Cover
Cover - shares | 3 Months Ended | |
Dec. 31, 2021 | Feb. 14, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Dec. 31, 2021 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2022 | |
Current Fiscal Year End Date | --09-30 | |
Entity File Number | 000-54730 | |
Entity Registrant Name | ITEM 9 LABS CORP. | |
Entity Central Index Key | 0001500123 | |
Entity Tax Identification Number | 96-0665018 | |
Entity Incorporation, State or Country Code | DE | |
Entity Address, Address Line One | 2727 North 3rd Street | |
Entity Address, Address Line Two | Suite 201 | |
Entity Address, City or Town | Phoenix | |
Entity Address, State or Province | AZ | |
Entity Address, Postal Zip Code | 85004 | |
City Area Code | 833 | |
Local Phone Number | 867-6337 | |
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 | 95,041,184 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Dec. 31, 2021 | Sep. 30, 2021 |
Current Assets: | ||
Cash and cash equivalents | $ 160,711 | $ 1,454,460 |
Accounts receivable, net | 1,622,604 | 1,448,280 |
Inventory | 5,253,327 | 6,391,351 |
Prepaid expenses and other current assets | 1,350,807 | 1,302,558 |
Total current assets | 8,387,449 | 10,596,649 |
Property and equipment, net | 19,206,064 | 10,877,848 |
Right of use asset | 154,309 | 156,938 |
Deferred commissions | 80,822 | 108,874 |
Escrow deposits | 12,836,228 | 17,744,913 |
Other deposits | 600,000 | |
Intangible assets, net | 18,291,328 | 18,659,095 |
Goodwill | 58,064,816 | 58,064,816 |
Total Assets | 117,021,016 | 116,809,133 |
Current Liabilities: | ||
Accounts payable | 4,487,717 | 3,759,818 |
Accrued payroll and payroll taxes | 2,190,834 | 2,678,694 |
Accrued interest | 1,612,987 | 1,391,766 |
Accrued expenses | 1,561,454 | 1,169,776 |
Deferred revenue, current portion | 319,992 | 119,992 |
Notes payable, current portion | 3,521,822 | 4,536,002 |
Operating lease liability, current portion | 55,935 | 56,592 |
Convertible notes payable, net of discounts | 1,988,040 | 1,277,394 |
Total current liabilities | 15,738,781 | 14,990,034 |
Deferred revenue, net of current portion | 450,853 | 655,851 |
Operating lease liability, net of current portion | 104,677 | 104,406 |
Notes payables, net of current portion and discounts | 16,264,502 | 14,957,399 |
Total liabilities | 32,558,813 | 30,707,690 |
Stockholders' Equity: | ||
Common stock, par value $.0001 per share, 2,000,000,000 shares authorized; 107,243,344 and 107,074,417 shares issued and 94,943,344 and 94,774,417 shares outstanding at December 31, 2021 and September 30, 2021, respectively | 10,724 | 10,707 |
Additional paid-in capital | 135,120,587 | 133,414,830 |
Accumulated deficit | (37,219,108) | (33,874,094) |
Treasury stock | (13,450,000) | (13,450,000) |
Total Stockholders' Equity | 84,462,203 | 86,101,443 |
Total Liabilities and Stockholders' Equity | $ 117,021,016 | $ 116,809,133 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Dec. 31, 2021 | Sep. 30, 2021 |
Statement of Financial Position [Abstract] | ||
Common Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 |
Common Stock, Shares Authorized | 2,000,000,000 | 2,000,000,000 |
Common Stock, Shares, Issued | 107,243,344 | 107,074,417 |
Common Stock, Shares, Outstanding | 94,943,344 | 94,774,417 |
UNAUDITED CONDENSED CONSOLIDATE
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Income Statement [Abstract] | ||
Revenues, net | $ 6,186,011 | $ 3,039,564 |
Cost of revenues | 3,787,245 | 1,608,131 |
Gross profit | 2,398,766 | 1,431,433 |
Operating expenses | ||
Professional fees and outside services | 657,445 | 293,955 |
Payroll and employee related expenses | 2,150,706 | 1,103,304 |
Sales and marketing | 439,436 | 43,181 |
Depreciation and amortization | 439,135 | 142,545 |
Other operating expenses | 846,668 | 214,537 |
Total expenses | 4,533,390 | 1,797,522 |
Loss from operations | (2,134,624) | (366,089) |
Other income (expense) | ||
Interest expense | (1,210,390) | (708,367) |
Total other income (expense), net | (1,210,390) | (708,367) |
Net loss, before income tax provision (benefit) | (3,345,014) | (1,074,456) |
Income tax provision (benefit) | ||
Net loss | $ (3,345,014) | $ (1,074,456) |
Basic and diluted net loss per common share | $ (0.04) | $ (0.02) |
Basic and diluted weighted average common shares outstanding | 94,910,167 | 58,488,133 |
UNAUDITED CONDENSED CONSOLIDA_2
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Treasury Stock [Member] | Retained Earnings [Member] | Total |
Beginning balance, value at Sep. 30, 2020 | $ 6,834 | $ 44,426,737 | $ (13,450,000) | $ (22,968,322) | $ 8,015,249 |
Shares, Outstanding, Beginning Balance at Sep. 30, 2020 | 68,336,113 | 12,300,000 | |||
Shares, Outstanding at Sep. 30, 2020 | (68,336,113) | (12,300,000) | |||
Stock issued for cash, net | $ 681 | 5,790,544 | 5,791,225 | ||
Sale of Stock, Number of Shares Issued in Transaction | 6,813,206 | ||||
Issuance of shares for services | $ 11 | 163,225 | 163,236 | ||
Stock Issued During Period, Shares, Issued for Services | 111,765 | ||||
Stock based compensation | 304,672 | 304,672 | |||
Net loss | (1,074,456) | (1,074,456) | |||
Ending balance, value at Dec. 31, 2020 | $ 7,526 | 50,685,178 | (13,450,000) | (24,042,778) | 13,199,926 |
Shares, Outstanding, Ending Balance at Dec. 31, 2020 | 75,261,084 | ||||
Shares, Outstanding at Dec. 31, 2020 | (75,261,084) | ||||
Beginning balance, value at Sep. 30, 2021 | $ 10,707 | 133,414,830 | $ (13,450,000) | (33,874,094) | 86,101,443 |
Shares, Outstanding, Beginning Balance at Sep. 30, 2021 | 107,074,417 | 12,300,000 | |||
Shares, Outstanding at Sep. 30, 2021 | (107,074,417) | (12,300,000) | |||
Issuance of shares for services | $ 2 | 25,830 | 25,832 | ||
Stock Issued During Period, Shares, Issued for Services | 16,666 | ||||
Stock based compensation | 507,294 | 507,294 | |||
Net loss | (3,345,014) | (3,345,014) | |||
Ending balance, value at Dec. 31, 2021 | $ 10,724 | 135,120,587 | $ (13,450,000) | (37,219,108) | 84,462,203 |
Shares, Outstanding, Ending Balance at Dec. 31, 2021 | 107,243,344 | 12,300,000 | |||
Shares, Outstanding at Dec. 31, 2021 | (107,243,344) | (12,300,000) | |||
Stock to be issued for debt inducement | $ 14 | 128,348 | 128,362 | ||
Stock Issued During Period, Shares, Other | 142,365 | ||||
Warrants issued with debt | 574,239 | 574,239 | |||
Beneficial conversion - convertible notes | 470,047 | 470,047 | |||
Stock issued on exercise of options | $ 1 | $ (1) | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | 9,896 |
UNAUDITED CONDENSED CONSOLIDA_3
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 3 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Operating Activities: | ||
Net loss | $ (3,345,014) | $ (1,074,456) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 71,368 | 32,484 |
Amortization of intangible assets | 367,767 | 110,061 |
Amortization of right of use asset | 2,629 | 16,136 |
Amortization of debt discount | 990,281 | 119,298 |
Common stock issued for services | 163,236 | |
Stock based compensation expense | 507,294 | 304,672 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (174,324) | (1,102,238) |
Inventory | 1,138,024 | (1,302,352) |
Prepaid expenses and other current assets | (20,197) | (302,941) |
Accounts payable | 841,910 | 569,641 |
Accrued payroll | (487,860) | (52,543) |
Accrued interest | 144,459 | 270,191 |
Accrued expenses | (298,647) | 332,414 |
Deferred revenue | (4,998) | |
Operating lease liability | (386) | (16,136) |
Net Cash Used in Operating Activities | (267,694) | (1,932,533) |
Investing Activities: | ||
Deposit on acquisition | (696,293) | |
Purchases of property, equipment and construction in progress | (2,492,445) | (499,452) |
Cash received from sale of Airware assets | 5,000 | |
Cash received from escrow accounts | 1,053,290 | |
Capitalized license fees | (130) | |
Net Cash Used in Investing Activities | (1,439,155) | (1,190,875) |
Financing Activities: | ||
Proceeds from the sale of common stock | 5,791,225 | |
Payment of debt discount | (18,750) | |
Proceeds from the issuance of debt | 1,500,000 | |
Payment of debt | (1,068,150) | (1,138,917) |
Net Cash Provided by Financing Activities | 413,100 | 4,652,308 |
Net Increase (Decrease) in Cash | (1,293,749) | 1,528,900 |
Cash and cash equivalents- Beginning of Period | 1,454,460 | 84,677 |
Cash and cash equivalents - End of Period | 160,711 | 1,613,577 |
Supplemental disclosure of cash flow information: | ||
Interest paid in cash | 75,650 | 318,878 |
Income taxes paid in cash | ||
Supplemental disclosure of non-cash investing and financing activities: | ||
Stock and warrants issued for debt | 728,433 | |
Fixed assets purchased with debt | 50,914 | |
Transfer of accrued interest to debt | 1,762 | |
Land purchased with escrow funds and deposit | 3,000,000 | |
Beneficial conversion feature on convertible debt | 470,047 | |
Escrow funds used to pay construction in progress | 1,019,944 | |
Accrued liabilities capitalized in construction in progress | 1,125,776 | |
Amortized debt discount capitalized in construction in progress | $ 875,430 |
Note 1 - Description of Busines
Note 1 - Description of Business and Summary of Significant Accounting Policies | 3 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Note 1 - Description of Business and Summary of Significant Accounting Policies | Note 1 - Description of Business and Summary of Significant Accounting Policies Description of Business Item 9 Labs Corp. ("Item 9 Labs" or, including its subsidiaries, the "Company"), formerly Airware Labs Corp., is a Delaware corporation. The Company was incorporated under the laws of the State of Delaware on June 15, 2010 as Crown Dynamics Corp. Item 9 Labs Corp. is a holding company, investing in cannabis and cannabis-related businesses. Its subsidiaries currently compete in two different market segments: (1) producing cannabis and cannabis-derived products and technologies through its Item 9 Labs brand (“Cultivation”), which is currently distributed though out the State of Arizona in licensed medical and adult-use dispensaries; and (2) sell medical and adult-use cannabis dispensary franchises under its franchise brand “Unity Rd.” (“Franchising”). In March 2021, the Company closed on the acquisition of OCG, Inc, dba Unity Rd, a dispensary franchisor. The transaction was structured as a reverse triangular merger, with the effect of OCG, Inc. becoming a wholly owned subsidiary of the Company. Unity Rd has agreements with more than twenty (20) entrepreneurial groups to open more than thirty-five (35) Unity Rd retail dispensary locations in fourteen (14) states. The majority of the locations are in the licensing process. Unity Rd will be the vehicle to bring Item 9 Labs products across the United States and internationally, while keeping dispensaries locally owned and operated, empowering entrepreneurs to operate their business and contribute to their local communities. As the Unity Rd dispensaries achieve sufficient market penetration, Item 9 Labs aims to offer its products in those locations to expand the distribution footprint of its premium product offerings. In March 2020, the World Health Organization categorized Coronavirus Disease 2019 ("COVID-19") as a pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency. The extent of the impact of the COVID-19 outbreak on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, its impact on our customers and vendors, and the range of governmental and community reactions to the pandemic, which are uncertain and cannot be fully predicted at this time. Principles of Consolidation The accompanying condensed consolidated financial statements of the Company as of December 31, 2021 have been prepared by us without audit pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and do not include all of the information and notes necessary for a presentation of financial position and results of operations in accordance with US GAAP and should be read in conjunction with our September 30, 2021 audited financial statements filed with the SEC on our Form 10-K on January 13, 2022. It is management's opinion that all material adjustments (consisting of normal recurring adjustments) have been made, which are necessary for a fair financial statement presentation. We derived the September 30, 2021 condensed consolidated balance sheet data from audited financial statements, however, we did not include all disclosures required by US GAAP. The results for the interim period ended December 31, 2021 are not necessarily indicative of the results to be expected for the year ending September 30, 2022. The condensed consolidated financial statements of the Company include the accounts of the Company, and its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated. Certain prior period balances have been reclassified in the accompanying condensed consolidated financial statements to conform to the current period presentation. These reclassifications had no effect on the prior period's net loss or accumulated deficit. Accounting Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could materially differ from those estimates. Significant estimates of the Company include but are not limited to accounting for depreciation and amortization, current and deferred income taxes, inventory, accruals and contingencies, carrying value of goodwill and intangible assets, the fair value of common stock and the estimated fair value of stock options and warrants. Due to the uncertainties in the formation of accounting estimates, and the significance of these items, it is reasonably possible that these estimates could be materially changed in the near term. Inventory Inventory is stated at the lower of cost or net realizable value with cost being determined on the first in first out method. Inventory consists of the costs directly related to the production and cultivation of cannabis crops, cannabis oils, and cannabis concentrate products. Inventory is relieved to cost of revenues as products are delivered to dispensaries. Inventory consists primarily of labor, utilities, costs of raw materials, packaging, nutrients and overhead. The Company routinely evaluates the carrying value of inventory for slow moving and potentially obsolete inventory and, when appropriate, will record an adjustment to reduce inventory to its estimated net realizable value. There were no inventory reserves recorded at December 31, 2021 and September 30, 2021. Revenue Recognition Cultivation revenue The core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASC 606 defines a five-step process to achieve this core principle, including identifying the contract with the customer, identifying the performance obligations in the contract, determining the transaction price, including estimating the amount of variable consideration to include in the transaction price, allocating the transaction price to each separate performance obligation and recognizing revenue when (or as) the performance obligation is satisfied. Substantially all of the Company's revenue is associated with a customer contract that represents an obligation to provide cannabis products that are delivered at a single point in time. Any costs incurred prior to the period in which the products are delivered are recorded to inventory and recognized as cost of revenues in the period in which the performance obligation is completed. For the three months ended December 31, 2021 and 2020, substantially all of the Company's revenue was generated from performance obligations completed in the state of Arizona. The Company recognizes revenue once the products are delivered. Revenue is considered earned upon successful delivery of the product to the dispensary as the Company has no further performance obligations at this point in time and collection is reasonably assured. The Company records revenue at the amount it expects to collect, 100% of the wholesale sales revenue. The fees paid for operating under the contract are expensed to cost of revenues. The Company's revenues accounted for under ASC 606 do not require significant estimates or judgments based on the nature of the Company's revenue stream. The sales price is generally fixed at the point of sale and all consideration from the contract is included in the transaction price. The Company's contracts do not include multiple performance obligations, variable consideration, rights of return or warranties. Franchising revenue Through OCG, Inc., the Company enters into franchise agreements and consulting agreements. The franchise agreement allows the franchisee to, among other things, establish a franchised outlet under the Company’s Unity Rd. brand. Under the consulting agreements, the Company assists customers with applying for and being awarded a retail cannabis license through the state license application process. The initial franchise fee and the consulting fee are due upon execution of the related agreement. These payments are deferred on the condensed consolidated balance sheet and is recognized into revenue on the condensed consolidated statement of operations when (or as) the performance obligations included in the agreements are satisfied. Deferred revenue had a balance of $ 770,845 775,843 4,998 0 Net Loss Per Share Basic net loss per share does not include dilution and is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution of securities that could share in the losses of an entity. Dilutive securities are not included in the weighted average number of shares when inclusion would be anti-dilutive. The following table summarizes the securities outstanding at December 31, 2021 and 2020 that were excluded from the diluted net loss per share calculation because the effect of including these potential shares was antidilutive due to the Company’s net loss. 2021 2020 Potentially dilutive common share equivalents Options 5,206,251 3,211,709 Warrants 47,834,744 16,500,000 Convertible notes 2,350,969 2,526,969 Potentially dilutive shares outstanding 55,391,964 22,238,678 Warrants, Conversion Options and Debt Discounts The Company analyzes warrants issued with debt to determine if the warrants are required to be bifurcated and accounted for at fair value at each reporting period. When bifurcation is not required, the Company records a debt discount, based on the relative fair values of the warrants and the debt, with a corresponding charge to equity unless the terms of the warrant require it to be classified as a liability. The warrants and corresponding note discounts are valued using the Black-Scholes valuation model. This model uses estimates of volatility, risk free interest rate and the expected term of the warrants, along with the current market price of the Company's stock, to estimate the value of the outstanding warrants. The Company estimates the expected term using an average of the contractual term and vesting period of the award. The expected volatility is measured using the average historical daily changes in the market price of the Company's common stock over the expected term of the award or, if earlier, since March 20, 2018, the day of the merger between BSSD Group LLC ("BSSD") and Airware Labs Corp, and the risk-free interest rate is equivalent to the implied yield on zero-coupon U.S. Treasury bonds with a remaining maturity equal to the expected term of the awards. The Company also analyzes conversion options embedded with debt to determine if the conversion options are required to be bifurcated and accounted for at fair value at each reporting period or to determine if there is a beneficial conversion feature. At December 31, 2021 and September 30, 2021, none of the conversion options embedded in the Company’s debt were required to be bifurcated. Segment Reporting The Company defines operating segments as components about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performances. The Company allocates its resources and assesses the performance of its sales activities based on the services performed by its subsidiaries. For the three months ended December 31, 2021, the Company has identified two segments: the cultivation, production and sale of cannabis and cannabis derived products and technologies (“Cultivation”) and the sales of Unity Rd. franchises to dispensaries (“Franchising”). Recently Issued Accounting Pronouncements Pending Adoption In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326) In August 2020, the FASB issued ASU No. 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40). In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. There have been no other recent accounting pronouncements or changes in accounting pronouncements that have been issued but not yet adopted that are of significance, or potential significance, to us. |
Note 2 - Going Concern
Note 2 - Going Concern | 3 Months Ended |
Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Note 2 - Going Concern | Note 2 - Going Concern The accompanying condensed consolidated financial statements have been prepared assuming the continuation of the Company as a going concern. The Company has not yet established an ongoing source of revenue sufficient to cover its operating costs and has incurred net losses since its inception. These losses, with the associated substantial accumulated deficit, are a direct result of the Company's planned ramp up period as it is pursuing market acceptance and geographic expansion. In view of these matters, realization of a major portion of the assets in the accompanying condensed consolidated balance sheets is dependent upon continued operations of the Company which in turn is dependent upon the Company's ability to meet its financing requirements, and the success of its future operations. The Company operates in a new, developing industry with a variety of competitors. These factors raise substantial doubt about the Company's ability to continue as a going concern. In order to continue as a going concern, the Company will need to generate additional revenue and obtain additional capital to fund its operating losses and service its debt. Management's plans in regard to these matters are described as follows: Sales and Marketing. Historically, the Company has generated the majority of its revenues by providing its products to dispensaries throughout the state of Arizona. The Company's revenues have increased significantly since its inception in May 2017. Management will continue its plans to increase revenues in the Arizona market by providing superior products. Additionally, as capital resources become available, the Company plans to expand into additional markets outside of Arizona, with construction of a cultivation and processing facility nearing completion in Nevada. The Company believes that it will continue reducing the overall costs of revenues and costs of revenues will increase at a lower rate than revenues in future periods, which will lead to increased profit margins. Financing. To date, the Company has financed its operations primarily with loans from shareholders, private placement financings and sales revenue. Management believes that with continued production efficiencies, production growth, and continued marketing efforts, sales revenue will continue to grow, thus enabling the Company to reverse its negative cash flow from operations and raise additional capital as needed. However, there is no assurance that the Company's overall efforts will be successful. If the Company is unable to generate additional sales growth in the near term and raise additional capital, there is a risk that the Company could default on its obligations, and could be required to discontinue or significantly reduce the scope of its operations if no other means of financing operations are available. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amount and classification of liabilities or any other adjustment that might be necessary should the Company be unable to continue as a going concern. |
Note 3 _ Inventory
Note 3 – Inventory | 3 Months Ended |
Dec. 31, 2021 | |
Inventory Disclosure [Abstract] | |
Note 3 – Inventory | Note 3 – Inventory Inventory consisted of the following at December 31, 2021 and September 30, 2021. December 31, September 30, 2021 2021 Raw materials and work in process $ 3,062,686 $ 4,291,095 Finished goods 955,789 1,052,375 Packaging and other 1,234,852 1,047,881 $ 5,253,327 $ 6,391,351 |
Note 4 _ Pending Acquisitions
Note 4 – Pending Acquisitions | 3 Months Ended |
Dec. 31, 2021 | |
Business Combination and Asset Acquisition [Abstract] | |
Note 4 – Pending Acquisitions | Note 4 – Pending Acquisitions On October 6, 2021, the Company entered into an Asset Purchase Agreement to purchase certain assets, which include licenses, a lease and certain personal property to operate a licensed recreational cannabis dispensary. The purchase price is $ 2.0 1.0 200,000 300,000 5 18 |
Note 5 - Property and Equipment
Note 5 - Property and Equipment, Net | 3 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Note 5 - Property and Equipment, Net | Note 5 - Property and Equipment, Net The following represents a summary of our property and equipment December 31, September 30, 2021 2021 Cultivation and manufacturing equipment $ 506,271 $ 506,271 Computer equipment and software 266,427 266,427 Buildings and improvements 2,823,523 2,785,781 3,596,221 3,558,479 Accumulated Depreciation (550,688 ) (479,320 ) 3,045,533 3,079,159 Land 3,455,563 380,584 Construction on progress 12,704,968 7,418,105 Property and Equipment, Net $ 19,206,064 $ 10,877,848 During the three months ended December 31, 2021, the Company completed the purchase of 44 acres of land from a related party for $ 3.0 Construction in progress relates to multiple capital projects ongoing during the three months ended December 31, 2021, including the construction of the Nevada facility, the expansion of the Arizona facility and implementation of an ERP system. Construction in progress also includes interest and fees on debt that is directly related to the financing of the Company’s capital projects. Depreciation expense for the three months ended December 31, 2021 and 2020 was $ 71,368 32,484 |
Note 6 - Debt
Note 6 - Debt | 3 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
Note 6 - Debt | Note 6 - Debt Effective Date Maturity Date Annual Interest Rate Balance at December 31, 2021 Balance at September 30, 2021 Conversion Price C-2 3/23/2020 9/23/2020 12 % 1,100,000 1,100,000 1.00 C-3 8/15/2011 8/15/2012 8 % 20,000 20,000 0.50 C-5 3/19/2021 9/19/2021 10 % — 80,000 2.50 C-7 9/29/2021 9/29/2022 10 % 250,000 250,000 1.67 C-8 9/29/2021 9/29/2022 10 % 500,000 500,000 1.67 C-9 10/1/2021 9/29/2022 10 % 750,000 — 1.67 C-10 10/29/2021 4/29/2022 15 % 750,000 — 1.50 3,370,000 1,950,000 Less: unamortized discounts (1,381,960 ) (672,606 ) $ 1,988,040 $ 1,277,394 (C-2) Convertible Viridis Note On March 23, 2020 the Company borrowed proceeds from a related party, Viridis I9 Capital LLC (“Viridis”), in the amount of $ 1.1 15 (C-9) Convertible Tysadco Note On October 1, 2021, the Company entered into a convertible note agreement. Up to fifty percent (50%) of the outstanding and unpaid principal amount is convertible into common stock. The note included warrants to purchase a total of 825,000 3 4 67,365 112,500 597,606 75,000 (C-10) Convertible Gaines Note On October 29, 2021, the Company entered into a convertible note agreement. The outstanding and unpaid principal and accrued interest is convertible, in whole, into shares of the Company’s common stock. The notes included warrants to purchase a total of 750,000 3 2 75,000 116,250 561,272 44,582 The future minimum payments of the Company’s convertible debt obligations as of December 31, 2021 are as follows. The unamortized discount will be amortized through September 2022. Year ended December 31, Amount 2022 $ 3,370,000 3,370,000 Less: unamortized discount (1,381,960 ) $ 1,988,040 Notes Payable Effective Date Maturity Date Annual Interest Rate Balance at December 31, 2021 Balance at September 30, 2021 Secured by f 5/1/2020 11/1/2023 10 % 1,386,370 1,386,370 2nd DOT AZ property h 5/1/2020 5/1/2023 15 % 283,666 283,666 N/A i 2/14/2020 10/14/2022 2 % — 312,500 Secured by licenses l 8/18/2021 8/18/2022 36 % 1,545,325 2,162,590 Future revenues n 12/20/2020 12/20/2021 9 % — 13,148 Secured by vehicles o 3/19/2021 4/1/2024 10 % 769,582 816,582 N/A p 2/1/2021 2/1/2022 10 % 520,590 520,590 N/A q 8/6/2021 2/6/2023 16 % 13,500,000 13,500,000 1st AZ property and other personal property r 8/6/2021 2/6/2023 16 % 5,500,000 5,500,000 1st NV property and other personal property s 9/30/2021 12/31/2021 15 % 500,000 500,000 Restricted common stock t 3/19/2021 3/19/2022 0 % 500,000 500,000 N/A 24,505,533 25,495,446 Less: unamortized discounts (4,719,209 ) (6,002,045 ) $ 19,786,324 $ 19,493,401 (f) Viridis AZ On September 13, 2018, the Company entered into a Loan and Revenue Participation Agreement with Viridis Group I9 Capital LLC ("Viridis"), a related party, in which Viridis agreed to loan the Company up to $ 1.2 nd On May 1, 2020, under a troubled debt restructuring, the Company renegotiated the $ 1,200,000 note payable. As part of the restructuring, the Company issued 1,555,556 warrants exercisable into the Company's common stock. The warrants have an exercise price of $ 1.00 and a term of 5 years. Accrued interest in the amount of $ 186,370 was added to the principal balance of the note, making the total principal $ 1,386,370 . Interest only payments of $ 11,553 shall be paid monthly until November 1, 2020 at which time monthly principal and interest payments of $ 28,144 are required for 36 months, with a balloon payment of all outstanding principal and interest due upon the note's maturity. The note also entitles Viridis to a gross revenue participation of the Arizona Operations equal to 1% of the gross sales (up to $20,000 monthly) upon the maturity of the note and for the subsequent 5 year period. The debt and warrants were recorded at their relative fair values. The resulting discount is amortized to interest expense over the term of the debt. The lender has granted a payment forbearance for the note and all unpaid principal and interest, accrued at the default interest rate of 12% per annum, will be added to the balloon payment at maturity. In August 2021, the Viridis AZ and Viridis NV debt was modified to subordinate these notes to the Pelorus Notes (see (q) and (r)). As part of this modification, it is anticipated that 2.0 million warrants were granted to Viridis. As of the date of these condensed consolidated financial statements, the terms of this modification have not been finalized. Based on the expected modification terms, this modification was accounted for as an extinguishment of the debt during the year ended September 30, 2021. The 2.0 million warrants were allocated to the accrued interest outstanding on the Viridis NV debt at the payoff date and then to the Viridis AZ and Viridis NV debt based on the amount of each debt outstanding at the time the warrants were granted at the relative fair value. The resulting discount is amortized to interest expense over the term of the debt. (h) Viridis (unsecured) The Company's subsidiary, BSSD Group, LLC borrowed $ 269,000 from Viridis, a related party, in December 2019. This note bears annualized interest at 15 %. On May 1, 2020, under a troubled debt restructuring, the Company renegotiated the $ 269,000 note payable. Accrued interest in the amount of $ 14,666 was added to the principal balance of the note, making the total principal $ 283,666 . As part of the restructuring, the Company issued 400,000 warrants exercisable into the Company's common stock. The warrants have an exercise price of $ .05 and a term of 5 years. Payments of principal and interest in the amount of $ 9,833 are due monthly, with a balloon payment of all outstanding principal and interest is due upon the note's maturity. The debt and warrants were recorded at their relative fair values. The resulting discount is amortized to interest expense over the term of the debt. The lender has granted a payment forbearance for the note and all unpaid principal and interest, accrued at the default interest rate of 18% per annum, will be added to the balloon payment at maturity. (o) OCG Officers Debt As part of the OCG transaction in March 2021, the Company assumed the debt that OCG, Inc. owed to its officers. Principal and interest payments are due monthly with a balloon payment of all outstanding principal and interest due at maturity. (p) Stockbridge Amended Debt In February 2021, the Company and Stockbridge Enterprises, a related party, under a trouble debt restructuring, agreed to restructure and settle the outstanding notes. The total outstanding balance of $ 1,660,590, including accrued interest, were to be repaid under a new promissory note, calling for a down payment of $ 300,000 (paid at time of signing), $ 120,000 monthly payments for 11 months with the remaining balance of $ 40,590 payable on February 1, 2022. This agreement was amended to extend the maturity date to March 31, 2022 and starting with the October 1, 2021 payment, the loan payments are interest only at an interest rate of 15 50,000 750,000 164,744 two-year 1.00 58,352 (s) Viridis $500,000 On September 30, 2021, the Company borrowed $ 500,000 500,000 0.60 five-year The future minimum payments of the Company’s notes payable obligations as of December 31, 2021 are as follows. The unamortized discount will be amortized through November 2023. Year ended December 31, Amount 2022 $ 4,074,783 2023 20,631,773 2024 351,937 25,058,493 Less: unamortized discount (4,719,209 ) Less: imputed interest (552,960 ) 19,786,324 Less: current portion (3,521,822 ) $ 16,264,502 A summary of interest expense for the three months ended December 31, 2021 and 2020 is as follows. Three months ended December 31, 2021 2020 Amortization of debt discounts from equity issuances and beneficial conversion features $ 1,559,401 $ 126,264 Amortization of debt discounts from success and other fees 306,310 — Stated interest paid or accrued 1,203,932 569,444 Finance charges and other interest 817 12,659 3,070,460 708,367 Less: interest capitalized to construction in progress (1,860,070 ) — $ 1,210,390 $ 708,367 |
Note 7 - Concentrations
Note 7 - Concentrations | 3 Months Ended |
Dec. 31, 2021 | |
Risks and Uncertainties [Abstract] | |
Note 7 - Concentrations | Note 7 - Concentrations For the three months ended December 31, 2021 and 2020, substantially all of the Company's revenue was generated from a single customer. Given the agreement with the license holder, although the Company’s products are distributed to numerous dispensaries throughout Arizona, all sales are made through the license holder. The Company's wholly owned subsidiary provides cannabis products to this customer under a three-year Cultivation Management Services Agreement that commenced on April 1, 2020. Provisions of the agreement require 30-day written notice to terminate except for the following circumstances, in which case the agreement is cancellable with no notice: (i) uncured default; (ii) gross negligence, intentional, or willful misconduct by either party; (iii) federal or state enforcement action against either party; (iv) any change or revocation of state or local law that has the effect of prohibiting the legal operation of the Cultivation Facility; (v) the dispensary license renewal is not approved; (vi) the dispensary fails to maintain its dispensary license in good standing with the regulators resulting in the revocation of the dispensary license. |
Note 8 - Commitments and Contin
Note 8 - Commitments and Contingencies | 3 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Note 8 - Commitments and Contingencies | Note 8 - Commitments and Contingencies The production and possession of marijuana is prohibited on a national level by the Controlled Substances Act, though the state of Arizona allows these activities to be performed at licensed facilities such as BSSD. If the federal government decides to change its policy on the enforcement of the Controlled Substances Act, it would have a material adverse effect on our business. The Company entered into a 60 month lease with VGI Citadel LLC, a related party, to rent office space for its corporate headquarters which began in June 2019. The monthly lease payments were $ 6,478 for the first twelve months and include all utilities and an estimated amount for common area maintenance and real estate taxes. The monthly lease payments increase to $ 6,653 , $ 6,828 , $ 7,003 , and $ 7,178 for years two through five, respectively. Rent expense for the three months ended December 31, 2021 and 2020 on this lease was $ 23,200 and $ 20,710 , respectively. Interest was imputed using a discount rate of 20%. The lease does not include renewal options. The future lease payments are as follows. Year ended December 31, Amount 2022 $ 83,165 2023 85,266 2024 35,891 204,322 Less: imputed interest (43,710 ) 160,612 Less: current portion: (55,935 ) $ 104,677 In August 2021, the Company signed a ten-year lease to rent approximately 7,000 square feet of retail space in Broomfield, Colorado. The lease will call for base rent payments of $ 12,097 , plus a prorated share of taxes and operating expenses, per month for the first year and escalate each year to $ 15,786 per month in year 10. The commencement of this lease is contingent upon the Company obtaining a license for the retail sale of recreational and medical marijuana. The Company shall pay $ 3,500 per month as consideration to the landlord for keeping the premises available until the contingency is met. The agreement will terminate if the contingency is not met. At December 31, 2021, the contingency has not been met. As such, the future minimum rental payments under this lease have not been included in the Company’s right of use asset and liability at December 31, 2021 or the future lease payments schedule above. In September 2021, the Company signed a seven-year lease to rent approximately 3,000 square feet of retail space in Biddeford, Maine. The lease will call for base rent payments of $ 6,604 , plus taxes and operating expenses, per month for the first year and escalate each year to $ 7,886 per month in year seven. The commencement of this lease is contingent upon the issuance and receipt of a license and city approval. The Company shall pay $ 4,500 per month, plus utilities and operating expenses as consideration to the landlord for keeping the premises available until the contingency is met. The agreement will terminate if the contingency is not met. At December 31, 2021, the contingency has not been met. As such, the future minimum rental payments under this lease have not been included in the Company’s right of use asset and liability at December 31, 2021 or the future lease payments schedule above. In October 2021, the Company entered into a commercial lease agreement to rent 12,000 square feet located in Denver, Colorado. The lease has a term of five years with escalating monthly base rent beginning at $ 6,354 7,295 As of December 31, 2021 and September 30, 2021, the Company has accrued unpaid payroll taxes and estimated penalties and interest of approximately $ 2,000,000 2,400,000 There are no material pending legal proceedings in which the Company or any of its subsidiaries is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of its voting securities, or security holder is a party adverse to us or has a material interest adverse to the Company. |
Note 9 - Related Party Transact
Note 9 - Related Party Transactions | 3 Months Ended |
Dec. 31, 2021 | |
Related Party Transactions [Abstract] | |
Note 9 - Related Party Transactions | Note 9 - Related Party Transactions As discussed in Note 5, the Company completed the purchase of 44 acres of land from a related party for $ 3.0 As discussed in Note 6, the Company has entered into various loan agreements with Viridis or its related entities. Two members of Viridis serve on the Company’s board of directors and one of these members also serves as the Company’s Chief Executive Officer. As discussed in Note 6, the Company has a loan agreement with Stockbridge Enterprises. Stockbridge Enterprises holds more than 5% of the Company’s common stock. As discussed in Note 8, the Company has a lease agreement with VGI Capital LLC. Two members of VGI Capital LLC serve on the Company’s board of directors and one of these members also serves as the Company’s Chief Executive Officer. During the three months ended December 31, 2021 and 2020, the Company purchased cultivation supplies from a related party in the amount of $ 12,993 10,089 Included in our accounts payable at December 31, 2021 and September 30, 2021 is approximately $ 158,000 138,000 |
Note 10 - Stockholders' Equity
Note 10 - Stockholders' Equity | 3 Months Ended |
Dec. 31, 2021 | |
Equity [Abstract] | |
Note 10 - Stockholders' Equity | Note 10 - Stockholders' Equity Warrants The following table summarizes the Company’s warrant activity for the three months ended December 31, 2021: Common Shares Issuable Upon Exercise of Warrants Weighted Average Exercise Price Weighted Average Contractual Term in Years Aggregate Intrinsic Value Balance of warrants at September 30, 2021 46,095,000 2.08 3.9 14,243,000 Warrants granted 1,739,744 2.81 3.0 — Balance of warrants at December 31, 2021 47,834,744 $ 2.10 $ 3.7 $ 5,932,122 (1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the closing price of the Company’s common stock as of December 31, 2021, for those awards that have an exercise price currently below the closing price as of December 31, 2021. Awards with an exercise price above the closing prices as of December 31, 2021 are considered to have no intrinsic value. The Company estimates the fair value of warrants issued using the Black-Scholes option-pricing model. The following range of assumptions were used during the three months ended December 31, 2021. No warrants were issued, exercised or forfeited during the three months ended December 31, 2020. Three months ended December 31, 2021 Expected stock price volatility 92 130 Risk-free interest rate 0.10 0.30 Expected term (years) 1.0 2.0 Expected dividend yield 0 Black-scholes value $ 0.34 0.89 Stock Options On June 21, 2019, our shareholders voted to approve the 2019 Equity Incentive Plan (the “2019 Plan”). Pursuant to the 2019 Plan, the maximum aggregate number of Shares available under the Plan through awards is the lesser of: (i) 6,000,000 shares, increased each anniversary date of the adoption of the plan by 2 percent of the then-outstanding shares, or (b) 10,000,000 shares. We have 4,141,021 The following table summarizes the Company’s stock option activity Common Shares Issuable Upon Exercise of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term in Years Aggregate Intrinsic Value (1) Balance of Options at September 30, 2021 5,217,315 1.23 8.9 2,633,375 Options granted 31,913 0.80 9.7 22,000 Forfeited/Cancelled (42,977 ) 1.00 — — Balance of Options at December 31, 2021 5,206,251 $ 1.22 8.7 $ 153,597 Exercisable at December 31, 2021 2,208,562 $ 1.29 7.9 $ 471,080 Unvested at December 31, 2021 2,997,689 $ 1.18 Number of Options Weighted Average Grant Date Fair Value Unvested at December 31, 2021 2,997,689 $ 1.18 Granted during the three months ended December 31, 2021 31,913 $ 1.72 Forfeited during the three months ended December 31, 2021 42,977 $ 0.96 (1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the closing price of the Company’s common stock as of December 31, 2021, for those awards that have an exercise price currently below the closing price as of December 31, 2021. Awards with an exercise price above the closing prices as of December 31, 2021 are considered to have no intrinsic value. The Company estimates the fair value of stock options granted using the Black-Scholes option-pricing model. The following range of assumptions were used during the three months ended December 31, 2021. No options were granted, exercised or forfeited during the three months ended December 31, 2020. Three months ended December 31, 2021 Expected stock price volatility 161 164 Risk-free interest rate .9 1.1 Expected term (years) 5.0 5.5 Expected dividend yield 0 Black-scholes value $ 1.48 3.01 During the three months ended December 31, 2021 and 2020, the Company recognized compensation expense of $ 507,294 304,672 2,798,762 |
Note 11 _ Segment Information
Note 11 – Segment Information | 3 Months Ended |
Dec. 31, 2021 | |
Segment Reporting [Abstract] | |
Note 11 – Segment Information | Note 11 – Segment Information The Company has identified two segments: the cultivation, production and sale of cannabis products (Cultivation) and the sales of Unity Rd. franchises to dispensaries (Franchising). The following table presents segment information for the three months ended December 31, 2021. Segment information for the three months ended December 31, 2020 has not been presented as the Company did not acquire the Franchising segment until the closing of the acquisition of OCG, Inc. effective March 19, 2021. Cultivation Franchising Corporate Total Revenues from external customers $ 6,141,217 $ 30,418 $ 14,376 $ 6,186,011 Operating income (loss) 1,569,295 (959,139 ) (2,744,780 ) (2,134,624 ) Interest expense 196 22,810 1,187,384 1,210,390 Depreciation and amortization 31,265 300,739 107,131 439,135 Additions to property, equipment and construction in progress — — 8,399,584 8,399,584 Property, equipment and construction in progress, net 658,276 77,630 18,470,158 19,206,064 Total assets (after intercompany eliminations) 7,905,440 68,151,658 40,963,918 117,021,016 |
Note 12 - Subsequent Events
Note 12 - Subsequent Events | 3 Months Ended |
Dec. 31, 2021 | |
Subsequent Events [Abstract] | |
Note 12 - Subsequent Events | Note 12 - Subsequent Events Subsequent to December 31, 2021 the following events have occurred. In January 2022, the Company executed on a short-term financing arrangement. The net proceeds of $2.45 million were used to repay the outstanding principal and interest of note payable (l) in Note 6 - Debt above in the amount of approximately $1.84 million. The remaining approximately $610,000 of proceeds will be used for general working capital purposes. Payments of $66,468 are due weekly until $3.35 million is repaid. This results in an effective interest rate of approximately 34%. The Company signed a Co-Management Agreement with a dispensary in Oklahoma for a term of three years. As part of the Co-Management Agreement, the Company purchased substantially all of the assets of the dispensary, excluding cannabis and cannabis related products, and assumed the dispensary’s lease. The purchase price is $130,000, payable at $32,500 on the effective date and $32,500 each 30, 60 and 90 days after the effective date. In addition, the Company will pay $1,667 per month for 35 months. Finally, the Company will pay the seller $65,000 in the Company’s common stock at a 10% discount to the stock’s 10-day volume weighted average. The Company has issued 97,840 shares of common stock related to the Co-Management Agreement discussed above and for other services received. |
Note 1 - Description of Busin_2
Note 1 - Description of Business and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The accompanying condensed consolidated financial statements of the Company as of December 31, 2021 have been prepared by us without audit pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and do not include all of the information and notes necessary for a presentation of financial position and results of operations in accordance with US GAAP and should be read in conjunction with our September 30, 2021 audited financial statements filed with the SEC on our Form 10-K on January 13, 2022. It is management's opinion that all material adjustments (consisting of normal recurring adjustments) have been made, which are necessary for a fair financial statement presentation. We derived the September 30, 2021 condensed consolidated balance sheet data from audited financial statements, however, we did not include all disclosures required by US GAAP. The results for the interim period ended December 31, 2021 are not necessarily indicative of the results to be expected for the year ending September 30, 2022. The condensed consolidated financial statements of the Company include the accounts of the Company, and its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated. Certain prior period balances have been reclassified in the accompanying condensed consolidated financial statements to conform to the current period presentation. These reclassifications had no effect on the prior period's net loss or accumulated deficit. |
Accounting Estimates | Accounting Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could materially differ from those estimates. Significant estimates of the Company include but are not limited to accounting for depreciation and amortization, current and deferred income taxes, inventory, accruals and contingencies, carrying value of goodwill and intangible assets, the fair value of common stock and the estimated fair value of stock options and warrants. Due to the uncertainties in the formation of accounting estimates, and the significance of these items, it is reasonably possible that these estimates could be materially changed in the near term. |
Inventory | Inventory Inventory is stated at the lower of cost or net realizable value with cost being determined on the first in first out method. Inventory consists of the costs directly related to the production and cultivation of cannabis crops, cannabis oils, and cannabis concentrate products. Inventory is relieved to cost of revenues as products are delivered to dispensaries. Inventory consists primarily of labor, utilities, costs of raw materials, packaging, nutrients and overhead. The Company routinely evaluates the carrying value of inventory for slow moving and potentially obsolete inventory and, when appropriate, will record an adjustment to reduce inventory to its estimated net realizable value. There were no inventory reserves recorded at December 31, 2021 and September 30, 2021. |
Revenue Recognition | Revenue Recognition Cultivation revenue The core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASC 606 defines a five-step process to achieve this core principle, including identifying the contract with the customer, identifying the performance obligations in the contract, determining the transaction price, including estimating the amount of variable consideration to include in the transaction price, allocating the transaction price to each separate performance obligation and recognizing revenue when (or as) the performance obligation is satisfied. Substantially all of the Company's revenue is associated with a customer contract that represents an obligation to provide cannabis products that are delivered at a single point in time. Any costs incurred prior to the period in which the products are delivered are recorded to inventory and recognized as cost of revenues in the period in which the performance obligation is completed. For the three months ended December 31, 2021 and 2020, substantially all of the Company's revenue was generated from performance obligations completed in the state of Arizona. The Company recognizes revenue once the products are delivered. Revenue is considered earned upon successful delivery of the product to the dispensary as the Company has no further performance obligations at this point in time and collection is reasonably assured. The Company records revenue at the amount it expects to collect, 100% of the wholesale sales revenue. The fees paid for operating under the contract are expensed to cost of revenues. The Company's revenues accounted for under ASC 606 do not require significant estimates or judgments based on the nature of the Company's revenue stream. The sales price is generally fixed at the point of sale and all consideration from the contract is included in the transaction price. The Company's contracts do not include multiple performance obligations, variable consideration, rights of return or warranties. Franchising revenue Through OCG, Inc., the Company enters into franchise agreements and consulting agreements. The franchise agreement allows the franchisee to, among other things, establish a franchised outlet under the Company’s Unity Rd. brand. Under the consulting agreements, the Company assists customers with applying for and being awarded a retail cannabis license through the state license application process. The initial franchise fee and the consulting fee are due upon execution of the related agreement. These payments are deferred on the condensed consolidated balance sheet and is recognized into revenue on the condensed consolidated statement of operations when (or as) the performance obligations included in the agreements are satisfied. Deferred revenue had a balance of $ 770,845 775,843 4,998 0 |
Net Loss Per Share | Net Loss Per Share Basic net loss per share does not include dilution and is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution of securities that could share in the losses of an entity. Dilutive securities are not included in the weighted average number of shares when inclusion would be anti-dilutive. The following table summarizes the securities outstanding at December 31, 2021 and 2020 that were excluded from the diluted net loss per share calculation because the effect of including these potential shares was antidilutive due to the Company’s net loss. 2021 2020 Potentially dilutive common share equivalents Options 5,206,251 3,211,709 Warrants 47,834,744 16,500,000 Convertible notes 2,350,969 2,526,969 Potentially dilutive shares outstanding 55,391,964 22,238,678 |
Warrants, Conversion Options and Debt Discounts | Warrants, Conversion Options and Debt Discounts The Company analyzes warrants issued with debt to determine if the warrants are required to be bifurcated and accounted for at fair value at each reporting period. When bifurcation is not required, the Company records a debt discount, based on the relative fair values of the warrants and the debt, with a corresponding charge to equity unless the terms of the warrant require it to be classified as a liability. The warrants and corresponding note discounts are valued using the Black-Scholes valuation model. This model uses estimates of volatility, risk free interest rate and the expected term of the warrants, along with the current market price of the Company's stock, to estimate the value of the outstanding warrants. The Company estimates the expected term using an average of the contractual term and vesting period of the award. The expected volatility is measured using the average historical daily changes in the market price of the Company's common stock over the expected term of the award or, if earlier, since March 20, 2018, the day of the merger between BSSD Group LLC ("BSSD") and Airware Labs Corp, and the risk-free interest rate is equivalent to the implied yield on zero-coupon U.S. Treasury bonds with a remaining maturity equal to the expected term of the awards. The Company also analyzes conversion options embedded with debt to determine if the conversion options are required to be bifurcated and accounted for at fair value at each reporting period or to determine if there is a beneficial conversion feature. At December 31, 2021 and September 30, 2021, none of the conversion options embedded in the Company’s debt were required to be bifurcated. |
Segment Reporting | Segment Reporting The Company defines operating segments as components about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performances. The Company allocates its resources and assesses the performance of its sales activities based on the services performed by its subsidiaries. For the three months ended December 31, 2021, the Company has identified two segments: the cultivation, production and sale of cannabis and cannabis derived products and technologies (“Cultivation”) and the sales of Unity Rd. franchises to dispensaries (“Franchising”). |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements Pending Adoption In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326) In August 2020, the FASB issued ASU No. 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40). In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. There have been no other recent accounting pronouncements or changes in accounting pronouncements that have been issued but not yet adopted that are of significance, or potential significance, to us. |
Note 1 - Description of Busin_3
Note 1 - Description of Business and Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Antidilutive shares excluded from calculation of diluted net loss per share | 2021 2020 Potentially dilutive common share equivalents Options 5,206,251 3,211,709 Warrants 47,834,744 16,500,000 Convertible notes 2,350,969 2,526,969 Potentially dilutive shares outstanding 55,391,964 22,238,678 |
Note 3 _ Inventory (Tables)
Note 3 – Inventory (Tables) | 3 Months Ended |
Dec. 31, 2021 | |
Inventory Disclosure [Abstract] | |
Inventory | December 31, September 30, 2021 2021 Raw materials and work in process $ 3,062,686 $ 4,291,095 Finished goods 955,789 1,052,375 Packaging and other 1,234,852 1,047,881 $ 5,253,327 $ 6,391,351 |
Note 5 - Property and Equipme_2
Note 5 - Property and Equipment, Net (Tables) | 3 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
property and equipment | The following represents a summary of our property and equipment December 31, September 30, 2021 2021 Cultivation and manufacturing equipment $ 506,271 $ 506,271 Computer equipment and software 266,427 266,427 Buildings and improvements 2,823,523 2,785,781 3,596,221 3,558,479 Accumulated Depreciation (550,688 ) (479,320 ) 3,045,533 3,079,159 Land 3,455,563 380,584 Construction on progress 12,704,968 7,418,105 Property and Equipment, Net $ 19,206,064 $ 10,877,848 |
Note 6 - Debt (Tables)
Note 6 - Debt (Tables) | 3 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
Convertible Debt [Table Text Block] | Effective Date Maturity Date Annual Interest Rate Balance at December 31, 2021 Balance at September 30, 2021 Conversion Price C-2 3/23/2020 9/23/2020 12 % 1,100,000 1,100,000 1.00 C-3 8/15/2011 8/15/2012 8 % 20,000 20,000 0.50 C-5 3/19/2021 9/19/2021 10 % — 80,000 2.50 C-7 9/29/2021 9/29/2022 10 % 250,000 250,000 1.67 C-8 9/29/2021 9/29/2022 10 % 500,000 500,000 1.67 C-9 10/1/2021 9/29/2022 10 % 750,000 — 1.67 C-10 10/29/2021 4/29/2022 15 % 750,000 — 1.50 3,370,000 1,950,000 Less: unamortized discounts (1,381,960 ) (672,606 ) $ 1,988,040 $ 1,277,394 |
[custom:ScheduleOfFutureMinimumPaymentsOfConvertibleDebtObligationsTableTextBlock] | Year ended December 31, Amount 2022 $ 3,370,000 3,370,000 Less: unamortized discount (1,381,960 ) $ 1,988,040 |
Schedule of Debt [Table Text Block] | Effective Date Maturity Date Annual Interest Rate Balance at December 31, 2021 Balance at September 30, 2021 Secured by f 5/1/2020 11/1/2023 10 % 1,386,370 1,386,370 2nd DOT AZ property h 5/1/2020 5/1/2023 15 % 283,666 283,666 N/A i 2/14/2020 10/14/2022 2 % — 312,500 Secured by licenses l 8/18/2021 8/18/2022 36 % 1,545,325 2,162,590 Future revenues n 12/20/2020 12/20/2021 9 % — 13,148 Secured by vehicles o 3/19/2021 4/1/2024 10 % 769,582 816,582 N/A p 2/1/2021 2/1/2022 10 % 520,590 520,590 N/A q 8/6/2021 2/6/2023 16 % 13,500,000 13,500,000 1st AZ property and other personal property r 8/6/2021 2/6/2023 16 % 5,500,000 5,500,000 1st NV property and other personal property s 9/30/2021 12/31/2021 15 % 500,000 500,000 Restricted common stock t 3/19/2021 3/19/2022 0 % 500,000 500,000 N/A 24,505,533 25,495,446 Less: unamortized discounts (4,719,209 ) (6,002,045 ) $ 19,786,324 $ 19,493,401 |
[custom:ScheduleOfFutureMinimumPaymentsOfNotesPayableObligationsTableTextBlock] | Year ended December 31, Amount 2022 $ 4,074,783 2023 20,631,773 2024 351,937 25,058,493 Less: unamortized discount (4,719,209 ) Less: imputed interest (552,960 ) 19,786,324 Less: current portion (3,521,822 ) $ 16,264,502 |
[custom:ScheduleOfDebtInterestExpenseSummaryTableTextBlock] | Three months ended December 31, 2021 2020 Amortization of debt discounts from equity issuances and beneficial conversion features $ 1,559,401 $ 126,264 Amortization of debt discounts from success and other fees 306,310 — Stated interest paid or accrued 1,203,932 569,444 Finance charges and other interest 817 12,659 3,070,460 708,367 Less: interest capitalized to construction in progress (1,860,070 ) — $ 1,210,390 $ 708,367 |
Note 8 - Commitments and Cont_2
Note 8 - Commitments and Contingencies (Tables) | 3 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block] | Year ended December 31, Amount 2022 $ 83,165 2023 85,266 2024 35,891 204,322 Less: imputed interest (43,710 ) 160,612 Less: current portion: (55,935 ) $ 104,677 |
Note 10 - Stockholders' Equity
Note 10 - Stockholders' Equity (Tables) | 3 Months Ended |
Dec. 31, 2021 | |
Equity [Abstract] | |
Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block] | Common Shares Issuable Upon Exercise of Warrants Weighted Average Exercise Price Weighted Average Contractual Term in Years Aggregate Intrinsic Value Balance of warrants at September 30, 2021 46,095,000 2.08 3.9 14,243,000 Warrants granted 1,739,744 2.81 3.0 — Balance of warrants at December 31, 2021 47,834,744 $ 2.10 $ 3.7 $ 5,932,122 |
Defined Benefit Plan, Assumptions [Table Text Block] | Three months ended December 31, 2021 Expected stock price volatility 92 130 Risk-free interest rate 0.10 0.30 Expected term (years) 1.0 2.0 Expected dividend yield 0 Black-scholes value $ 0.34 0.89 |
stock option activity | The following table summarizes the Company’s stock option activity Common Shares Issuable Upon Exercise of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term in Years Aggregate Intrinsic Value (1) Balance of Options at September 30, 2021 5,217,315 1.23 8.9 2,633,375 Options granted 31,913 0.80 9.7 22,000 Forfeited/Cancelled (42,977 ) 1.00 — — Balance of Options at December 31, 2021 5,206,251 $ 1.22 8.7 $ 153,597 Exercisable at December 31, 2021 2,208,562 $ 1.29 7.9 $ 471,080 Unvested at December 31, 2021 2,997,689 $ 1.18 Number of Options Weighted Average Grant Date Fair Value Unvested at December 31, 2021 2,997,689 $ 1.18 Granted during the three months ended December 31, 2021 31,913 $ 1.72 Forfeited during the three months ended December 31, 2021 42,977 $ 0.96 (1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the closing price of the Company’s common stock as of December 31, 2021, for those awards that have an exercise price currently below the closing price as of December 31, 2021. Awards with an exercise price above the closing prices as of December 31, 2021 are considered to have no intrinsic value. |
[custom:ScheduleOfAssumptionsUsed1TableTextBlock] | Three months ended December 31, 2021 Expected stock price volatility 161 164 Risk-free interest rate .9 1.1 Expected term (years) 5.0 5.5 Expected dividend yield 0 Black-scholes value $ 1.48 3.01 |
Note 11 _ Segment Information (
Note 11 – Segment Information (Tables) | 3 Months Ended |
Dec. 31, 2021 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment [Table Text Block] | Cultivation Franchising Corporate Total Revenues from external customers $ 6,141,217 $ 30,418 $ 14,376 $ 6,186,011 Operating income (loss) 1,569,295 (959,139 ) (2,744,780 ) (2,134,624 ) Interest expense 196 22,810 1,187,384 1,210,390 Depreciation and amortization 31,265 300,739 107,131 439,135 Additions to property, equipment and construction in progress — — 8,399,584 8,399,584 Property, equipment and construction in progress, net 658,276 77,630 18,470,158 19,206,064 Total assets (after intercompany eliminations) 7,905,440 68,151,658 40,963,918 117,021,016 |
Note 1 - Description of Busin_4
Note 1 - Description of Business and Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Sep. 30, 2021 | |
Accounting Policies [Abstract] | |||
Deferred Revenue | $ 770,845 | $ 775,843 | |
Deferred Revenue, Revenue Recognized | $ 4,998 | $ 0 |
Antidilutive shares excluded fr
Antidilutive shares excluded from calculation of diluted net loss per share - shares | 3 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Potentially dilutive common share equivalents | ||
Options | 5,206,251 | 3,211,709 |
Warrants | 47,834,744 | 16,500,000 |
Convertible notes | 2,350,969 | 2,526,969 |
Potentially dilutive shares outstanding | 55,391,964 | 22,238,678 |
Inventory
Inventory - USD ($) | Dec. 31, 2021 | Sep. 30, 2021 |
Inventory Disclosure [Abstract] | ||
Raw materials and work in process | $ 3,062,686 | $ 4,291,095 |
Finished goods | 955,789 | 1,052,375 |
Packaging and other | $ 1,234,852 | $ 1,047,881 |
Note 4 _ Pending Acquisitions (
Note 4 – Pending Acquisitions (Details Narrative) - Acquisition 1 [Member] | 3 Months Ended |
Dec. 31, 2021USD ($)shares | |
Business Acquisition [Line Items] | |
Asset Acquisition, Price of Acquisition, Expected | $ 2 |
Payments to Acquire Businesses, Gross | 1 |
[custom:NoteIssuedDuringAcquisitionAsPartOfPurchasePrice-0] | $ 200,000 |
Stock Issued During Period, Shares, Acquisitions | shares | 300,000 |
Debt Instrument, Interest Rate During Period | 5.00% |
Debt Instrument, Term | 18 months |
property and equipment (Details
property and equipment (Details) - USD ($) | Dec. 31, 2021 | Sep. 30, 2021 |
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 3,596,221 | $ 3,558,479 |
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | (550,688) | (479,320) |
Property, Plant and Equipment, Other, Gross | 3,045,533 | 3,079,159 |
Property, Plant and Equipment, Net | 19,206,064 | 10,877,848 |
Machinery and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 506,271 | 506,271 |
Computer Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 266,427 | 266,427 |
Building Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 2,823,523 | 2,785,781 |
Land [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 3,455,563 | 380,584 |
Construction in Progress [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 12,704,968 | $ 7,418,105 |
Note 5 - Property and Equipme_3
Note 5 - Property and Equipment, Net (Details Narrative) - USD ($) | 3 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | ||
[custom:LandPurchasedWithEscrowFundsAndDeposit] | $ 3,000,000 | |
Depreciation | $ 71,368 | $ 32,484 |
Convertible Notes Payable
Convertible Notes Payable - USD ($) | 3 Months Ended | |
Dec. 31, 2021 | Sep. 30, 2021 | |
Short-term Debt [Line Items] | ||
Convertible Notes Payable, Current | $ 1,988,040 | $ 1,277,394 |
Notes Payable C 2 [Member] | ||
Short-term Debt [Line Items] | ||
Debt Instrument, Issuance Date | Mar. 23, 2020 | |
Debt Instrument, Maturity Date | Sep. 23, 2020 | |
Debt Instrument, Interest Rate During Period | 12.00% | |
Convertible Notes Payable | $ 1,100,000 | 1,100,000 |
Debt Instrument, Convertible, Conversion Price | $ 1 | |
Notes Payable C 3 [Member] | ||
Short-term Debt [Line Items] | ||
Debt Instrument, Issuance Date | Aug. 15, 2011 | |
Debt Instrument, Maturity Date | Aug. 15, 2012 | |
Debt Instrument, Interest Rate During Period | 8.00% | |
Convertible Notes Payable | $ 20,000 | 20,000 |
Debt Instrument, Convertible, Conversion Price | $ 0.50 | |
Notes Payable C 5 [Member] | ||
Short-term Debt [Line Items] | ||
Debt Instrument, Issuance Date | Mar. 19, 2021 | |
Debt Instrument, Maturity Date | Sep. 19, 2021 | |
Debt Instrument, Interest Rate During Period | 10.00% | |
Convertible Notes Payable | 80,000 | |
Debt Instrument, Convertible, Conversion Price | $ 2.50 | |
Notes Payable C 7 [Member] | ||
Short-term Debt [Line Items] | ||
Debt Instrument, Issuance Date | Sep. 29, 2021 | |
Debt Instrument, Maturity Date | Sep. 29, 2022 | |
Debt Instrument, Interest Rate During Period | 10.00% | |
Convertible Notes Payable | $ 250,000 | 250,000 |
Debt Instrument, Convertible, Conversion Price | $ 1.67 | |
Notes Payable C 8 [Member] | ||
Short-term Debt [Line Items] | ||
Debt Instrument, Issuance Date | Sep. 29, 2021 | |
Debt Instrument, Maturity Date | Sep. 29, 2022 | |
Debt Instrument, Interest Rate During Period | 10.00% | |
Convertible Notes Payable | $ 500,000 | 500,000 |
Debt Instrument, Convertible, Conversion Price | $ 1.67 | |
Notes Payable C 9 [Member] | ||
Short-term Debt [Line Items] | ||
Debt Instrument, Issuance Date | Oct. 1, 2021 | |
Debt Instrument, Maturity Date | Sep. 29, 2022 | |
Debt Instrument, Interest Rate During Period | 10.00% | |
Convertible Notes Payable | $ 750,000 | |
Debt Instrument, Convertible, Conversion Price | $ 1.67 | |
Notes Payable C 10 [Member] | ||
Short-term Debt [Line Items] | ||
Debt Instrument, Issuance Date | Oct. 29, 2021 | |
Debt Instrument, Maturity Date | Apr. 29, 2022 | |
Debt Instrument, Interest Rate During Period | 15.00% | |
Convertible Notes Payable | $ 750,000 | |
Debt Instrument, Convertible, Conversion Price | $ 1.50 | |
Convertible Notes Payable Total [Member] | ||
Short-term Debt [Line Items] | ||
Convertible Notes Payable | $ 3,370,000 | 1,950,000 |
Debt Instrument, Unamortized Discount | $ (1,381,960) | $ (672,606) |
Note 6 - Debt (Details Narrativ
Note 6 - Debt (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 4 Months Ended | 5 Months Ended | 6 Months Ended | 7 Months Ended | 12 Months Ended | |||||||
Dec. 31, 2019 | Dec. 31, 2021 | Jan. 31, 2021 | Dec. 31, 2020 | Jan. 25, 2022 | Oct. 30, 2020 | Mar. 31, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2018 | Feb. 01, 2022 | Feb. 01, 2021 | May 01, 2020 | |
Short-term Debt [Line Items] | ||||||||||||||
Amortization of Debt Discount (Premium) | $ 990,281 | $ 119,298 | ||||||||||||
Convertible Notes Payable C 2 [Member] | ||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||
Proceeds from Related Party Debt | $ 1,100,000 | |||||||||||||
Debt Instrument, Interest Rate During Period | 15.00% | |||||||||||||
Convertible Notes Payable C 9 [Member] | ||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||
[custom:WarrantsIssuedInConnectionWithDebt] | 825,000 | |||||||||||||
[custom:ExercisePriceOnWarrantsIssued] | $ 3 | |||||||||||||
Warrants and Rights Outstanding, Term | 4 years | 4 years | ||||||||||||
[custom:CommonStockIssuedAsPartOfNoteAgreementShares] | 67,365 | |||||||||||||
[custom:CommonStockIssuedAsPartOfNoteAgreementValue] | $ 112,500 | |||||||||||||
Amortization of Debt Discount (Premium) | 597,606 | |||||||||||||
Amortization of Debt Issuance Costs and Discounts | $ 75,000 | |||||||||||||
Convertible Notes Payable C 10 [Member] | ||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||
[custom:WarrantsIssuedInConnectionWithDebt] | 750,000 | |||||||||||||
[custom:ExercisePriceOnWarrantsIssued] | $ 3 | |||||||||||||
Warrants and Rights Outstanding, Term | 2 years | 2 years | ||||||||||||
[custom:CommonStockIssuedAsPartOfNoteAgreementShares] | 75,000 | |||||||||||||
[custom:CommonStockIssuedAsPartOfNoteAgreementValue] | $ 116,250 | |||||||||||||
Amortization of Debt Discount (Premium) | 561,272 | |||||||||||||
Amortization of Debt Issuance Costs | $ 44,582 | |||||||||||||
Notes Payable F [Member] | ||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||
Debt Instrument, Interest Rate During Period | 10.00% | |||||||||||||
[custom:WarrantsIssuedInConnectionWithDebt] | 1,555,556 | |||||||||||||
[custom:ExercisePriceOnWarrantsIssued] | $ 1 | |||||||||||||
Warrants and Rights Outstanding, Term | 5 years | |||||||||||||
[custom:LoanAgreementMaximumAmount] | $ 1,200,000 | |||||||||||||
Debt Instrument, Face Amount | $ 1,200,000 | |||||||||||||
Debt Instrument, Increase, Accrued Interest | $ 186,370 | |||||||||||||
Long-term Debt, Gross | $ 1,386,370 | |||||||||||||
Debt Instrument, Periodic Payment, Interest | $ 11,553 | |||||||||||||
Debt Instrument, Periodic Payment | $ 28,144 | |||||||||||||
Notes Payable H [Member] | ||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||
Proceeds from Related Party Debt | $ 269,000 | |||||||||||||
Debt Instrument, Interest Rate During Period | 15.00% | 15.00% | ||||||||||||
[custom:WarrantsIssuedInConnectionWithDebt] | 400,000 | |||||||||||||
[custom:ExercisePriceOnWarrantsIssued] | $ 0.05 | |||||||||||||
Warrants and Rights Outstanding, Term | 5 years | |||||||||||||
Debt Instrument, Face Amount | $ 269,000 | |||||||||||||
Debt Instrument, Increase, Accrued Interest | $ 14,666 | |||||||||||||
Long-term Debt, Gross | $ 283,666 | |||||||||||||
Debt Instrument, Periodic Payment | $ 9,833 | |||||||||||||
Notes Payable P [Member] | ||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||
Debt Instrument, Interest Rate During Period | 10.00% | 15.00% | ||||||||||||
[custom:WarrantsIssuedInConnectionWithDebt] | 164,744 | |||||||||||||
[custom:ExercisePriceOnWarrantsIssued] | $ 1 | |||||||||||||
Warrants and Rights Outstanding, Term | 2 years | 2 years | ||||||||||||
Amortization of Debt Discount (Premium) | $ 58,352 | |||||||||||||
Long-term Debt, Gross | $ 1,660,590 | |||||||||||||
Debt Instrument, Periodic Payment | $ 50,000 | $ 120,000 | ||||||||||||
[custom:DownpaymentOnNotePayable] | 300,000 | |||||||||||||
[custom:DebtInstrumentRemainingBalancePayable-0] | $ 40,590 | |||||||||||||
[custom:ClosingOfEquityRaiseMinimumAmount] | $ 750,000 | |||||||||||||
Notes Payable S [Member] | ||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||
Debt Instrument, Interest Rate During Period | 15.00% | |||||||||||||
[custom:WarrantsIssuedInConnectionWithDebt] | 500,000 | |||||||||||||
[custom:ExercisePriceOnWarrantsIssued] | $ 0.60 | |||||||||||||
Warrants and Rights Outstanding, Term | 5 years | 5 years | ||||||||||||
Proceeds from Notes Payable | $ 500,000 |
Future minimum payments of Comp
Future minimum payments of Company's convertible debt obligations | Dec. 31, 2021USD ($) |
Future Minimum Payments Of Companys Convertible Debt Obligations | |
[custom:FutureMinimumPaymentsConvertibleDebtObligationDueNextTwelveMonths-0] | $ 3,370,000 |
[custom:FutureMinimumPaymentsConvertibleDebtObligationDue-0] | 3,370,000 |
[custom:FutureMinimumPaymentsConvertibleDebtObligationDueUnamortizedDiscount-0] | (1,381,960) |
[custom:FutureMinimumPaymentsConvertibleDebtObligationDueNet-0] | $ 1,988,040 |
Notes Payable
Notes Payable - USD ($) | 3 Months Ended | 4 Months Ended | 12 Months Ended | |
Dec. 31, 2021 | Jan. 25, 2022 | Sep. 30, 2020 | Sep. 30, 2021 | |
Short-term Debt [Line Items] | ||||
Notes Payable | $ 19,786,324 | $ 19,493,401 | ||
Notes Payable F [Member] | ||||
Short-term Debt [Line Items] | ||||
Debt Instrument, Issuance Date | May 1, 2020 | |||
Debt Instrument, Maturity Date | Nov. 1, 2023 | |||
Debt Instrument, Interest Rate During Period | 10.00% | |||
Notes Payable | $ 1,386,370 | 1,386,370 | ||
Notes Payable H [Member] | ||||
Short-term Debt [Line Items] | ||||
Debt Instrument, Issuance Date | May 1, 2020 | |||
Debt Instrument, Maturity Date | May 1, 2023 | |||
Debt Instrument, Interest Rate During Period | 15.00% | 15.00% | ||
Notes Payable | $ 283,666 | 283,666 | ||
Notes Payable I [Member] | ||||
Short-term Debt [Line Items] | ||||
Debt Instrument, Issuance Date | Feb. 14, 2020 | |||
Debt Instrument, Maturity Date | Oct. 14, 2022 | |||
Debt Instrument, Interest Rate During Period | 2.00% | |||
Notes Payable | 312,500 | |||
Notes Payable L [Member] | ||||
Short-term Debt [Line Items] | ||||
Debt Instrument, Issuance Date | Aug. 18, 2021 | |||
Debt Instrument, Maturity Date | Aug. 18, 2022 | |||
Debt Instrument, Interest Rate During Period | 36.00% | |||
Notes Payable | $ 1,545,325 | 2,162,590 | ||
Notes Payable N [Member] | ||||
Short-term Debt [Line Items] | ||||
Debt Instrument, Issuance Date | Dec. 20, 2020 | |||
Debt Instrument, Maturity Date | Dec. 20, 2021 | |||
Debt Instrument, Interest Rate During Period | 9.00% | |||
Notes Payable | 13,148 | |||
Notes Payable O [Member] | ||||
Short-term Debt [Line Items] | ||||
Debt Instrument, Issuance Date | Mar. 19, 2021 | |||
Debt Instrument, Maturity Date | Apr. 1, 2024 | |||
Debt Instrument, Interest Rate During Period | 10.00% | |||
Notes Payable | $ 769,582 | 816,582 | ||
Notes Payable P [Member] | ||||
Short-term Debt [Line Items] | ||||
Debt Instrument, Issuance Date | Feb. 1, 2021 | |||
Debt Instrument, Maturity Date | Feb. 1, 2022 | |||
Debt Instrument, Interest Rate During Period | 10.00% | 15.00% | ||
Notes Payable | $ 520,590 | 520,590 | ||
Notes Payable Q [Member] | ||||
Short-term Debt [Line Items] | ||||
Debt Instrument, Issuance Date | Aug. 6, 2021 | |||
Debt Instrument, Maturity Date | Feb. 6, 2023 | |||
Debt Instrument, Interest Rate During Period | 16.00% | |||
Notes Payable | $ 13,500,000 | 13,500,000 | ||
Notes Payable R [Member] | ||||
Short-term Debt [Line Items] | ||||
Debt Instrument, Issuance Date | Aug. 6, 2021 | |||
Debt Instrument, Maturity Date | Feb. 6, 2023 | |||
Debt Instrument, Interest Rate During Period | 16.00% | |||
Notes Payable | $ 5,500,000 | 5,500,000 | ||
Notes Payable S [Member] | ||||
Short-term Debt [Line Items] | ||||
Debt Instrument, Issuance Date | Sep. 30, 2021 | |||
Debt Instrument, Maturity Date | Dec. 31, 2021 | |||
Debt Instrument, Interest Rate During Period | 15.00% | |||
Notes Payable | $ 500,000 | 500,000 | ||
Notes Payable T [Member] | ||||
Short-term Debt [Line Items] | ||||
Debt Instrument, Issuance Date | Mar. 19, 2021 | |||
Debt Instrument, Maturity Date | Mar. 19, 2022 | |||
Debt Instrument, Interest Rate During Period | 0.00% | |||
Notes Payable | $ 500,000 | 500,000 | ||
Notes Payable Total [Member] | ||||
Short-term Debt [Line Items] | ||||
Notes Payable | 24,505,533 | 25,495,446 | ||
Debt Instrument, Unamortized Discount | $ (4,719,209) | $ (6,002,045) |
Future minimum payments of Co_2
Future minimum payments of Company's notes payable obligations | Dec. 31, 2021USD ($) |
Future Minimum Payments Of Companys Notes Payable Obligations | |
[custom:FutureMinimumPaymentsNotesPayableObligationDueNextTwelveMonths-0] | $ 4,074,783 |
[custom:FutureMinimumPaymentsNotesPayableObligationDueYearTwo-0] | 20,631,773 |
[custom:FutureMinimumPaymentsNotesPayableObligationDueYearThree-0] | 351,937 |
[custom:FutureMinimumPaymentsNotesPayableObligationDue-0] | 25,058,493 |
[custom:FutureMinimumPaymentsNotesPayableObligationDueUnamortizedDiscount-0] | (4,719,209) |
[custom:FutureMinimumPaymentsNotesPayableObligationDueImputedInterest-0] | (552,960) |
[custom:FutureMinimumPaymentsNotesPayableObligationDueNet-0] | 19,786,324 |
[custom:FutureMinimumPaymentsNotesPayableObligationCurrentPortion-0] | (3,521,822) |
[custom:FutureMinimumPaymentsNotesPayableObligationDueNetLessCurrentPortion-0] | $ 16,264,502 |
Summary of interest expense
Summary of interest expense - USD ($) | 3 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Summary Of Interest Expense | ||
Amortization of debt discounts from equity issuances and beneficial conversion features | $ 1,559,401 | $ 126,264 |
Amortization of debt discounts from success and other fees | 306,310 | |
Stated interest paid or accrued | 1,203,932 | 569,444 |
Finance charges and other interest | 817 | 12,659 |
3,070,460 | 708,367 | |
Less: interest capitalized to construction in progress | (1,860,070) | |
$ 1,210,390 | $ 708,367 |
Note 8 - Commitments and Cont_3
Note 8 - Commitments and Contingencies (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||||||
Dec. 31, 2021 | Dec. 31, 2020 | May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | Sep. 30, 2021 | |
Accrued Payroll Taxes, Current | $ 2,000,000 | $ 2,400,000 | ||||||
Operating Lease 1 [Member] | ||||||||
Operating Lease, Payments | $ 7,178 | $ 7,003 | $ 6,828 | $ 6,653 | $ 6,478 | |||
Operating Leases, Rent Expense | 23,200 | $ 20,710 | ||||||
Operating Lease 2 [Member] | ||||||||
Operating Lease, Payments | 12,097 | |||||||
[custom:OperatingLeasePaymentsMaximumMonthlyRentAmount] | 15,786 | |||||||
[custom:MonthlyConsiderationPaidUntilLeaseContingencyMet] | 3,500 | |||||||
Operating Lease 3 [Member] | ||||||||
Operating Lease, Payments | 6,604 | |||||||
[custom:OperatingLeasePaymentsMaximumMonthlyRentAmount] | 7,886 | |||||||
[custom:MonthlyConsiderationPaidUntilLeaseContingencyMet] | 4,500 | |||||||
Operating Lease 4 [Member] | ||||||||
Operating Lease, Payments | 6,354 | |||||||
[custom:OperatingLeasePaymentsMaximumMonthlyRentAmount] | $ 7,295 |
Future lease payments
Future lease payments | Dec. 31, 2021USD ($) |
Leases [Abstract] | |
Operating Leases, Future Minimum Payments Due, Next Twelve Months | $ 83,165 |
Operating Leases, Future Minimum Payments, Due in Two Years | 85,266 |
Operating Leases, Future Minimum Payments, Due in Three Years | 35,891 |
Operating Leases, Future Minimum Payments Due | 204,322 |
[custom:OperatingLeasesFutureMinimumPaymentsImputedInterest-0] | (43,710) |
[custom:OperatingLeasesFutureMinimumPaymentsDueNet-0] | 160,612 |
[custom:OperatingLeasesFutureMinimumPaymentsLessCurrentPortion-0] | (55,935) |
[custom:OperatingLeasesFutureMinimumPaymentsDueNetLessCurrentPortion-0] | $ 104,677 |
Note 9 - Related Party Transa_2
Note 9 - Related Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Sep. 30, 2021 | |
Related Party Transactions [Abstract] | |||
[custom:LandPurchasedWithEscrowFundsAndDeposit] | $ 3,000,000 | ||
[custom:PurchasesOfSuppliesFromRelatedParty] | 12,993 | $ 10,089 | |
[custom:AmountsDueToRelatedPartiesIncludedInAccountsPayable-0] | $ 158,000 | $ 138,000 |
Warrant Activity
Warrant Activity - Warrants 1 [Member] - USD ($) | 3 Months Ended | |
Dec. 31, 2021 | Sep. 30, 2021 | |
Class of Warrant or Right [Line Items] | ||
Class of Warrant or Right, Outstanding | 47,834,744 | 46,095,000 |
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 2.10 | $ 2.08 |
Warrants and Rights Outstanding | $ 5,932,122 | $ 14,243,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Granted | 1,739,744 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | $ 2.81 |
Assumptions Used to Estimate Fa
Assumptions Used to Estimate Fair Value of Warrants - Warrants [Member] - $ / shares | 3 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Class of Warrant or Right [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate, Minimum | 92.00% | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate, Maximum | 130.00% | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate, Minimum | 0.10% | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate, Maximum | 0.30% | |
[custom:SharebasedCompensationArrangementBySharebasedPaymentAwardFairValueAssumptionsExpectedTermMinimum1] | 1 year | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term | 2 years | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate | 0.00% | |
[custom:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExercisePriceMinimum-0] | $ 0.34 | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Exercise Price | $ 0.89 |
stock option activity (Details)
stock option activity (Details) - USD ($) | 3 Months Ended | |
Dec. 31, 2021 | Sep. 30, 2021 | |
Options 1 [Member] | ||
Option Indexed to Issuer's Equity [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 5,206,251 | 5,217,315 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price | $ 1.22 | $ 1.23 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value | $ 153,597 | $ 2,633,375 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 31,913 | |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ 0.80 | |
[custom:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriodTotalIntrinsicValue] | $ 22,000 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested Options Forfeited, Number of Shares | (42,977) | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period, Weighted Average Exercise Price | $ 1 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number | 2,208,562 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price | $ 1.29 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value | $ 471,080 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares | 2,997,689 | |
[custom:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsNonvestedWeightedAverageExercisePrice-0] | $ 1.18 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested Options Forfeited, Number of Shares | 42,977 | |
Options 2 [Member] | ||
Option Indexed to Issuer's Equity [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 31,913 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested Options Forfeited, Number of Shares | (42,977) | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares | 2,997,689 | |
Share-based Compensation Arrangement by Share-based Payment Award, Option, Nonvested, Weighted Average Exercise Price | $ 1.18 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value | $ 1.72 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested Options Forfeited, Number of Shares | 42,977 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested Options Forfeited, Weighted Average Grant Date Fair Value | $ 0.96 |
Note 10 - Stockholders' Equit_2
Note 10 - Stockholders' Equity (Details Narrative) - USD ($) | 3 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Equity [Abstract] | ||
[custom:SharesAvailableForIssuanceUnderEquityIncentivePlan] | 4,141,021 | |
Share-based Payment Arrangement, Noncash Expense | $ 507,294 | $ 304,672 |
[custom:UnrecognizedStockCompensationCost-0] | $ 2,798,762 |
Assumptions Used to Estimate _2
Assumptions Used to Estimate Fair Value of Stock Options - Stock Options [Member] | 3 Months Ended | 12 Months Ended |
Dec. 31, 2021$ / shares | Dec. 31, 2021$ / shares | |
Option Indexed to Issuer's Equity [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate, Minimum | 161.00% | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate, Maximum | 164.00% | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate, Minimum | 0.90% | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate, Maximum | 1.10% | |
[custom:SharebasedCompensationArrangementBySharebasedPaymentAwardFairValueAssumptionsExpectedTermMinimum1] | 5 years | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term | 5 years 6 months | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate | 0.00% | |
[custom:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExercisePriceMinimum-0] | $ 1.48 | $ 1.48 |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Exercise Price | $ 3.01 | $ 3.01 |
Segment Information
Segment Information - USD ($) | 3 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Operating income (loss) | $ (2,134,624) | $ (366,089) |
Interest expense | 1,210,390 | 708,367 |
Depreciation and amortization | 439,135 | $ 142,545 |
Cultivation Segment [Member] | ||
Revenues from external customers | 6,141,217 | |
Operating income (loss) | 1,569,295 | |
Interest expense | 196 | |
Depreciation and amortization | 31,265 | |
Additions to property, equipment and construction in progress | ||
Property, equipment and construction in progress, net | 658,276 | |
Total assets (after intercompany eliminations) | 7,905,440 | |
Franchising Segment [Member] | ||
Revenues from external customers | 30,418 | |
Operating income (loss) | (959,139) | |
Interest expense | 22,810 | |
Depreciation and amortization | 300,739 | |
Additions to property, equipment and construction in progress | ||
Property, equipment and construction in progress, net | 77,630 | |
Total assets (after intercompany eliminations) | 68,151,658 | |
Corporate Segment [Member] | ||
Revenues from external customers | 14,376 | |
Operating income (loss) | (2,744,780) | |
Interest expense | 1,187,384 | |
Depreciation and amortization | 107,131 | |
Additions to property, equipment and construction in progress | 8,399,584 | |
Property, equipment and construction in progress, net | 18,470,158 | |
Total assets (after intercompany eliminations) | 40,963,918 | |
Corporate and Other [Member] | ||
Revenues from external customers | 6,186,011 | |
Operating income (loss) | (2,134,624) | |
Interest expense | 1,210,390 | |
Depreciation and amortization | 439,135 | |
Additions to property, equipment and construction in progress | 8,399,584 | |
Property, equipment and construction in progress, net | 19,206,064 | |
Total assets (after intercompany eliminations) | $ 117,021,016 |