Cover
Cover - shares | 9 Months Ended | |
Jun. 30, 2022 | Aug. 15, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2022 | |
Document Fiscal Period Focus | Q3 | |
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 | 96,264,406 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($) | Jun. 30, 2022 | Sep. 30, 2021 |
Current Assets: | ||
Cash and cash equivalents | $ 441,662 | $ 1,454,460 |
Accounts receivable, net | 591,504 | 1,448,280 |
Inventory | 4,130,779 | 6,391,351 |
Prepaid expenses and other current assets | 527,655 | 802,558 |
Total current assets | 5,691,600 | 10,096,649 |
Property and equipment, net | 26,307,212 | 10,877,848 |
Right of use asset | 1,001,192 | 156,938 |
Construction escrow deposits | 8,586,463 | 17,744,913 |
Deposits | 86,604 | 600,000 |
Other assets | 1,398,720 | 608,874 |
Intangible assets, net | 19,222,666 | 18,659,095 |
Goodwill | 58,233,386 | 58,064,816 |
Total Assets | 120,527,843 | 116,809,133 |
Current Liabilities: | ||
Accounts payable | 5,819,455 | 3,759,818 |
Accrued payroll and payroll taxes | 1,846,614 | 2,678,694 |
Accrued interest | 2,011,369 | 1,391,766 |
Accrued expenses | 1,514,448 | 1,169,776 |
Deferred revenue, current portion | 214,994 | 119,992 |
Notes payable, current portion, net of discounts | 24,532,509 | 4,536,002 |
Income tax payable | 7,948 | |
Operating lease liability, current portion | 256,471 | 56,592 |
Convertible notes payable, net of discounts | 3,266,179 | 1,277,394 |
Total current liabilities | 39,469,987 | 14,990,034 |
Deferred revenue, net of current portion | 345,855 | 655,851 |
Operating lease liability, net of current portion | 756,604 | 104,406 |
Notes payables, net of current portion and discounts | 1,448,860 | 14,957,399 |
Total liabilities | 42,021,306 | 30,707,690 |
Stockholders' Equity: | ||
Common stock, par value $.0001 per share, 2,000,000,000 shares authorized; 108,562,706 and 107,074,417 shares issued and 96,262,706 and 94,774,417 shares outstanding at June 30, 2022 and September 30, 2021, respectively | 10,856 | 10,707 |
Additional paid-in capital | 138,499,394 | 133,414,830 |
Accumulated deficit | (46,567,663) | (33,874,094) |
Treasury stock | (13,450,000) | (13,450,000) |
Total Item 9 Labs Corp. Stockholders' Equity | 78,492,587 | 86,101,443 |
Non-controlling interest | 13,950 | |
Total Stockholders' Equity | 78,506,537 | 86,101,443 |
Total Liabilities and Stockholders' Equity | $ 120,527,843 | $ 116,809,133 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) - $ / shares | Jun. 30, 2022 | 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 | 108,562,706 | 107,074,417 |
Common Stock, Shares, Outstanding | 96,262,706 | 94,774,417 |
UNAUDITED CONDENSED CONSOLIDATE
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Income Statement [Abstract] | ||||
Revenues, net | $ 4,931,322 | $ 6,693,061 | $ 17,755,519 | $ 15,843,256 |
Cost of revenues | 3,341,367 | 3,802,447 | 11,089,560 | 8,531,623 |
Gross profit | 1,589,955 | 2,890,614 | 6,665,959 | 7,311,633 |
Operating expenses | ||||
Professional fees and outside services | 993,452 | 442,483 | 2,207,618 | 1,350,196 |
Payroll and employee related expenses | 2,683,722 | 1,592,673 | 7,889,672 | 4,014,819 |
Sales and marketing | 207,213 | 262,473 | 1,260,551 | 389,819 |
Depreciation and amortization | 439,052 | 112,159 | 1,320,664 | 360,601 |
Other operating expenses | 1,114,323 | 728,100 | 2,747,158 | 1,292,154 |
Provision for (recovery of) bad debt | (5,000) | |||
Total expenses | 5,437,762 | 3,137,888 | 15,420,663 | 7,407,589 |
Loss from operations | (3,847,807) | (247,274) | (8,754,704) | (95,956) |
Other income (expense) | ||||
Interest expense | (1,625,155) | (629,265) | (3,932,918) | (1,806,019) |
Other income | 42,634 | 318 | 42,634 | |
Total other income (expense), net | (1,625,155) | (586,631) | (3,932,600) | (1,763,385) |
Net loss, before income tax provision (benefit) | (5,472,962) | (833,905) | (12,687,304) | (1,859,341) |
Income tax provision (benefit) | 4,624 | 7,948 | ||
Net loss | (5,477,586) | (833,905) | (12,695,252) | (1,859,341) |
Less: Net loss attributable to non-controlling interest | (7,109) | (1,683) | ||
Net loss attributable to Item 9 Labs Corp. | $ (5,470,477) | $ (833,905) | $ (12,693,569) | $ (1,859,341) |
Basic net income (loss) per common share | $ (0.06) | $ (0.01) | $ (0.13) | $ (0.03) |
Basic weighted average common shares outstanding | 96,162,616 | 92,209,521 | 95,446,846 | 72,115,022 |
Diluted net income (loss) per common share | $ (0.06) | $ (0.01) | $ (0.13) | $ (0.03) |
Diluted weighted average common shares outstanding | 96,162,616 | 92,209,521 | 95,446,846 | 72,115,022 |
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] | Noncontrolling Interest [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 | 12,300,000 | ||||
Shares, Outstanding at Dec. 31, 2020 | (75,261,084) | (12,300,000) | ||||
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) | ||||
Net loss | (1,859,341) | |||||
Stock issued for acquisition | 65,000,000 | |||||
Stock issued for licenses | ||||||
Non-controlling interest | ||||||
Ending balance, value at Jun. 30, 2021 | $ 10,451 | 173,877,183 | $ (13,450,000) | (24,827,663) | 135,609,971 | |
Shares, Outstanding, Ending Balance at Jun. 30, 2021 | 104,509,521 | 12,300,000 | ||||
Shares, Outstanding at Jun. 30, 2021 | (104,509,521) | (12,300,000) | ||||
Beginning balance, value at Dec. 31, 2020 | $ 7,526 | 50,685,178 | $ (13,450,000) | (24,042,778) | 13,199,926 | |
Shares, Outstanding, Beginning Balance at Dec. 31, 2020 | 75,261,084 | 12,300,000 | ||||
Shares, Outstanding at Dec. 31, 2020 | (75,261,084) | (12,300,000) | ||||
Stock issued for cash, net | $ 843 | 7,167,740 | 7,168,583 | |||
Sale of Stock, Number of Shares Issued in Transaction | 8,433,437 | |||||
Stock based compensation | 304,672 | 304,672 | ||||
Net loss | 49,020 | 49,020 | ||||
Stock issued for acquisition | $ 1,908 | 64,998,092 | 65,000,000 | |||
Stock Issued During Period, Shares, Acquisitions | 19,080,000 | |||||
Warrants issued for acquisition | 51,081,066 | 51,081,066 | ||||
Stock to be issued for convertible notes | $ 134 | (134) | ||||
[custom:StockToBeIssuedForConvertibleNotesShares] | 1,335,000 | |||||
Warrants issued with convertible notes | 926,198 | 926,198 | ||||
Beneficial conversion feature | 428,802 | 428,802 | ||||
Ending balance, value at Mar. 31, 2021 | $ 10,411 | 175,591,614 | $ (13,450,000) | (23,993,758) | 138,158,267 | |
Shares, Outstanding, Ending Balance at Mar. 31, 2021 | 104,109,521 | 12,300,000 | ||||
Shares, Outstanding at Mar. 31, 2021 | (104,109,521) | (12,300,000) | ||||
Shares, Outstanding at Mar. 31, 2021 | (104,109,521) | (12,300,000) | ||||
Stock issued for cash, net | $ 40 | 339,960 | 340,000 | |||
Sale of Stock, Number of Shares Issued in Transaction | 400,000 | |||||
Stock based compensation | 304,672 | 304,672 | ||||
Net loss | (833,905) | (833,905) | ||||
Adjustment to acquisition price, warrants | (2,359,063) | (2,359,063) | ||||
Ending balance, value at Jun. 30, 2021 | $ 10,451 | 173,877,183 | $ (13,450,000) | (24,827,663) | 135,609,971 | |
Shares, Outstanding, Ending Balance at Jun. 30, 2021 | 104,509,521 | 12,300,000 | ||||
Shares, Outstanding at Jun. 30, 2021 | (104,509,521) | (12,300,000) | ||||
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) | ||||
Beneficial conversion feature | 470,047 | 470,047 | ||||
Stock issued for debt inducement | $ 14 | 128,348 | 128,362 | |||
[custom:StockIssuedForDebtInducementShares] | 142,365 | |||||
Warrants issued with debt | 574,239 | 574,239 | ||||
Stock issued on exercise of options | $ 1 | (1) | ||||
[custom:StockIssuedDuringPeriodSharesStockIssuedInStockOptionsExercised] | 9,896 | |||||
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) | ||||
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) | ||||
Net loss | (12,695,252) | |||||
Stock issued for acquisition | 65,000 | |||||
Stock issued for licenses | 336,000 | |||||
Non-controlling interest | 15,633 | |||||
Ending balance, value at Jun. 30, 2022 | $ 10,856 | 138,499,394 | $ (13,450,000) | (46,567,663) | 13,950 | 78,506,537 |
Shares, Outstanding, Ending Balance at Jun. 30, 2022 | 108,562,706 | 12,300,000 | ||||
Shares, Outstanding at Jun. 30, 2022 | (108,562,706) | (12,300,000) | ||||
Beginning balance, value at Dec. 31, 2021 | $ 10,724 | 135,120,587 | $ (13,450,000) | (37,219,108) | 84,462,203 | |
Shares, Outstanding, Beginning Balance at Dec. 31, 2021 | 107,243,344 | 12,300,000 | ||||
Shares, Outstanding at Dec. 31, 2021 | (107,243,344) | (12,300,000) | ||||
Stock issued for cash, net | $ 28 | 288,813 | 288,841 | |||
Sale of Stock, Number of Shares Issued in Transaction | 278,000 | |||||
Issuance of shares for services | $ 34 | 328,466 | 328,500 | |||
Stock Issued During Period, Shares, Issued for Services | 335,159 | |||||
Stock based compensation | 1,091,560 | 1,091,560 | ||||
Net loss | (3,878,078) | 5,426 | (3,872,652) | |||
Stock issued for acquisition | $ 7 | 64,993 | 65,000 | |||
Stock Issued During Period, Shares, Acquisitions | 69,892 | |||||
Beneficial conversion feature | 25,000 | 25,000 | ||||
Stock issued for debt inducement | $ 2 | 24,998 | 25,000 | |||
[custom:StockIssuedForDebtInducementShares] | 25,000 | |||||
Stock issued on exercise of options | $ 2 | (2) | ||||
[custom:StockIssuedDuringPeriodSharesStockIssuedInStockOptionsExercised] | 18,033 | |||||
Stock issued for licenses | $ 30 | 335,970 | 336,000 | |||
[custom:StockIssuedDuringPeriodSharesLicenseAcquisition] | 300,000 | |||||
Non-controlling interest | 15,633 | 15,633 | ||||
Ending balance, value at Mar. 31, 2022 | $ 10,827 | 137,280,385 | $ (13,450,000) | (41,097,186) | 21,059 | 82,765,085 |
Shares, Outstanding, Ending Balance at Mar. 31, 2022 | 108,269,428 | 12,300,000 | ||||
Shares, Outstanding at Mar. 31, 2022 | (108,269,428) | (12,300,000) | ||||
Shares, Outstanding at Mar. 31, 2022 | (108,269,428) | (12,300,000) | ||||
Stock issued for cash, net | $ 26 | 254,311 | 254,337 | |||
Sale of Stock, Number of Shares Issued in Transaction | 263,313 | |||||
Issuance of shares for services | $ 3 | 30,017 | 30,020 | |||
Stock Issued During Period, Shares, Issued for Services | 29,965 | |||||
Stock based compensation | 934,681 | 934,681 | ||||
Net loss | (5,470,477) | (7,109) | (5,477,586) | |||
Ending balance, value at Jun. 30, 2022 | $ 10,856 | $ 138,499,394 | $ (13,450,000) | $ (46,567,663) | $ 13,950 | $ 78,506,537 |
Shares, Outstanding, Ending Balance at Jun. 30, 2022 | 108,562,706 | 12,300,000 | ||||
Shares, Outstanding at Jun. 30, 2022 | (108,562,706) | (12,300,000) |
UNAUDITED CONDENSED CONSOLIDA_3
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Operating Activities: | ||
Net loss | $ (12,695,252) | $ (1,859,341) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 217,363 | 100,535 |
Amortization of intangible assets | 1,103,301 | 260,066 |
Amortization of right of use asset | 89,844 | 39,818 |
Amortization of debt discounts | 2,311,783 | 565,021 |
Common stock issued for services | 498,983 | 163,236 |
Stock based compensation expense | 2,533,535 | 914,016 |
Recovery of bad debt | (5,000) | |
Loss on disposal of fixed assets | 10,841 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 856,776 | (1,703,092) |
Inventory | 2,276,205 | (6,348,573) |
Prepaid expenses and other assets | (339,994) | (192,292) |
Deposits | (86,604) | |
Accounts payable | 2,107,137 | 524,088 |
Accrued payroll and payroll taxes | (832,080) | (114,703) |
Income tax payable | 7,948 | |
Accrued interest | 542,841 | 643,068 |
Accrued expenses | (316,760) | 147,868 |
Deferred revenue | (214,994) | 22,844 |
Operating lease liability | (82,021) | (39,818) |
Net Cash Used in Operating Activities | (2,016,148) | (6,877,259) |
Investing Activities: | ||
Deposit on acquisition | (1,685,368) | |
Cash paid for acquisition | (140,726) | |
Purchases of property, equipment and construction in progress | (2,918,584) | (2,263,388) |
Cash received for note receivable | 5,000 | 5,000 |
Cash received from construction escrow accounts | 816,227 | |
Cash acquired in acquisition | 6,143 | 94,596 |
Cash paid to acquisition escrow accounts | (406,932) | |
Capitalized license fees | (2,790) | |
Purchase of license | (1,130,872) | |
Net Cash Used in Investing Activities | (3,769,744) | (3,851,950) |
Financing Activities: | ||
Proceeds from the sale of common stock | 555,911 | 13,298,965 |
Costs for sale of common stock | (12,733) | |
Payment of debt discount | (50,750) | |
Proceeds from the issuance of debt | 7,282,763 | 1,355,000 |
Payment of debt | (3,002,097) | (3,712,541) |
Net Cash Provided by Financing Activities | 4,773,094 | 10,941,424 |
Net Increase (Decrease) in Cash | (1,012,798) | 212,215 |
Cash and cash equivalents- Beginning of Period | 1,454,460 | 84,677 |
Cash and cash equivalents - End of Period | 441,662 | 296,892 |
Supplemental disclosure of cash flow information: | ||
Interest paid in cash | 3,855,724 | 597,930 |
Income taxes paid in cash | ||
Supplemental disclosure of non-cash investing and financing activities: | ||
Stock issued for acquisitions | 65,000 | 65,000,000 |
Stock issued for acquisition of a license | 336,000 | |
Accrued interest transferred to debt | 1,762 | 160,590 |
Warrants issued for debt and acquisition | 574,239 | 49,648,201 |
Stock issued for debt | 223,214 | |
Non-controlling interest | 15,633 | |
Stock issuance costs paid in stock | 89,645 | |
Fixed assets purchased with debt | 50,914 | |
Debt issued for acquisition of a license | 200,000 | |
Debt proceeds used to pay debt discounts | 80,000 | |
Land purchased with escrow funds and deposit | 3,000,000 | |
Stock issued to pay accounts payable and prepay expenses | 292,500 | |
Operating lease right of use asset and liability | 934,098 | |
Beneficial conversion feature on convertible debt | 495,047 | 428,802 |
Construction in progress paid with escrow funds | 6,426,063 | |
Accrued debt discount fees | 75,000 | |
Amortized debt discount capitalized in construction in progress | 2,620,476 | |
Accrued liabilities capitalized in construction in progress | $ 612,158 |
Note 1 - Description of Busines
Note 1 - Description of Business and Summary of Significant Accounting Policies | 9 Months Ended |
Jun. 30, 2022 | |
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 is a holding company, investing in cannabis and cannabis-related businesses. Its subsidiaries currently compete in two different market segments: (1) production of 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) sale of 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 (30) Unity Rd retail dispensary locations in twelve (12) states. The majority of the locations are in the licensing process. We currently have one franchisee operating in Boulder, Colorado. 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 June 30, 2022 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 June 30, 2022 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 and a consolidated variable interest entity (“VIE”). Intercompany balances and transactions have been eliminated. Item 9 Labs consolidates a VIE in which the Company is deemed to be the primary beneficiary. An entity is generally a VIE if it meets any of the following criteria: (i) the entity has insufficient equity to finance its activities without additional subordinated financial support from other parties, (ii) the equity investors cannot make significant decisions about the entity’s operations or (iii) the voting rights of some investors are not proportional to their obligations to absorb the expected losses of the entity or receive the expected returns of the entity and substantially all of the entity’s activities involve or are conducted on behalf of the investor with disproportionately few voting rights. The Company makes significant judgments in determining whether an entity is a VIE and, for each reporting period, the Company assesses whether it is the primary beneficiary of the VIE. Effective February 1, 2022, the Company was deemed the primary beneficiary of Elevated Connections, Inc. The equity in Elevated Connections, Inc. held by its stockholder has been presented on the balance sheet and the statement of operations as a non-controlling interest. 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 periods’ net income, 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 primarily 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 June 30, 2022 and September 30, 2021. Licenses Cannabis licenses vary in term for each jurisdiction. The Company capitalizes all costs associated with the acquisition of cannabis licenses in the year the license is obtained. Subsequent measurement is determined by the length of the term of the license. The Company acquired licenses during the nine months ended June 30, 2022 that have indefinite useful lives, subject to annual renewals. Costs associated with maintaining licenses (annual fees) are expensed as incurred. The anticipated maintenance fees are not expected to be material to the condensed consolidated financial statements. Licenses are included on the balance sheet under the heading Intangible assets, net at June 30, 2022 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 and nine months ended June 30, 2022 and 2021, all of the Company's cultivation 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 $ 560,849 775,843 4,998 0 214,994 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 net loss 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 June 30, 2022 and 2021 that were excluded from the diluted net loss per share calculation for the three and nine months ended June 30, 2022 and 2021 because the effect of including these potential shares was antidilutive due to the Company’s net loss. 2022 2021 Potentially dilutive common share equivalents Options 6,223,462 3,211,709 Warrants 48,069,687 41,415,000 Convertible notes 3,510,792 2,707,238 Potentially dilutive shares outstanding 57,803,941 47,333,947 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 June 30, 2022 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 and nine months ended June 30, 2022 and 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”). Business Combination The Company allocates the purchase price of an acquired business to the tangible and intangible assets acquired and liabilities assumed based upon their estimated fair values on the acquisition date. Any excess of the purchase price over the fair value of the net assets acquired is recorded as goodwill. The purchase price allocation process requires management to make significant estimates and assumptions, especially at the acquisition date with respect to intangible assets. Direct transaction costs associated with the business combination are expensed as incurred. The allocation of the consideration transferred in certain cases may be subject to revision based on the final determination of fair values during the measurement period, which may be up to one year from the acquisition date. The Company includes the results of operations of the business that it has acquired in its consolidated results prospectively from the date of acquisition. If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognized in profit or loss. 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 | 9 Months Ended |
Jun. 30, 2022 | |
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 reduce 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 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 additional 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 | 9 Months Ended |
Jun. 30, 2022 | |
Inventory Disclosure [Abstract] | |
Note 3 – Inventory | Note 3 – Inventory Inventory consisted of the following at June 30, 2022 and September 30, 2021. June 30, September 30, 2022 2021 Raw materials and work in process $ 1,817,094 $ 4,291,095 Finished goods 1,596,924 1,052,375 Packaging and other 716,761 1,047,881 $ 4,130,779 $ 6,391,351 |
Note 4 _ Acquisitions
Note 4 – Acquisitions | 9 Months Ended |
Jun. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Note 4 – Acquisitions | Note 4 – Acquisitions Oklahoma City dispensary acquisition In January 2022, 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 a dispensary, excluding cannabis and cannabis related products and licenses, and assumed the dispensary’s lease. The purchase price was $ 130,000 32,500 32,500 1,667 65,000 69,892 49,274 As of June 30, 2022, the consideration paid or accrued for this acquisition was as follows: Cash $ 190,000 Common stock 65,000 $ 255,000 The following table summarizes the allocation of the purchase price to the estimated fair values of the assets acquired as of the transaction date: Tangible assets acquired Cash $ 6,143 Fixed assets 80,287 Tangible net assets acquired 86,430 Goodwill 168,570 Consideration paid $ 255,000 Adams County acquisition On October 6, 2021, the Company entered into an Asset Purchase Agreement with Nebrina Adams County LLC to purchase certain assets, which include licenses, a lease and certain personal property to operate a licensed recreational cannabis dispensary (the “Adams County Acquisition”). The purchase price is $ 1,651,789 1.0 200,000 300,000 1.12 Business Combinations As of June 30, 2022, the consideration paid in this asset acquisition was as follows: Cash $ 1,000,000 Debt 200,000 Common stock 336,000 Direct costs of acquisition 130,872 $ 1,666,872 The Herbal Cure pending acquisition On March 11, 2022, the Company entered into an Asset Purchase Agreement with The Herbal Cure LLC (“Seller”), pursuant to which, the Company is purchasing certain assets from the Seller. The total purchase price for the assets to be acquired is $ 5,750,000 (i) Upon mutual execution and delivery of the Asset Purchase Agreement, the Company shall convey to the Seller a down payment in the amount of $ 250,000 (ii) At the Closing, the Company shall pay to Seller $ 3,700,000 (iii) $ 700,000 5 (iv) the Company shall pay the remainder of the purchase price in shares of its common stock on the Closing Date, in such amount of Shares as is the quotient of $ 1,100,000 At June 30, 2022, the $ 250,000 Business Combinations , Sessions pending acquisition On May 18, 2022, the Company and its wholly owned subsidiary, OCG Management Ontario, Inc., a corporation formed under the laws of the Province of Ontario (“Purchaser”) solely for the purpose of completing this transaction, entered into a Share Purchase Agreement pursuant to which the Purchaser is purchasing all, but not less than all, of the issued and outstanding shares in the capital of Wild Card Cannabis Incorporated, a corporation formed under the laws of the Province of Ontario free and clear of all Liens from the Shareholders. The total purchase price for the Shares is Twelve Million Eight Hundred Thousand Dollars ($ 12,800,000.00 Purchase Price (i) The Company has delivered the Exclusivity Deposit in the amount of $ 156,902 (ii) At the Closing, Purchaser shall pay to Shareholders the Estimated Purchase Price of Twelve Million Eight Hundred Thousand Dollars ($ 12,800,000.00 (iii) Four Million One Hundred Thousand Dollars ($ 4,100,000.00 (iv) Four Million One Hundred Thousand Dollars ($ 4,100,000.00 At June 30, 2022, the $ 156,902 Business Combinations , |
Note 5 _ Variable Interest Enti
Note 5 – Variable Interest Entity | 9 Months Ended |
Jun. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Note 5 – Variable Interest Entity | Note 5 – Variable Interest Entity In January 2022, the Company signed a Co-Management Agreement with a dispensary in Oklahoma for a term of three years. Under the terms of the Co-Management Agreement, the Company purchased substantially all of the assets of a dispensary, excluding cannabis and cannabis related products and licenses, and assumed the dispensary’s lease (see Note 4). Further, under the Co-Management Agreement, the Company is to operate, staff, and otherwise manage the day-to-day operations of the dispensary. The Company shall also pay all claims, costs and liabilities associated with operating the dispensary. The terms of the Co-Management Agreement provide the Company with, in its judgment, the ability to manage and make decisions that most significantly affect the operations of Elevated Connections and to absorb losses that could potentially be significant to Elevated Connections. As such, the Company has consolidated Elevated Connections effective February 1, 2022. The assets of the VIE cannot be used to settle obligations of the Company or its wholly owned subsidiaries. However, liabilities recognized as a result of consolidating the VIE does represent additional claims on the Company’s general assets. The following table presents the carrying values of the assets and liabilities of the entity that is a VIE and consolidated by the Company at June 30, 2022. June 30, Assets 2022 Current assets Inventory $ 27,773 Total assets $ 27,773 Liabilities Current liabilities Income tax payable $ 7,948 Total liabilities $ 7,948 The following table presents the operations (after intercompany eliminations) of the entity that is a VIE and consolidated by the Company for the three and nine months ended June 30, 2022. Three months ended June 30, Nine months ended June 30, 2022 2022 Revenues, net $ 40,245 $ 73,582 Cost of revenue 21,111 44,128 Gross profit 19,134 29,454 Income tax expense 4,624 7,948 Net income $ 14,510 $ 21,506 |
Note 6 _ Goodwill and Intangibl
Note 6 – Goodwill and Intangible Assets | 9 Months Ended |
Jun. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Note 6 – Goodwill and Intangible Assets | Note 6 – Goodwill and Intangible Assets Goodwill and identifiable intangible assets, including licenses, consist of the following as of June 30, 2022 and September 30, 2021: Gross Carrying Accumulated Accumulated Amount Amortization Impairment Net June 30, 2022 Finite lived intangible assets: Trade names and trademarks $ 8,570,848 $ 1,140,172 $ — $ 7,430,676 Customer relationships 290,000 290,000 — — Websites and other intellectual property 2,470,000 1,144,470 955,223 370,307 Franchise and consulting agreements 3,970,000 919,170 — 3,050,830 Total finite lived intangible assets 15,300,848 3,493,812 955,223 10,851,813 Indefinite lived intangible assets: Licenses 8,370,853 — — 8,370,853 Total intangible assets $ 23,671,701 $ 3,493,812 $ 955,223 $ 19,222,666 Gross Carrying Accumulated Accumulated Amount Amortization Impairment Net September 30, 2021 Finite lived intangible assets: Trade names and trademarks $ 8,570,848 $ 497,356 $ — $ 8,073,492 Customer relationships 290,000 290,000 — — Websites and other intellectual property 2,470,000 946,488 955,223 568,289 Franchise and consulting agreements 3,970,000 656,667 — 3,313,333 Total finite lived intangible assets 15,300,848 2,390,511 955,223 11,955,114 Indefinite lived intangible assets: Licenses 6,703,981 — — 6,703,981 Total intangible assets $ 22,004,829 $ 2,390,511 $ 955,223 $ 18,659,095 Gross Carrying Gross Carrying Amount Amount Goodwill Goodwill Impairment Changes in goodwill and indefinite lived intangibles: Balance at September 30, 2021 $ 62,868,420 $ 4,803,604 Additional goodwill related to Oklahoma City dispensary acquisition 168,570 — Balance at June 30, 2022 $ 63,036,990 $ 4,803,604 As of June 30, 2022, the cultivation and processing licenses from the state of Nevada, included above, have not been transferred to the Company as the transfer is awaiting regulatory approval. During the three months ended June 30, 2022, the Company has noted indicators of the possible impairment of its goodwill and intangible assets. The Company will analyze these indicators during the fourth quarter of the year ended September 30, 2022 and determine if any impairment has occurred. Given the carrying value of the Company’s goodwill and intangible assets at June 30, 2022, the occurrence of an impairment may be material to the Company’s financial position and results of operations. |
Note 7 - Property and Equipment
Note 7 - Property and Equipment, Net | 9 Months Ended |
Jun. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Note 7 - Property and Equipment, Net | Note 7 - Property and Equipment, Net The following represents a summary of our property and equipment as of June 30, 2022 and September 30, 2021: June 30, September 30, 2022 2021 Cultivation and manufacturing equipment $ 551,045 $ 506,271 Computer equipment and software 266,427 266,427 Leasehold improvements 49,667 — Buildings and improvements 2,811,340 2,785,781 3,678,479 3,558,479 Accumulated Depreciation (696,052 ) (479,320 ) 2,982,427 3,079,159 Land 3,455,563 380,584 Construction on progress 19,869,222 7,418,105 Property and Equipment, Net $ 26,307,212 $ 10,877,848 During the nine months ended June 30, 2022, 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 and nine months ended June 30, 2022, including the construction of the Nevada facility and the expansion of the Arizona facility. 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 June 30, 2022 and 2021 was $ 71,285 35,965 217,363 100,535 |
Note 8 _ Debt
Note 8 – Debt | 9 Months Ended |
Jun. 30, 2022 | |
Debt Disclosure [Abstract] | |
Note 8 – Debt | Note 8 – Debt Convertible Notes Effective Maturity Annual Interest Balance at Balance at Conversion Date Date Rate June 30, 2022 September 30, 2021 Price C-2 3/23/2020 9/23/2020 15 % 1,100,000 1,100,000 See C-2 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 C-11 2/21/2022 8/31/2022 24 % 250,000 — 1.10 3,620,000 1,950,000 Less: unamortized discounts (353,821 ) (672,606 ) $ 3,266,179 $ 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 million. The note is convertible at the lesser of a) $1.00 per share or, b) 20% discount to the ten day average closing price of the Company’s common stock, immediately prior to the conversion date. All principal and interest were due on the maturity date. The lender has granted a payment forbearance for the note and all unpaid principal and interest, accrued at the default interest rate of 15% per annum, will be paid at maturity, which has been postponed to a date that has not yet been determined. At June 30, 2022 the Viridis note was in default. The Viridis note remains in default as of this filing, though the parties are negotiating a long-term arrangement. (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 shares of the Company’s common stock for $3 per share, with a 4 year term. Further, the Company issued 67,365 shares of common stock, valued at $112,500 as an inducement to the lenders to enter into the note agreements. The debt included a beneficial conversion feature after consideration of the relative fair values of the warrants and shares of common stock. The debt, shares of common stock and warrants were recorded at their relative fair values, along with the beneficial conversion feature. The resulting discount of $597,606 and an additional $75,000 discount related to a one-time interest charge of 10% of the original principal amount, is amortized to interest expense over the term of the debt. The one-time interest charge was accrued at June 30, 2022. (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 shares of the Company’s common stock for $3 per share, with a 2 year term. Further, the Company issued 75,000 shares of common stock, valued at $116,250 as an inducement to the lender to enter into the note agreement. The debt included a beneficial conversion feature after consideration of the relative fair values of the warrants and shares of common stock. The debt, shares of common stock and warrants were recorded at their relative fair values, along with the beneficial conversion feature. The resulting discount of $561,272, which also included debt issuance costs of $44,582, is amortized to interest expense over the term of the debt. This convertible note is currently due on demand and interest is paid monthly. (C-11) Convertible Goldstein Note On February 21, 2022, 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 Company issued 25,000 shares of common stock, valued at $25,000 as an inducement to the lender to enter into the note agreement. The debt included a beneficial conversion feature after consideration of the relative fair value of the shares of common stock. The debt and shares of common stock were recorded at their relative fair values, along with the beneficial conversion feature. The resulting discount of $50,000 is amortized to interest expense over the term of the debt. The future minimum payments of the Company’s convertible debt obligations as of June 30, 2022 are as follows. The unamortized discount will be amortized through September 2022. Year ended June 30, Amount 2023 $ 3,620,000 3,620,000 Less: unamortized discount (353,821 ) $ 3,266,179 Notes Payable Effective Maturity Annual Interest Balance at Balance at Date Date Rate June 30, 2022 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 1/25/2023 36 % 1,713,707 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 % 670,932 816,582 N/A p 2/1/2021 6/30/2022 15 % 270,590 520,590 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 18 % 500,000 500,000 Restricted common stock t 3/19/2021 7/19/2022 18 % 250,000 500,000 N/A u 2/22/2022 2/28/2023 36 % 547,806 — Future revenues v 2/22/2022 2/28/2023 36 % 176,453 — Future revenues w 3/4/2022 On demand 15 % 3,652,000 — x 3/10/2022 5/10/2022 20 % 250,000 — N/A y 3/2/2022 8/1/2023 5 % 166,667 — N/A 28,868,191 25,495,446 Less: unamortized discounts (2,886,822 ) (6,002,045 ) $ 25,981,369 $ 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 million for the expansion of the Company's Arizona property. In exchange for the loan, Viridis was to be repaid in the form of waterfall revenue participation schedules. Viridis was to receive 5% of the Company's gross revenues from the Arizona operations until the loan was repaid, 2% until repaid 200% of the amount loaned, and 1% of gross revenues in perpetuity or until a change in control. The loan was originally collateralized with a Deed of Trust on the Company's 5-acre parcel in Coolidge, AZ and its two 10,000 square foot buildings. In August 2019, Viridis agreed to subordinate its first priority Deed of Trust and move into a 2 nd position. At that time, the loan was amended to include 6% annualized interest. 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 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. (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. (l) Upwise Capital In August 2021, the Company executed on a short-term financing arrangement. The proceeds of $2.5 million are being utilized to further expand the production capabilities of the operations in Arizona and to complete the Nevada facility. Payments of $64,762 are due weekly until $3.264 million is repaid. This results in an effective interest rate of approximately 36%. On January 26, 2022, the Company executed a second short-term financing arrangement. The proceeds of $2.5 million were used to repay the first short-term financing arrangement, discussed above, in the amount of approximately $1.839 million, and the remainder of the proceeds was used for working capital purposes. Payments of $66,468 are due weekly until $3.35 million has been repaid. This results in an effective interest rate of 36%. The repayment of the first short-term financing was accounted for as an extinguishment. As such, all previously unamortized discount in the amount of $46,588 and imputed interest in the amount of $483,840 was capitalized to construction in progress during January 2022. Fees paid for the second short-term financing arrangement in the amount of $91,000 have been recorded as a discount and will be amortized to interest expense over the term of the arrangement. See Note 14. (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 its 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% per annum until January 25, 2022. Principal payments in the amount of $50,000 are due on January 25, 2022, February 15, 2022 and March 15, 2022, with a final payment of the remaining principal and accrued interest due on March 31, 2022. Upon closing of an equity raise of at least $750,000, the Company will repay the outstanding balance plus any accrued interest immediately. As part of the amendment, the Company issued 164,744 warrants to purchase the Company’s common stock. The warrants have a two-year period and an exercise price of $1.00. The resulting discount of $58,352 was fully amortized to interest expense during the six months ended March 31, 2022. Effective March 31, 2022, the debt was amended to extend the maturity date to June 30, 2022, interest payments are due on April 1, May 1 and June 1, 2022. Principal payments in the amount of $50,000 are due on April 15, May 15 and June 15, 2022 and a final balloon payment of outstanding principal and interest in the amount of $223,972 is due on June 30, 2022. This note is currently due on demand and interest is paid monthly. (s) Viridis $500,000 On September 30, 2021, the Company borrowed $500,000 from Viridis Group I9 Capital LLC, a related party. The proceeds of the debt were used to make a payment on the outstanding unpaid payroll tax liability. The debt is collateralized by restricted common stock in the amount of twice the balance of the debt. It is anticipated that the note will include warrants to purchase a total of 500,000 shares of the Company’s common stock for $0.60 per share, with a five-year term. As of the date of these condensed consolidated financial statements, the terms of these warrants have not been finalized. The debt and anticipated 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 beginning January 1, 2022, will be paid at maturity, which has been postponed to a date that has not yet been determined. (t) Chessler note Prior to the acquisition, OCG entered into a settlement agreement with its former landlord, which included a note agreement for $500,000. During March 2022, this note agreement was modified to extend the maturity date to July 19, 2022 and add an interest rate of 18% per annum. The modified note also calls for principal payments of $75,000 on the effective date of the note, $75,000 on April 10, 2022, $100,000 on May 22, 2022 and $250,000 at maturity, plus accrued and unpaid interest. The principal balance of this note plus accrued and unpaid interest was paid subsequent to June 30, 2022. (u) Lendspark In February 2022, the Company executed on a short-term financing arrangement for proceeds of $750,000. Payments of $20,400 are due weekly until approximately $1.02 million is repaid. This results in an effective interest rate of approximately 36%. Fees in the amount of $48,765 have been recorded as a discount and are being amortized to interest expense over the term of the arrangement. See Note 14. (v) Upwise Capital 2 In February 2022, the Company executed on a third short-term financing arrangement with Upwise Capital for proceeds of $250,000. Payments of $6,746 are due weekly until $340,000 is repaid. This results in an effective interest rate of approximately 36%. Fees in the amount of $16,255 have been recorded as a discount and are being amortized to interest expense over the term of the arrangement. See Note 14. (w) Viridis working capital loans During the nine months ended June 30, 2022, the Company received several short-term working capital loans from Viridis, a related party, in the amount of $3,702,000. The terms of these short term loans are still being determined, however, an interest rate of 15% has been estimated. (x) Non-convertible Gaines Note On March 10, 2022, the Company entered into a short-term promissory note for $250,000. The short-term promissory note is due and payable in monthly payments of interest only, with all principal and any accrued and unpaid interest due at maturity. This convertible note is currently due on demand and interest is paid monthly. (y) Nebrina Adams County Note Effective with the close of the Adams County acquisition (see Note 4), the Company entered into a note for $200,000 with the seller as part of the purchase price. The note is payable in six installments on the last day of each three-month period following the Closing Date. The future minimum payments of the Company’s notes payable obligations as of March 31, 2022 are as follows. The unamortized discount will be amortized through November 2023. Year ended June 30, Amount 2023 $ 27,563,901 2024 1,862,175 2025 — 29,426,076 Less: unamortized discount (2,886,822 ) Less: imputed interest (557,885 ) 25,981,369 Less: current portion (24,532,509 ) $ 1,448,860 A summary of interest expense for the three and nine months ended June 30, 2022 and 2021 is as follows. Three months ended June 30, Nine months ended June 30, 2022 2022 2021 2022 2021 Amortization of debt discounts $ 1,440,535 $ 316,320 $ 4,932,259 $ 564,622 Stated interest paid or accrued 1,508,210 301,933 4,073,665 1,217,726 Finance charges and other interest 22,021 11,012 25,016 23,671 2,970,766 629,265 9,030,940 1,806,019 Less: interest capitalized to construction in progress (1,345,611 ) — (5,098,022 ) — $ 1,625,155 $ 629,265 $ 3,932,918 $ 1,806,019 |
Note 9 - Concentrations
Note 9 - Concentrations | 9 Months Ended |
Jun. 30, 2022 | |
Risks and Uncertainties [Abstract] | |
Note 9 - Concentrations | Note 9 - Concentrations For the three and nine months ended June 30, 2022 and 2021, 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. One of our license holder’s customers that the Company’s products are distributed to accounts for 33% of our cultivation revenue for the nine months ended June 30, 2022. Should our products no longer be distributed to this customer of our license holder, it would have a material adverse effect on our operations. |
Note 10 - Commitments and Conti
Note 10 - Commitments and Contingencies | 9 Months Ended |
Jun. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Note 10 - Commitments and Contingencies | Note 10 - Commitments and Contingencies The production and possession of cannabis 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 6,653 6,828 7,003 7,178 20,782 20,617 64,939 61,454 In February 2022, the Company assumed a lease to rent approximately 3,100 square feet of retail space in Oklahoma City, Oklahoma as part of the Oklahoma City acquisition disclosed in Note 4. The lease calls for base rent payments of $21 per square foot ($ 5,483 22,129 36,406 In March 2022, the Company assumed a lease to rent approximately 2,650 square feet of retail space in Adams County, Colorado as part of the Adams County acquisition disclosed in Note 4. The lease calls for base rent payments of $ 15,450 15,913 52,822 68,870 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 calls for base rent payments of $ 6,604 7,886 21,781 48,197 The future lease payments are as follows. Year ended June 30, Amount 2023 $ 420,720 2024 359,998 2025 158,342 2026 163,093 2027 167,985 Thereafter 266,399 1,536,537 Less: imputed interest (523,462 ) 1,013,075 Less: current portion: (256,471 ) $ 756,604 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 June 30, 2022 and September 30, 2021, the Company has accrued unpaid payroll taxes and estimated penalties and interest of approximately $ 1,350,000 2,400,000 94,278 294,000 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 11 - Related Party Transac
Note 11 - Related Party Transactions | 9 Months Ended |
Jun. 30, 2022 | |
Related Party Transactions [Abstract] | |
Note 11 - Related Party Transactions | Note 11 - Related Party Transactions As discussed in Note 7, the Company completed the purchase of 44 acres of land from a related party for $ 3.0 As discussed in Note 8, 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 8, 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 10, 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 June 30, 2022 and 2021, the Company purchased cultivation supplies from a related party in the amount of $ 0 13,868 31,708 39,397 Included in our accounts payable at June 30, 2022 and September 30, 2021 is approximately $ 231,000 138,000 |
Note 12 - Stockholders' Equity
Note 12 - Stockholders' Equity | 9 Months Ended |
Jun. 30, 2022 | |
Equity [Abstract] | |
Note 12 - Stockholders' Equity | Note 12 - Stockholders' Equity Unit Offering Prior to the three months ended June 30, 2022, the Company began offering up to 28,000,000 units of the Company for $1.40 per Unit on a “best-efforts/no minimum” basis pursuant to Regulation A of Section 3(6) of the Securities Act of 1933, as amended, for Tier 2 offerings. Each Unit is comprised of one share of common stock and one-half of one warrant to purchase a share of common stock. Only whole warrants are exercisable. Each whole warrant entitles the holder to purchase one share of common stock for $2.00 per share, subject to certain adjustments, from the date of issuance until the second anniversary of the date of issuance and is redeemable by the Company under certain conditions. Effective May 4, 2022, the Company repriced the offering to $1.12 per Unit and the exercise price of the warrant was reduced to $1.75 per share. The Company has incurred approximately $922,000 in fees related to this offering. These fees are included in Other assets on the condensed consolidated balance sheet at June 30, 2022 and will be netted against the proceeds received in the offering. Warrants The following table summarizes the Company’s warrant activity for the nine months ended June 30, 2022: Common Shares Issuable Upon Exercise of Weighted Average Weighted Average Contractual Aggregate Warrants Exercise Price Term in Years Intrinsic Value Balance of warrants at September 30, 2021 46,095,000 2.08 3.9 14,243,000 Warrants granted 1,974,687 2.68 2.8 — Exercised — — — — Forfeited/Cancelled — — — — Balance of warrants at June 30, 2022 48,069,687 $ 2.10 $ 3.7 $ 1,375,000 (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 June 30, 2022, for those awards that have an exercise price currently below the closing price as of June 30, 2022. Awards with an exercise price above the closing prices as of June 30, 2022 are considered to have no intrinsic value. The following range of assumptions were used to estimate the fair value of warrants issued during the nine months ended June 30, 2022, using the Black-Scholes option-pricing model, excluding the 234,943 whole warrants issued as part of the Company’s unit offering. Nine months ended June 30, 2022 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, the Company’s 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. The maximum contractual term of the award is 10 years. The vesting period for options outstanding at June 30, 2022 ranges from vesting immediately to three years. The following table summarizes the Company’s stock option activity for the nine months ended June 30, 2022: 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 1,161,582 1.55 6.7 15,800 Exercised (41,104 ) 0.87 8.3 19,730 Forfeited/Cancelled (114,331 ) 0.94 — — Balance of Options at June 30, 2022 6,223,462 $ 1.29 7.9 $ 67,175 Exercisable at June 30, 2022 2,456,774 $ 1.33 7.3 $ 33,588 Unvested at June 30, 2022 3,766,688 $ 1.27 Number of Options Weighted Average Grant Date Fair Value Unvested at June 30, 2022 3,766,688 $ 1.21 Granted during the nine months ended June 30, 2022 1,161,582 $ 1.37 Vested during the nine months ended June 30, 2022 358,004 $ 1.49 Forfeited during the nine months ended June 30, 2022 114,331 $ 1.91 (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 June 30, 2022, for those awards that have an exercise price currently below the closing price as of June 30, 2022. Awards with an exercise price above the closing prices as of June 30, 2022 are considered to have no intrinsic value. The following range of assumptions were used to estimate the fair value of stock options granted during the nine months ended June 30, 2022, using the Black-Scholes option-pricing model. Nine months ended June 30, 2022 Expected stock price volatility 126 % - 176 % Risk-free interest rate .7 % - 2.6 % Expected term (years) 2.8 - 6.5 Expected dividend yield 0 % Black-scholes value $ 0.68 - $ 3.01 During the three months ended June 30, 2022 and 2021, the Company recognized compensation expense of $ 934,681 304,672 2,533,535 914,016 2,299,311 |
Note 13 _ Segment Information
Note 13 – Segment Information | 9 Months Ended |
Jun. 30, 2022 | |
Segment Reporting [Abstract] | |
Note 13 – Segment Information | Note 13 – 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 tables presents segment information for the three and nine months ended June 30, 2022 and 2021. The Company acquired the Franchising segment at the closing of the acquisition of OCG, Inc. effective March 19, 2021. Cultivation Franchising Corporate Total Nine months ended June 30, 2022 Revenues from external customers $ 17,360,844 $ 280,529 $ 114,146 $ 17,755,519 Operating income (loss) 3,993,350 (2,705,153 ) (10,042,901 ) (8,754,704 ) Interest expense 460,524 79,993 3,392,401 3,932,918 Depreciation and amortization 90,362 901,675 328,627 1,320,664 Additions to property, equipment and construction in progress 25,623 — 15,631,945 15,657,568 Three months ended June 30, 2022 Revenues from external customers $ 4,861,737 $ 22,031 $ 47,554 $ 4,931,322 Operating income (loss) 983,533 (1,001,768 ) (3,829,572 ) (3,847,807 ) Interest expense 303,462 36,777 1,284,916 1,625,155 Depreciation and amortization 27,830 300,150 111,072 439,052 At June 30, 2022 Property, equipment and construction in progress, net $ 421,757 $ 20,899 $ 25,864,556 $ 26,307,212 Total assets (after intercompany eliminations) 5,102,841 68,217,019 47,207,983 120,527,843 Three and nine months ended June 30, 2021 Revenues from external customers $ 6,585,396 $ 78,418 $ 29,247 $ 6,693,061 Operating income (loss) 2,315,224 (484,351 ) (2,078,147 ) (247,274 ) Interest expense 123,286 112,419 393,560 629,265 Depreciation and amortization 16,530 5,633 89,996 112,159 At June 30, 2021 Property, equipment and construction in progress, net $ 1,526,319 $ 34,990 $ 7,852,680 $ 9,413,989 Total assets (after intercompany eliminations) 12,313,816 118,976,427 18,633,128 149,923,371 |
Note 14 - Subsequent Events
Note 14 - Subsequent Events | 9 Months Ended |
Jun. 30, 2022 | |
Subsequent Events [Abstract] | |
Note 14 - Subsequent Events | Note 14 - Subsequent Events Subsequent to June 30, 2022 the following events have occurred. The Company’s North Denver dispensary location began operations on July 11, 2022, making it the Company’s first corporate-owned shop in Colorado under the Company’s cannabis dispensary brand, Unity Rd. The Company has sold 1,700 units under its offering pursuant to Regulation A of Section 3(6) of the Securities Act of 1933, as amended, for Tier 2 offerings for total proceeds of $1,904 subsequent to June 30, 2022. The Company received short-term loans in the aggregate amount of $1,370,000 from Viridis, a related party. The terms of these short-term loans are being determined as of the date of the filing. On July 20, 2022, the Company entered into short-term financing arrangement with Capybara Capital. The proceeds of $0.5 million were used for working capital purposes. Payments of $18,889 are due weekly until $0.68 million has been repaid. This results in an effective interest rate of 36%. On July 22, 2022, the Company entered into a short-term financing arrangement with Upwise Capital. The proceeds of $1.954 million were used to repay the second short-term financing arrangement (see (l) in Note 8 above) and the Upwise Capital 2 financing arrangement (see (v) in Note 8 above). Payments of $55,552 are due weekly until $2.598 million has been repaid. This results in an effective interest rate of 33%. On July 22, 2022, the Company entered into a short-term financing arrangement with Lendspark. The proceeds of $0.65 million were used to repay the previous Lendspark short-term financing (see (u) in Note 8 above) in the amount of $0.591 million, and the remainder of the proceeds, approximately $0.05 million was used for working capital purposes. Payments of $17,680 are due weekly until $0.884 million has been repaid. This results in an effective interest rate of 36%. |
Note 1 - Description of Busin_2
Note 1 - Description of Business and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The accompanying condensed consolidated financial statements of the Company as of June 30, 2022 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 June 30, 2022 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 and a consolidated variable interest entity (“VIE”). Intercompany balances and transactions have been eliminated. Item 9 Labs consolidates a VIE in which the Company is deemed to be the primary beneficiary. An entity is generally a VIE if it meets any of the following criteria: (i) the entity has insufficient equity to finance its activities without additional subordinated financial support from other parties, (ii) the equity investors cannot make significant decisions about the entity’s operations or (iii) the voting rights of some investors are not proportional to their obligations to absorb the expected losses of the entity or receive the expected returns of the entity and substantially all of the entity’s activities involve or are conducted on behalf of the investor with disproportionately few voting rights. The Company makes significant judgments in determining whether an entity is a VIE and, for each reporting period, the Company assesses whether it is the primary beneficiary of the VIE. Effective February 1, 2022, the Company was deemed the primary beneficiary of Elevated Connections, Inc. The equity in Elevated Connections, Inc. held by its stockholder has been presented on the balance sheet and the statement of operations as a non-controlling interest. 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 periods’ net income, 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 primarily 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 June 30, 2022 and September 30, 2021. |
Licenses | Licenses Cannabis licenses vary in term for each jurisdiction. The Company capitalizes all costs associated with the acquisition of cannabis licenses in the year the license is obtained. Subsequent measurement is determined by the length of the term of the license. The Company acquired licenses during the nine months ended June 30, 2022 that have indefinite useful lives, subject to annual renewals. Costs associated with maintaining licenses (annual fees) are expensed as incurred. The anticipated maintenance fees are not expected to be material to the condensed consolidated financial statements. Licenses are included on the balance sheet under the heading Intangible assets, net at June 30, 2022 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 and nine months ended June 30, 2022 and 2021, all of the Company's cultivation 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 $ 560,849 775,843 4,998 0 214,994 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 net loss 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 June 30, 2022 and 2021 that were excluded from the diluted net loss per share calculation for the three and nine months ended June 30, 2022 and 2021 because the effect of including these potential shares was antidilutive due to the Company’s net loss. 2022 2021 Potentially dilutive common share equivalents Options 6,223,462 3,211,709 Warrants 48,069,687 41,415,000 Convertible notes 3,510,792 2,707,238 Potentially dilutive shares outstanding 57,803,941 47,333,947 |
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 June 30, 2022 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 and nine months ended June 30, 2022 and 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”). |
Business Combination | Business Combination The Company allocates the purchase price of an acquired business to the tangible and intangible assets acquired and liabilities assumed based upon their estimated fair values on the acquisition date. Any excess of the purchase price over the fair value of the net assets acquired is recorded as goodwill. The purchase price allocation process requires management to make significant estimates and assumptions, especially at the acquisition date with respect to intangible assets. Direct transaction costs associated with the business combination are expensed as incurred. The allocation of the consideration transferred in certain cases may be subject to revision based on the final determination of fair values during the measurement period, which may be up to one year from the acquisition date. The Company includes the results of operations of the business that it has acquired in its consolidated results prospectively from the date of acquisition. If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognized in profit or loss. |
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) | 9 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block] | 2022 2021 Potentially dilutive common share equivalents Options 6,223,462 3,211,709 Warrants 48,069,687 41,415,000 Convertible notes 3,510,792 2,707,238 Potentially dilutive shares outstanding 57,803,941 47,333,947 |
Note 3 _ Inventory (Tables)
Note 3 – Inventory (Tables) | 9 Months Ended |
Jun. 30, 2022 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory, Current [Table Text Block] | June 30, September 30, 2022 2021 Raw materials and work in process $ 1,817,094 $ 4,291,095 Finished goods 1,596,924 1,052,375 Packaging and other 716,761 1,047,881 $ 4,130,779 $ 6,391,351 |
Note 4 _ Acquisitions (Tables)
Note 4 – Acquisitions (Tables) | 9 Months Ended |
Jun. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Business Acquisitions, by Acquisition [Table Text Block] | Cash $ 190,000 Common stock 65,000 $ 255,000 |
Schedule of Noncash or Part Noncash Acquisitions [Table Text Block] | Tangible assets acquired Cash $ 6,143 Fixed assets 80,287 Tangible net assets acquired 86,430 Goodwill 168,570 Consideration paid $ 255,000 |
[custom:ScheduleOfBusinessAcquisitionsByAcquisition2TextBlock] | Cash $ 1,000,000 Debt 200,000 Common stock 336,000 Direct costs of acquisition 130,872 $ 1,666,872 |
Note 5 _ Variable Interest En_2
Note 5 – Variable Interest Entity (Tables) | 9 Months Ended |
Jun. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Variable Interest Entities [Table Text Block] | June 30, Assets 2022 Current assets Inventory $ 27,773 Total assets $ 27,773 Liabilities Current liabilities Income tax payable $ 7,948 Total liabilities $ 7,948 |
[custom:ScheduleOfVariableInterestEntities2TextBlock] | Three months ended June 30, Nine months ended June 30, 2022 2022 Revenues, net $ 40,245 $ 73,582 Cost of revenue 21,111 44,128 Gross profit 19,134 29,454 Income tax expense 4,624 7,948 Net income $ 14,510 $ 21,506 |
Note 6 _ Goodwill and Intangi_2
Note 6 – Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Jun. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets and Goodwill [Table Text Block] | Gross Carrying Accumulated Accumulated Amount Amortization Impairment Net June 30, 2022 Finite lived intangible assets: Trade names and trademarks $ 8,570,848 $ 1,140,172 $ — $ 7,430,676 Customer relationships 290,000 290,000 — — Websites and other intellectual property 2,470,000 1,144,470 955,223 370,307 Franchise and consulting agreements 3,970,000 919,170 — 3,050,830 Total finite lived intangible assets 15,300,848 3,493,812 955,223 10,851,813 Indefinite lived intangible assets: Licenses 8,370,853 — — 8,370,853 Total intangible assets $ 23,671,701 $ 3,493,812 $ 955,223 $ 19,222,666 Gross Carrying Accumulated Accumulated Amount Amortization Impairment Net September 30, 2021 Finite lived intangible assets: Trade names and trademarks $ 8,570,848 $ 497,356 $ — $ 8,073,492 Customer relationships 290,000 290,000 — — Websites and other intellectual property 2,470,000 946,488 955,223 568,289 Franchise and consulting agreements 3,970,000 656,667 — 3,313,333 Total finite lived intangible assets 15,300,848 2,390,511 955,223 11,955,114 Indefinite lived intangible assets: Licenses 6,703,981 — — 6,703,981 Total intangible assets $ 22,004,829 $ 2,390,511 $ 955,223 $ 18,659,095 Gross Carrying Gross Carrying Amount Amount Goodwill Goodwill Impairment Changes in goodwill and indefinite lived intangibles: Balance at September 30, 2021 $ 62,868,420 $ 4,803,604 Additional goodwill related to Oklahoma City dispensary acquisition 168,570 — Balance at June 30, 2022 $ 63,036,990 $ 4,803,604 |
Note 7 - Property and Equipme_2
Note 7 - Property and Equipment, Net (Tables) | 9 Months Ended |
Jun. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment [Table Text Block] | June 30, September 30, 2022 2021 Cultivation and manufacturing equipment $ 551,045 $ 506,271 Computer equipment and software 266,427 266,427 Leasehold improvements 49,667 — Buildings and improvements 2,811,340 2,785,781 3,678,479 3,558,479 Accumulated Depreciation (696,052 ) (479,320 ) 2,982,427 3,079,159 Land 3,455,563 380,584 Construction on progress 19,869,222 7,418,105 Property and Equipment, Net $ 26,307,212 $ 10,877,848 |
Note 8 _ Debt (Tables)
Note 8 – Debt (Tables) | 9 Months Ended |
Jun. 30, 2022 | |
Debt Disclosure [Abstract] | |
Convertible Debt [Table Text Block] | Convertible Notes Effective Maturity Annual Interest Balance at Balance at Conversion Date Date Rate June 30, 2022 September 30, 2021 Price C-2 3/23/2020 9/23/2020 15 % 1,100,000 1,100,000 See C-2 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 C-11 2/21/2022 8/31/2022 24 % 250,000 — 1.10 3,620,000 1,950,000 Less: unamortized discounts (353,821 ) (672,606 ) $ 3,266,179 $ 1,277,394 |
[custom:ScheduleOfFutureMinimumPaymentsOfConvertibleDebtObligationsTableTextBlock] | Year ended June 30, Amount 2023 $ 3,620,000 3,620,000 Less: unamortized discount (353,821 ) $ 3,266,179 |
Schedule of Debt [Table Text Block] | Notes Payable Effective Maturity Annual Interest Balance at Balance at Date Date Rate June 30, 2022 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 1/25/2023 36 % 1,713,707 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 % 670,932 816,582 N/A p 2/1/2021 6/30/2022 15 % 270,590 520,590 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 18 % 500,000 500,000 Restricted common stock t 3/19/2021 7/19/2022 18 % 250,000 500,000 N/A u 2/22/2022 2/28/2023 36 % 547,806 — Future revenues v 2/22/2022 2/28/2023 36 % 176,453 — Future revenues w 3/4/2022 On demand 15 % 3,652,000 — x 3/10/2022 5/10/2022 20 % 250,000 — N/A y 3/2/2022 8/1/2023 5 % 166,667 — N/A 28,868,191 25,495,446 Less: unamortized discounts (2,886,822 ) (6,002,045 ) $ 25,981,369 $ 19,493,401 |
[custom:ScheduleOfFutureMinimumPaymentsOfNotesPayableObligationsTableTextBlock] | Year ended June 30, Amount 2023 $ 27,563,901 2024 1,862,175 2025 — 29,426,076 Less: unamortized discount (2,886,822 ) Less: imputed interest (557,885 ) 25,981,369 Less: current portion (24,532,509 ) $ 1,448,860 |
[custom:ScheduleOfDebtInterestExpenseSummaryTableTextBlock] | Three months ended June 30, Nine months ended June 30, 2022 2022 2021 2022 2021 Amortization of debt discounts $ 1,440,535 $ 316,320 $ 4,932,259 $ 564,622 Stated interest paid or accrued 1,508,210 301,933 4,073,665 1,217,726 Finance charges and other interest 22,021 11,012 25,016 23,671 2,970,766 629,265 9,030,940 1,806,019 Less: interest capitalized to construction in progress (1,345,611 ) — (5,098,022 ) — $ 1,625,155 $ 629,265 $ 3,932,918 $ 1,806,019 |
Note 10 - Commitments and Con_2
Note 10 - Commitments and Contingencies (Tables) | 9 Months Ended |
Jun. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block] | Year ended June 30, Amount 2023 $ 420,720 2024 359,998 2025 158,342 2026 163,093 2027 167,985 Thereafter 266,399 1,536,537 Less: imputed interest (523,462 ) 1,013,075 Less: current portion: (256,471 ) $ 756,604 |
Note 12 - Stockholders' Equity
Note 12 - Stockholders' Equity (Tables) | 9 Months Ended |
Jun. 30, 2022 | |
Equity [Abstract] | |
Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block] | Common Shares Issuable Upon Exercise of Weighted Average Weighted Average Contractual Aggregate Warrants Exercise Price Term in Years Intrinsic Value Balance of warrants at September 30, 2021 46,095,000 2.08 3.9 14,243,000 Warrants granted 1,974,687 2.68 2.8 — Exercised — — — — Forfeited/Cancelled — — — — Balance of warrants at June 30, 2022 48,069,687 $ 2.10 $ 3.7 $ 1,375,000 (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 June 30, 2022, for those awards that have an exercise price currently below the closing price as of June 30, 2022. Awards with an exercise price above the closing prices as of June 30, 2022 are considered to have no intrinsic value. |
Defined Benefit Plan, Assumptions [Table Text Block] | Nine months ended June 30, 2022 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 |
Share-Based Payment Arrangement, Option, Activity [Table Text Block] | 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 1,161,582 1.55 6.7 15,800 Exercised (41,104 ) 0.87 8.3 19,730 Forfeited/Cancelled (114,331 ) 0.94 — — Balance of Options at June 30, 2022 6,223,462 $ 1.29 7.9 $ 67,175 Exercisable at June 30, 2022 2,456,774 $ 1.33 7.3 $ 33,588 Unvested at June 30, 2022 3,766,688 $ 1.27 Number of Options Weighted Average Grant Date Fair Value Unvested at June 30, 2022 3,766,688 $ 1.21 Granted during the nine months ended June 30, 2022 1,161,582 $ 1.37 Vested during the nine months ended June 30, 2022 358,004 $ 1.49 Forfeited during the nine months ended June 30, 2022 114,331 $ 1.91 (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 June 30, 2022, for those awards that have an exercise price currently below the closing price as of June 30, 2022. Awards with an exercise price above the closing prices as of June 30, 2022 are considered to have no intrinsic value. |
[custom:ScheduleOfAssumptionsUsed1TableTextBlock] | Nine months ended June 30, 2022 Expected stock price volatility 126 % - 176 % Risk-free interest rate .7 % - 2.6 % Expected term (years) 2.8 - 6.5 Expected dividend yield 0 % Black-scholes value $ 0.68 - $ 3.01 |
Note 13 _ Segment Information (
Note 13 – Segment Information (Tables) | 9 Months Ended |
Jun. 30, 2022 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment [Table Text Block] | Cultivation Franchising Corporate Total Nine months ended June 30, 2022 Revenues from external customers $ 17,360,844 $ 280,529 $ 114,146 $ 17,755,519 Operating income (loss) 3,993,350 (2,705,153 ) (10,042,901 ) (8,754,704 ) Interest expense 460,524 79,993 3,392,401 3,932,918 Depreciation and amortization 90,362 901,675 328,627 1,320,664 Additions to property, equipment and construction in progress 25,623 — 15,631,945 15,657,568 Three months ended June 30, 2022 Revenues from external customers $ 4,861,737 $ 22,031 $ 47,554 $ 4,931,322 Operating income (loss) 983,533 (1,001,768 ) (3,829,572 ) (3,847,807 ) Interest expense 303,462 36,777 1,284,916 1,625,155 Depreciation and amortization 27,830 300,150 111,072 439,052 At June 30, 2022 Property, equipment and construction in progress, net $ 421,757 $ 20,899 $ 25,864,556 $ 26,307,212 Total assets (after intercompany eliminations) 5,102,841 68,217,019 47,207,983 120,527,843 Three and nine months ended June 30, 2021 Revenues from external customers $ 6,585,396 $ 78,418 $ 29,247 $ 6,693,061 Operating income (loss) 2,315,224 (484,351 ) (2,078,147 ) (247,274 ) Interest expense 123,286 112,419 393,560 629,265 Depreciation and amortization 16,530 5,633 89,996 112,159 At June 30, 2021 Property, equipment and construction in progress, net $ 1,526,319 $ 34,990 $ 7,852,680 $ 9,413,989 Total assets (after intercompany eliminations) 12,313,816 118,976,427 18,633,128 149,923,371 |
Antidilutive shares excluded fr
Antidilutive shares excluded from calculation of diluted net loss per share (Details) - shares | 9 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Potentially dilutive common share equivalents | ||
Options | 6,223,462 | 3,211,709 |
Warrants | 48,069,687 | 41,415,000 |
Convertible notes | 3,510,792 | 2,707,238 |
Potentially dilutive shares outstanding | 57,803,941 | 47,333,947 |
Note 1 - Description of Busin_4
Note 1 - Description of Business and Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Sep. 30, 2021 | |
Accounting Policies [Abstract] | |||||
Deferred Revenue | $ 560,849 | $ 560,849 | $ 775,843 | ||
Deferred Revenue, Revenue Recognized | $ 4,998 | $ 0 | $ 214,994 | $ 0 |
Inventory (Details)
Inventory (Details) - USD ($) | Jun. 30, 2022 | Sep. 30, 2021 |
Inventory Disclosure [Abstract] | ||
Raw materials and work in process | $ 1,817,094 | $ 4,291,095 |
Finished goods | 1,596,924 | 1,052,375 |
Packaging and other | $ 716,761 | $ 1,047,881 |
Consideration paid or accrued f
Consideration paid or accrued for acquisition (1) (Details) - USD ($) | 9 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Business Acquisition [Line Items] | ||
Cash | $ 140,726 | |
Series of Individually Immaterial Business Acquisitions [Member] | ||
Business Acquisition [Line Items] | ||
Common stock | 65,000 | |
$ 255,000 |
Allocation of purchase price to
Allocation of purchase price to estimated fair values of assets acquired (1) (Details) - USD ($) | 9 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Business Acquisition [Line Items] | ||
Cash | $ 6,143 | $ 94,596 |
Series Of Individually Immaterial Business Acquisitions 1 [Member] | ||
Business Acquisition [Line Items] | ||
Cash | 6,143 | |
Fixed assets | 80,287 | |
Tangible net assets acquired | 86,430 | |
Goodwill | 168,570 | |
Consideration paid | $ 255,000 |
Consideration paid or accrued_2
Consideration paid or accrued for acquisition (2) (Details) - USD ($) | 9 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Business Acquisition [Line Items] | ||
Cash | $ 140,726 | |
Series Of Individually Immaterial Business Acquisitions 2 [Member] | ||
Business Acquisition [Line Items] | ||
Cash | 1 | |
Debt | 200,000 | |
Common stock | 336,000 | |
Direct costs of acquisition | 130,872 | |
$ 1,666,872 |
Note 4 _ Acquisitions (Details
Note 4 – Acquisitions (Details Narrative) - USD ($) | 9 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Oct. 06, 2021 | |
Business Acquisition [Line Items] | |||
Payments to Acquire Businesses, Gross | $ 140,726 | ||
Series Of Individually Immaterial Business Acquisitions 1 [Member] | |||
Business Acquisition [Line Items] | |||
Business Combination, Price of Acquisition, Expected | 130,000 | ||
[custom:BusinessCombinationPriceOfAcquisitionExpectedInitialPayment] | 32,500 | ||
[custom:BusinessCombinationPriceOfAcquisitionExpectedSubsequentPayments] | 32,500 | ||
[custom:BusinessCombinationPriceOfAcquisitionExpectedSubsequentPeriodicPayments] | 1,667 | ||
Asset Acquisition, Consideration Transferred, Equity Interest Issued and Issuable | $ 65,000 | ||
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares | 69,892 | ||
Accrued Liabilities and Other Liabilities | $ 49,274 | ||
Series Of Individually Immaterial Business Acquisitions 2 [Member] | |||
Business Acquisition [Line Items] | |||
Business Combination, Price of Acquisition, Expected | 1,651,789 | ||
Asset Acquisition, Consideration Transferred, Equity Interest Issued and Issuable | $ 336,000 | ||
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares | 300,000 | ||
Payments to Acquire Businesses, Gross | $ 1 | ||
Notes Issued | 200,000 | ||
Shares Issued, Price Per Share | $ 1.12 | ||
Series Of Individually Immaterial Business Acquisitions 3 [Member] | |||
Business Acquisition [Line Items] | |||
Business Combination, Price of Acquisition, Expected | 5,750,000 | ||
Asset Acquisition, Consideration Transferred, Equity Interest Issued and Issuable | 1,100,000 | ||
Payments to Acquire Businesses, Gross | 3,700,000 | ||
Notes Issued | 700,000 | ||
[custom:DownpaymentPursuantToAssetPurchaseAgreement] | $ 250,000 | ||
Debt Instrument, Interest Rate During Period | 5% | ||
Series Of Individually Immaterial Business Acquisitions 4 [Member] | |||
Business Acquisition [Line Items] | |||
Business Combination, Price of Acquisition, Expected | $ 12,800,000 | ||
Asset Acquisition, Consideration Transferred, Equity Interest Issued and Issuable | 4,100,000 | ||
Payments to Acquire Businesses, Gross | 12,800,000 | ||
Increase (Decrease) in Deposit Assets | 156,902 | ||
[custom:AssetAcquisitionConsiderationTransferredEquityInterestIssuedAndIssuable1] | $ 4,100,000 |
Carrying values of assets and l
Carrying values of assets and liabilities of VIE consolidated by the Company (Details) | Jun. 30, 2022 USD ($) |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Inventory | $ 27,773 |
Total assets | 27,773 |
Income tax payable | 7,948 |
Total liabilities | $ 7,948 |
Operations (after intercompany
Operations (after intercompany eliminations) of VIE consolidated by the Company (Details) - USD ($) | 3 Months Ended | 9 Months Ended |
Jun. 30, 2022 | Jun. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Revenues, net | $ 40,245 | $ 73,582 |
Cost of revenue | 21,111 | 44,128 |
Gross profit | 19,134 | 29,454 |
Income tax expense | 4,624 | 7,948 |
Net income | $ 14,510 | $ 21,506 |
Goodwill and identifiable intan
Goodwill and identifiable intangible assets, including licenses (Details) - USD ($) | 9 Months Ended | |
Jun. 30, 2022 | Sep. 30, 2021 | |
Gross Carrying Amount [Member] | ||
Trade names and trademarks | $ 8,570,848 | $ 8,570,848 |
Customer relationships | 290,000 | 290,000 |
Websites and other intellectual property | 2,470,000 | 2,470,000 |
Franchise and consulting agreements | 3,970,000 | 3,970,000 |
Total finite lived intangible assets | 15,300,848 | 15,300,848 |
Licenses | 8,370,853 | 6,703,981 |
Total intangible assets | 23,671,701 | 22,004,829 |
Accumulated Amortization [Member] | ||
Trade names and trademarks | 1,140,172 | 497,356 |
Customer relationships | 290,000 | 290,000 |
Websites and other intellectual property | 1,144,470 | 946,488 |
Franchise and consulting agreements | 919,170 | 656,667 |
Total finite lived intangible assets | 3,493,812 | 2,390,511 |
Licenses | ||
Total intangible assets | 3,493,812 | 2,390,511 |
Accumulated Impairment [Member] | ||
Trade names and trademarks | ||
Customer relationships | ||
Websites and other intellectual property | 955,223 | 955,223 |
Franchise and consulting agreements | ||
Total finite lived intangible assets | 955,223 | 955,223 |
Licenses | ||
Total intangible assets | 955,223 | 955,223 |
Intangible Assets Net [Member] | ||
Trade names and trademarks | 7,430,676 | 8,073,492 |
Customer relationships | ||
Websites and other intellectual property | 370,307 | 568,289 |
Franchise and consulting agreements | 3,050,830 | 3,313,333 |
Total finite lived intangible assets | 10,851,813 | 11,955,114 |
Licenses | 8,370,853 | 6,703,981 |
Total intangible assets | 19,222,666 | $ 18,659,095 |
Gross Carrying Amount Goodwill [Member] | ||
Balance at September 30, 2021 | 62,868,420 | |
Additional goodwill related to Oklahoma City dispensary acquisition | 168,570 | |
Balance at June 30, 2022 | 63,036,990 | |
Gross Carrying Amount Goodwill Impairment [Member] | ||
Balance at September 30, 2021 | 4,803,604 | |
Additional goodwill related to Oklahoma City dispensary acquisition | ||
Balance at June 30, 2022 | $ 4,803,604 |
Property and equipment (Details
Property and equipment (Details) - USD ($) | Jun. 30, 2022 | Sep. 30, 2021 |
Property, Plant and Equipment [Abstract] | ||
Cultivation and manufacturing equipment | $ 551,045 | $ 506,271 |
Computer equipment and software | 266,427 | 266,427 |
Leasehold improvements | 49,667 | |
Buildings and improvements | 2,811,340 | 2,785,781 |
Accumulated Depreciation | (696,052) | (479,320) |
Land | 3,455,563 | 380,584 |
Construction on progress | 19,869,222 | 7,418,105 |
Property and Equipment, Net | $ 26,307,212 | $ 10,877,848 |
Note 7 - Property and Equipme_3
Note 7 - Property and Equipment, Net (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Property, Plant and Equipment [Abstract] | ||||
Payments to Acquire Land Held-for-use | $ 3,000,000 | |||
Depreciation | $ 71,285 | $ 35,965 | $ 217,363 | $ 100,535 |
Convertible Notes Payable (Deta
Convertible Notes Payable (Details) - USD ($) | 9 Months Ended | |
Jun. 30, 2022 | Sep. 30, 2021 | |
Short-Term Debt [Line Items] | ||
Convertible Notes Payable, Current | $ 3,266,179 | $ 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 | 15% | |
Convertible Notes Payable | $ 1,100,000 | 1,100,000 |
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% | |
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% | |
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% | |
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% | |
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. 01, 2021 | |
Debt Instrument, Maturity Date | Sep. 29, 2022 | |
Debt Instrument, Interest Rate During Period | 10% | |
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% | |
Convertible Notes Payable | $ 750,000 | |
Debt Instrument, Convertible, Conversion Price | $ 1.50 | |
Notes Payable C 11 [Member] | ||
Short-Term Debt [Line Items] | ||
Debt Instrument, Issuance Date | Feb. 21, 2022 | |
Debt Instrument, Maturity Date | Aug. 31, 2022 | |
Debt Instrument, Interest Rate During Period | 24% | |
Convertible Notes Payable | $ 250,000 | |
Debt Instrument, Convertible, Conversion Price | $ 1.10 | |
Convertible Notes Payable Total [Member] | ||
Short-Term Debt [Line Items] | ||
Convertible Notes Payable | $ 3,620,000 | 1,950,000 |
Debt Instrument, Unamortized Discount | $ (353,821) | $ (672,606) |
Future minimum payments of Comp
Future minimum payments of Company's convertible debt obligations (Details) | Jun. 30, 2022 USD ($) |
Debt Disclosure [Abstract] | |
$ 3,620,000 | |
3,620,000 | |
(353,821) | |
$ 3,266,179 |
Notes Payable (Details)
Notes Payable (Details) - USD ($) | 9 Months Ended | |
Jun. 30, 2022 | Sep. 30, 2021 | |
Short-Term Debt [Line Items] | ||
Notes Payable | $ 25,981,369 | $ 19,493,401 |
Notes Payable F [Member] | ||
Short-Term Debt [Line Items] | ||
Debt Instrument, Issuance Date | May 01, 2020 | |
Debt Instrument, Maturity Date | Nov. 01, 2023 | |
Debt Instrument, Interest Rate During Period | 10% | |
Notes Payable | $ 1,386,370 | 1,386,370 |
Notes Payable H [Member] | ||
Short-Term Debt [Line Items] | ||
Debt Instrument, Issuance Date | May 01, 2020 | |
Debt Instrument, Maturity Date | May 01, 2023 | |
Debt Instrument, Interest Rate During Period | 15% | |
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% | |
Notes Payable | 312,500 | |
Notes Payable L [Member] | ||
Short-Term Debt [Line Items] | ||
Debt Instrument, Issuance Date | Aug. 18, 2021 | |
Debt Instrument, Maturity Date | Jan. 25, 2023 | |
Debt Instrument, Interest Rate During Period | 36% | |
Notes Payable | $ 1,713,707 | 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% | |
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. 01, 2024 | |
Debt Instrument, Interest Rate During Period | 10% | |
Notes Payable | $ 670,932 | 816,582 |
Notes Payable P [Member] | ||
Short-Term Debt [Line Items] | ||
Debt Instrument, Issuance Date | Feb. 01, 2021 | |
Debt Instrument, Maturity Date | Jun. 30, 2022 | |
Debt Instrument, Interest Rate During Period | 15% | |
Notes Payable | $ 270,590 | 520,590 |
Notes Payable Q [Member] | ||
Short-Term Debt [Line Items] | ||
Debt Instrument, Issuance Date | Aug. 06, 2021 | |
Debt Instrument, Maturity Date | Feb. 06, 2023 | |
Debt Instrument, Interest Rate During Period | 16% | |
Notes Payable | $ 13,500,000 | 13,500,000 |
Notes Payable R [Member] | ||
Short-Term Debt [Line Items] | ||
Debt Instrument, Issuance Date | Aug. 06, 2021 | |
Debt Instrument, Maturity Date | Feb. 06, 2023 | |
Debt Instrument, Interest Rate During Period | 16% | |
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 | 18% | |
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 | Jul. 19, 2022 | |
Debt Instrument, Interest Rate During Period | 18% | |
Notes Payable | $ 250,000 | 500,000 |
Notes Payable U [Member] | ||
Short-Term Debt [Line Items] | ||
Debt Instrument, Issuance Date | Feb. 22, 2022 | |
Debt Instrument, Maturity Date | Feb. 28, 2023 | |
Debt Instrument, Interest Rate During Period | 36% | |
Notes Payable | $ 547,806 | |
Notes Payable V [Member] | ||
Short-Term Debt [Line Items] | ||
Debt Instrument, Issuance Date | Feb. 22, 2022 | |
Debt Instrument, Maturity Date | Feb. 28, 2023 | |
Debt Instrument, Interest Rate During Period | 36% | |
Notes Payable | $ 176,453 | |
Notes Payable W [Member] | ||
Short-Term Debt [Line Items] | ||
Debt Instrument, Issuance Date | Mar. 04, 2022 | |
Debt Instrument, Interest Rate During Period | 15% | |
Notes Payable | $ 3,652,000 | |
Notes Payable X [Member] | ||
Short-Term Debt [Line Items] | ||
Debt Instrument, Issuance Date | Mar. 10, 2022 | |
Debt Instrument, Maturity Date | May 10, 2022 | |
Debt Instrument, Interest Rate During Period | 20% | |
Notes Payable | $ 250,000 | |
Notes Payable Y [Member] | ||
Short-Term Debt [Line Items] | ||
Debt Instrument, Issuance Date | Mar. 02, 2022 | |
Debt Instrument, Maturity Date | Aug. 01, 2023 | |
Debt Instrument, Interest Rate During Period | 5% | |
Notes Payable | $ 166,667 | |
Notes Payable Total [Member] | ||
Short-Term Debt [Line Items] | ||
Notes Payable | 28,868,191 | 25,495,446 |
Debt Instrument, Unamortized Discount | $ (2,886,822) | $ (6,002,045) |
Future minimum payments of Co_2
Future minimum payments of Company's notes payable obligations (Details) | Jun. 30, 2022 USD ($) |
Debt Disclosure [Abstract] | |
$ 27,563,901 | |
1,862,175 | |
29,426,076 | |
(2,886,822) | |
(557,885) | |
25,981,369 | |
(24,532,509) | |
$ 1,448,860 |
Summary of interest expense (De
Summary of interest expense (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Debt Disclosure [Abstract] | ||||
Amortization of debt discounts | $ 1,440,535 | $ 316,320 | $ 4,932,259 | $ 564,622 |
Stated interest paid or accrued | 1,508,210 | 301,933 | 4,073,665 | 1,217,726 |
Finance charges and other interest | 22,021 | 11,012 | 25,016 | 23,671 |
2,970,766 | 629,265 | 9,030,940 | 1,806,019 | |
Less: interest capitalized to construction in progress | (1,345,611) | (5,098,022) | ||
$ 1,625,155 | $ 629,265 | $ 3,932,918 | $ 1,806,019 |
Future lease payments (Details)
Future lease payments (Details) | Jun. 30, 2022 USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
$ 420,720 | |
359,998 | |
158,342 | |
163,093 | |
167,985 | |
266,399 | |
1,536,537 | |
(523,462) | |
1,013,075 | |
(256,471) | |
$ 756,604 |
Note 10 - Commitments and Con_3
Note 10 - Commitments and Contingencies (Details Narrative) - USD ($) | 3 Months Ended | 4 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2022 | Jun. 30, 2021 | Aug. 31, 2028 | Sep. 30, 2026 | May 31, 2024 | Jan. 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | Sep. 30, 2021 | |
[custom:AccruedAndUnpaidPayrollTaxesAndEstimatedPenaltiesInterest-0] | $ 1,350,000 | $ 1,350,000 | $ 1,350,000 | $ 2,400,000 | ||||||||||
[custom:UnpaidPayrollTaxesAndEstimatedPenaltiesInterestPeriodicPayment] | $ 94,278 | |||||||||||||
[custom:EmployeeRetentionCreditsReceivedByCompany] | 294,000 | |||||||||||||
Operating Lease 1 [Member] | ||||||||||||||
Operating Lease, Payments | $ 7,178 | $ 7,003 | $ 6,828 | $ 6,653 | $ 6,478 | |||||||||
Operating Leases, Rent Expense | 20,782 | $ 20,617 | 64,939 | $ 61,454 | ||||||||||
Operating Lease 2 [Member] | ||||||||||||||
Operating Lease, Payments | 5,483 | |||||||||||||
Operating Leases, Rent Expense | 22,129 | 36,406 | ||||||||||||
Operating Lease 3 [Member] | ||||||||||||||
Operating Lease, Payments | 15,450 | $ 15,913 | ||||||||||||
Operating Leases, Rent Expense | 52,822 | 68,870 | ||||||||||||
Operating Lease 4 [Member] | ||||||||||||||
Operating Lease, Payments | 6,604 | $ 7,886 | ||||||||||||
Operating Leases, Rent Expense | $ 21,781 | 48,197 | ||||||||||||
Operating Lease 5 [Member] | ||||||||||||||
Operating Lease, Payments | $ 6,354 | $ 7,295 |
Note 11 - Related Party Trans_2
Note 11 - Related Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Sep. 30, 2021 | |
Related Party Transactions [Abstract] | |||||
Payments to Acquire Land Held-for-use | $ 3,000,000 | ||||
[custom:PurchasesOfSuppliesFromRelatedParty] | $ 0 | $ 13,868 | 31,708 | $ 39,397 | |
Due to Related Parties, Current | $ 231,000 | $ 231,000 | $ 138,000 |
Warrant Activity (Details)
Warrant Activity (Details) - Warrants 1 [Member] - USD ($) | 9 Months Ended | |
Jun. 30, 2022 | Sep. 30, 2021 | |
Class of Warrant or Right [Line Items] | ||
Class of Warrant or Right, Outstanding | 48,069,687 | 46,095,000 |
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 2.10 | $ 2.08 |
Warrants and Rights Outstanding | $ 1,375,000 | $ 14,243,000 |
Share-Based Compensation Arrangement by Share-Based Payment Award, Non-Option Equity Instruments, Granted | 1,974,687 | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | $ 2.68 |
Assumptions Used to Estimate Fa
Assumptions Used to Estimate Fair Value of Warrants (Details) - Warrants [Member] - $ / shares | 9 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Class of Warrant or Right [Line Items] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Volatility Rate, Minimum | 92% | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Volatility Rate, Maximum | 130% | |
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% | |
[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 ($) | 9 Months Ended | |
Jun. 30, 2022 | 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 | 6,223,462 | 5,217,315 |
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding, Weighted Average Exercise Price | $ 1.29 | $ 1.23 |
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding, Intrinsic Value | $ 67,175 | $ 2,633,375 |
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Gross | 1,161,582 | |
Share-Based Compensation Arrangements by Share-Based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ 1.55 | |
[custom:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriodTotalIntrinsicValue] | $ 15,800 | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercises in Period | (41,104) | |
Share-Based Compensation Arrangements by Share-Based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price | $ 0.87 | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercises in Period, Intrinsic Value | $ 19,730 | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Nonvested Options Forfeited, Number of Shares | (114,331) | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Forfeitures and Expirations in Period, Weighted Average Exercise Price | $ 0.94 | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercisable, Number | 2,456,774 | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercisable, Weighted Average Exercise Price | $ 1.33 | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercisable, Intrinsic Value | $ 33,588 | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Nonvested, Number of Shares | 3,766,688 | |
[custom:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsNonvestedWeightedAverageExercisePrice-0] | $ 1.27 | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Nonvested Options Forfeited, Number of Shares | 114,331 | |
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 | 1,161,582 | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Nonvested Options Forfeited, Number of Shares | (114,331) | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Nonvested, Number of Shares | 3,766,688 | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Option, Nonvested, Weighted Average Exercise Price | $ 1.21 | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value | $ 1.37 | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vested, Number of Shares | 358,004 | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vested, Weighted Average Grant Date Fair Value | $ 1.49 | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Nonvested Options Forfeited, Number of Shares | 114,331 | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Nonvested Options Forfeited, Weighted Average Grant Date Fair Value | $ 1.91 |
Assumptions Used to Estimate _2
Assumptions Used to Estimate Fair Value of Stock Options (Details) - Stock Options [Member] | 9 Months Ended | 12 Months Ended |
Jun. 30, 2022 $ / shares | Jun. 30, 2022 $ / 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 | 126% | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Volatility Rate, Maximum | 176% | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Risk Free Interest Rate, Minimum | 0.70% | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Risk Free Interest Rate, Maximum | 2.60% | |
[custom:SharebasedCompensationArrangementBySharebasedPaymentAwardFairValueAssumptionsExpectedTermMinimum1] | 2 years 9 months 18 days | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Term | 6 years 6 months | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Dividend Rate | 0% | |
[custom:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExercisePriceMinimum-0] | $ 0.68 | $ 0.68 |
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Exercise Price | $ 3.01 | $ 3.01 |
Note 12 - Stockholders' Equit_2
Note 12 - Stockholders' Equity (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Equity [Abstract] | ||||
Share-Based Payment Arrangement, Noncash Expense | $ 934,681 | $ 304,672 | $ 2,533,535 | $ 914,016 |
[custom:UnrecognizedStockCompensationCost-0] | $ 2,299,311 | $ 2,299,311 |
Segment Information (Details)
Segment Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Segment Reporting Information [Line Items] | ||||
Revenues from external customers | $ 4,931,322 | $ 6,693,061 | $ 17,755,519 | $ 15,843,256 |
Operating income (loss) | (3,847,807) | (247,274) | (8,754,704) | (95,956) |
Interest expense | 1,625,155 | 629,265 | 3,932,918 | 1,806,019 |
Depreciation and amortization | 439,052 | 112,159 | 1,320,664 | 360,601 |
Cultivation Segment [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues from external customers | 4,861,737 | 17,360,844 | 6,585,396 | |
Operating income (loss) | 983,533 | 3,993,350 | 2,315,224 | |
Interest expense | 303,462 | 460,524 | 123,286 | |
Depreciation and amortization | 27,830 | 90,362 | 16,530 | |
Additions to property, equipment and construction in progress | 25,623 | |||
Property, equipment and construction in progress, net | 421,757 | 1,526,319 | 421,757 | 1,526,319 |
Total assets (after intercompany eliminations) | 5,102,841 | 12,313,816 | 5,102,841 | 12,313,816 |
Franchising Segment [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues from external customers | 22,031 | 280,529 | 78,418 | |
Operating income (loss) | (1,001,768) | (2,705,153) | (484,351) | |
Interest expense | 36,777 | 79,993 | 112,419 | |
Depreciation and amortization | 300,150 | 901,675 | 5,633 | |
Additions to property, equipment and construction in progress | ||||
Property, equipment and construction in progress, net | 20,899 | 34,990 | 20,899 | 34,990 |
Total assets (after intercompany eliminations) | 68,217,019 | 118,976,427 | 68,217,019 | 118,976,427 |
Corporate Segment [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues from external customers | 47,554 | 114,146 | 29,247 | |
Operating income (loss) | (3,829,572) | (10,042,901) | (2,078,147) | |
Interest expense | 1,284,916 | 3,392,401 | 393,560 | |
Depreciation and amortization | 111,072 | 328,627 | 89,996 | |
Additions to property, equipment and construction in progress | 15,631,945 | |||
Property, equipment and construction in progress, net | 25,864,556 | 7,852,680 | 25,864,556 | 7,852,680 |
Total assets (after intercompany eliminations) | 47,207,983 | 18,633,128 | 47,207,983 | 18,633,128 |
Corporate and Other [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues from external customers | 4,931,322 | 17,755,519 | 6,693,061 | |
Operating income (loss) | (3,847,807) | (8,754,704) | (247,274) | |
Interest expense | 1,625,155 | 3,932,918 | 629,265 | |
Depreciation and amortization | 439,052 | 1,320,664 | 112,159 | |
Additions to property, equipment and construction in progress | 15,657,568 | |||
Property, equipment and construction in progress, net | 26,307,212 | 9,413,989 | 26,307,212 | 9,413,989 |
Total assets (after intercompany eliminations) | $ 120,527,843 | $ 149,923,371 | $ 120,527,843 | $ 149,923,371 |