Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2022 | May 12, 2022 | |
Document Information Line Items | ||
Entity Registrant Name | Cryomass Technologies, Inc. | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 200,664,498 | |
Amendment Flag | false | |
Entity Central Index Key | 0001533030 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Document Period End Date | Mar. 31, 2022 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 000-56155 | |
Entity Incorporation, State or Country Code | NV | |
Entity Tax Identification Number | 82-5051728 | |
Entity Address, Address Line One | 1001 Bannock Street | |
Entity Address, Address Line Two | Suite 612 | |
Entity Address, City or Town | Denver | |
Entity Address, State or Province | CO | |
Entity Address, Postal Zip Code | 80204 | |
Entity Interactive Data Current | Yes | |
City Area Code | 303 | |
Local Phone Number | 416-7208 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 3,594,275 | $ 5,772,839 |
Prepaid expenses | 73,178 | 757,383 |
Total current assets | 3,667,453 | 6,530,222 |
Loan receivable | 4,218,831 | 3,600,000 |
Property and equipment, net | 233,641 | 225,000 |
Goodwill | 1,190,000 | 1,190,000 |
Intangible assets, net | 4,016,768 | 4,038,600 |
Total assets | 13,326,693 | 15,583,822 |
Current liabilities: | ||
Accounts payable and accrued expenses | 1,364,905 | 1,882,419 |
Total current liabilities | 1,364,905 | 1,882,419 |
Notes payable | 208,333 | 177,083 |
Total liabilities | 1,573,238 | 2,059,052 |
Commitments and contingencies (Note 15) | ||
Shareholders’ equity: | ||
Preferred stock, $0.001 par value, 100,000 shares authorized, no shares issued and outstanding respectively | ||
Common stock, $0.001 par value, 500,000,000 shares authorized, 199,143,664 and 196,949,801 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively | 199,144 | 196,950 |
Additional paid-in capital | 42,215,245 | 41,916,207 |
Common stock to be issued | 80,208 | |
Accumulated deficit | (30,741,142) | (28,588,837) |
Total shareholders’ equity | 11,753,455 | 13,524,320 |
Total liabilities and shareholders’ equity | $ 13,326,693 | $ 15,583,822 |
Consolidated Balance Sheets (_2
Consolidated Balance Sheets (Unaudited) (Parentheticals) - $ / shares | Mar. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 100,000 | 100,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 199,143,664 | 196,949,801 |
Common stock, shares outstanding | 199,143,664 | 196,949,801 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Income Statement [Abstract] | ||
Net sales | ||
Cost of goods sold | ||
Gross profit | ||
Operating expenses: | ||
Personnel costs | 335,230 | 373,714 |
General and administrative | 295,349 | 396,470 |
Legal and professional fees | 1,458,257 | 225,520 |
Amortization expense | 21,832 | |
Research and development | 17,122 | |
Total operating expenses | 2,127,790 | 995,704 |
Loss from operations | (2,127,790) | (995,704) |
Other income (expenses): | ||
Interest expense - net | (36,023) | (202,609) |
Gain on foreign exchange | 11,508 | 34,770 |
Total other expenses | (24,515) | (167,839) |
Net loss from continuing operations, before taxes | (2,152,305) | (1,163,543) |
Income taxes | ||
Net loss from continuing operations | (2,152,305) | (1,163,543) |
Net gain from discontinued operations, net of tax | 116,616 | |
Net loss | (2,152,305) | (1,046,927) |
Comprehensive loss from discontinued operations | ||
Comprehensive loss | $ (2,152,305) | $ (1,046,927) |
Net loss per common share: | ||
Loss from continuing operations - basic and diluted (in Dollars per share) | $ (0.01) | $ (0.01) |
Gain / (loss) from discontinued operations - basic and diluted (in Dollars per share) | ||
Loss per common share - basic and diluted (in Dollars per share) | $ (0.01) | $ (0.01) |
Weighted average common shares outstanding—basic and diluted (in Shares) | 198,268,853 | 98,257,687 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders’ Equity (Unaudited) - USD ($) | Common Stock | Additional Paid-In Capital | Common Stock to be Issued | Accumulated Deficit | Total |
Balance at Dec. 31, 2020 | $ 97,006 | $ 19,138,947 | $ 98,535 | $ (15,729,194) | $ 3,605,294 |
Balance (in Shares) at Mar. 31, 2021 | 97,005,817 | ||||
Share issuance from sale of common stock | $ 1,492 | 207,043 | (98,535) | 110,000 | |
Share issuance from sale of common stock (in Shares) | 1,491,819 | ||||
Stock-based compensation | 250,817 | 250,817 | |||
Net loss | (1,046,927) | (1,046,927) | |||
Balance at Mar. 31, 2021 | $ 98,498 | 19,596,807 | (16,776,121) | 2,919,184 | |
Balance (in Shares) at Dec. 31, 2020 | 98,497,636 | ||||
Balance at Dec. 31, 2021 | $ 196,950 | 41,916,207 | (28,588,837) | 13,524,320 | |
Balance (in Shares) at Mar. 31, 2022 | 196,949,801 | ||||
Share issuance in exchange for services | $ 458 | 159,959 | 80,208 | 240,625 | |
Share issuance in exchange for services (in Shares) | 458,334 | ||||
Stock-based compensation | $ 1,736 | 139,079 | 140,815 | ||
Stock-based compensation | 1,735,529 | ||||
Net loss | (2,152,305) | (2,152,305) | |||
Balance at Mar. 31, 2022 | $ 199,144 | $ 42,215,245 | $ 80,208 | $ (30,741,142) | $ 11,753,455 |
Balance (in Shares) at Dec. 31, 2021 | 199,143,664 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (2,152,305) | $ (1,163,543) |
Adjustments to reconcile net loss to net cash used in operating activities from continuing operations: | ||
Amortization of debt discount | 31,250 | 31,250 |
Depreciation and amortization expense | 21,832 | |
Stock-based compensation expense | 140,815 | 250,817 |
Fair value of common stock issued pursuant to service and advisory agreements | 160,417 | |
Change in operating assets and liabilities: | ||
Prepaid expenses | 684,205 | 30,238 |
Accounts payable and accrued expenses | (517,514) | 190,848 |
Net cash used in operating activities from continuing operations | (1,631,300) | (660,390) |
Net cash provided by / (used in) operating activities from disc ops | 194,167 | |
Net cash used in operating activities | (1,631,300) | (466,223) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Issuance of loans receivable | (618,831) | |
Purchase of property and equipment | (8,641) | |
Net cash used in investing activities from continuing operations | (627,472) | |
Net cash used in investing activities from discontinued operations | (174,003) | |
Net cash used in investing activities | (627,472) | (174,003) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from issuance of common stock | 110,000 | |
Proceeds from common stock subscribed and to be issued | 80,208 | |
Proceeds from loans payable, net of repayment | 136,778 | |
Proceeds from notes payable | 725,000 | |
Net cash provided by financing activities from continuing operations | 80,208 | 971,778 |
Net cash provided by financing activities from discontinued operations | ||
Net cash provided by financing activities | 80,208 | 971,778 |
Net increase / (decrease) in cash from continuing operations | (2,178,564) | 311,388 |
Net increase in cash from discontinued operations | 20,164 | |
Cash at beginning of period | 5,772,839 | 329,839 |
Cash at end of period | 3,594,275 | 661,391 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 125,065 | |
Supplemental disclosure of non-cash investing and financing activities: | ||
Common stock issued pursuant to vesting of restricted stock units | $ 848,500 | $ 146,602 |
Nature of the Business
Nature of the Business | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Nature of the Business | 1. Nature of the Business Cryomass Technologies Inc (“Cryomass Technologies” or the “Company”) owns and is developing the strategy to operate patented cryo-mechanical technology is for the separation of plant materials in the harvesting of hemp and cannabis, and potentially other high value crops such as hops. The system exploits CryoMass’s U.S.-patented process for the controlled application of liquid nitrogen to stabilize and separate the structural elements of gross plant material. The device currently under development is scaled for highway transportability and is being optimized for the low-cost collection of fully intact hemp and cannabis trichomes. The functional “beta” machine is expected to be fully field-tested during mid-2022, followed by commercial use of the equipment including revenue generation. |
Variable Interest Entity
Variable Interest Entity | 3 Months Ended |
Mar. 31, 2022 | |
Variable Interest Entity [Abstract] | |
Variable Interest Entity | 2. Variable Interest Entity Pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Section 810 , Consolidation Under ASC 810, a reporting entity has a controlling financial interest in a VIE, and must consolidate that VIE, if the total equity investment at risk is not sufficient to permit the legal entity to finance its activities without additional subordinated financial support provided by any parties, including equity holders. Beginning July 15, 2019, the Company consolidated Critical Mass Industries LLC DBA Good Meds (“CMI” and/or “Good Meds”) as a VIE pursuant to certain intellectual property, administrative and consulting agreements in which the Company is deemed the primary beneficiary of CMI. Accordingly, the results of CMI have been included in the accompanying consolidated financial statements. Effective December 31, 2021, we entered into a restated and amended administrative services agreement, terminated our license and marketing agreements, and restated the asset purchase agreement with CMI and affiliates. As a result of these agreements, we disposed of all CMI-related assets and extinguished any and all related obligations. For clarity, we have no management or operations decision-making right or responsibility, nor any access to future economic benefits from operation of the assets. Therefore, upon commencing these agreements, we determined that CMI no longer qualifies as a variable interest entity as of December 31, 2021. CMI Statement of Operations For the Three Months Ended Description 2022 2021 Net sales $ - $ 1,695,925 Cost of goods sold, inclusive of depreciation - 1,118,735 Gross profit $ - $ 577,190 Operating expenses Personnel costs - 154,460 Sales and marketing - 226,347 General and administrative - 28,988 Legal and professional fees - 21,515 Total operating expenses - 431,310 Gain from operations $ - $ 145,880 Other income / (expense) Interest expense - (29,264 ) Total other income / (expense) - (29,264 ) Net loss - 116,616 As a result of new agreements entered with CMI on December 31, 2021, as further detailed in Note 1 above, we disposed of all CMI-related assets and extinguished any and all related obligations in exchange for a $3,600,000 promissory note due to us no later than December 31, 2023. |
Going Concern Uncertainty, Fina
Going Concern Uncertainty, Financial Conditions and Management’s Plans | 3 Months Ended |
Mar. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern Uncertainty, Financial Conditions and Management’s Plans | 3. Going Concern Uncertainty, Financial Conditions and Management’s Plans The Company believes it has sufficient cash available to fund its anticipated level of operations for at least the next twelve months. During the year ended 2021, the Company raised $10,548,535 in common stock and $4,900,000 in convertible notes which were all converted to common stock. While management believes the Company has sufficient cash available to support an anticipated level of operations for at least the next twelve months, the continuation of our company as a going concern is dependent upon the continued financial support from its shareholders, the ability of our company to obtain necessary equity or debt financing to continue operations, the payment of our note receivable from CMI , and ultimately the attainment of profitable operations. For the three months ended March 31, 2022, our company used $1,631,300 of cash for operating activities, incurred a net loss of $2,152,305 and has an accumulated deficit of $30,741,142 since inception. On March 11, 2020, the 2019 novel coronavirus (“COVID-19) was characterized as a “pandemic.” The Company’s operations were impacted during the year in the United States. The impact of COVID-19 developments and uncertainty with respect to the economic effects of the pandemic has introduced significant volatility in the financial markets. The Company assessed certain accounting matters that require consideration of forecasted financial information, including, but not limited to, the carrying value of the Company’s goodwill, intangible assets, and other long-lived assets, and valuation allowances in context with the information reasonably available to the Company and the unknown future impacts of COVID-19 as of March 31, 2022 and through the date of this report. The Company’s future assessment of the magnitude and duration of COVID-19, as well as other factors, could result in material impacts to the Consolidated Financial Statements in future reporting periods. The COVID-19 pandemic and responses to this crisis, including actions taken by federal, state and local governments, have had an impact on the operations of the company, including, without limitation, the following: reduced staffing due to employee suspected conditions and social distancing measures; constraints on productivity; management and staff non-essential business-related travel was constrained due to stay-at-home orders; most employees have shifted to remote work resulting in loss of productivity; consumers visiting dispensaries operated under license impacted by stay-at-home orders. Management continues to monitor the COVID-19 pandemic situation and federal, state and local recommendations and will provide updates as appropriate. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 4. Summary of Significant Accounting Policies Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with GAAP. The consolidated financial statements include the accounts of the Cryomass Technologies Inc, Cryomass LLC, and CMI, a VIE for which the Company was deemed to be the primary beneficiary. All significant intercompany balances and transactions have been eliminated in consolidation. The Company operates as one segment from its corporate headquarters in Colorado. Effective December 31, 2021, the Company entered into an asset purchase agreement involving its VIE with Critical Mass Industries, Inc. and John Knapp, the sole shareholder of Critical Mass Industries, Inc., to divest its discontinued operations in cannabis cultivation, where the buyer assumes all assets and liabilities from the Company. Therefore, with regards to both criteria discussed above, the Company no longer has the power to direct activities, absorb losses, or receive benefits from the VIE and as such will no longer consolidate with CMI. Use of Estimates The preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of expenses during the reporting period. Significant estimates and assumptions reflected in these financial statements include, but are not limited to determining the fair value of the assets acquired and liabilities assumed in acquisition, determining the fair value and potential impairment of inventory, determining the useful lives and potential impairment of long-lived assets and potential impairment of goodwill. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates when there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates. Reclassifications Certain items in the consolidated financial statements were reclassified from prior periods for presentation purposes. Cash and Cash Equivalents The Company considers all highly liquid instruments with maturities of three months or less at the time of issuance to be cash equivalents. Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash. Periodically, the Company maintains deposits in accredited financial institutions in excess of federally insured limits. The Company deposits its cash in financial institutions that it believes have high credit quality and has not experienced any losses on such accounts. Additionally, the company entered into a $3,600,000 loan receivable in conjunction with the disposal of discontinued operations at the end of 2021, which is backed by the assets of the discontinued operations, should the borrower default. Aside from these items, the Company does not believe it is exposed to any unusual credit risk. Purchase Accounting for Acquisitions We apply the acquisition method of accounting for a business combination. In general, this methodology requires us to record assets acquired and liabilities assumed at their respective fair values at the date of acquisition. Any amount of the purchase price paid that is in excess of the estimated fair value of the net assets acquired is recorded as goodwill. For certain acquisitions, we also record a liability for contingent consideration based on estimated future business performance. We monitor our assumptions surrounding these estimated future cash flows and, if there is a significant change, would record an adjustment to the contingent consideration liability and a corresponding adjustment to either income or expense. We determine fair value using widely accepted valuation techniques, primarily discounted cash flow and market multiple analyses. These types of analyses require us to make assumptions and estimates regarding industry and economic factors, the profitability of future business strategies, discount rates and cash flow. If actual results are not consistent with our assumptions and estimates, or our assumptions and estimates change due to new information, we may be exposed to an impairment charge in the future. If the contingent consideration paid for any of our acquisitions differs from the amount initially recorded, we would record either income or expense associated with the change in liability. Variable Interest Entities The Company accounts for variable interest entities in accordance with FASB ASC Topic 810, Consolidation Accounts Receivable, net Accounts receivable, net is comprised of balances due from customers and are recorded at the invoiced amount. Past due balances are determined based on the contractual terms of the arrangements. Accounts receivable are accrued against when management determines, after considering economic and business conditions and all means of collection efforts have been exhausted and the potential for recovery is considered remote, that the collection of receivables is doubtful. Inventory, net Inventory, net is comprised of work-in-process and finished goods consisting of cannabis and cannabidiol products. Cost includes expenditures directly related to the manufacturing process as well as suitable portions of related production overheads, based on normal operating capacity. Inventory, net is stated at the lower of cost or net realizable value. The Company compares the cost of inventory with market value and writes down inventories to net realizable value, if lower. In evaluating whether inventories are stated at lower of cost or net realizable value, management considers such factors as inventories on hand, physical deterioration, obsolescence, changes in price levels, estimated time to sell such inventories and current market conditions. Due to changing market conditions, management will periodically conduct a thorough review of its inventory and record a provision for inventory losses if necessary. This is based on the Company’s best estimates of product sales prices and customer demand patterns. It is at least reasonably possible that the estimates used by the Company to determine its provision for inventory losses will be materially different from the actual amounts or results. These differences could result in materially higher than expected inventory provisions, which could have a materially adverse effect on the Company’s results of operations and financial conditions in the near term. Revenue Recognition Under FASB Topic 606, Revenue from Contacts with Customers Discontinued Operations For the three months ended March 31, 2021, Company’s revenue consisted of sales of cannabis and ancillary products to both retail consumers and wholesale customers. Revenue for retail customers was recognized upon completion of the transaction in the point of sale system and satisfaction of the sale by providing the corresponding inventory at the retail location. Revenue for wholesale customers was recognized upon acceptance of the physical goods and confirmation by acceptance of the inventory in the regulatory marijuana enforcement tracking reporting compliance (“METRC”) system. Revenue was recognized upon transfer of control of promised products to customers, generally as risk of loss passes, in an amount that reflected the consideration the Company expected to receive in exchange for those products. Taxes collected from customers, which was subsequently remitted to governmental authorities, were excluded from revenue. Retail customer loyalty liabilities were recognized in the period in which they were incurred and were often be retired without being utilized. Shipping and handling costs were expensed as incurred and are included in cost of sales. The Company operated in a highly regulated environment in which state regulatory approval was required prior to the customer being able to purchase the product, either through the Colorado Marijuana Enforcement Division for wholesale clients or the Colorado Department of Public Health and Environment for medical patients. Expenses Operating Expenses Operating expenses encompass personnel costs, sales and marketing expenses, research and development expenses, general and administrative expenses, professional and legal fees and depreciation and amortization related to the property and equipment and intangibles acquired through the acquisition of CMI and Cryocann. Personnel costs consist primarily of consulting expense and administrative salaries and wages. Sales and marketing expenses consist primarily of advertising and marketing, and salaries related to sales and marketing employees. General and administrative expenses are comprised of travel expenses, accounting expenses, and board fees. Professional services are principally comprised of outside legal and professional fees. Discontinued Operations Cost of Goods Sold, Net of Depreciation and Amortization Cost of goods sold primarily consisted of allocated salaries and wages of employees directly related with the production process, allocated depreciation and amortization directly related to the production process, cultivation supplies, rent and utilities. Other Expense, net Other expense, net consisted of interest expense, other income and (loss) gain on foreign exchange. Stock-Based Compensation The fair value of restricted stock units (“RSUs”) granted are measured on the grant date using the closing price of the Company’s common shares on the grant date. For stock options, the Company engages a valuation firm to calculate the grant date fair value of the options issued. The Company accounts for forfeitures as they occur, rather than estimating expected forfeitures over the course of a vesting period. All stock-based compensation costs are recorded in general and administrative expenses in the consolidated statements of operations. Property and Equipment, net Purchase of property and equipment are recorded at cost. Improvements and replacements of property and equipment are capitalized. Maintenance and repairs that do not improve or extend the lives of property and equipment are charged to expense as incurred. When assets are sold or retired, their cost and related accumulated depreciation are removed from the accounts and any gain or loss is reported in the consolidated statements of operations. Depreciation and amortization expense is recognized using the straight-line method over the estimated useful life of each asset, as follows: Estimated Useful Life Computer equipment 3 – 5 years Furniture and fixtures 5 – 7 years Machinery and equipment 5 – 8 years Leasehold improvements Shorter of lease term or 15 years Goodwill and Intangible Assets Goodwill represents the excess of the purchase price of an acquired entity over the fair value of identifiable tangible and intangible assets acquired and liabilities assumed in a business combination. Indefinite-lived intangible assets established in connection with business combinations consists of in process research and development. Intangible assets with indefinite lives are recorded at their estimated fair value at the date of acquisition. Once in process research and development is placed in service, it will be amortized over the estimated useful life. Intangible assets with finite lives are recorded at their estimated fair value at the date of acquisition and are amortized over their estimated useful lives using the straight-line method. Amortization of assets ceases upon designation as held for sale. The estimated useful lives of intangible assets are detailed in the table below: Estimated Patent 10 years In process research and development Indefinite Impairment of Goodwill and Intangible Assets Goodwill Goodwill is not amortized, but instead is tested annually at December 31 for impairment and upon the occurrence of certain events or substantive changes in circumstances. We account for the impairment of goodwill under the provisions of Financial Accounting Standards Board (FASB) Accounting Standard Update 2017-04 (“ASU 2017-04”), “ Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment Intangibles – Goodwill and Other – Goodwill The Company performs impairment testing for goodwill by performing the following steps: 1) evaluate the relevant events or circumstances to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, 2) if yes to step 1, calculate the fair value of the reporting unit and compare it with its carrying amount, including goodwill, 3) recognize impairment, limited to the total amount of goodwill allocated to that reporting unit, equal to the excess of the carrying value of a reporting unit over its fair value. Management concluded that there were no events indicative of goodwill impairment during the three months ended March 31, 2022. Indefinite-Lived Intangible Assets and Intangible Assets Subject to Amortization Indefinite-lived intangible assets and intangible assets subject to amortization are not amortized, but instead are tested annually at December 31 for impairment and upon the occurrence of certain events or substantive changes in circumstances. We account for the impairment of indefinite-lived intangible assets under the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 350-30-35, Intangibles – Goodwill and Other – General Intangibles Other Than Goodwill We account for the impairment of intangible assets subject to amortization under the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 360-10-35, Property, Plant, and Equipment Management concluded that there were no events indicative of identifiable intangible asset impairment during the three months ended March 31, 2022. Income Taxes The Company uses the liability method of accounting for income taxes as set forth in ASC 740, Income Taxes Fair Value Measurements Certain assets and liabilities of the Company are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable: ● Level 1 — Quoted prices in active markets for identical assets or liabilities. ● Level 2 — Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. ● Level 3 — Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. The carrying values reported in the consolidated balance sheets for cash, prepaid expenses, inventories, accounts payable, and notes payable approximate fair values because of the immediate or short-term maturities of these financial instruments. There were no other assets or liabilities that require fair value to be recalculated on a recurring basis. The fair value of beneficial conversion features associated with convertible notes and the fair value of warrants are calculated utilizing level 2 inputs. When multiple instruments are issued in a single transaction, the total proceeds from the transaction should be allocated among the individual freestanding instruments identified. The allocation occurs after identifying (1) all the freestanding instruments and (2) the subsequent measurement basis for those instruments. The subsequent measurement basis helps inform how the proceeds should be allocated. After the proceeds are allocated to the freestanding instruments, those instruments should be further evaluated for embedded features that may need to be bifurcated or separated. If debt or stock is issued with detachable warrants, the guidance in ASC 470-20-25-2 (applied by analogy to stock) requires that the proceeds be allocated to the two instruments based on their relative fair values. This method is generally appropriate if debt or stock is issued with any other freestanding instrument that is classified in equity (such as a detachable forward contract) or as a liability but not subject to subsequent fair value accounting. Given that our convertible notes and common stock that were issued with warrants are both not subject to subsequent fair value accounting treatment, Management determined the relative fair value method shall be used for allocating the proceeds of the transaction. Under the relative fair value method, the instrument being analyzed is allocated a portion of the proceeds based on its fair value to the sum of the fair value of all the instruments covered int the allocation. Management additionally evaluates the facts and circumstances to determine whether the principal balance of convertible notes approximate their fair value, which we have concluded for all convertible notes issued. Net Loss per Share The Company follows ASC 260, Earnings Per Share Recent Accounting Pronouncements In August 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40). |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Mar. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | 5. Revenue Recognition Disaggregated Revenue The following amounts relate to discontinued operations from our CMI VIE disposed of on December 31, 2021. For the Three Months Ended 2022 2021 Types of Revenues: Medical retail $ - $ 1,130,504 Medical wholesale - 556,310 Recreational wholesale - 9,010 Total revenues $ - $ 1,130,504 |
Business Combination
Business Combination | 3 Months Ended |
Mar. 31, 2022 | |
Business Combination [Abstract] | |
Business Combination | 6. Business Combination On June 22, 2021, the Company entered into an Asset Purchase Agreement with Cryocann USA Corp, a California corporation (“Cryocann”), pursuant to which Company acquired substantially all the assets of Cryocann (the “Cryocann Acquisition”). The aggregate purchase price was $3,500,000 million in cash and 10,000,000 shares of Company common stock and a promissory note was issued for $1,252,316 payable by Company to Cryocann on October 15, 2021, which represents the remaining Purchase Price of $2,500,000 minus the amount owed by Cryocann under a Loan Agreement dated April 23, 2021 by and between Cryocann and the Company. The Company concluded that the Cryocann Acquisition qualified as a business combination under ASC 805. The Company’s allocation of the purchase price was calculated as follows: Cash $ 2,247,684 Common stock 1,804,500 Promissory Note 1,220,079 Total purchase price $ 5,272,263 Description Fair Value Weighted Assets acquired: Intangible assets: In process research and development 3,209,000 Indefinite Patent 873,263 10 Goodwill 1,190,000 Total assets acquired $ 5,272,263 As if the acquisition occurred on January 1, 2021, as reported in our pro forma basis, our net loss would have been $2,025,847 and our net loss per common share would have been $0.02 for the three months ended March 31, 2021. Our net sales would have remained unchanged during the period. These pro forma results are not necessarily indicative of the results that actually would have occurred if the acquisition had occurred on the first day of the periods presented, nor does the pro forma financial information purport to represent the results of operations for future periods. |
Discontinued Operations
Discontinued Operations | 3 Months Ended |
Mar. 31, 2022 | |
Discontinued Operations [Abstract] | |
Discontinued Operations | 7. Discontinued Operations In June 2020, the Company’s board of directors adopted a plan to exit the cultivation, manufacturing of infused products and retail distribution businesses through the sale of CMI. The Company determined that the intended sale represented a strategic shift that will have a major effect on the Company’s operations and financial results. The consolidated statements of operations include the following operating results related to these CMI discontinued operations: Three Months Ended 2022 2021 Net sales $ - $ 1,695,925 Cost of goods sold, inclusive of depreciation - 1,118,735 Gross profit - 577,190 Operating expenses: Personnel costs - 154,460 Sales and marketing - 226,347 General and administrative - 28,988 Legal and professional fees - 21,515 Total operating expenses - 431,310 Gain / (loss) from operations - 145,880 Other income (expenses): Interest expense - (29,264 ) Total other expenses - (29,264 ) Net gain / (loss) from discontinued operations, before taxes - 116,616 Income taxes - - Net gain / (loss) from discontinued operations $ - $ 116,616 |
Property and Equipment, Net
Property and Equipment, Net | 3 Months Ended |
Mar. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT, NET | 8. Property and Equipment, Net Property and equipment, net consisted of the following. March 31, December 31, Leasehold improvements $ - $ - Machinery and equipment 233,641 225,000 Furniture and fixtures - - Construction in progress - - 233,641 225,000 Less: Accumulated depreciation - - $ 233,641 $ 225,000 As of March 31, 2022, our machinery and equipment was not capable of producing a unit of product that is saleable. Depreciation expense will be recognized once our machinery and equipment is ready for its intended use. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Mar. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | 9. Goodwill and Intangible Assets The carrying value of goodwill was $1,190,000 as of March 31, 2022 and December 31, 2021. The following tables summarize information relating to the Company’s identifiable intangible assets as of March 31, 2022 and December 31, 2021: March 31, 2022 Estimated Gross Accumulated Carrying Amortized Patent 10 years $ 873,263 $ (65,495 ) $ 807,768 Indefinite-lived In-process research and development Indefinite 3,209,000 - 3,209,000 Total identifiable intangible assets $ 4,082,263 $ (65,495 ) $ 4,016,768 December 31, 2021 Estimated Gross Accumulated Carrying Amortized Patent 10 years $ 873,263 $ (43,663 ) $ 829,600 Indefinite-lived In-process research and development Indefinite 3,209,000 - 3,209,000 Total identifiable intangible assets $ 4,082,263 $ (43,663 ) $ 4,038,600 Amortization expense was $21,832 and $0 for the three months ended March 31, 2022 and 2021, respectively. |
Loans Receivable
Loans Receivable | 3 Months Ended |
Mar. 31, 2022 | |
Loan Receivable [Abstract] | |
Loans Receivable | 10. Loans Receivable As a result of new agreements entered with CMI on December 31, 2021, as further detailed in Note 1 above, we received a $3,600,000 promissory note due to us no later than December 31, 2023. In consideration of the loan receivable, we conveyed to CMI, any and all manufacturing, grow equipment, retail-related assets and other assets Seller owns in the state of Colorado and are currently used by CMI subsidiaries in the course of business, including client lists and appertaining intellectual property, and no other Buyer or Parent assets, as well as all liabilities related to these assets. During the quarter, the Company issued an additional $620,000 in loans to CMI. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
Debt | 11. Debt On July 27, 2020, the Company entered into a subscription agreement consisting of 1) a convertible note and 2) warrants. The 1) convertible note has a face value of $250,000, matures August 1, 2022, and accrues interest at 8% per annum. The note is convertible into 2,500,000 shares of the Company’s common stock at a conversion price of $0.10 per share. The beneficial conversion feature is accounted for in accordance with ASC 470-20 Debt with Conversion and Other Options On August 26, 2020, the Company entered into a $600,000 loan agreement, which accrues interest at 84% per annum. On January 25, 2021, the Company refinanced this loan at 93.6%, to obtain additional funding. The loan was fully repaid on April 27, 2021. On March 18, 2021, the Company entered into a $225,000 note payable, which accrued interest at 15% per annum. The note was fully repaid on May 7, 2021. Between March 29, 2021 and July 6, 2021, the Company entered into a series of similar subscription agreements with either domestic or non-US accredited investors, respectively (each, a “Initial Tranche Subscription Agreement (US)” and, respectively, “Initial Tranche Subscription Agreement (non-US)”) pursuant to which the Company issued and sold to certain accredited investors, in the initial tranche of a non-brokered private placement (the “Private Placement”), an aggregate 3,000 units (“Units”), each Unit representing (i) one $1,000 principal amount term note providing for an optional conversion into shares of Company common stock at a price of $0.20 per share (each the “Initial Convertible Term Note”) and (ii) a common share warrant for the purchase of 5,000 shares of Company common stock at an exercise price of $0.40 per share (each an “Initial Warrant”), for aggregate net proceeds of $3,000,000. The Initial Convertible Term Notes and the Initial Warrants mature on March 31, 2022 and March 31, 2023, respectively, and accrued interest at a rate of 12% per annum payable on a quarterly basis. Between May and July 6, 2021, the Company entered into a series of substantially similar subscription agreements with either domestic or non-US investors (each, a “Subscription Agreement (US)”, and, respectively, “Subscription Agreement (non-US)”) pursuant to which the Company issued and sold to certain accredited investors, in the second tranche of the Private Placement, an aggregate 1,900 units (“Units”), each Unit representing (i) one $1,000 principal amount term note (each a “Convertible Term Note”) providing for an optional conversion into shares of Company common stock at a price of $0.20 per share and (ii) a common share warrant for the purchase of 5,000 shares of Company common stock at an exercise price of $0.40 per share (each a “Warrant”), for additional aggregate net proceeds of $1,900,000. The Convertible Term Notes and Warrants mature on September 30, 2022 and April 30, 2023, respectively, and accrued interest at a rate of 12% per annum payable on a quarterly basis. All notes were converted during the fourth quarter of 2021. On August 20, 2021, the Company entered into a $300,000 loan agreement, which accrued interest at 91.23% per annum. Payment is due on a weekly basis up to the maturity date of May 27, 2021. The loan was fully repaid on October 19, 2021. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2022 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 12. Related Party Transactions In conjunction with the Cryocann Acquisition, the Company received a promissory note from Matt Armstrong, an employee of the Company, for $281,771. This note receivable was issued as part of an employment agreement with Matt Armstrong, effective June 22, 2021, and was offset against his signing bonus on October 15, 2021. There was no interest associated with the note. On August 19, 2021, the Company entered into a loan agreement of $237,590 with its Chief Executive Officer, Christian Noel. The note accrues interest at 14% per annum and was repaid on October 22, 2021. On November 15, 2021, the Company issued 250,000 common shares and warrants, respectively, to Christian Noel in exchange for $50,000. In addition, the Company issued 760,000 common shares and warrants, respectively, to Trichome Capital Inc. in exchange for $152,000. Christian Noel has voting and investment control of Trichome Capital Inc. |
Shareholders' Equity
Shareholders' Equity | 3 Months Ended |
Mar. 31, 2022 | |
Stockholders' Equity Note [Abstract] | |
Shareholders' Equity | 13. Shareholders’ Equity From January to March 2021, the Company issued 1,491,819 shares of common stock in order to raise capital. From April to June 2021, the Company issued 10,000,000 shares of common stock related to the CryoCann transaction, 6,903,172 shares of common stock pursuant to employment agreements, 2,500,000 shares of common stock in exchange for the extinguishment of debt, and 633,125 shares of common stock in exchange for services. From July to September 2021, the Company issued 798,414 shares of common stock in order to raise capital, 633,707 shares of common stock in exchange for services, and 92,127 shares of common stock for interest payment on a note payable. From October to December 2021, the Company issued 50,700,000 shares of common stock in order to raise capital, 1,570,501 shares of common stock in exchange for services, and 24,621,119 shares of common stock in exchange for extinguishment of debt. From January to March 2022, the Company issued 458,334 shares of common stock in exchange for services, 550,000 shares of common stock for 2021 management performance bonuses, 185,529 shares of common stock for director compensation, and 1,000,000 shares of common stock for 2020 RSU grants vesting in January 2022. Restricted Stock Unit Awards The Company adopted its 2019 Omnibus Stock Incentive Plan (the “2019 Plan”), which provides for the issuance of stock options, stock grants and RSUs to employees, directors and consultants. The primary purpose of the 2019 Plan is to enhance the ability to attract, motivate, and retain the services of qualified employees, officers and directors. Any RSUs granted under the 2019 Plan will be at the discretion of the Compensation Committee of the Board of Directors. On January 10, 2022, the shareholders approved the 2022 Stock Incentive Plan which then replaced the 2019 Plan. A summary of the Company’s RSU award activity for the three months ended March 31, 2022 is as follows: Restricted Weighted Outstanding at December 31, 2021 2,200,003 $ 0.45 Granted 1,469,511 0.27 Vested (1,735,529 ) 0.49 Forfeited - - Outstanding at March 31, 2022 1,933,982 $ 0.27 The total fair value of RSUs vested during the three months ending March 31, 2022 and 2021 was $848,600 and $146,602, respectively. As of March 31, 2022 and 2021, there was $187,761 and $472,087, respectively, of unrecognized stock-based compensation cost related to non-vested RSU’s, which is expected to be recognized over the remaining vesting period. Stock-based compensation expense relating to RSU’s was $140,815 and $250,817 for the three months ending March 31, 2022 and 2021, respectively. Stock-based compensation for the three months ending March 31, 2022 consisted of equity awards forfeited, granted and vested to employees, directors and consultants of the Company in the amount of $27,179, $108,771, and $4,866, respectively. Expenses for stock-based compensation are included on the accompanying consolidated statements of operations in general and administrative expense. Stock Option Awards A summary of the Company’s stock option activity for the three months ended March 31, 2022 is as follows: Stock Weighted Weighted Aggregate Outstanding at December 31, 2021 8,500,000 $ 0.18 9.2 $ 1,579,108 Granted and vested - - - - Forfeited - - - - Outstanding at March 31, 2022 8,500,000 $ 0.18 9.0 $ 1,579,108 During the three months ended March 31, 2022 and 2021, the Company did not issue any stock options. During the year ended December 31, 2021, the Company issued warrants with the option to purchase 73,950,000 common shares at an exercise price of $0.40 per share. Of these warrants, 15,000,000 shares expire on March 31, 2023, 9,500,000 expire on April 30, 2023, 1,000,000 expire on September 17, 2023, 7,750,000 expire on October 15, 2023, 9,510,000 expire on October 26, 2023, 190,000 expire on November 2, 2023, 27,060,000 expire on November 10, 2023, 1,940,000 expire on November 15, 2023, and 750,000 expire on November 17, 2023. The fair value of these warrants is $1,867,960, which is reflected in additional paid in capital. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 14. Income Taxes In accordance with ASC 740-270, the Company calculates the interim tax expense based on an annual effective tax rate (“AETR”). The AETR represents the Company’s estimated effective tax rate for the year based on full year projection of tax expense, divided by the projection of full year pretax book loss, adjusted for discrete transactions occurring during the period. The annual effective tax rate for the three months ended March 31, 2022 was 0.0%, As of March 31, 2022, the Company has recorded no income tax liability. |
Commitments & Contingencies
Commitments & Contingencies | 3 Months Ended |
Mar. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments & Contingencies | 15. Commitments & Contingencies Occasionally, the Company may be involved in claims and legal proceedings arising from the ordinary course of its business. The Company records a provision for a liability when it believes that it is both probable that a liability has been incurred, and the amount can be reasonably estimated. If these estimates and assumptions change or prove to be incorrect, it could have a material impact on the Company’s consolidated financial statements. Contingencies are inherently unpredictable, and the assessments of the value can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions. Lease Commitments The Company accounts for lease transactions in accordance with Topic 842, Leases There are no other leases that meet the reporting standards of ASU Topic 842 as the Company does not have any other leases with a term exceeding twelve months. Other lease payments not accounted for under ASU Topic 842 total $0 and $14,392 for the three months ended March 31, 2022 and 2021, respectively. An ROU asset of $1,411,461 was recognized upon the CMI Transaction. The right of use assets and lease liabilities assumed from the CMI transaction were disposed of as part of the disposal of our discontinued operations, which is described in further detail above. The present value of the liabilities decreased by $0 and $132,230 for the three months ended March 31, 2022 and 2021, respectively. This balance is included in the operating section of the statement of cash flows for three months ended March 31, 2022 and 2021. Operating lease cost was approximately $0 and $ 159,5254 The Company does not have any leases that have not yet commenced which are significant. Legal Proceedings We know of no material, existing or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our company. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | 16. Subsequent Events Subsequent to March 31, 2022, the Company issued 1,091,667 shares of common stock. 291,667 shares were issued at $0.35 per share in exchange for services, 800,000 shares were issued to three directors and one executive officer at $0.28 per share, and 200,000 shares were issued to an executive officer at $0.25 per share. Subsequent to March 31, 2022, the Company purchased property and equipment associated with testing of our processing equipment for a total value of $115,945. On April 5, 2022, the Company granted 500,000 shares for director services. The shares will vest on January 1, 2023. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with GAAP. The consolidated financial statements include the accounts of the Cryomass Technologies Inc, Cryomass LLC, and CMI, a VIE for which the Company was deemed to be the primary beneficiary. All significant intercompany balances and transactions have been eliminated in consolidation. The Company operates as one segment from its corporate headquarters in Colorado. Effective December 31, 2021, the Company entered into an asset purchase agreement involving its VIE with Critical Mass Industries, Inc. and John Knapp, the sole shareholder of Critical Mass Industries, Inc., to divest its discontinued operations in cannabis cultivation, where the buyer assumes all assets and liabilities from the Company. Therefore, with regards to both criteria discussed above, the Company no longer has the power to direct activities, absorb losses, or receive benefits from the VIE and as such will no longer consolidate with CMI. |
Use of Estimates | Use of Estimates The preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of expenses during the reporting period. Significant estimates and assumptions reflected in these financial statements include, but are not limited to determining the fair value of the assets acquired and liabilities assumed in acquisition, determining the fair value and potential impairment of inventory, determining the useful lives and potential impairment of long-lived assets and potential impairment of goodwill. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates when there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates. |
Reclassifications | Reclassifications Certain items in the consolidated financial statements were reclassified from prior periods for presentation purposes. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid instruments with maturities of three months or less at the time of issuance to be cash equivalents. |
Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash. Periodically, the Company maintains deposits in accredited financial institutions in excess of federally insured limits. The Company deposits its cash in financial institutions that it believes have high credit quality and has not experienced any losses on such accounts. Additionally, the company entered into a $3,600,000 loan receivable in conjunction with the disposal of discontinued operations at the end of 2021, which is backed by the assets of the discontinued operations, should the borrower default. Aside from these items, the Company does not believe it is exposed to any unusual credit risk. |
Purchase Accounting for Acquisitions | Purchase Accounting for Acquisitions We apply the acquisition method of accounting for a business combination. In general, this methodology requires us to record assets acquired and liabilities assumed at their respective fair values at the date of acquisition. Any amount of the purchase price paid that is in excess of the estimated fair value of the net assets acquired is recorded as goodwill. For certain acquisitions, we also record a liability for contingent consideration based on estimated future business performance. We monitor our assumptions surrounding these estimated future cash flows and, if there is a significant change, would record an adjustment to the contingent consideration liability and a corresponding adjustment to either income or expense. We determine fair value using widely accepted valuation techniques, primarily discounted cash flow and market multiple analyses. These types of analyses require us to make assumptions and estimates regarding industry and economic factors, the profitability of future business strategies, discount rates and cash flow. If actual results are not consistent with our assumptions and estimates, or our assumptions and estimates change due to new information, we may be exposed to an impairment charge in the future. If the contingent consideration paid for any of our acquisitions differs from the amount initially recorded, we would record either income or expense associated with the change in liability. |
Variable Interest Entities | Variable Interest Entities The Company accounts for variable interest entities in accordance with FASB ASC Topic 810, Consolidation |
Accounts Receivable, net | Accounts Receivable, net Accounts receivable, net is comprised of balances due from customers and are recorded at the invoiced amount. Past due balances are determined based on the contractual terms of the arrangements. Accounts receivable are accrued against when management determines, after considering economic and business conditions and all means of collection efforts have been exhausted and the potential for recovery is considered remote, that the collection of receivables is doubtful. |
Inventory, net | Inventory, net Inventory, net is comprised of work-in-process and finished goods consisting of cannabis and cannabidiol products. Cost includes expenditures directly related to the manufacturing process as well as suitable portions of related production overheads, based on normal operating capacity. Inventory, net is stated at the lower of cost or net realizable value. The Company compares the cost of inventory with market value and writes down inventories to net realizable value, if lower. In evaluating whether inventories are stated at lower of cost or net realizable value, management considers such factors as inventories on hand, physical deterioration, obsolescence, changes in price levels, estimated time to sell such inventories and current market conditions. Due to changing market conditions, management will periodically conduct a thorough review of its inventory and record a provision for inventory losses if necessary. This is based on the Company’s best estimates of product sales prices and customer demand patterns. It is at least reasonably possible that the estimates used by the Company to determine its provision for inventory losses will be materially different from the actual amounts or results. These differences could result in materially higher than expected inventory provisions, which could have a materially adverse effect on the Company’s results of operations and financial conditions in the near term. |
Revenue Recognition | Revenue Recognition Under FASB Topic 606, Revenue from Contacts with Customers |
Discontinued Operations | Discontinued Operations For the three months ended March 31, 2021, Company’s revenue consisted of sales of cannabis and ancillary products to both retail consumers and wholesale customers. Revenue for retail customers was recognized upon completion of the transaction in the point of sale system and satisfaction of the sale by providing the corresponding inventory at the retail location. Revenue for wholesale customers was recognized upon acceptance of the physical goods and confirmation by acceptance of the inventory in the regulatory marijuana enforcement tracking reporting compliance (“METRC”) system. Revenue was recognized upon transfer of control of promised products to customers, generally as risk of loss passes, in an amount that reflected the consideration the Company expected to receive in exchange for those products. Taxes collected from customers, which was subsequently remitted to governmental authorities, were excluded from revenue. Retail customer loyalty liabilities were recognized in the period in which they were incurred and were often be retired without being utilized. Shipping and handling costs were expensed as incurred and are included in cost of sales. The Company operated in a highly regulated environment in which state regulatory approval was required prior to the customer being able to purchase the product, either through the Colorado Marijuana Enforcement Division for wholesale clients or the Colorado Department of Public Health and Environment for medical patients. |
Expenses | Expenses Operating Expenses Operating expenses encompass personnel costs, sales and marketing expenses, research and development expenses, general and administrative expenses, professional and legal fees and depreciation and amortization related to the property and equipment and intangibles acquired through the acquisition of CMI and Cryocann. Personnel costs consist primarily of consulting expense and administrative salaries and wages. Sales and marketing expenses consist primarily of advertising and marketing, and salaries related to sales and marketing employees. General and administrative expenses are comprised of travel expenses, accounting expenses, and board fees. Professional services are principally comprised of outside legal and professional fees. Discontinued Operations Cost of Goods Sold, Net of Depreciation and Amortization Cost of goods sold primarily consisted of allocated salaries and wages of employees directly related with the production process, allocated depreciation and amortization directly related to the production process, cultivation supplies, rent and utilities. Other Expense, net Other expense, net consisted of interest expense, other income and (loss) gain on foreign exchange. |
Stock-Based Compensation | Stock-Based Compensation The fair value of restricted stock units (“RSUs”) granted are measured on the grant date using the closing price of the Company’s common shares on the grant date. For stock options, the Company engages a valuation firm to calculate the grant date fair value of the options issued. The Company accounts for forfeitures as they occur, rather than estimating expected forfeitures over the course of a vesting period. All stock-based compensation costs are recorded in general and administrative expenses in the consolidated statements of operations. |
Property and Equipment, net | Property and Equipment, net Purchase of property and equipment are recorded at cost. Improvements and replacements of property and equipment are capitalized. Maintenance and repairs that do not improve or extend the lives of property and equipment are charged to expense as incurred. When assets are sold or retired, their cost and related accumulated depreciation are removed from the accounts and any gain or loss is reported in the consolidated statements of operations. Depreciation and amortization expense is recognized using the straight-line method over the estimated useful life of each asset, as follows: Estimated Useful Life Computer equipment 3 – 5 years Furniture and fixtures 5 – 7 years Machinery and equipment 5 – 8 years Leasehold improvements Shorter of lease term or 15 years |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill represents the excess of the purchase price of an acquired entity over the fair value of identifiable tangible and intangible assets acquired and liabilities assumed in a business combination. Indefinite-lived intangible assets established in connection with business combinations consists of in process research and development. Intangible assets with indefinite lives are recorded at their estimated fair value at the date of acquisition. Once in process research and development is placed in service, it will be amortized over the estimated useful life. Intangible assets with finite lives are recorded at their estimated fair value at the date of acquisition and are amortized over their estimated useful lives using the straight-line method. Amortization of assets ceases upon designation as held for sale. The estimated useful lives of intangible assets are detailed in the table below: Estimated Patent 10 years In process research and development Indefinite |
Impairment of Goodwill and Intangible Assets | Impairment of Goodwill and Intangible Assets Goodwill Goodwill is not amortized, but instead is tested annually at December 31 for impairment and upon the occurrence of certain events or substantive changes in circumstances. We account for the impairment of goodwill under the provisions of Financial Accounting Standards Board (FASB) Accounting Standard Update 2017-04 (“ASU 2017-04”), “ Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment Intangibles – Goodwill and Other – Goodwill The Company performs impairment testing for goodwill by performing the following steps: 1) evaluate the relevant events or circumstances to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, 2) if yes to step 1, calculate the fair value of the reporting unit and compare it with its carrying amount, including goodwill, 3) recognize impairment, limited to the total amount of goodwill allocated to that reporting unit, equal to the excess of the carrying value of a reporting unit over its fair value. Management concluded that there were no events indicative of goodwill impairment during the three months ended March 31, 2022. |
Indefinite-Lived Intangible Assets and Intangible Assets Subject to Amortization | Indefinite-Lived Intangible Assets and Intangible Assets Subject to Amortization Indefinite-lived intangible assets and intangible assets subject to amortization are not amortized, but instead are tested annually at December 31 for impairment and upon the occurrence of certain events or substantive changes in circumstances. We account for the impairment of indefinite-lived intangible assets under the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 350-30-35, Intangibles – Goodwill and Other – General Intangibles Other Than Goodwill We account for the impairment of intangible assets subject to amortization under the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 360-10-35, Property, Plant, and Equipment Management concluded that there were no events indicative of identifiable intangible asset impairment during the three months ended March 31, 2022. |
Income Taxes | Income Taxes The Company uses the liability method of accounting for income taxes as set forth in ASC 740, Income Taxes |
Fair Value Measurements | Fair Value Measurements Certain assets and liabilities of the Company are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable: ● Level 1 — Quoted prices in active markets for identical assets or liabilities. ● Level 2 — Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. ● Level 3 — Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. The carrying values reported in the consolidated balance sheets for cash, prepaid expenses, inventories, accounts payable, and notes payable approximate fair values because of the immediate or short-term maturities of these financial instruments. There were no other assets or liabilities that require fair value to be recalculated on a recurring basis. The fair value of beneficial conversion features associated with convertible notes and the fair value of warrants are calculated utilizing level 2 inputs. When multiple instruments are issued in a single transaction, the total proceeds from the transaction should be allocated among the individual freestanding instruments identified. The allocation occurs after identifying (1) all the freestanding instruments and (2) the subsequent measurement basis for those instruments. The subsequent measurement basis helps inform how the proceeds should be allocated. After the proceeds are allocated to the freestanding instruments, those instruments should be further evaluated for embedded features that may need to be bifurcated or separated. If debt or stock is issued with detachable warrants, the guidance in ASC 470-20-25-2 (applied by analogy to stock) requires that the proceeds be allocated to the two instruments based on their relative fair values. This method is generally appropriate if debt or stock is issued with any other freestanding instrument that is classified in equity (such as a detachable forward contract) or as a liability but not subject to subsequent fair value accounting. Given that our convertible notes and common stock that were issued with warrants are both not subject to subsequent fair value accounting treatment, Management determined the relative fair value method shall be used for allocating the proceeds of the transaction. Under the relative fair value method, the instrument being analyzed is allocated a portion of the proceeds based on its fair value to the sum of the fair value of all the instruments covered int the allocation. Management additionally evaluates the facts and circumstances to determine whether the principal balance of convertible notes approximate their fair value, which we have concluded for all convertible notes issued. |
Net Loss per Share | Net Loss per Share The Company follows ASC 260, Earnings Per Share |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40). |
Variable Interest Entity (Table
Variable Interest Entity (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Variable Interest Entity [Abstract] | |
Schedule of determined that CMI no longer qualifies as a variable interest entity | CMI Statement of Operations For the Three Months Ended Description 2022 2021 Net sales $ - $ 1,695,925 Cost of goods sold, inclusive of depreciation - 1,118,735 Gross profit $ - $ 577,190 Operating expenses Personnel costs - 154,460 Sales and marketing - 226,347 General and administrative - 28,988 Legal and professional fees - 21,515 Total operating expenses - 431,310 Gain from operations $ - $ 145,880 Other income / (expense) Interest expense - (29,264 ) Total other income / (expense) - (29,264 ) Net loss - 116,616 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Schedule of estimated useful life of property and equipment | Estimated Useful Life Computer equipment 3 – 5 years Furniture and fixtures 5 – 7 years Machinery and equipment 5 – 8 years Leasehold improvements Shorter of lease term or 15 years |
Schedule of estimated useful lives of intangible assets | Estimated Patent 10 years In process research and development Indefinite |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of amounts relate to discontinued operations | For the Three Months Ended 2022 2021 Types of Revenues: Medical retail $ - $ 1,130,504 Medical wholesale - 556,310 Recreational wholesale - 9,010 Total revenues $ - $ 1,130,504 |
Business Combination (Tables)
Business Combination (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Business Combination [Abstract] | |
Schedule of purchase price | Cash $ 2,247,684 Common stock 1,804,500 Promissory Note 1,220,079 Total purchase price $ 5,272,263 |
Schedule of business combination | Description Fair Value Weighted Assets acquired: Intangible assets: In process research and development 3,209,000 Indefinite Patent 873,263 10 Goodwill 1,190,000 Total assets acquired $ 5,272,263 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Discontinued Operations [Abstract] | |
Schedule of CMI discontinued operations | Three Months Ended 2022 2021 Net sales $ - $ 1,695,925 Cost of goods sold, inclusive of depreciation - 1,118,735 Gross profit - 577,190 Operating expenses: Personnel costs - 154,460 Sales and marketing - 226,347 General and administrative - 28,988 Legal and professional fees - 21,515 Total operating expenses - 431,310 Gain / (loss) from operations - 145,880 Other income (expenses): Interest expense - (29,264 ) Total other expenses - (29,264 ) Net gain / (loss) from discontinued operations, before taxes - 116,616 Income taxes - - Net gain / (loss) from discontinued operations $ - $ 116,616 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment, net | March 31, December 31, Leasehold improvements $ - $ - Machinery and equipment 233,641 225,000 Furniture and fixtures - - Construction in progress - - 233,641 225,000 Less: Accumulated depreciation - - $ 233,641 $ 225,000 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of identifiable intangible assets | March 31, 2022 Estimated Gross Accumulated Carrying Amortized Patent 10 years $ 873,263 $ (65,495 ) $ 807,768 Indefinite-lived In-process research and development Indefinite 3,209,000 - 3,209,000 Total identifiable intangible assets $ 4,082,263 $ (65,495 ) $ 4,016,768 December 31, 2021 Estimated Gross Accumulated Carrying Amortized Patent 10 years $ 873,263 $ (43,663 ) $ 829,600 Indefinite-lived In-process research and development Indefinite 3,209,000 - 3,209,000 Total identifiable intangible assets $ 4,082,263 $ (43,663 ) $ 4,038,600 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Stockholders' Equity Note [Abstract] | |
Schedule of the company's RSU award activity | Restricted Weighted Outstanding at December 31, 2021 2,200,003 $ 0.45 Granted 1,469,511 0.27 Vested (1,735,529 ) 0.49 Forfeited - - Outstanding at March 31, 2022 1,933,982 $ 0.27 |
Schedule of stock options activity | Stock Weighted Weighted Aggregate Outstanding at December 31, 2021 8,500,000 $ 0.18 9.2 $ 1,579,108 Granted and vested - - - - Forfeited - - - - Outstanding at March 31, 2022 8,500,000 $ 0.18 9.0 $ 1,579,108 |
Variable Interest Entity (Detai
Variable Interest Entity (Details) | 12 Months Ended |
Dec. 31, 2021USD ($) | |
Variable Interest Entity [Abstract] | |
Promissory note due | $ 3,600,000 |
Due date | Dec. 31, 2023 |
Variable Interest Entity (Det_2
Variable Interest Entity (Details) - Schedule of determined that CMI no longer qualifies as a variable interest entity - VIE's [Member] - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Variable Interest Entity [Line Items] | ||
Net sales | $ 1,695,925 | |
Cost of goods sold, inclusive of depreciation | 1,118,735 | |
Gross profit | 577,190 | |
Operating expenses | ||
Personnel costs | 154,460 | |
Sales and marketing | 226,347 | |
General and administrative | 28,988 | |
Legal and professional fees | 21,515 | |
Total operating expenses | 431,310 | |
Gain from operations | 145,880 | |
Other income / (expense) | ||
Interest expense | (29,264) | |
Total other income / (expense) | (29,264) | |
Net loss | $ 116,616 |
Going Concern Uncertainty, Fi_2
Going Concern Uncertainty, Financial Conditions and Management’s Plans (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Dec. 31, 2021 | |
Going Concern Uncertainty, Financial Conditions and Management’s Plans (Details) [Line Items] | ||
Convertible notes | $ 4,900,000 | |
Cash for operating activities | $ 1,631,300 | |
Incurred net loss | 2,152,305 | |
Accumulated deficit | $ 30,741,142 | |
Common Stock [Member] | ||
Going Concern Uncertainty, Financial Conditions and Management’s Plans (Details) [Line Items] | ||
Raised common stock amount | $ 10,548,535 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Accounting Policies [Abstract] | ||
Loan receivable (in Dollars) | $ 3,600,000 | |
Income taxes, description | In accordance with ASC 740-10, for those tax positions where there is a greater than 50% likelihood that a tax benefit will be sustained, our policy will be to record the largest amount of tax benefit that is more likely than not to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where there is less than 50% likelihood that a tax benefit will be sustained, no tax benefit will be recognized in the financial statements. | |
Unvested RSU’s considered potentially dilutive securities outstanding | 1,933,982 | 2,050,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful life of property and equipment | 3 Months Ended |
Mar. 31, 2022 | |
Computer equipment [Member] | Minimum [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful life of property and equipment [Line Items] | |
Property, plant and equipment, useful life | 3 years |
Computer equipment [Member] | Maximum [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful life of property and equipment [Line Items] | |
Property, plant and equipment, useful life | 5 years |
Furniture and fixtures [Member] | Minimum [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful life of property and equipment [Line Items] | |
Property, plant and equipment, useful life | 5 years |
Furniture and fixtures [Member] | Maximum [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful life of property and equipment [Line Items] | |
Property, plant and equipment, useful life | 7 years |
Machinery and equipment [Member] | Minimum [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful life of property and equipment [Line Items] | |
Property, plant and equipment, useful life | 5 years |
Machinery and equipment [Member] | Maximum [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful life of property and equipment [Line Items] | |
Property, plant and equipment, useful life | 8 years |
Leasehold improvements [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful life of property and equipment [Line Items] | |
Property, plant and equipment, useful life | 15 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of intangible assets | 3 Months Ended |
Mar. 31, 2022 | |
Schedule of estimated useful lives of intangible assets [Abstract] | |
Patent | 10 years |
In process research and development | Indefinite |
Revenue Recognition (Details) -
Revenue Recognition (Details) - Schedule of amounts relate to discontinued operations - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Disaggregation of Revenue [Line Items] | ||
Total revenues | $ 1,130,504 | |
Medical retail [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 1,130,504 | |
Medical wholesale [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 556,310 | |
Recreational wholesale [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | $ 9,010 |
Business Combination (Details)
Business Combination (Details) - USD ($) | Oct. 15, 2021 | Jun. 22, 2021 | Jan. 01, 2021 | Mar. 31, 2021 | Apr. 23, 2021 |
Business Combination [Abstract] | |||||
Aggregate purchase price | $ 3,500,000,000,000 | ||||
Shares of common stock (in Shares) | 10,000,000 | ||||
Promissory note issued | $ 1,252,316 | ||||
Purchase price | $ 2,500,000 | ||||
Net loss | $ 2,025,847 | ||||
Net loss per share (in Dollars per share) | $ 0.02 |
Business Combination (Details)
Business Combination (Details) - Schedule of purchase price - Cryocann Acquisition [Member] | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Business Combination (Details) - Schedule of purchase price [Line Items] | |
Cash | $ 2,247,684 |
Common stock | 1,804,500 |
Promissory Note | 1,220,079 |
Total purchase price | $ 5,272,263 |
Business Combination (Details_2
Business Combination (Details) - Schedule of business combination - Cryocann Acquisition [Member] | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Intangible assets: | |
In process research and development, Fair Value | $ 3,209,000 |
In process research and development, Weighted average useful life (in years) | Indefinite |
Patent, Fair Value | $ 873,263 |
Patent, Weighted average useful life (in years) | 10 years |
Goodwill, Fair Value | $ 1,190,000 |
Total assets acquired, Fair Value | $ 5,272,263 |
Discontinued Operations (Detail
Discontinued Operations (Details) - Schedule of CMI discontinued operations - CMI Transaction [Member] - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Discontinued Operations (Details) - Schedule of CMI discontinued operations [Line Items] | ||
Net sales | $ 1,695,925 | |
Cost of goods sold, inclusive of depreciation | 1,118,735 | |
Gross profit | 577,190 | |
Operating expenses: | ||
Personnel costs | 154,460 | |
Sales and marketing | 226,347 | |
General and administrative | 28,988 | |
Legal and professional fees | 21,515 | |
Total operating expenses | 431,310 | |
Gain / (loss) from operations | 145,880 | |
Other income (expenses): | ||
Interest expense | (29,264) | |
Total other expenses | (29,264) | |
Net gain / (loss) from discontinued operations, before taxes | 116,616 | |
Income taxes | ||
Net gain / (loss) from discontinued operations | $ 116,616 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - Schedule of property and equipment, net - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 233,641 | $ 225,000 |
Less: Accumulated depreciation | ||
Property and equipment, net | 233,641 | 225,000 |
Leasehold improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | ||
Machinery and equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 233,641 | 225,000 |
Furniture and fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | ||
Construction in progress [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Carrying value of goodwill | $ 1,190,000 | $ 1,190,000 | |
Amortization expense | $ 21,832 | $ 0 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets (Details) - Schedule of identifiable intangible assets - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Dec. 31, 2021 | |
Indefinite-lived | ||
Indefinite-lived Intangible assets, Gross Amount | $ 4,082,263 | $ 4,082,263 |
Indefinite-lived Intangible assets, Accumulated Amortization | (65,495) | (43,663) |
Indefinite-lived intangible assets, Carrying Value | $ 4,016,768 | $ 4,038,600 |
Patent [Member] | ||
Amortized | ||
Amortized intangible assets, Estimated Useful Life (Years) | 10 years | 10 years |
Amortized intangible assets, Gross Amount | $ 873,263 | $ 873,263 |
Amortized intangible assets, Accumulated Amortization | (65,495) | (43,663) |
Amortized intangible assets, Carrying Value | $ 807,768 | $ 829,600 |
In-process research and development [Member] | ||
Indefinite-lived | ||
Indefinite-lived intangible assets, Estimated Useful Life (Years) | Indefinite | Indefinite |
Indefinite-lived Intangible assets, Gross Amount | $ 3,209,000 | $ 3,209,000 |
Indefinite-lived Intangible assets, Accumulated Amortization | ||
Indefinite-lived intangible assets, Carrying Value | $ 3,209,000 | $ 3,209,000 |
Loans Receivable (Details)
Loans Receivable (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Mar. 31, 2022 | |
Loan Receivable [Abstract] | ||
Promissory note due | $ 3,600,000 | |
Additional loans | $ 620,000 |
Debt (Details)
Debt (Details) - USD ($) | Aug. 20, 2021 | Mar. 18, 2021 | Jan. 25, 2021 | Jul. 27, 2020 | Jul. 06, 2021 | Jul. 06, 2021 | Mar. 31, 2022 | Dec. 31, 2021 | Aug. 26, 2020 |
Debt (Details) [Line Items] | |||||||||
Debt instrument description | convertible note has a face value of $250,000, matures August 1, 2022, and accrues interest at 8% per annum. | ||||||||
Conversion price (in Dollars per share) | $ 0.1 | ||||||||
Net carrying amount | $ 208,333 | $ 177,083 | |||||||
Convertible notes | 250,000 | 250,000 | |||||||
Unamortized debt discount | $ 41,667 | $ 72,917 | |||||||
Warrants exercisable (in Shares) | 2,500,000 | ||||||||
Interest per annum | 15.00% | ||||||||
Refinanced loan percentage | 93.60% | ||||||||
Loan repaid date | Oct. 19, 2021 | May 7, 2021 | Apr. 27, 2021 | ||||||
Note payable | $ 225,000 | ||||||||
Loan agreement | $ 300,000 | ||||||||
Accrued interest | 91.23% | ||||||||
Maturity date | Payment is due on a weekly basis up to the maturity date of May 27, 2021. | ||||||||
Subscription Agreement [Member] | |||||||||
Debt (Details) [Line Items] | |||||||||
Convertible into shares (in Shares) | 2,500,000 | ||||||||
Common stock price per share (in Dollars per share) | $ 0.2 | $ 0.2 | $ 0.25 | ||||||
Aggregate units (in Shares) | 3,000 | ||||||||
Principal amount | $ 1,000 | $ 1,000 | |||||||
Warrant for purchase shares (in Shares) | 5,000 | 5,000 | |||||||
Common stock exercise price per share (in Dollars per share) | $ 0.4 | $ 0.4 | |||||||
Aggregate net proceeds | $ 3,000,000 | $ 3,000,000 | |||||||
Convertible term description | The Initial Convertible Term Notes and the Initial Warrants mature on March 31, 2022 and March 31, 2023, respectively, and accrued interest at a rate of 12% per annum payable on a quarterly basis. | ||||||||
Loan Agreement [Member] | |||||||||
Debt (Details) [Line Items] | |||||||||
Loan agreement | $ 600,000 | ||||||||
Interest per annum | 84.00% | ||||||||
Convertible Debt [Member] | |||||||||
Debt (Details) [Line Items] | |||||||||
Aggregate units (in Shares) | 1,900 | ||||||||
Principal amount | $ 1,000 | $ 1,000 | |||||||
Warrant for purchase shares (in Shares) | 5,000 | 5,000 | |||||||
Common stock exercise price per share (in Dollars per share) | $ 0.4 | $ 0.4 | |||||||
Aggregate net proceeds | $ 1,900,000 | $ 1,900,000 | |||||||
Convertible term description | The Convertible Term Notes and Warrants mature on September 30, 2022 and April 30, 2023, respectively, and accrued interest at a rate of 12% per annum payable on a quarterly basis. | ||||||||
Conversion price per share (in Dollars per share) | $ 0.2 | $ 0.2 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 1 Months Ended | 3 Months Ended | |||
Aug. 19, 2021 | Mar. 31, 2022 | Dec. 31, 2021 | Nov. 15, 2021 | Oct. 22, 2021 | |
Related Party Transactions (Details) [Line Items] | |||||
Promissory note received | $ 281,771 | ||||
Loan agreement | $ 237,590 | ||||
Interest rate | 14.00% | ||||
Common shares and warrants (in Shares) | 73,950,000 | 250,000 | |||
Exchange amount | $ 50,000 | ||||
Trichome Capital Inc [Member] | |||||
Related Party Transactions (Details) [Line Items] | |||||
Common shares and warrants (in Shares) | 760,000 | ||||
Exchange amount | $ 152,000 |
Shareholders' Equity (Details)
Shareholders' Equity (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||
Jan. 31, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2021 | Nov. 15, 2021 | |
Shareholders' Equity (Details) [Line Items] | ||||||||
Issuance of common stock shares | 10,000,000 | |||||||
Transaction shares | 6,903,172 | |||||||
Agreements shares | 2,500,000 | |||||||
Share exchange for services | 633,125 | |||||||
Common stock shares | 1,000,000 | 458,334 | 50,700,000 | 798,414 | ||||
Raising capital | 633,707 | |||||||
Interest rate | 92,127 | |||||||
Common stock in exchange for services | 550,000 | 1,570,501 | ||||||
Common stock in exchange for extinguishment of debt. | 185,529 | 24,621,119 | ||||||
Fair value of RSU’s vested (in Dollars) | $ 848,600 | $ 146,602 | ||||||
Unrecognized stock-based compensation (in Dollars) | 187,761 | 472,087 | ||||||
Stock-based compensation expense (in Dollars) | 140,815 | $ 250,817 | ||||||
Warrants shares | 73,950,000 | 73,950,000 | 250,000 | |||||
Exercise price (in Dollars per share) | $ 0.4 | |||||||
Fair value of additional paid in capital (in Dollars) | $ 1,867,960 | $ 1,867,960 | ||||||
March 31, 2023 [Member] | ||||||||
Shareholders' Equity (Details) [Line Items] | ||||||||
Warrants expire | 15,000,000 | |||||||
April 30, 2023 [Member] | ||||||||
Shareholders' Equity (Details) [Line Items] | ||||||||
Warrants expire | 9,500,000 | |||||||
September 17, 2023 [Member] | ||||||||
Shareholders' Equity (Details) [Line Items] | ||||||||
Warrants expire | 1,000,000 | |||||||
October 15, 2023 [Member] | ||||||||
Shareholders' Equity (Details) [Line Items] | ||||||||
Warrants expire | 7,750,000 | |||||||
October 26, 2023 [Member] | ||||||||
Shareholders' Equity (Details) [Line Items] | ||||||||
Warrants expire | 9,510,000 | |||||||
November 2, 2023 [Member] | ||||||||
Shareholders' Equity (Details) [Line Items] | ||||||||
Warrants expire | 190,000 | |||||||
November 10, 2023 [Member] | ||||||||
Shareholders' Equity (Details) [Line Items] | ||||||||
Warrants expire | 27,060,000 | |||||||
November 15, 2023 [Member] | ||||||||
Shareholders' Equity (Details) [Line Items] | ||||||||
Warrants expire | 1,940,000 | |||||||
November 17, 2023 [Member] | ||||||||
Shareholders' Equity (Details) [Line Items] | ||||||||
Warrants expire | 750,000 | |||||||
Employees [Member] | ||||||||
Shareholders' Equity (Details) [Line Items] | ||||||||
Stock-based compensation consisted of equity awards granted and vested (in Dollars) | 27,179 | |||||||
Raise capital [Member] | ||||||||
Shareholders' Equity (Details) [Line Items] | ||||||||
Issuance of common stock shares | 1,491,819 | |||||||
RSU’s [Member] | ||||||||
Shareholders' Equity (Details) [Line Items] | ||||||||
Stock-based compensation expense (in Dollars) | 140,815 | $ 250,817 | ||||||
Director [Member] | ||||||||
Shareholders' Equity (Details) [Line Items] | ||||||||
Stock-based compensation consisted of equity awards granted and vested (in Dollars) | 108,771 | |||||||
Consultants [Member] | ||||||||
Shareholders' Equity (Details) [Line Items] | ||||||||
Stock-based compensation consisted of equity awards granted and vested (in Dollars) | $ 4,866 |
Shareholders' Equity (Details)
Shareholders' Equity (Details) - Schedule of the company's RSU award activity | 3 Months Ended |
Mar. 31, 2022$ / sharesshares | |
Schedule of the company's RSU award activity [Abstract] | |
Restricted Stock Units, Outstanding beginning balance | shares | 2,200,003 |
Weighted Average Grant Date Fair Value, Outstanding beginning balance | $ / shares | $ 0.45 |
Restricted Stock Units, Granted | shares | 1,469,511 |
Weighted Average Grant Date Fair Value, Granted | $ / shares | $ 0.27 |
Restricted Stock Units, Vested | shares | (1,735,529) |
Weighted Average Grant Date Fair Value, Vested | $ / shares | $ 0.49 |
Restricted Stock Units, Forfeited | shares | |
Weighted Average Grant Date Fair Value, Forfeited | $ / shares | |
Restricted Stock Units, Outstanding ending balance | shares | 1,933,982 |
Weighted Average Grant Date Fair Value, Outstanding ending balance | $ / shares | $ 0.27 |
Shareholders' Equity (Details_2
Shareholders' Equity (Details) - Schedule of stock options activity - Stock Option [Member] | 3 Months Ended |
Mar. 31, 2022USD ($)$ / sharesshares | |
Shareholders' Equity (Details) - Schedule of stock options activity [Line Items] | |
Stock Option Shares, Outstanding, beginning | shares | 8,500,000 |
Weighted Average Exercise Price, Outstanding, beginning | $ / shares | $ 0.18 |
Weighted Average Remaining Contractual Term, Outstanding, beginning | 9 years 2 months 12 days |
Aggregate Intrinsic Value, Outstanding, beginning | $ | $ 1,579,108 |
Stock Option Shares, Granted and vested | shares | |
Weighted Average Exercise Price, Granted and vested | $ / shares | |
Weighted Average Remaining Contractual Term, Granted and vested | |
Aggregate Intrinsic Value, Granted and vested | $ | |
Stock Option Shares, Forfeited | shares | |
Weighted Average Exercise Price, Forfeited | $ / shares | |
Weighted Average Remaining Contractual Term, Forfeited | |
Aggregate Intrinsic Value, Forfeited | $ | |
Stock Option Shares, Outstanding, ending | shares | 8,500,000 |
Weighted Average Exercise Price, Outstanding, ending | $ / shares | $ 0.18 |
Weighted Average Remaining Contractual Term, Outstanding, ending | 9 years |
Aggregate Intrinsic Value, Outstanding, ending | $ | $ 1,579,108 |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended |
Mar. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Annual effective tax rate | 0.00% |
Commitments & Contingencies (De
Commitments & Contingencies (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Commitments & Contingencies (Details) [Line Items] | ||
Other lease term | 12 months | |
Other lease payments | $ 0 | $ 14,392 |
Present value of liabilities | 0 | 132,230 |
Operating lease cost | 0 | $ 1,595,254 |
CMI Transaction [Member] | ||
Commitments & Contingencies (Details) [Line Items] | ||
Assets recognized upon transaction | $ 1,411,461 |
Subsequent Events (Details)
Subsequent Events (Details) | Apr. 05, 2022shares | Mar. 31, 2022USD ($)$ / sharesshares |
Subsequent Events (Details) [Line Items] | ||
Common stock issued | 1,091,667 | |
Shares issued | 200,000 | |
Price per share (in Dollars per share) | $ / shares | $ 0.25 | |
Number of directors | 3 | |
Number of executive officer | 1 | |
Property and equipment (in Dollars) | $ | $ 115,945 | |
Shares granted | 1,469,511 | |
Common Stock [Member] | ||
Subsequent Events (Details) [Line Items] | ||
Shares issued | 291,667 | |
Price per share (in Dollars per share) | $ / shares | $ 0.35 | |
Subsequent Event [Member] | ||
Subsequent Events (Details) [Line Items] | ||
Shares granted | 500,000 | |
Vested date | Jan. 1, 2023 | |
Three Directors [Member] | ||
Subsequent Events (Details) [Line Items] | ||
Shares issued | 800,000 | |
One Executive Officer [Member] | ||
Subsequent Events (Details) [Line Items] | ||
Price per share (in Dollars per share) | $ / shares | $ 0.28 |