Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 04, 2020 | |
Document And Entity Information | ||
Entity Registrant Name | GRAND HAVANA INC. | |
Entity Central Index Key | 0001514113 | |
Entity File Number | 000-55037 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Entity's Reporting Status Current | No | |
Entity Interactive Data Current | Yes | |
Entity Emerging Growth Company | true | |
Elected Not To Use the Extended Transition Period | false | |
Entity Incorporation State Country Code | NV | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 132,224,189 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 |
Balance Sheets
Balance Sheets - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
CURRENT ASSETS: | ||
Cash | $ 263,222 | $ 1,463 |
Accounts receivable, net | 11,978 | 4,302 |
Inventory, net | 20,314 | 1,549 |
Prepaid expenses and other current assets | 10,900 | 10,514 |
Total Current Assets | 306,414 | 17,828 |
Property and equipment, net | 314,638 | 224,219 |
Right-of-use asset - operating lease | 36,384 | |
Security deposits | 1,400 | 1,400 |
Intangible assets, net | 16,024 | 16,978 |
Certificate of deposit | 5,300 | 5,300 |
TOTAL ASSETS | 680,160 | 265,725 |
CURRENT LIABILITIES | ||
Accounts payable and accrued expenses | 444,504 | 390,569 |
Accrued interest | 357,548 | 180,684 |
Convertible notes, net | 1,077,066 | 755,043 |
Notes payable | 153,426 | 102,188 |
Loans payable - related parties | 433,418 | 417,018 |
Right-of-use liabilities - operating lease | 30,318 | |
Line of credit | 4,886 | 4,995 |
Derivative liabilities | 10,681,415 | 12,244,301 |
Payroll liabilities - related parties | 345,915 | 282,543 |
Payroll liabilities | 44,053 | 52,160 |
Preferred stock liability | 125,000 | |
Total Current Liabilities | 13,572,549 | 14,554,501 |
Long term portion of convertible loans, net | 230,000 | 170,000 |
Long term portion of notes payable | 72,603 | 83,486 |
Long term Right-of-use liabilities - operating lease | 6,423 | |
TOTAL LIABILITIES | 13,881,575 | 14,807,987 |
STOCKHOLDERS' DEFICIT | ||
Undesignated Preferred stock, $0.001 par value, 19,999,800 and 19,999,900 shares authorized; no shares issued and outstanding, as of September 30, and December 31, 2018, respectively | ||
Preferred Series A stock, $0.001 par value, 200 and 100 shares authorized, respectively; 151 and 100 shares issued and outstanding, respectively | 1 | 1 |
Preferred Series B stock, $0.001 par value, 10,000,000 shares authorized; no shares issued and outstanding, respectively | ||
Common stock, $0.001 par value, 400,000,000 shares authorized; 101,028,648 and 74,116,845 shares issued and outstanding, respectively | 101,029 | 74,117 |
Additional paid in capital | 10,785,656 | 2,567,250 |
Accumulated deficit | (24,250,362) | (17,347,076) |
Total Grand Havana stockholders' deficit | (13,363,676) | (14,705,708) |
Non-controlling interest | 162,261 | 163,446 |
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) | (13,201,415) | (14,542,262) |
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) | $ 680,160 | $ 265,725 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Undesignated Preferred Stock, par value | $ 0.001 | $ 0.001 |
Undesignated Preferred Stock, shares authorized | 19,999,800 | 19,999,900 |
Undesignated Preferred Stock, outstanding | ||
Undesignated Preferred Stock shares issued | ||
Preferred Series A stock, par value | $ 0.001 | $ 0.001 |
Preferred Series A stock, shares authorized | 200 | 100 |
Preferred Series A stock, shares outstanding | 151 | 100 |
Preferred Series A stock, shares issued | 151 | 100 |
Preferred Series B stock, par value | $ 0.001 | $ 0.001 |
Preferred Series B stock, authorized | $ 10,000,000 | $ 10,000,000 |
Preferred Series B stock, shares outstanding | ||
Preferred Series B stock, shares issued | ||
Common Stock, par value | $ 0.001 | $ 0.001 |
Common Stock, shares authorized | 400,000,000 | 400,000,000 |
Common Stock, shares issued | 101,028,648 | 74,116,845 |
Common Stock, shares outstanding | 101,028,648 | 74,116,845 |
Statements of Operations
Statements of Operations - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
NET REVENUES: | ||||
Revenues, net | $ 63,585 | $ 33,349 | $ 166,685 | $ 132,257 |
TOTAL NET REVENUES | 63,585 | 33,349 | 166,685 | 132,257 |
COST OF GOODS SOLD: | ||||
Cost of goods sold | 47,961 | 12,340 | 125,816 | 64,054 |
TOTAL COST OF GOODS SOLD | 47,961 | 12,340 | 125,816 | 64,054 |
GROSS PROFIT | 15,624 | 21,009 | 40,869 | 68,203 |
OPERATING EXPENSES: | ||||
General and administrative expenses | 603,474 | 234,463 | 1,557,419 | 408,503 |
Depreciation and amortization | 15,622 | 5,675 | 42,189 | 13,350 |
Payroll and related expenses | 206,537 | 144,107 | 6,263,105 | 424,292 |
TOTAL OPERATING EXPENSES | 825,633 | 384,245 | 7,862,713 | 846,145 |
LOSS FROM OPERATIONS | (810,009) | (363,236) | (7,821,844) | (777,942) |
OTHER INCOME (EXPENSE): | ||||
Interest expense, net | (211,957) | (169,264) | (631,264) | (600,359) |
Change in derivative liabilities | 3,847,256 | (818,267) | 1,548,691 | 2,768,315 |
Other expense | (1,852) | (54) | (1,425) | |
TOTAL OTHER INCOME (EXPENSE) | 3,635,299 | (989,383) | 917,373 | 2,166,531 |
NET INCOME (LOSS) | 2,825,290 | (1,352,619) | (6,904,471) | 1,388,589 |
LESS: NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTEREST | 65 | (1,141) | (1,185) | (1,141) |
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ 2,825,225 | $ (1,351,478) | $ (6,903,286) | $ 1,389,730 |
NET INCOME (LOSS) PER COMMON SHARE: | ||||
Basic | $ 0.03 | $ (0.02) | $ (0.08) | $ 0.02 |
Diluted | $ 0 | $ (0.02) | $ (0.08) | $ 0 |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: | ||||
Basic | 97,613,068 | 68,034,353 | 86,435,941 | 66,727,567 |
Diluted | 517,228,519 | 68,034,353 | 86,435,941 | 273,589,102 |
Shareholders Equity (Unaudited)
Shareholders Equity (Unaudited) - USD ($) | Preferred StockPreferred Stock Class A | Common Stock | Additional Paid-In Capital | Retained Earnings / Accumulated Deficit | Noncontrolling Interest | Total |
Beginning Balance, shares at Dec. 31, 2017 | 100 | 61,125,687 | ||||
Beginning Balance, amount at Dec. 31, 2017 | $ 1 | $ 61,126 | $ 1,991,817 | $ (8,776,179) | $ 167,435 | $ (6,555,800) |
Issuance of shares for purchase of equipment, shares | 100,000 | |||||
Issuance of shares for purchase of equipment, amount | $ 100 | 4,900 | 5,000 | |||
Issuance of shares for cash, shares | 3,852,000 | |||||
Issuance of shares for cash, amount | $ 3,852 | 89,248 | 93,100 | |||
Issuance of common stock as settlement of accounts payable related party, shares | 500,000 | |||||
Issuance of common stock as settlement of accounts payable related party, amount | $ 500 | 39,500 | 40,000 | |||
Shares issued as compensation, shares | 5,918,325 | |||||
Shares issued as compensation, amount | $ 5,918 | 321,611 | 327,529 | |||
Net Income (Loss) | 1,389,730 | (1,141) | 1,388,589 | |||
Ending Balance, shares at Sep. 30, 2018 | 100 | 71,496,012 | ||||
Ending Balance, amount at Sep. 30, 2018 | $ 1 | $ 71,496 | 2,447,076 | (7,386,449) | 166,294 | (4,701,582) |
Beginning Balance, shares at Jun. 30, 2018 | 100 | 65,641,687 | ||||
Beginning Balance, amount at Jun. 30, 2018 | $ 1 | $ 65,642 | 2,244,351 | (6,034,971) | 167,435 | (3,557,542) |
Issuance of shares for purchase of equipment, shares | 100,000 | |||||
Issuance of shares for purchase of equipment, amount | $ 100 | 4,900 | 5,000 | |||
Issuance of shares for cash, shares | 3,336,000 | |||||
Issuance of shares for cash, amount | $ 3,336 | 65,964 | 69,300 | |||
Shares issued as compensation, shares | 2,418,325 | |||||
Shares issued as compensation, amount | $ 2,418 | 131,861 | 134,279 | |||
Net Income (Loss) | (1,351,478) | (1,141) | (1,352,619) | |||
Ending Balance, shares at Sep. 30, 2018 | 100 | 71,496,012 | ||||
Ending Balance, amount at Sep. 30, 2018 | $ 1 | $ 71,496 | 2,447,076 | (7,386,449) | 166,294 | (4,701,582) |
Beginning Balance, shares at Dec. 31, 2018 | 100 | 74,116,845 | ||||
Beginning Balance, amount at Dec. 31, 2018 | $ 1 | $ 74,117 | $ 2,567,250 | (17,347,076) | 163,446 | (14,542,262) |
Issuance of shares for cash, shares | 17,989,286 | |||||
Issuance of shares for cash, amount | $ 17,989 | 602,511 | 620,500 | |||
Shares issued as compensation, shares | 41 | 5,020,706 | ||||
Shares issued as compensation, amount | $ 5,021 | 7,063,323 | 7,068,344 | |||
Issuance of preferred class A shares as settlement of liability, shares | 5 | |||||
Issuance of preferred class A shares as settlement of liability, amount | $ 125,000 | $ 125,000 | ||||
Issuance of preferred class A shares for cash, shares | 5 | 28,000 | 28,000 | |||
Resolution of derivative liability through APIC | $ 379,570 | $ 379,570 | ||||
Issuance of shares as settlement of accounts payable,shares | 100,000 | |||||
Issuance of shares as settlement of accounts payable,amount | $ 100 | 9,900 | 10,000 | |||
Conversion of debt and accrued interest into common stock, shares | 3,512,493 | |||||
Conversion of debt and accrued interest into common stock, amount | $ 3,513 | 10,391 | 13,904 | |||
Cashless warrant exercised, shares | 289,318 | |||||
Cashless warrant exercised, amount | $ 289 | (289) | ||||
Net Income (Loss) | (6,903,286) | (1,185) | (6,904,471) | |||
Ending Balance, shares at Sep. 30, 2019 | 151 | 101,028,648 | ||||
Ending Balance, amount at Sep. 30, 2019 | $ 101,029 | 10,785,656 | (24,250,362) | 162,261 | (13,201,415) | |
Beginning Balance, shares at Jun. 30, 2019 | 146 | 95,386,473 | ||||
Beginning Balance, amount at Jun. 30, 2019 | $ 1 | $ 95,386 | 10,183,534 | (27,075,587) | 162,196 | (16,634,470) |
Issuance of shares for cash, shares | 2,321,428 | |||||
Issuance of shares for cash, amount | $ 2,322 | 67,679 | 70,001 | |||
Shares issued as compensation, shares | 2,931,429 | |||||
Shares issued as compensation, amount | $ 2,932 | 467,900 | 470,832 | |||
Issuance of preferred class A shares for cash, shares | 5 | |||||
Issuance of preferred class A shares for cash, amount | $ 28,000 | 28,000 | ||||
Resolution of derivative liability through APIC | 28,932 | 28,932 | ||||
Issuance of shares as settlement of accounts payable,shares | 100,000 | |||||
Issuance of shares as settlement of accounts payable,amount | $ 100 | 9,900 | 10,000 | |||
Cashless warrant exercised, shares | 289,318 | |||||
Cashless warrant exercised, amount | $ 289 | (289) | ||||
Net Income (Loss) | 2,825,225 | 65 | 2,825,290 | |||
Ending Balance, shares at Sep. 30, 2019 | 151 | 101,028,648 | ||||
Ending Balance, amount at Sep. 30, 2019 | $ 101,029 | $ 10,785,656 | $ (24,250,362) | $ 162,261 | $ (13,201,415) |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income (loss) before non-controlling interest | $ (6,904,471) | $ 1,388,589 |
Adjustment to reconcile change in net (loss) income to net cash and cash equivalents used in operating activities: | ||
Depreciation expense | 41,235 | 11,547 |
Loss on sale of equipment | 54 | 1,425 |
Amortization of intangibles | 954 | 1,803 |
Loss on settlement of accounts payable - related party | 2,000 | |
Amortization of debt discount | 394,390 | 512,274 |
Change in derivative liabilities | (1,548,691) | (2,768,315) |
Default interest capitalized into convertible note payable | 47,875 | |
Convertible note issued for services rendered | 70,000 | |
Stock-based compensation | 7,068,344 | 327,529 |
Amortization of right-of-use assets - operating lease | 21,606 | |
Changes in operating assets and liabilities | ||
Accounts receivable | (7,676) | 1,009 |
Inventory | (18,765) | 10,252 |
Prepaid expenses and other current assets | (386) | (200) |
Accounts payable and accrued expenses | 63,935 | 67,855 |
Lease Liability | (21,249) | |
Accrued interest | 179,027 | 33,622 |
Payroll and related liabilities | (8,107) | (6,726) |
Payroll and related liabilities - related parties | 63,372 | 90,258 |
NET CASH USED IN OPERATING ACTIVITIES | (628,553) | (256,578) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of property and equipment | (135,298) | (57,281) |
Proceeds from sale of equipment | 3,590 | 11,390 |
NET CASH USED IN INVESTING ACTIVITIES | (131,708) | (45,891) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from convertible notes payable | 316,874 | 118,000 |
Proceeds of loans payable - related parties | 16,400 | |
Net proceeds (repayments) of notes payable | 40,355 | (597) |
Net repayments towards advances from line of credit | (109) | (157) |
Proceeds from the sale of preferred stock | 28,000 | 100,000 |
Proceeds from sale of common stock | 620,500 | 93,100 |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 1,022,020 | 310,346 |
Net increase in cash | 261,759 | 7,877 |
Cash, beginning of year | 1,463 | 30,185 |
Cash, end of period | 263,222 | 38,062 |
SUPPLEMENTAL CASH FLOW INFORMATION: | ||
Cash paid for interest | 5,517 | |
Cash paid for taxes | ||
NON-CASH ACTIVITIES: | ||
Initial recognition of right-of-use asset and lease liability | 57,990 | |
Debt discounts on convertible notes payable | 365,374 | 492,112 |
Resolution of derivative liability through APIC | 379,570 | |
Conversion of debt and accrued interest into common stock | 13,904 | |
Cashless warrant exercised | 289 | |
Common stock issued for settlement of accounts payable | 10,000 | |
Issuance of preferred stock for settlement of preferred stock liability | 125,000 | |
Financing for purchase of vehicles | 46,261 | |
Common stock issued for settlement of accounts payable - related party | 38,000 | |
Common stock issued for purchase of equipment | 5,000 | |
Increase in principal of convertible notes due to default provisions | $ 53,362 |
NOTE 1 - ORGANIZATION
NOTE 1 - ORGANIZATION | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NOTE 1 - ORGANIZATION | NOTE 1 - ORGANIZATION Grand Havana Inc. f/k/a Junkiedog.com, Inc. (the “Company”) was incorporated in the State of Texas in 2009 as Unique Underwriters, Inc. On April 25, 2017, the Company entered into an agreement to purchase 70% of the issued and outstanding capital stock of Cafesa Co., a Florida corporation that is a coffee wholesaler. Cafesa became a majority owned subsidiary of Grand Havana Master LLC. During the fourth quarter of 2019, the Company determined to shut down Cafesa Co. and started to build up customer base on its own effort for the same coffee distribution business in the same geographical area. After analyzing the affect by the criteria provided by ASC 205-20-55, the Company has concluded that the abandonment of Cafesa Co. should not be considered as “discontinued operations” since the abandonment does not represent a strategic shift that has (or will have) a major affect on the Company’s operations and financial results. On June 3, 2019, the Company filed Articles of Organization as a Domestic Limited Liability Company with the Florida Secretary of State creating a new wholly-owned subsidiary, Grand Master Brands LLC (“GMB”). The business purpose of GMB is to provide marketing and sales services for the Company’s products to retail businesses. Grand Havana, Inc. and its subsidiaries, Grand Havana Master LLC, Cafesa Co., Grand Master Brands LLC, Unique Underwriters, Inc., are hereinafter referred to as the “Company”. |
NOTE 2 - SUMMARY OF SIGNIFICANT
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The interim unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States and should be read in conjunction with the audited financial statements and notes thereto for the years ended December 31, 2018 and 2017 which are included on a Form 10-K filed on February 10, 2020. In the opinion of management, all adjustments which include normal recurring adjustments, necessary to fairly present the Company’s financial position, results of operations and cash flows for the periods shown have been reflected herein. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for years ended December 31, 2018 have been omitted. PRINCIPLES OF CONSOLIDATION The accompanying unaudited financial statements reflect the consolidation of the individual unaudited financial statements of Grand Havana, Inc., Grand Havana Master LLC, Unique Underwriters, Inc. and Cafesa Co. All significant intercompany accounts and transactions have been eliminated. RECLASSIFICATION Certain prior year amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on net earnings and the financial position of the Company. FAIR VALUE OF FINANCIAL INSTRUMENTS GAAP requires certain disclosures regarding the fair value of financial instruments. The fair value of financial instruments is made as of a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair values. GAAP defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal, or most advantageous market in which it would transact, and it considers assumptions that market participants would use when pricing the asset or liability. GAAP establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument's categorization within the fair value hierarchy is based upon the degree of subjectivity that is necessary to estimate the fair value of a financial instrument. GAAP establishes three levels of inputs that may be used to measure fair value: Level 1 – Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 – Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3 – Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. Fair Value Measurements as of September 30, 2019 Total Level 1 Level 2 Level 3 Convertible notes payable $ 10,112,697 $ — $ — $ 10,112,697 Warrants $ 568,718 $ — $ — $ 568,718 Fair Value Measurements at December 31, 2018 Total Level 1 Level 2 Level 3 Convertible notes payable $ 11,418,125 $ — $ — $ 11,418,125 Warrants $ 826,176 $ — $ — $ 826,176 The Company uses a multinomial lattice model that values the derivative liability within the convertible notes and warrants based on probability weighted discounted cash flow model. The fair values of the conversion option and the attached warrants were estimated using a binomial model with the following assumptions: September 30, 2019 Conversion Warrants Option Volatility 156.55%-200.73% 156.55%-756.65% Dividend Yield 0% 0% Risk-free rate 1.75%-1.88% 1.56%-1.83% Expected term 0.25-1.07 years 0.37-3.48 years Stock price $ 0.10 $ 0.10 Exercise price $ 0.0047-0.0550 $ 0.012-0.16 Derivative liability fair value $ 10,112,697 $ 568,718 December 31, 2018 Conversion Warrants Option Volatility 207.03%-699.96% 339.96%-982.13% Dividend Yield 0% 0% Risk-free rate 2.48%-2.63% 2.46%-2.63% Expected term 0.18-1.82 years 1.12-4.23 years Stock price $ 0.13 $ 0.13 Exercise price $ 0.005-0.083 $ 0.012-0.10 Derivative liability fair value $ 11,418,125 $ 826,176 The following table presents a summary of the Company’s derivative liabilities as of September 30, 2019 and 2018: September 30, September 30, Description 2019 2018 Beginning balance $ 12,244,301 $ 4,960,740 Proceeds, payments and conversions (14,195 ) 492,113 Total change in fair value (1,548,691 ) (2,768,315 ) Ending balance $ 10,681,415 $ 2,684,538 LEASES On January 1, 2019, the Company adopted ASU 2016-02( Topic 842 EARNINGS (LOSS) PER SHARE The Company utilizes the guidance per ASC 260, Earnings Per Share The reconciliations of basic and diluted earnings (loss) per share are as follow: For three months ended September 30, 2019 2018 Basic net income (loss) $ 2,825,225 $ (1,351,478 ) (Less): Change in derivative liabilities (3,847,255 ) — Add Back: Amortization of Debt discount 131,878 — Diluted Net (loss) $ (890,152 ) $ (1,351,478 ) Basic and dilutive shares Weight average basic shares outstanding 97,613,068 68,034,353 Shares issuable from Convertible notes 110,765,917 — Shares issuable from Warrants 3,743,017 — Shares issuable from Series A Preferred Stock 305,106,517 — Dilutive Shares 517,228,519 68,034,353 Income (loss) Per Share: Basic $ 0.03 $ (0.02 ) Diluted $ (0.00 ) $ (0.02 ) For nine months ended September 30, 2019 2018 Basic net income (loss) $ (6,903,286 ) $ 1,389,730 (Less): Change in derivative liabilities — (2,768,315 ) Add Back: Amortization of Debt discount — 512,774 Diluted Net (loss) $ (6,903,286 ) $ (865,811 ) Basic and dilutive shares Weight average basic shares outstanding 86,435,941 66,727,567 Shares issuable from Convertible notes — 59,901,468 Shares issuable from Warrants — 1,968,042 Shares issuable from Series A Preferred Stock — 144,992,025 Dilutive Shares 86,435,941 273,589,102 Income (loss) Per Share: Basic $ (0.08 ) $ 0.02 Diluted $ (0.08 ) $ (0.00 ) NEW ACCOUNTING PRONOUNCEMENTS In January 2017, the FASB issued guidance within ASU 2017-04, Intangibles-Goodwill and Other. The amendments in ASU 2017-04 simplify the subsequent measurement of goodwill by comparing the fair value of a reporting unit with its carrying amount. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019. We are currently evaluating the impact the adoption of this new standard will have on our financial position and results of operations. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Changes to the Disclosure Requirements for Fair Value Measurement Other pronouncements issued by the FASB or other authoritative accounting standards groups with future effective dates are either not applicable or are not expected to be significant to our financial position, results of operations or cash flows. |
NOTE 3 - GOING CONCERN
NOTE 3 - GOING CONCERN | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NOTE 3 - GOING CONCERN | NOTE 3 - GOING CONCERN The Company’s unaudited consolidated financial statements have been prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has incurred net loss of $6,903,286 for the nine months ended September 30, 2019. Cash on hand will not be sufficient to cover debt repayments, operating expenses and capital expenditure requirements for at least twelve months from the date of these financial statements. As of September 30, 2019 and December 31, 2018, the Company had working capital deficits $13,266,135 and $14,536,673, respectively. Our historical operating results raise substantial doubt related to the Company’s ability to continue as a going concern. In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to seek equity and/or debt financing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. There are no assurances that the Company will be able to either (1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (2) obtain additional financing through either private placements, public offerings and/or bank financing necessary to support the Company's working capital requirements. To the extent that funds generated from operations, any private placements, public offerings and/or bank financing are insufficient, the Company will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying unaudited consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. |
NOTE 4 - FIXED ASSET
NOTE 4 - FIXED ASSET | 9 Months Ended |
Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
NOTE 4 - FIXED ASSET | NOTE 4 - FIXED ASSET Property and equipment consisted of the following As of September 30, 2019 and December 31, 2018: September 30, December 31, 2019 2018 Equipment $ 282,108 $ 151,177 Vehicles 106,080 106,080 Less: Accumulated depreciation (73,550 ) (33,038 ) Property and equipment, net $ 314,638 $ 224,219 Depreciation expense for the three and nine months ended September 30, 2019 and 2018 were $15,304 and $41,235, and $5,357 and 11,547, respectively. During the first three quarters of 2019, the Company sold equipment for $3,590 and recognized a loss on sale of equipment for $54. During the first three quarters of 2019, the Company purchased property and equipment for $135,298. During the first three quarters of 2018, the Company sold equipment for $11,390 and recognized a loss on sale of equipment for $1,425. During the first three quarters of 2018, the Company purchased property and equipment for $57,281. |
NOTE 5 - CONVERTIBLE NOTES
NOTE 5 - CONVERTIBLE NOTES | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
NOTE 5 - CONVERTIBLE NOTES | NOTE 5 - CONVERTIBLE NOTES On February 13, 2017, the Company entered into an unsecured convertible promissory note for $25,000, due on February 13, 2018, bearing interest at 8% per annum. This convertible promissory note contains a provision for conversion at the holder's option including accrued interest, into the Company's common stock at a rate of 55% of the lowest trading price during the last fifteen trading day period, including the date of conversion. During the first three quarters of 2019, the principal increased by $2,500 as a result of default penalty, and the Company converted $7,000 principal and $2,162 accrued interest to 2,395,231 shares of common stock at a conversion price of $0.003825 per share, please see Note 8 for further discussion. As of September 30, 2019 and December 31, 2018, the outstanding balance of the note was $20,500 and $25,000, respectively and the related accrued interest was $9,148 and $7,200, respectively. This note is currently in default bearing a default interest rate of 24%. On February 13, 2017, the Company entered into an unsecured convertible promissory note for $95,000, due on February 13, 2018, bearing interest at 8% per annum. This convertible promissory note contains a provision for conversion at the holder's option including accrued interest, into the Company's common stock at a rate of 55% of the lowest trading price during the last fifteen trading day period, including the date of conversion. During the first three quarters of 2019, the principal increased by $9,500 as a result of default penalty. As of September 30, 2019 and December 31, 2018, the outstanding balance of the note was $104,500 and $95,000, respectively, and the related accrued interest was $44,143 and $25,333, respectively. This note is currently in default bearing a default interest rate of 24%. On March 15, 2017, the Company entered into a secured convertible promissory note for $60,000, due on March 15, 2018, bearing interest at 8% per annum and secured by the assets of the Company. This convertible promissory note contains a provision for conversion at the holder's option including accrued interest, into the Company's common stock at a rate of 55% of the lowest trading price during the last fifteen trading day period, including the date of conversion. During the first three quarters of 2019, the principal increased by $6,000 as a result of default penalty. As of June 2019, the note holder converted $2,742 of principal to 716,862 shares of common stock at $0.00383 per share, please refer to Note 8 for further discussion. As of September 30, 2019 and December 31, 2018, the outstanding balance of the note was $63,258 and $60,000, respectively, and the related accrued interest was $27,626 and $16,240, respectively. This note is currently in default bearing a default interest rate of 24%. On March 17, 2017, the Company entered into an unsecured convertible promissory note for $60,000, due on March 17, 2018, bearing interest at 8% per annum. This convertible promissory note contains a provision for conversion at the holder's option including accrued interest, into the Company's common stock at a rate of 55% of the lowest trading price during the last fifteen trading day period, including the date of conversion. During the first three quarters of 2019, the principal was increased by $6,000 as a result of default penalty. As of September 30, 2019 and December 31, 2018, the outstanding balance of the note was $66,000 and $60,000, respectively, and the related accrued interest was $ 20,920 and $9,040, respectively. This note is currently in default bearing a default interest rate of On April 7, 2017, the Company entered into an unsecured convertible promissory note for $20,000, due on April 7, 2018, bearing interest at 8% per annum. This convertible promissory note contains a provision for conversion at the holder's option including accrued interest, into the Company's common stock at a rate of 55% of the lowest trading price during the last fifteen trading day period, including the date of conversion. During the first three quarters of 2019, the principal was increased by $2,000 as a result of default penalty. As of September 30, 2019, and December 31, 2018, the outstanding balance of the note was $22,000 and $20,000, respectively, and the related accrued interest was $9,053 and $5,093, respectively. This note is currently in default bearing a default interest rate of 24%. On May 3, 2017, the Company entered into an unsecured convertible promissory note for $20,000, due on May 3, 2018, bearing interest at 8% per annum. This convertible promissory note contains a provision for conversion at the holder's option including accrued interest, into the Company's common stock at a rate of 55% of the lowest trading price during the last fifteen trading day period, including the date of conversion. During the first three quarters of 2019, the principal was increased by $2,000 as a result of default penalty . As of September 30, 2019, and December 31, 2018, the outstanding balance of the note was $22,000 and $20,000, and the related accrued interest was $7,004 and $4,524, respectively. This note is currently in default bearing a default interest rate of On May 3, 2017, the Company entered into a secured convertible promissory note for $60,000, due on May 3, 2018, bearing interest at 8% per annum and secured by the assets of the Company. This convertible promissory note contains a provision for conversion at the holder's option including accrued interest, into the Company's common stock at a rate of 55% of the lowest trading price during the last fifteen trading day period, including the date of conversion. During the first three quarters of 2019, the principal was increased by $6,000 as a result of default penalty . As of September 30, 2019, and December 31, 2018, the outstanding balance of the note was $66,000 and $60,000, respectively, and the related accrued interest was $21,011 and $13,573, respectively. This note is currently in default bearing a default interest rate of On August 7, 2017, the Company entered into a secured convertible promissory note for $78,750, due on August 7, 2018, bearing interest at 8% per annum and secured by the assets of the Company. This convertible promissory note contains a provision for conversion at the holder's option including accrued interest, into the Company's common stock at a rate of 55% of the lowest trading price during the last fifteen trading day period, including the date of conversion. During the first three quarters of 2019, the principal was increased by $7,875 as a result of default penalty and the company converted $2,000 of the principal to 400,400 shares of common stock at $0.005 per shares. Please refer to Note 8 for further discussion. As of September 30, 2019, and December 31, 2018, the outstanding balance of the note was $84,625 and $78,750, respectively, and the related accrued interest was $23,674 and $12,600, respectively. This note is currently in default bearing a default interest rate of On December 13, 2017, the Company entered into a secured convertible promissory note for $60,000, due on September 14, 2018, bearing interest at 8% per annum and secured by the assets of the Company. This convertible promissory note contains a provision for conversion at the holder's option including accrued interest, into the Company's common stock at a rate of 55% of the lowest trading price during the last fifteen trading day period, including the date of conversion. During the first three quarters of 2019, the principal was increased by $6,000 as a result of default penalty. As of September 30, 2019, and December 31, 2018, the outstanding balance of the note was $66,000 and $60,000, respectively, and the related accrued interest was $ 14,531 and $5,520, respectively. This note is currently in default bearing a default interest rate of On January 3, 2019, the Company entered into a secured convertible promissory note for $63,309, due on January 3, 2020, bearing interest at 8% per annum and secured by the assets of the Company. This convertible promissory note contains a provision for conversion at the holder's option including accrued interest, into the Company's common stock at a rate of 55% of the lowest trading price during the last fifteen trading day period, including the date of conversion. In connection with the issuance of convertible notes, the Company also granted 73,046 warrants to acquire common stock at $0.13 per share, please refer to Note 9 for further discussion. As of September 30, 2019, the outstanding balance of the note was $63,309, and the related accrued interest was $3,760. As of filling date, this note is in default bearing a default interest rate of 16%. On January 8, 2019, the Company entered into a secured convertible promissory note for $35,000, due on December 31, 2019, bearing interest at 8% per annum and secured by the assets of the Company. This convertible promissory note contains a provision for conversion at the holder's option including accrued interest, into the Company's common stock at a rate of 55% of the lowest trading price during the last fifteen trading day period, including the date of conversion. As of September 30, 2019, the outstanding balance of the note was $35,000, and the related accrued interest was $2,071. As of filling date, this note is in default bearing a default interest rate of 16%. On April 12, 2019, the Company entered into a secured convertible promissory note for $100,000 due on October 26, 2020, bearing interest at 12% per annum and secured by the assets of the Company. This convertible promissory note contains a provision for conversion at the holder's option including accrued interest, into the Company's common stock at a rate of $0.02 per share. As of September 30, 2019, the outstanding balance of the note was $100,000, and the related accrued interest was $6,674. On April 25, 2019, the Company entered into a secured convertible promissory note for $33,000 due on April 25, 2020, bearing interest at 12% per annum and secured by the assets of the Company. This convertible promissory note contains $3,000 original issue discount and a provision for conversion at the holder's option including accrued interest, into the Company's common stock at a rate of the lesser of $0.11 or 50% of the lowest trading price during the last twenty trading day period prior to date of conversion, including the date of conversion. In connection with the issuance of convertible notes, the Company also granted 75,000 warrants to acquire common stock at $0.11 per share, please refer to Note 9 for further discussion. As of September 30, 2019, the outstanding balance of the note was $33,000, and the related accrued interest was $2,601. As of filling date, this note is in default bearing a default interest rate of 16%. On April 25, 2019, the Company entered into a secured convertible promissory note for $33,000 due on April 25, 2020, bearing interest at 12% per annum and secured by the assets of the Company. This convertible promissory note contains $3,000 original issue discount and a provision for conversion at the holder's option including accrued interest, into the Company's common stock at a rate of the lesser of $0.11 or 50% of the lowest trading price during the last twenty trading day period prior to date of conversion, including the date of conversion. In connection with the issuance of convertible notes, the Company also granted 75,000 warrants to acquire common stock at $0.11 per share, please refer to Note 9 for further discussion. As of September 30, 2019, the outstanding balance of the note was $33,000, and the related accrued interest was $2,601, respectively. As of filling date, this note is in default bearing a default interest rate of 16%. On August 16, 2019, the Company entered into a secured convertible promissory note for $30,565 due on August 16, 2020, bearing interest at 8% per annum and secured by the assets of the Company. This convertible promissory note contains a provision for conversion at the holder's option including accrued interest, into the Company's common stock at a rate of 55% of the lowest trading price during the last twenty trading day period prior to date of conversion, including the date of conversion. In connection with the issuance of convertible notes, the Company also granted 28,654 warrants to acquire common stock at $0.16 per share, please refer to Note 8 for further discussion. As of September 30, 2019, the outstanding balance of the note was $30,565, and the related accrued interest was $516, respectively. As of filling date, this note is in default bearing a default interest rate of 16%. On September 16, 2019, the Company entered into a secured convertible promissory note for $28,000 due on September 16, 2020, bearing interest at 12% per annum and secured by the assets of the Company. This convertible promissory note contains a provision for conversion at the holder's option including accrued interest, into the Company's common stock at a rate of 55% of the lowest trading price during the last twenty trading day period prior to date of conversion, including the date of conversion. In connection with the issuance of convertible notes, the Company also granted 42,000 warrants to acquire common stock at $0.10 per share, please refer to Note 8 for further discussion. As of September 30, 2019, the outstanding balance of the note was $28,000, and the related accrued interest was $282. As of September 30, 2019 and December 31, 2018, the Company has outstanding convertible notes, net of debt discount, in the amount of $1,307,066 and $925,043, respectively. During the nine months ended September 30, 2019, the Company amortized $394,390 of debt discount while recognizing $365,374 in additional debt discount on convertible notes payable. |
NOTE 6 - NOTES PAYABLES
NOTE 6 - NOTES PAYABLES | 9 Months Ended |
Sep. 30, 2019 | |
Notes Payable [Abstract] | |
NOTE 6 - NOTES PAYABLES | NOTE 6 - NOTES PAYABLES During 2018, the Company entered into four loans for the purchase of and secured by vehicles with terms of 72 to 75 months and interest rates ranging from 6.99% to 8.94%. The combining outstanding balance on these notes is $87,072 and $96,717 as of September 30, 2019 and December 31, 2018, respectively. On March 12, 2019, the Company entered into a secured promissory note for $50,000, due on October 11, 2019, bearing interest at 8% per annum and secured by the assets of the Company. As of September 30, 2019, the outstanding balance of the note was $50,000, and the related accrued interest was $2,258. This note was repaid subsequent to period end. |
NOTE 7 - RELATED PARTIES TRANSA
NOTE 7 - RELATED PARTIES TRANSACTIONS | 9 Months Ended |
Sep. 30, 2019 | |
Related Party Transactions [Abstract] | |
NOTE 7 - RELATED PARTIES TRANSACTIONS | NOTE 7 - RELATED PARTIES TRANSACTIONS During 2018, the Company entered into various stock purchase agreements with various members of the Board of Directors to issue a total of 137,000 share of common stock for $0.05 per share and 5 shares of Preferred Series A stock for $25,000 per share for a total of $131,850. During the first three quarters of 2019, the Company entered into various stock purchase agreements with various members of the Board of Directors to issue a total of 325,000 share of common stock, and 5 shares of Preferred Series A stock for totaling $43,500. During 2017, the Company received loans totaling $102,018, from related parties for working capital purposes. These unsecured loans bear interest at a rate of 6% per annum and have no repayment terms. During the first three quarters of 2019, the Company entered into two unsecured loans totaling $16,400 from related parties for working capital resources. These notes are due on demand and bear no interest. As of September 30, 2019 and December 31, 2018, the outstanding balance on these related party notes were $118,418 and $102,018, respectively, and the related accrued interest was $14,241, and $9,703, respectively. As part of the Cafesa acquisition on April 25, 2017, the Company is required to make cash and stock payments totaling $315,000 to a related party. No repayments or borrowings were made during the first three quarters of 2019 and the full year of 2018. As of September 30, 2019 and December 31, 2018, the outstanding balance due to this related party was $315,000. The Company is currently involved in a lawsuit with the note holder. Please refer to Note 10 for further discussion. |
NOTE 8 - EQUITY
NOTE 8 - EQUITY | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
NOTE 8 - EQUITY | NOTE 8 - EQUITY Preferred Stock As of September 30, 2019, and December 31, 2018, the Company has 19,999,900 During 2018, the Company entered stock purchase agreements to sell 5 Preferred Series A shares for $25,000 per share, totaling $125,000 to related parties. Payment for the shares was received during 2018. These shares of Preferred Series A were issued during the first quarter of 2019. During the first three quarters of 2019, the Company entered into stock purchase agreements with related parties to sell 5 Preferred Series A shares for $5,600 per share, totaling $28,000. On March 4, 2019, the Company amended the Certificate of Designation of the Series A Preferred Stock of the Company to increase the number of authorized A Series Preferred Stock of the Company to 200 shares. During the first three quarters of 2019, the company issued 41 shares of Preferred Series A, with estimated valuation of $6,446,352 or $157,228 per shares, for compensation, of which 37 shares of Preferred Series A, totaling $5,817,440, were issued to related parties. Common Stock As of September 30, 2019, and December 31, 2018, the Company has 400,000,000 authorized shares of common stock, par value $0.001, of which 101,028,648 and 74,116,845 shares are issued and outstanding, respectively. During 2018, the Company issued a total of 5,918,325 shares of common stock totaling $327,529 for services rendered. In addition, the Company issued 100,000 shares of common stock for the purchase of equipment valued at $5,000. The Company also issued 3,852,000 shares of common stock for cash totaling $93,100, of which 137,000 common shares were issued to related parties for $6,850. The Company issued 500,000 shares as settlement of $40,000 of accounts payable with a current director. During the first three quarters of 2019, the Company issued 5,020,706 shares of common stock totaling $621,992 for services rendered, of which 1,961,029 shares totaling $282,247 were issued to related parties. In addition, 17,989,286 shares of common stock were issued in exchange for cash totaling $620,500, of which 325,000 shares were issued to a related party for $15,500. There were 3,512,493 shares of common stock issued for conversion of convertible notes and accrued interest totaling $13,904 and as a result settled $350,638 of derivative liabilities through additional paid in capital. Please refer to Note 5 for further details. The Company also issued 100,000 shares as settlement of $10,000 of accounts payable and 289,318 shares of common stock for cashless exercise of 431,818 warrants, and as a result settled $28,932 of derivative liabilities through additional paid in capital. Please refer to Note 9 for further |
NOTE 9 - WARRANTS
NOTE 9 - WARRANTS | 9 Months Ended |
Sep. 30, 2019 | |
Warrants and Rights Note Disclosure [Abstract] | |
NOTE 9 - WARRANTS | NOTE 9 - WARRANTS During the year ended December 31, 2018, the Company granted a total of 4,088,874 warrants to acquire shares of common stock at a range of $0.015 to $0.13 per share, respectively. All tranches of stock purchase warrants were issued to various note holders in connection with the issuance of convertible debt. During the first three quarter of September 30, 2019, the Company granted 293,700 warrants to acquire shares of common stock from $0.11 to $0.16 per share. These tranches of stock purchase warrants were issued to note holder in connection with the issuance of convertible notes. During the first three quarters of 2019, the Company issued 289,318 shares of common stock for cashless exercise of 431,818 warrants. A summary of the status of the Company’s warrants as of September 30, 2019 is presented below: Number of Options and Warrants Range of Exercise Prices Weighted Average Remaining Contractual Life (in years) Weighted Average Exercise Price Outstanding at December 31, 2018 6,481,258 $0.01 to $0.10 2.27 0.05 Warrants granted 293,700 $0.10 to $0.16 2.58 0.12 Warrants exercised (431,818 ) $ 0.03 — — Warrants forfeited or expired — - - - Outstanding as of September 30, 2019 6,343,140 $0.01 to $0.13 1.65 0.05 Exercisable as of September 30, 2019 6,343,140 $0.01 to $0.13 1.65 0.05 As of September 30, 2019, all of the 6,343,140 outstanding warrants are exercisable. |
NOTE 10 - COMMITMENTS AND CONTI
NOTE 10 - COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
NOTE 10 - COMMITMENTS AND CONTINGENCIES | NOTE 10 - COMMITMENTS AND CONTINGENCIES Luis Ravelo and Lucia Ravelo v. Grand Havana Inc. and Grand Havana Master LLC William Graubard v. Grand Havana Inc., th |
NOTE 11 - SUBSEQUENT EVENTS
NOTE 11 - SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2019 | |
Subsequent Events [Abstract] | |
NOTE 11 - SUBSEQUENT EVENTS | NOTE 11 - SUBSEQUENT EVENTS The Company entered into various, convertible or promissory, notes totaling $142,850. The notes bear interest rate ranging from 0% to 12%. The due dates for these notes are range from due on demand to May 20, 2022. The Company entered into various agreements to issue an aggregate of 7,289,894 shares of common stocks for services rendered to the Company. In addition, the Company entered into several subscription agreements to issue 1,858,333 shares of common stock for cash totaling $55,750. A total of 22,047,324 shares of common stock were also issued for various debt conversion. On June 2, 2020, the Company entered into an agreement with third party to grant options to purchase up to 10 million shares of the Company’s common stock at $0.015 per share for an aggregate amount of $150,000. These options are granted in lieu of services rendered to the Company. |
NOTE 2 - SUMMARY OF SIGNIFICA_2
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION The interim unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States and should be read in conjunction with the audited financial statements and notes thereto for the years ended December 31, 2018 and 2017 which are included on a Form 10-K filed on February 10, 2020. In the opinion of management, all adjustments which include normal recurring adjustments, necessary to fairly present the Company’s financial position, results of operations and cash flows for the periods shown have been reflected herein. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for years ended December 31, 2018 have been omitted. |
PRINCIPLES OF CONSOLIDATION | PRINCIPLES OF CONSOLIDATION The accompanying unaudited financial statements reflect the consolidation of the individual unaudited financial statements of Grand Havana, Inc., Grand Havana Master LLC, Unique Underwriters, Inc. and Cafesa Co. All significant intercompany accounts and transactions have been eliminated. |
RECLASSIFICATION | RECLASSIFICATION Certain prior year amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on net earnings and the financial position of the Company. |
FAIR VALUE OF FINANCIAL INSTRUMENTS | FAIR VALUE OF FINANCIAL INSTRUMENTS GAAP requires certain disclosures regarding the fair value of financial instruments. The fair value of financial instruments is made as of a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair values. GAAP defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal, or most advantageous market in which it would transact, and it considers assumptions that market participants would use when pricing the asset or liability. GAAP establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument's categorization within the fair value hierarchy is based upon the degree of subjectivity that is necessary to estimate the fair value of a financial instrument. GAAP establishes three levels of inputs that may be used to measure fair value: Level 1 – Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 – Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3 – Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The following table presents the derivative financial instruments, recorded at fair value on the Company’s balance sheets on a recurring basis, and their level within the fair value hierarchy as of September 30, 2019 and December 31, 2018: Fair Value Measurements as of September 30, 2019 Total Level 1 Level 2 Level 3 Convertible notes payable $ 10,112,697 $ — $ — $ 10,112,697 Warrants $ 568,718 $ — $ — $ 568,718 Fair Value Measurements at December 31, 2018 Total Level 1 Level 2 Level 3 Convertible notes payable $ 11,418,125 $ — $ — $ 11,418,125 Warrants $ 826,176 $ — $ — $ 826,176 The Company uses a multinomial lattice model that values the derivative liability within the convertible notes and warrants based on probability weighted discounted cash flow model. The fair values of the conversion option and the attached warrants were estimated using a binomial model with the following assumptions: September 30, 2019 Conversion Warrants Option Volatility 156.55%-200.73% 156.55%-756.65% Dividend Yield 0% 0% Risk-free rate 1.75%-1.88% 1.56%-1.83% Expected term 0.25-1.07 years 0.37-3.48 years Stock price $ 0.10 $ 0.10 Exercise price $ 0.0047-0.0550 $ 0.012-0.16 Derivative liability fair value $ 10,112,697 $ 568,718 December 31, 2018 Conversion Warrants Option Volatility 207.03%-699.96% 339.96%-982.13% Dividend Yield 0% 0% Risk-free rate 2.48%-2.63% 2.46%-2.63% Expected term 0.18-1.82 years 1.12-4.23 years Stock price $ 0.13 $ 0.13 Exercise price $ 0.005-0.083 $ 0.012-0.10 Derivative liability fair value $ 11,418,125 $ 826,176 The following table presents a summary of the Company’s derivative liabilities as of September 30, 2019 and 2018: September 30, September 30, Description 2019 2018 Beginning balance $ 12,244,301 $ 4,960,740 Proceeds, payments and conversions (14,195 ) 492,113 Total change in fair value (1,548,691 ) (2,768,315 ) Ending balance $ 10,681,415 $ 2,684,538 |
LEASE | LEASES On January 1, 2019, the Company adopted ASU 2016-02( Topic 842 |
EARNINGS (LOSS) PER SHARE | EARNINGS (LOSS) PER SHARE The Company utilizes the guidance per ASC 260, Earnings Per Share The reconciliations of basic and diluted earnings (loss) per share are as follow: For three months ended September 30, 2019 2018 Basic net income (loss) $ 2,825,225 $ (1,351,478 ) (Less): Change in derivative liabilities (3,847,255 ) — Add Back: Amortization of Debt discount 131,878 — Diluted Net (loss) $ (890,152 ) $ (1,351,478 ) Basic and dilutive shares Weight average basic shares outstanding 97,613,068 68,034,353 Shares issuable from Convertible notes 110,765,917 — Shares issuable from Warrants 3,743,017 — Shares issuable from Series A Preferred Stock 305,106,517 — Dilutive Shares 517,228,519 68,034,353 Income (loss) Per Share: Basic $ 0.03 $ (0.02 ) Diluted $ (0.00 ) $ (0.02 ) For nine months ended September 30, 2019 2018 Basic net income (loss) $ (6,903,286 ) $ 1,389,730 (Less): Change in derivative liabilities — (2,768,315 ) Add Back: Amortization of Debt discount — 512,774 Diluted Net (loss) $ (6,903,286 ) $ (865,811 ) Basic and dilutive shares Weight average basic shares outstanding 86,435,941 66,727,567 Shares issuable from Convertible notes — 59,901,468 Shares issuable from Warrants — 1,968,042 Shares issuable from Series A Preferred Stock — 144,992,025 Dilutive Shares 86,435,941 273,589,102 Income (loss) Per Share: Basic $ (0.08 ) $ 0.02 Diluted $ (0.08 ) $ (0.00 ) |
NEW ACCOUNTING PRONOUNCEMENTS | NEW ACCOUNTING PRONOUNCEMENTS In January 2017, the FASB issued guidance within ASU 2017-04, Intangibles-Goodwill and Other. The amendments in ASU 2017-04 simplify the subsequent measurement of goodwill by comparing the fair value of a reporting unit with its carrying amount. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019. We are currently evaluating the impact the adoption of this new standard will have on our financial position and results of operations. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Changes to the Disclosure Requirements for Fair Value Measurement Other pronouncements issued by the FASB or other authoritative accounting standards groups with future effective dates are either not applicable or are not expected to be significant to our financial position, results of operations or cash flows. |
NOTE 2 - SUMMARY OF SIGNIFICA_3
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Schedule Fair Value Measurements | Fair Value Measurements As of September 30, 2019 Total Level 1 Level 2 Level 3 Convertible notes payable $ 10,112,697 $ — $ — $ 10,112,697 Warrants $ 568,718 $ — $ — $ 568,718 |
Derivative liability related to convertible notes | September 30, September 30, Description 2019 2018 Beginning balance $ 12,244,301 $ 4,960,740 Proceeds, payments and conversions (14,195 ) 492,113 Total change in fair value (1,548,691 ) (2,768,315 ) Ending balance $ 10,681,415 $ 2,684,538 |
NOTE 7 - RELATED PARTY TRANSACT
NOTE 7 - RELATED PARTY TRANSACTIONS (Details Narrative) | Sep. 30, 2019USD ($) |
Related Party Transactions [Abstract] | |
Outstanding loans balance | $ 315,000 |