888,933 | $ 1,289,591 | $ 1,289,591 | |||||
TREES MLK | ||||||||
Debt Instrument [Line Items] | ||||||||
Consideration payable in equal monthly installments | $ 384,873 | |||||||
Consideration payable in equal monthly amounts | $ 16,036 | |||||||
Term of consideration payable in equal monthly installments | 24 months | |||||||
Green Tree LLC | ||||||||
Debt Instrument [Line Items] | ||||||||
Consideration payable in equal monthly installments | $ 3,500,000 | 3,500,000 | ||||||
Consideration payable in equal monthly amounts | $ 233,333 | |||||||
Term of consideration payable in equal monthly installments | 15 months | 15 months | ||||||
Debt discount | 512,367 | 512,367 | ||||||
Amortization of debt discount | 96,672 | $ 0 | 251,520 | $ 0 | ||||
Green Man Corp | ||||||||
Debt Instrument [Line Items] | ||||||||
Consideration payable in equal monthly installments | $ 1,500,000 | $ 1,500,000 | ||||||
Consideration payable in equal monthly amounts | $ 83,333 | |||||||
Term of consideration payable in equal monthly installments | 18 months | 18 months | ||||||
Debt discount | 275,154 | 275,154 | ||||||
Amortization of debt discount | $ 39,545 | $ 0 | $ 115,171 | $ 0 |
NOTES PAYABLE - 2022 12 Notes (
NOTES PAYABLE - 2022 12 Notes (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||||
Sep. 15, 2022 | Feb. 08, 2021 | Feb. 28, 2023 | Sep. 30, 2022 | Dec. 31, 2020 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | Apr. 20, 2021 | |
Debt Instrument [Line Items] | |||||||||||
Debt discount | $ 1,289,591 | $ 1,289,591 | $ 1,888,933 | ||||||||
Additional paid-in capital | 98,652,956 | 98,652,956 | $ 98,598,761 | ||||||||
10% Warrants | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Interest rate (as a percent) | 10% | 10% | 10% | 10% | |||||||
Percentage of aggregate principal amount coverage | 20% | 20% | |||||||||
Exercise price of warrants | $ 0.56 | $ 0.56 | $ 0.56 | ||||||||
Additional paid-in capital | $ 810,000 | ||||||||||
12% Warrants | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Interest rate (as a percent) | 12% | 12% | 12% | 12% | |||||||
Percentage of aggregate principal amount coverage | 20% | ||||||||||
Exercise price of warrants | $ 0.70 | ||||||||||
10% Notes | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Interest rate (as a percent) | 10% | 10% | 10% | 10% | 10% | 10% | |||||
Aggregate principal amount | $ 2,940,000 | ||||||||||
Aggregate indebtedness amount | $ 2,912,750 | ||||||||||
Stock issued | 1,050,011 | ||||||||||
Amortization of debt discount | $ 1,125,844 | 0 | $ 41,352 | 0 | $ 84,375 | ||||||
12% Investors | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Interest rate (as a percent) | 12% | ||||||||||
Proceeds from debt | $ 10,587,250 | ||||||||||
Percentage of aggregate principal amount coverage | 50% | ||||||||||
12% Investors | Maximum | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Conversion price (in dollars per share) | $ 1 | ||||||||||
Twelve Percent Notes 2022 [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Interest rate (as a percent) | 12% | 12% | 12% | 12% | |||||||
Aggregate principal amount | $ 13,500,000 | ||||||||||
Stock issued | 3,857,150 | ||||||||||
Debt fee percentage (as a percent) | 5% | ||||||||||
Debt discount | $ 675,000 | ||||||||||
Amortization of debt discount | 78,404 | $ 11,931 | 232,651 | $ 11,931 | |||||||
Twelve Percent Notes 2022 [Member] | Denver CO | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Interest rate (as a percent) | 12% | ||||||||||
Debt discount | $ 50,918 | ||||||||||
Amortization of debt discount | $ 5,164 | $ 22,197 | |||||||||
Aggregate principal amount of 12% Note to be issue and sell in consideration for acquisition | $ 384,873 | ||||||||||
Twelve Percent Notes 2022 [Member] | 12% Warrants | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Stock issued | 1,928,571 | ||||||||||
Debt discount | 10% Warrants | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Additional paid-in capital | $ 429,300 | $ 254,400 | |||||||||
Debt discount | 12% Warrants | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Additional paid-in capital | $ 569,223 | ||||||||||
Extinguishment of debt | 10% Warrants | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Additional paid-in capital | $ 131,000 | ||||||||||
Extinguishment of debt | 12% Warrants | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Additional paid-in capital | $ 103,577 |
NOTES PAYABLE - 2020 10 Notes (
NOTES PAYABLE - 2020 10 Notes (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||||
Apr. 20, 2021 USD ($) item $ / shares | Feb. 08, 2021 USD ($) $ / shares shares | Sep. 30, 2022 USD ($) | Dec. 31, 2020 USD ($) $ / shares shares | Sep. 30, 2023 USD ($) $ / shares | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) $ / shares | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) $ / shares | Sep. 15, 2022 USD ($) shares | Sep. 10, 2021 $ / shares | |
Debt Instrument [Line Items] | |||||||||||
Additional paid-in capital | $ 98,652,956 | $ 98,652,956 | $ 98,598,761 | ||||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | |||||||
Repayment of notes | $ 918,852 | $ 4,867,012 | |||||||||
Loss on extinguishment of debt | $ (218,237) | $ (310,622) | (218,237) | $ (310,622) | |||||||
10% Warrants | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Interest rate (as a percent) | 10% | 10% | 10% | 10% | |||||||
Percentage of aggregate principal amount coverage | 20% | 20% | |||||||||
Exercise price of warrants | $ / shares | $ 0.56 | $ 0.56 | $ 0.56 | ||||||||
Additional paid-in capital | $ 810,000 | ||||||||||
10% Notes | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Interest rate (as a percent) | 10% | 10% | 10% | 10% | 10% | 10% | |||||
Aggregate principal amount | $ 2,940,000 | ||||||||||
Aggregate indebtedness amount | $ 2,912,750 | ||||||||||
Stock issued | shares | 1,050,011 | ||||||||||
Amortization of debt discount | $ 1,125,844 | 0 | $ 41,352 | 0 | $ 84,375 | ||||||
Beneficial conversion feature | $ 0 | ||||||||||
Debt exchanged amount | 2,912,750 | ||||||||||
Repayment of notes | 3,987,250 | ||||||||||
Loss on extinguishment of debt | $ 207,045 | ||||||||||
10% Notes 2021 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Interest rate (as a percent) | 10% | ||||||||||
Aggregate principal amount | $ 1,660,000 | ||||||||||
Stock issued | shares | 592,858 | ||||||||||
Conversion price (in dollars per share) | $ / shares | $ 0.66 | ||||||||||
Debt conversion commitment price (in dollars per share) | $ / shares | 0.90 | ||||||||||
Amortization of debt discount | 0 | 454,741 | 0 | 594,721 | |||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | ||||||||||
10% Notes April 2021 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Interest rate (as a percent) | 10% | ||||||||||
Aggregate principal amount | $ 2,300,000 | ||||||||||
Percentage of aggregate principal amount coverage | 20% | ||||||||||
Exercise price of warrants | $ / shares | $ 0.56 | ||||||||||
Conversion price (in dollars per share) | $ / shares | 0.49 | ||||||||||
Debt conversion commitment price (in dollars per share) | $ / shares | $ 0.83 | ||||||||||
Amortization of debt discount | 0 | $ 775,638 | 0 | $ 1,023,577 | |||||||
Convertible note offering amount | $ 4,600,000 | ||||||||||
Number of lead investor | item | 1 | ||||||||||
Aggregate principal amount invested | 35.50% | ||||||||||
10% Investors | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Interest rate (as a percent) | 10% | 10% | 10% | ||||||||
Proceeds from debt | $ 1,940,000 | ||||||||||
Conversion price trigger (as a percent) | 80% | 80% | 80% | ||||||||
10% Investors | Minimum | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Conversion price (in dollars per share) | $ / shares | $ 0.65 | $ 0.65 | $ 0.65 | ||||||||
10% Investors | Maximum | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Percentage of aggregate principal amount coverage | 50% | 50% | 50% | ||||||||
Conversion price (in dollars per share) | $ / shares | $ 1 | $ 1 | $ 1 | ||||||||
Twelve Percent Notes 2022 [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Interest rate (as a percent) | 12% | 12% | 12% | 12% | |||||||
Aggregate principal amount | $ 13,500,000 | ||||||||||
Stock issued | shares | 3,857,150 | ||||||||||
Amortization of debt discount | $ 78,404 | $ 11,931 | $ 232,651 | $ 11,931 | |||||||
15% Notes [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Interest rate (as a percent) | 15% | ||||||||||
Aggregate indebtedness amount | $ 1,000,000 | ||||||||||
Debt discount | 10% Warrants | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Additional paid-in capital | $ 429,300 | 254,400 | |||||||||
Debt discount | 10% Notes 2021 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Additional paid-in capital | $ 417,539 | ||||||||||
Debt discount | 10% Notes April 2021 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Additional paid-in capital | $ 692,500 | ||||||||||
Extinguishment of debt | 10% Warrants | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Additional paid-in capital | $ 131,000 |
NOTES PAYABLE - Assumptions Use
NOTES PAYABLE - Assumptions Used to Calculate Fair Value of Warrants (Details) | Sep. 15, 2022 USD ($) Y $ / shares | Apr. 20, 2021 $ / shares USD ($) Y | Feb. 08, 2021 $ / shares Y | Dec. 23, 2020 Y $ / shares |
10% Warrants | Current stock price | ||||
NOTES PAYABLE | ||||
Measurement input used to calculate fair value of warrants | $ / shares | 0.83 | 1.12 | 0.53 | |
10% Warrants | Exercise price | ||||
NOTES PAYABLE | ||||
Measurement input used to calculate fair value of warrants | 0.56 | 0.56 | 0.56 | |
10% Warrants | Risk-free interest rate | ||||
NOTES PAYABLE | ||||
Measurement input used to calculate fair value of warrants | 0.81 | 0.48 | 0.38 | |
10% Warrants | Expected term (in years) | ||||
NOTES PAYABLE | ||||
Measurement input used to calculate fair value of warrants | Y | 5 | 5 | 5 | |
10% Warrants | Expected volatility | ||||
NOTES PAYABLE | ||||
Measurement input used to calculate fair value of warrants | 115 | 118 | 115 | |
12% Warrants | Current stock price | ||||
NOTES PAYABLE | ||||
Measurement input used to calculate fair value of warrants | $ / shares | 0.20 | |||
12% Warrants | Exercise price | ||||
NOTES PAYABLE | ||||
Measurement input used to calculate fair value of warrants | $ | 0.70 | |||
12% Warrants | Risk-free interest rate | ||||
NOTES PAYABLE | ||||
Measurement input used to calculate fair value of warrants | 0.0366 | |||
12% Warrants | Expected term (in years) | ||||
NOTES PAYABLE | ||||
Measurement input used to calculate fair value of warrants | Y | 5 | |||
12% Warrants | Expected volatility | ||||
NOTES PAYABLE | ||||
Measurement input used to calculate fair value of warrants | 1.07 |
WARRANT DERIVATIVE LIABILITY -
WARRANT DERIVATIVE LIABILITY - Summary (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
May 31, 2019 | May 31, 2020 | Sep. 30, 2023 | Sep. 30, 2022 | Mar. 31, 2021 | Dec. 31, 2019 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2020 | Dec. 31, 2022 | |
WARRANT DERIVATIVE LIABILITY | ||||||||||
Common stock, shares issued | 118,664,094 | 118,664,094 | 118,664,094 | |||||||
Gain (loss) on warrant derivative liability | $ (2,860) | $ 16,365 | $ 2,359 | $ 14,959 | ||||||
2019 Warrants | ||||||||||
WARRANT DERIVATIVE LIABILITY | ||||||||||
Proceeds from issuance of common stock and warrants | $ 3,000,000 | |||||||||
Shares issued in cashless exercise of warrants | 747,208 | |||||||||
Common stock, shares issued | 3,000,000 | |||||||||
Number of warrants issued | 3,000,000 | |||||||||
Share price | $ 1 | |||||||||
Exercise price of warrants | $ 1.30 | |||||||||
Warrant exercise price, decrease (in dollars per share) | $ 0.45 | $ 0.45 | $ 0.3983 | |||||||
Common stock, other shares, outstanding | 322,807 | 8,666,666 | 322,807 | 9,591,614 | ||||||
Warrants exercised | 1,323,000 | |||||||||
Adjustment to derivative liability | $ 1,523,117 | |||||||||
Gain (loss) on warrant derivative liability | $ (2,860) | $ 16,364 | $ 2,359 | $ 14,959 |
WARRANT DERIVATIVE LIABILITY _2
WARRANT DERIVATIVE LIABILITY - Assumptions Used to Calculate Fair Value of 2019 Warrants (Details) - 2019 Warrants | Sep. 30, 2023 $ / shares Y item | Dec. 31, 2022 item $ / shares Y |
Number of shares underlying the warrants | ||
WARRANT DERIVATIVE LIABILITY | ||
Measurement input used to calculate fair value of warrants | item | 322,807 | 322,807 |
Fair market value of stock | ||
WARRANT DERIVATIVE LIABILITY | ||
Measurement input used to calculate fair value of warrants | 0.16 | 0.15 |
Exercise price | ||
WARRANT DERIVATIVE LIABILITY | ||
Measurement input used to calculate fair value of warrants | $ / shares | 0.40 | 0.40 |
Volatility | ||
WARRANT DERIVATIVE LIABILITY | ||
Measurement input used to calculate fair value of warrants | 90 | 78 |
Risk-free interest rate | ||
WARRANT DERIVATIVE LIABILITY | ||
Measurement input used to calculate fair value of warrants | 5.53 | 3.99 |
Warrant life (years) | ||
WARRANT DERIVATIVE LIABILITY | ||
Measurement input used to calculate fair value of warrants | Y | 0.66 | 1.41 |
WARRANT DERIVATIVE LIABILITY _3
WARRANT DERIVATIVE LIABILITY - Schedule of Level 3 Financial Liabilities (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Changes in the fair value of the warrant derivative liability | ||||
Beginning balance | $ 289 | $ 29,723 | $ 5,508 | $ 28,318 |
Change in fair value of warrants derivative liability | 2,860 | (16,364) | (2,359) | (14,959) |
Ending balance | $ 3,149 | $ 13,359 | $ 3,149 | $ 13,359 |
OTHER INCOME (Details)
OTHER INCOME (Details) | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
OTHER INCOME. | |
Employee retention credit net of third-party specialist fee | $ 1,085,939 |
Party specialist fee | 217,188 |
Cash received from ECR | 909,282 |
Other current assets relating to ECR | $ 176,657 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) | 1 Months Ended | 9 Months Ended | 12 Months Ended | |||
Nov. 01, 2020 USD ($) | Jun. 30, 2023 USD ($) installment | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Dec. 31, 2020 USD ($) | Aug. 01, 2023 USD ($) | |
COMMITMENTS AND CONTINGENCIES | ||||||
Initial payment (including security deposit) | $ 957,153 | $ 193,523 | ||||
Settled Litigation | 2353 SB, LLC | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||
Aggregate amount | $ 150,000 | |||||
Number of installment payment | installment | 1 | |||||
Installment payment payable | $ 30,000 | |||||
Number of subsequent installment payments | installment | 20 | |||||
Amount of subsequent installments payable | $ 6,000 | |||||
Period of defaulting party | 7 days | |||||
Litigation settlement payable | $ 345,000 | |||||
2353 SB, LLC | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||
Lease agreement terms | 3 years | |||||
Monthly lease payments | $ 12,867 | |||||
Initial payment (including security deposit) | $ 39,633 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - USD ($) | Sep. 14, 2021 | Sep. 10, 2021 | Sep. 30, 2023 | Dec. 31, 2022 |
STOCKHOLDERS' EQUITY | ||||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 | |
Preferred stock, par value (in dollars per share) | $ 0 | $ 0 | ||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 | ||
Accrued dividends | $ 106,200 | $ 88,500 | ||
Series A Preferred | ||||
STOCKHOLDERS' EQUITY | ||||
Value of shares issued during the period | $ 1,180,000 | |||
Number of common shares issued | 1,180 | |||
Purchase price per unit | $ 1,000 | |||
Number of units issued | 1,180 | |||
Aggregate amount sold | $ 1,180,000 | |||
Number of common stock issuable for each preferred share | 1,000 | 1,000 | ||
Number of preferred shares per unit | 1 | |||
Minimum capital raise | $ 5,000,000 | $ 5,000,000 | ||
Preferred stock, par value (in dollars per share) | $ 0 | |||
Preferred stock, shares authorized | 5,000 | |||
Preferred stock, voting rights | None | |||
Preferred stock, dividend (percentage) | 6% | |||
Preferred Warrants | ||||
STOCKHOLDERS' EQUITY | ||||
Exercise price of warrants | $ 1.05 | |||
Term of warrants | 5 years | |||
Number of warrants per unit | 354,000 | |||
Threshold per share price during future capital raise | $ 1 | |||
Preferred Warrants | Series A Preferred | ||||
STOCKHOLDERS' EQUITY | ||||
Number of warrants per unit | 354,000 | |||
Warrants fair value | $ 117,131 | |||
Amount of warrants allocated to preferred stock | $ 1,073,446 |
STOCKHOLDERS' EQUITY - Share-Ba
STOCKHOLDERS' EQUITY - Share-Based Compensation (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Apr. 01, 2022 USD ($) item $ / shares shares | Sep. 30, 2023 USD ($) $ / shares shares | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) $ / shares shares | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) $ / shares shares | |
Share-based compensation | ||||||
Stock-based compensation (income)/expense | $ | $ 8,745 | $ 38,460 | $ 54,195 | $ 156,961 | ||
Granted | 250,000 | |||||
Stock-based compensation options, expiration period | 5 years | |||||
Vesting period | 1 year | |||||
Fair value of awards, grant date | $ | $ 56,348 | |||||
Unrecognized compensation expense related to unvested Employee Awards | $ | $ 0 | $ 0 | ||||
Number of Shares | ||||||
Outstanding, beginning of period | 4,936,825 | |||||
Granted | 250,000 | |||||
Outstanding, end of period | 4,936,825 | 4,936,825 | 4,936,825 | |||
Exercisable, end of period | 4,936,825 | 4,936,825 | ||||
Weighted-average Exercise Price per Share | ||||||
Outstanding, beginning of period | $ / shares | $ 1.08 | |||||
Outstanding, end of period | $ / shares | $ 1.08 | 1.08 | $ 1.08 | |||
Exercisable, end of period | $ / shares | $ 1.08 | $ 1.08 | ||||
Weighted-average Remaining Contractual Term (in years) | ||||||
Outstanding contractual term (in years) | 4 years 4 months 24 days | 4 years 4 months 24 days | ||||
Exercisable, end of period | 4 years 4 months 24 days | |||||
Aggregate Intrinsic Value | ||||||
Outstanding, end of period | $ | $ 22,000 | $ 22,000 | $ 22,000 | |||
Exercisable, end of period | $ | $ 22,000 | $ 22,000 | ||||
2020 Plan | ||||||
Share-based compensation | ||||||
Fair value instruments | $ | $ 535,976 | |||||
Requisite service period derived from the valuation period | 10 years | |||||
Restricted Stock Units (RSUs) | 2020 Plan | ||||||
Share-based compensation | ||||||
Number of participants in restricted stock unit agreement | item | 4 | |||||
Number of executives to whom restricted stock units granted | item | 4 | |||||
Number of tranches | item | 3 | |||||
Vested | 0 | |||||
Restricted Stock Units (RSUs) | 2020 Plan | Tranche 1 | ||||||
Share-based compensation | ||||||
Shares granted | 100,000 | |||||
Share Price | $ / shares | $ 1 | |||||
Restricted Stock Units (RSUs) | 2020 Plan | Tranche 2 | ||||||
Share-based compensation | ||||||
Shares granted | 100,000 | |||||
Share Price | $ / shares | $ 2 | |||||
Restricted Stock Units (RSUs) | 2020 Plan | Tranche 3 | ||||||
Share-based compensation | ||||||
Shares granted | 100,000 | |||||
Share Price | $ / shares | $ 3 | |||||
Restricted Stock Units (RSUs) | 2020 Plan | Executive Officer | ||||||
Share-based compensation | ||||||
Shares granted | 1,200,000 | |||||
Restricted Stock Units (RSUs) | 2020 Plan | Executive One | ||||||
Share-based compensation | ||||||
Shares granted | 300,000 | |||||
Restricted Stock Units (RSUs) | 2020 Plan | Executive Two | ||||||
Share-based compensation | ||||||
Shares granted | 300,000 | |||||
Restricted Stock Units (RSUs) | 2020 Plan | Executive Three | ||||||
Share-based compensation | ||||||
Shares granted | 300,000 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Sep. 16, 2022 USD ($) shares | Jan. 31, 2023 USD ($) | Sep. 30, 2023 USD ($) ft² | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) ft² | Sep. 30, 2022 USD ($) | |
RELATED PARTY TRANSACTIONS | ||||||
Aggregate rent expense | $ 957,153 | $ 193,523 | ||||
Consulting agreement | Adam Hershey - Interim Chief Executive Officer | ||||||
RELATED PARTY TRANSACTIONS | ||||||
Chief executive officer with compensation | $ 200,000 | |||||
Renewal term of consulting agreement | 6 months | |||||
Term of consulting agreement | 1 year | |||||
Number of warrants issued | shares | 7,280,007 | |||||
Aggregate amount of consulting fees paid | $ 50,000 | $ 24,999 | $ 150,000 | 74,997 | ||
Additional term | 2 years | |||||
Lease agreement | Dalton Adventures, LLC | ||||||
RELATED PARTY TRANSACTIONS | ||||||
Leased space (in sq ft) | ft² | 17,000 | 17,000 | ||||
Monthly rent expenses | $ 29,691 | |||||
Monthly rent attributable to base rent | $ 27,405 | 27,000 | ||||
Monthly rent attributable to property taxes | 2,691 | |||||
Aggregate rent expense | $ 75,849 | 75,849 | 227,547 | 151,698 | ||
Lease agreement | Bellewood Holdings, LLC | ||||||
RELATED PARTY TRANSACTIONS | ||||||
Monthly rent expenses | 11,287 | |||||
Monthly rent attributable to base rent | 10,000 | |||||
Monthly rent attributable to property taxes | 1,287 | |||||
Aggregate rent expense | 0 | 0 | 0 | 52,287 | ||
Lease agreement | JLA Enterprises, LLC | ||||||
RELATED PARTY TRANSACTIONS | ||||||
Aggregate rent expense | $ 51,942 | $ 0 | $ 155,826 | $ 0 |
SEGMENT INFORMATION - Net Loss
SEGMENT INFORMATION - Net Loss by Segment (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) segment | Sep. 30, 2022 USD ($) | |
Segment Reporting Information | ||||
Number of operating segments | segment | 2 | |||
Total revenue | $ 4,111,583 | $ 3,177,177 | $ 14,320,196 | $ 9,986,212 |
Continuing Operations | ||||
Segment Reporting Information | ||||
Total revenue | 4,111,583 | 3,177,177 | 14,320,196 | 9,986,212 |
Costs and expenses | (4,332,820) | (2,910,235) | (14,791,086) | (8,273,967) |
Segment operating income (loss) | (221,237) | 266,942 | (470,890) | 1,712,245 |
Corporate expenses | (1,490,565) | (2,971,621) | (5,163,601) | (5,466,211) |
ERC Credits | 896,679 | 896,679 | ||
Net loss from continuing operations before income taxes | (815,123) | (2,704,679) | (4,737,812) | (3,753,966) |
Operating segments | Retail | ||||
Segment Reporting Information | ||||
Total revenue | 4,038,019 | 3,080,778 | 14,228,202 | 9,536,657 |
Costs and expenses | (3,403,102) | (2,413,190) | (13,285,938) | (7,169,103) |
Segment operating income (loss) | 634,917 | 667,588 | 942,264 | 2,367,554 |
Operating segments | Cultivation | ||||
Segment Reporting Information | ||||
Total revenue | 415,963 | 448,623 | 2,044,810 | 1,316,241 |
Costs and expenses | (1,272,117) | (849,269) | (3,457,964) | (1,971,550) |
Segment operating income (loss) | (856,154) | (400,646) | (1,413,154) | (655,309) |
Eliminations | ||||
Segment Reporting Information | ||||
Total revenue | (342,399) | (352,224) | (1,952,816) | (866,686) |
Costs and expenses | $ 342,399 | $ 352,224 | $ 1,952,816 | $ 866,686 |
SEGMENT INFORMATION - Total Ass
SEGMENT INFORMATION - Total Assets by Segment (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
SEGMENT INFORMATION | ||
Total assets - consolidated | $ 27,501,634 | $ 31,694,713 |
Operating segments | ||
SEGMENT INFORMATION | ||
Total assets - segments | 27,501,634 | 31,826,152 |
Operating segments | Retail | ||
SEGMENT INFORMATION | ||
Total assets - segments | 23,904,244 | 25,212,245 |
Operating segments | Cultivation | ||
SEGMENT INFORMATION | ||
Total assets - segments | 3,058,175 | 4,628,452 |
Operating segments | Corporate | ||
SEGMENT INFORMATION | ||
Total assets - segments | $ 539,215 | 1,985,455 |
Eliminations | ||
SEGMENT INFORMATION | ||
Total assets - segments | $ (131,439) |