Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | Nov. 26, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | Notis Global, Inc. | |
Entity Central Index Key | 0001547996 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | No | |
Entity Interactive Data Current | No | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 10,000,000,000 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2017 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Current assets | ||
Cash | $ 164,033 | $ 23,967 |
Capitalized agricultural costs | 288,003 | 160,131 |
Prepaid expenses and other current assets | 99,349 | 92,976 |
Assets of discontinued operations | 2,492 | 2,522 |
Total current assets | 553,877 | 279,596 |
Property and equipment, net | 6,621,931 | 6,712,369 |
Total assets | 7,175,808 | 6,991,965 |
Current liabilities | ||
Accounts payable | 7,023,896 | 6,009,827 |
Accrued expenses | 2,601,169 | 2,187,393 |
Accounts payable and accrued expenses - related parties | 588,134 | 727,893 |
Liabilities of discontinued operations | 1,021,993 | 1,020,127 |
Current portion of notes payable, net | 4,079,110 | 3,367,478 |
Notes payable - related parties | 289,866 | 289,866 |
Convertible notes payable, net | 15,497,090 | 8,645,442 |
Convertible notes payable - related parties | 105,000 | 105,000 |
Due on demand note | 287,431 | |
Share restriction liability | 51,747 | |
Derivative liability | 17,996,473 | 15,635,947 |
Warrant liability | 2,994,260 | 14,430 |
Total current liabilities | 52,536,169 | 38,003,403 |
Notes payable, less current portion | 4,093,272 | |
Total liabilities | 52,536,169 | 42,096,675 |
Commitments and contingencies (Note 9) | ||
Stockholders' deficit | ||
Preferred stock, $0.001 par value: 10,000,000 authorized; 0 issued and outstanding as of March 31, 2017 and December 31, 2016, respectively | ||
Common stock, $0.001 par value: 10,000,000,000 authorized, 9,944,548,868 and 9,942,223,868 issued and outstanding as of March 31, 2017 and December 31, 2016, respectively | 9,944,549 | 9,942,224 |
Additional paid-in capital | 46,606,987 | 46,606,283 |
Treasury stock | (1,209,600) | (1,209,600) |
Accumulated deficit | (100,702,297) | (90,443,617) |
Total stockholders' deficit | (45,360,361) | (35,104,710) |
Total liabilities and stockholders' deficit | $ 7,175,808 | $ 6,991,965 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 10,000,000,000 | 10,000,000,000 |
Common stock, shares issued | 9,944,548,868 | 9,942,223,868 |
Common stock, shares outstanding | 9,944,548,868 | 9,942,223,868 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Income Statement [Abstract] | ||
Revenue | $ 89,390 | $ 139,228 |
Operating expenses | ||
Cost of revenues | 64,685 | 99,763 |
General and administrative | 1,100,504 | 3,594,055 |
Total operating expenses | 1,165,189 | 3,693,818 |
Loss from operations | (1,075,799) | (3,554,590) |
Other income (expense) | ||
Interest expense, net | (9,218,472) | (4,631,508) |
Change in fair value of derivative liabilities | 656,295 | 8,879,586 |
Change in fair value of warrant liability | (599) | 555,973 |
Gain on sale of interest in subsidiary | 299,571 | |
Loss on failed business combination | (799,910) | |
Other income (expense) | 183,000 | (22,786) |
Total other income (expense) | (9,179,686) | 5,080,836 |
Net loss from continuing operations | (10,255,485) | 1,526,246 |
Discontinued operations | ||
Net loss from discontinued operations | (3,195) | (278,444) |
Income (loss) before provision for income taxes | (10,258,680) | 1,247,802 |
Net income (loss) | $ (10,258,680) | $ 1,247,802 |
Loss per share attributable to common stockholders | ||
Basic and diluted loss per share - continuing operations | $ 0 | $ 0 |
Basic and diluted loss per share from discontinued operations | 0 | 0 |
Basic and diluted loss per share | $ 0 | $ 0 |
Weighted average shares outstanding | ||
Basic | 9,943,779,424 | 311,760,253 |
Diluted | 9,943,779,424 | 6,058,529,459 |
Other comprehensive income (loss) | ||
Net income (loss) | $ (10,258,680) | $ 1,247,802 |
Unrealized gain from marketable securities | 3,134 | |
Comprehensive income (loss) | $ (10,258,680) | $ 1,250,937 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Cash flows from operating activities | |||
Net income (loss) | $ (10,258,680) | $ 1,247,802 | $ 17,700,000 |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | |||
Depreciation and amortization | 90,438 | 462,300 | |
Provisions and allowances | 70,000 | ||
Gain on sale of interest in subsidiary | (299,571) | ||
Change in fair value of marketable securities | (3,134) | ||
Change in fair value of derivative liability | (656,295) | (8,879,586) | |
Change in fair value of warrant liability | 599 | (555,973) | |
Amortization of debt discount | 1,568,055 | 1,868,077 | |
Financing costs | 2,785,920 | 2,515,843 | |
Note principal increase upon default | 3,857,877 | ||
Loss on failed business combination | 799,910 | ||
Stock based compensation | 54,776 | 576,098 | |
Changes in operating assets and liabilities: | |||
Accounts receivable | 113,717 | ||
Inventory | (106,589) | ||
Capitalized agricultural costs | (127,872) | ||
Prepaid insurance | 172,810 | ||
Prepaid expenses and other current assets | (6,373) | (5,907) | |
Deferred costs | (76,000) | ||
Accounts payable | 979,027 | (836,226) | |
Accrued expenses | 413,776 | (545,674) | |
Accrued expenses - Related parties | (139,759) | 124,792 | |
Deferred revenue | (12,014) | ||
Net cash used in operating activities | (638,601) | (4,169,234) | (3,500,000) |
Changes related to discontinued operations | 1,896 | 3,317,945 | |
Cash flows from investing activities | |||
Issuance of note receivable | (10,000) | ||
Payments made for investment in PCH | (386,453) | ||
Proceeds from sale of assets of subsidiary | 35,000 | ||
Proceeds received for sale of interest held in subsidiary | 299,571 | ||
Net cash provided by (used in) by investing activities | (386,453) | 324,571 | |
Cash flows from financing activities | |||
Proceeds from issuance of notes payable | 367,750 | ||
Proceeds from issuance of notes payable, related party | 41,667 | ||
Payments on notes payable | (21,660) | (1,026,390) | |
Payments on notes payable - related party | (2,500) | ||
Proceeds from issuance of demand loan | 287,431 | ||
Exercise of employee stock options | 16,000 | ||
Proceeds from issuance of convertible notes payable, net of fees | 1,261,000 | 1,040,001 | |
Payments on convertible notes payable | (363,547) | ||
Proceeds from issuance of convertible notes payable - related party, net | 105,000 | ||
Net cash provided by financing activities | 1,163,224 | 541,528 | |
Net change in cash and cash equivalents | 140,066 | 14,809 | |
Cash, beginning of year | 23,967 | 52,834 | 52,834 |
Cash, end of year | 164,033 | 67,643 | $ 23,967 |
Supplemental disclosures of cash flow information: | |||
Cash paid for interest | 89,520 | 38,595 | |
Non-cash investing and financing activities: | |||
Common stock issued upon debt conversion | 2,700,003 | ||
Common stock issued for accounts payable | 12,500 | ||
Account payable assigned to note payable | 7,500 | ||
Account payable assigned to convertible note payable | 37,500 | ||
Original issue discount on note payable | 11,940 | ||
Exchange of notes payable and accrued interest to convertible note payable | 3,966,199 | ||
Issuance of note payable for financing costs | 700,000 | ||
Issuance of warrants in connection with convertible debentures | 2,979,230 | ||
Debt discount additions for notes payable | 230,901 | ||
Common stock issued for settlements | $ 2,000 |
Business Organization, Nature o
Business Organization, Nature of Operations | 3 Months Ended |
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business Organization, Nature of Operations | NOTE 1 – BUSINESS ORGANIZATION, NATURE OF OPERATIONS Business Description Notis Global, Inc. (formerly Medbox, Inc.), which is incorporated in the state of Nevada (the “Company”), provides specialized services to the hemp and marijuana industry, distributes hemp product processed by contractual partners and through March 31, 2017, owned independently and through affiliates, real property and licenses that it leased and assigned or sublicensed to partner cultivators and operators in return for a percentage of revenues or profits from sales and operations. Prior to 2016, through its consulting services, the Company worked with clients who sought to enter the medical and cultivation marijuana markets in those states where approved. In 2015, the Company expanded into hemp cultivation with the acquisition of a 320-acre farm (the “Farm”) in Colorado by the Company’s wholly-owned subsidiary, EWSD I, LLC (“EWSD”). The farm was operated by an independent farming partner until the relationship was terminated in May 2016. In addition, through its wholly-owned subsidiary, Vaporfection International, Inc. (“VII”), the Company sold a line of vaporizer and accessory products online and through distribution partners. On March 28, 2016, the Company sold the assets of VII and exited the vaporizer and accessory business. As of December 31, 2016, the Company was headquartered in Los Angeles, California. As of the date of filing of this Quarterly Report, the Company was headquartered in Red Bank, New Jersey. Effective January 28, 2016, the Company changed its legal corporate name from Medbox, Inc., to Notis Global, Inc. The name change was effected through a parent/subsidiary short-form merger pursuant to Section 92A.180 of the Nevada Revised Statutes. Notis Global, Inc., the Company’s wholly-owned Nevada subsidiary formed solely for the purpose of the name change, was merged with and into the Company, with Notis Global, Inc. as the surviving entity. The merger had the effect of amending the Company’s Articles of Incorporation to reflect the new legal name of the Company. There were no other changes to the Company’s Articles of Incorporation. The Company’s Board of Directors approved the name-change. Notis Global, Inc., operates the business directly and through the utilization of three primary operating subsidiaries, as follows: ● EWSD I, LLC, a Delaware limited liability company that owns property in Colorado. ● Pueblo Agriculture Supply and Equipment, LLC, a Delaware limited liability company that was established to own extraction equipment. ● Shi Cooperative, LLC, a Colorado limited liability company that contracts with third-party farmers to cultivate hemp in, among other areas, Colorado, Nevada, and Oklahoma. ● San Diego Sunrise, LLC, a California corporation to hold San Diego, California dispensary operations. (As of June 30, 2016, the Company sold its interest in San Diego Sunrise, LLC.) ● Prescription Vending Machines, Inc., a California corporation, d/b/a Medicine Dispensing Systems in the State of California (“MDS”), which previously distributed our Medbox product and provided related consulting services. ● Vaporfection International, Inc., a Florida corporation through which we distributed our medical vaporizing products and accessories. (All the assets of which were sold during the three months ended March 31, 2016). ● Medbox Property Investments, Inc., a California corporation specializing in real property acquisitions and leases for dispensaries and cultivation centers. This corporation currently owns no real property. During December 2016 the Company’s Board of Directors and management completed a strategic shift and completely exited the vapor and medical cannabis dispensing line. (See Note 9) On April 15, 2016, at a special meeting of the stockholders of the Company, the stockholders of the Company holding a majority of the total shares of outstanding common stock (the “Common Stock”) of the Company voted to amend the Company’s Articles of Incorporation to increase the number of authorized shares of Common Stock from 400,000,000 to 10,000,000,000 (the “Certificate of Amendment”). The Certificate of Amendment was filed with the Nevada Secretary of State and was declared effective on April 18, 2016. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Going Concern The Condensed Consolidated Financial Statements were prepared on a going concern basis. The going concern basis assumes that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of business. During the three months ended March 31, 2017, the Company had a net loss from operations of approximately $10.2 million, negative cash flow from operations of $638,601 and negative working capital of $51.9 million. . During the year ended December 31, 2016, the Company had a net loss of approximately $17.7 million, negative cash flow from operations of $3.5 million and negative working capital of $38 million. The Company will need to raise capital in order to fund its operations. On September 22, 2016, the Company received notice of an Event of Default and Acceleration from one of its lenders regarding a Promissory Note issued on March 14, 2016. As of the date of this filing, the Company is in default on all notes outstanding. The Company is unable to predict the outcome of these matters, however, legal action taken by the Company’s lenders could have a material adverse effect on the financial condition, results of operations and/or cash flows of the Company and its ability to raise funds in the future. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the issuance of these financial statements. The ability to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan. The Condensed Consolidated Financial Statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Management’s plans include: The Company expects that the acquisition of EWSD, which owns a 320-acre farm in Pueblo, Colorado, will generate recurring revenues for the Company through farming hemp, extracting and selling CBD oil, and collecting fees from production related to extracting CBD oil for other farmers, while controlling the full production cycle to ensure consistent quality. Lastly, management is actively seeking additional financing over the next few months to fund operations. The Company will continue to execute on its business model by attempting to raise additional capital through the sales of debt or equity securities or other means. However, there is no guarantee that such financing will be available on terms acceptable to the Company, or at all. It is uncertain whether the Company can obtain financing to fund operating deficits until profitability is achieved. This need may be adversely impacted by: unavailability of financing, uncertain market conditions, the success of the crop growing season, the demand for CBD oil, the ability of the Company to obtain financing for the equipment and labor needed to cultivate hemp and extract the CBD oil, and adverse operating results. The outcome of these matters cannot be predicted at this time. On May 24, 2016, the Company received a notice from the OTC Markets Group, Inc. (“OTC Markets”) that the Company’s bid price was below $0.01 and that the Company did not meet the Standards for Continued Eligibility for OTCQB pursuant to OTC Markets’ Standards. If the bid price did not close at or above $0.01 for ten consecutive trading days by November 20, 2016, the Company would be moved to the OTC Pink marketplace. Additionally, on September 9, 2016, the Company received notice from the OTC that OTC Markets would move the Company’s listing from the OTCQB market to OTC Pink marketplace, if the Company did not file its Quarterly Report on Form 10-Q for the period ended June 30, 2016 by September 30, 2016. On or about October 1, 2016, the Company moved to the OTC Pink marketplace. These actions might also impact the Company’s ability to obtain funding. Basis of Presentation - Unaudited Interim Financial Information The accompanying unaudited interim condensed consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) with respect to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim condensed consolidated financial statements furnished reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s annual report on Form 10-K for the year ended December 31, 2016. Principles of Consolidation The Condensed Consolidated Financial Statements include the accounts of Notis Global, Inc. and its wholly-owned subsidiaries, as named in Note 1 above. All intercompany transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Critical accounting estimates are estimates for which (a) the nature of the estimate is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and (b) the impact of the estimate on financial condition or operating performance is material. The Company’s critical accounting estimates and assumptions affecting the financial statements were: (i) Assumption as a going concern (ii) Fair value of long-lived assets: (iii) Valuation allowance for deferred tax assets (iv) Estimates and assumptions used in valuation of equity instruments These significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to these estimates or assumptions, and certain estimates or assumptions are difficult to measure or value. Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience, and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly. Actual results could differ from those estimates. Discontinued Operations US GAAP requires the results of operations of a component of an equity that either has been disposed of or is classified as held for sale to be reported as discontinued operations in the Condensed Consolidated Financial Statements if the sale or disposition represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results . Concentrations of Credit Risk The Company maintains cash balances at several financial institutions that are insured by the Federal Deposit Insurance Corporation up to $250,000. The Company has not experienced any losses in such accounts and periodically evaluates the credit worthiness of the financial institutions and has determined the credit exposure to be negligible. Fair Value of Financial Instruments Pursuant to ASC No. 825, Financial Instruments Embedded derivative – The Company’s convertible notes payable include embedded features that require bifurcation due to a reset provision and are accounted for as a separate embedded derivative (see Note 5). The Company estimated the fair value of the conversion feature derivatives embedded in the convertible debentures based on a Monte Carlo Simulation model (“MCS”). The MCS model was used to simulate the stock price of the Company from the valuation date through to the maturity date of the related debenture and to better estimate the fair value of the derivative liability due to the complex nature of the convertible debentures and embedded instruments. Management believes that the use of the MCS model compared to the Black-Scholes-Merton model as previously used would provide a better estimate of the fair value of these instruments The Company valued these embedded derivatives using a “with-and-without method,” where the value of the Convertible Debentures including the embedded derivatives, is defined as the “with”, and the value of the Convertible Debentures excluding the embedded derivatives, is defined as the “without.” This method estimates the value of the embedded derivatives by observing the difference between the value of the Convertible Debentures with the embedded derivatives and the value of the Convertible Debentures without the embedded derivatives. The Company believes the “with-and-without method” results in a measurement that is more representative of the fair value of the embedded derivatives. For each simulation path, the Company used the Geometric Brownian Motion (“GBM”) model to determine future stock prices at the maturity date. The inputs utilized in the application of the GBM model included a starting stock price, an expected term of each debenture remaining from the valuation date to maturity, an estimated volatility, and a risk-free rate. For the three months ended March 31, 2017, the Company estimated the fair value of the conversion feature derivatives embedded in the convertible debentures based on an internally calculated adjustment to the MCS valuation determined at December 31, 2016. This adjustment took into consideration the changes in the assumptions, such as market value and expected volatility of the Common Stock and the discount rate used in the March 31, 2017, valuation as compared to December 31, 2016. The Company believes this methodology results in a reasonable fair value of the embedded derivatives for the interim period. Warrants The Company reexamined the determination made as of December 31, 2015, that it did not have sufficient authorized shares available for all of their outstanding warrants to be classified in equity at March 31, 2016 and concluded there still were insufficient authorized shares (Note 7). Therefore, the Company recognized a warrant liability as of December 31, 2016. The Company estimated the fair value of the warrant liability based on the Black-Scholes-Merton model. The key assumptions used consist of the price of the Company’s stock, a risk-free interest rate based on the average yield of a one to three-year Treasury note (based on remaining term of the related warrants) and expected volatility of the Common Stock over the remaining life of the warrants. A three-tier fair value hierarchy is used to prioritize the inputs in measuring fair value as follows: Level 1 Quoted prices in active markets for identical assets or liabilities. Level 2 Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable, either directly or indirectly. Level 3 Significant unobservable inputs that cannot be corroborated by market data. The assets or liabilities’ fair value measurement within the fair value hierarchy is based upon the lowest level of any input that is significant to the fair value measurement. The following table provides a summary of the relevant assets and liabilities that are measured at fair value on a recurring basis: March 31, 2017 Total Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) Quoted Prices for Similar Assets or Liabilities in Active Markets (Level 2) Significant Unobservable Inputs (Level 3) Warrant liability 2,994,260 - - 2,994,260 Derivative liability 17,996,473 - - 17,996,473 Total liabilities $ 20,990,733 $ - $ - $ 20,990,733 December 31, 2016 Total Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) Quoted Prices for Similar Assets or Liabilities in Active Markets (Level 2) Significant Unobservable Inputs (Level 3) Warrant liability 14,430 - - 14,430 Derivative liability 15,635,947 - - 15,635,947 Total liabilities $ 15,650,377 $ - $ - $ 15,650,377 The following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial liabilities that are measured at fair value on a recurring basis: For the three months ended March 31, 2017 Total January 1, 2017 15,650,377 Initial recognition of conversion feature 3,016,821 Initial recognition of warrant liability 2,979,231 Change in fair value of conversion feature (656,295 ) Change in fair value of warrant liability 599 Ending Balance, March 31, 2017 $ 20,990,733 Revenue Recognition Revenues from Cannabidiol oil product The Company recognizes revenue from the sale of Cannabidiol oil products (“CBD oil”) upon shipment, when title passes, and when collectability is reasonably assured. Cost of Revenue Cost of revenue consists primarily of expenses associated with the delivery and distribution of the Company’s products and services. Under the Company’s prior business model, the Company only began capitalizing costs when it obtained a license and a site for operation of a customer dispensary or cultivation center. The previously capitalized costs are charged to cost of revenue in the same period that the associated revenue is earned. In the case where it is determined that previously inventoried costs are in excess of the projected net realizable value of the sale of the licenses, then the excess cost above net realizable value is written off to cost of revenues. Cost of revenues also includes the rent expense on master leases held in the Company’s name, which are subleased to the Company’s operators. In addition, cost of revenue related to the Company’s vaporizer line of products consists of direct procurement cost of the products along with costs associated with order fulfillment, shipping, inventory storage and inventory management costs. Cash and cash equivalents The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. As of March 31, 2017 and December 31, 2016, the Company held no cash equivalents. The Company’s policy is to place its cash with high credit quality financial instruments and institutions and limit the amounts invested with any one financial institution or in any type of instrument. Deposits held with banks may exceed the amount of insurance provided on such deposits. The Company has not experienced any losses on its deposits of cash. Accounts Receivable and Allowances Accounts receivable are recorded at the invoiced amount and are not interest bearing. The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The Company makes ongoing assumptions relating to the collectability of its accounts receivable in its calculation of the allowance for doubtful accounts. In determining the amount of the allowance, the Company makes judgments about the creditworthiness of customers based on ongoing credit evaluations and assesses current economic trends affecting its customers that might impact the level of credit losses in the future and result in different rates of bad debts than previously seen. The Company also considers its historical level of credit losses. As of March 31, 2017 and December 31, 2016, there was an allowance for doubtful accounts of $0. Inventory The Company utilizes lower of standard cost or net realizable value method. During the three months ended March 31, 2017 the Company recorded an impairment of $0 that was recorded to cost of revenues. Capitalized agricultural costs Capitalized agricultural costs consists of pre-harvest agricultural costs, including irrigation, fertilization, seeding, laboring, other ongoing crop and land maintenance activities and work-in-progress activities. All capitalized agricultural costs are accumulated and capitalized as incurred. The Company has reflected the capitalized agriculture costs as a current asset as the growing cycle of the crops are estimated to be six months to a year. Basic and Diluted Net Income/Loss Per Share Basic net loss per share of Common Stock is computed by dividing net loss attributable to common stockholders by the weighted-average number of shares of Common Stock outstanding during the period. Diluted net loss per share of Common Stock is determined using the weighted-average number of shares of Common Stock outstanding during the period, adjusted for the dilutive effect of Common Stock equivalents. In periods when losses are reported, which is the case for the three months ended March 31, 2017 presented in these Condensed Consolidated Financial Statements, the weighted-average number of shares of Common Stock outstanding excludes Common Stock equivalents because their inclusion would be anti-dilutive. As of March 31, 2016 the Company had approximately 50,119,000 warrants to purchase common stock outstanding as of March 31, 2016, which were not included in the computation of diluted loss per share, as based on their exercise prices they would all have an anti-dilutive effect on net loss per share. The Company also had approximately $7,661,000 in convertible debentures outstanding at March 31, 2016, that are convertible at the holders’ option at a conversion price of the lower of $0.75 or 51% to 60% of either the lowest trading price or the VWAP over the last 20 to 30 days prior to conversion (subject to reset upon a future dilutive financing), whose underlying shares resulted in an additional 5,746,769,206 dilutive shares being included in the computation of diluted net income per share. The Company had the following Common Stock equivalents at March 31, 2017: March 31, 2017 Warrants 10,065,757,748 Convertible notes – related party 10,500,000 Convertible notes 192,715,257,452 Totals 202,791,515,200 Property and Equipment Property and equipment are recorded at cost. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes. The Company uses accelerated depreciation methods for tax purposes where appropriate. The estimated useful lives for significant property and equipment categories are as follows: Vehicles 5 years Furniture and Fixtures 3 - 5 years Office equipment 3 years Machinery 2 years Buildings 10 - 39 years Income Taxes The Company accounts for income taxes under the asset and liability method. The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the Condensed Consolidated Financial Statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The components of the deferred tax assets and liabilities are classified as current and non-current based on their characteristics. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. In addition, the Company’s management performs an evaluation of all uncertain income tax positions taken or expected to be taken in the course of preparing the Company’s income tax returns to determine whether the income tax positions meet a “more likely than not” standard of being sustained under examination by the applicable taxing authorities. This evaluation is required to be performed for all open tax years, as defined by the various statutes of limitations, for federal and state purposes. Commitments and Contingencies Certain conditions may exist as of the date the Condensed Consolidated Financial Statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Condensed Consolidated Financial Statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed. The Company accrues all legal costs expected to be incurred per event. For legal matters covered by insurance, the Company accrues all legal costs expected to be incurred per event up to the amount of the deductible. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers,” which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for annual reporting periods for public business entities beginning after December 15, 2017, including interim periods within that reporting period. The new standard permits the use of either the retrospective or cumulative effect transition method. The Company is currently evaluating the effect that ASU 2014-09 will have on its financial statements and related disclosures. The Company has not yet selected a transition method nor determined the effect of the standard on its ongoing financial reporting. In February 2016, the FASB issued “Leases (Topic 842)” (ASU 2016-02). This update amends leasing accounting requirements. The most significant change will result in the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under current guidance. The new guidance will also require significant additional disclosures about the amount, timing, and uncertainty of cash flows from leases. ASU 2016-02 is effective for fiscal years and interim periods beginning after December 15, 2018, which for the Company is December 31, 2018, the first day of its 2019 fiscal year. Upon adoption, entities are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. Early adoption is permitted, and a number of optional practical expedients may be elected to simplify the impact of adoption. The Company is currently evaluating the impact of adopting this guidance. The overall impact is that assets and liabilities arising from leases are expected to increase based on the present value of remaining estimated lease payments at the time of adoption. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting Compensation – Stock Compensation In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” Under ASU 2016-02, lessees will, among other things, require lessees to recognize a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors; however, certain changes were made to align, where necessary, lessor accounting with the lessee accounting model and ASC Topic 606, “Revenue from Contracts with Customers.” ASU 2016-02 will be effective for us on January 1, 2019 and initially required transition using a modified retrospective approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. In July 2018, the FASB issued ASU 2018-11 , “Leases (Topic 842) - Targeted Improvements,” which, among other things, provides an additional transition method that would allow entities to not apply the guidance in ASU 2016-02 in the comparative periods presented in the financial statements and instead recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. In December 2018, the FASB also issued ASU 2018-20, “Leases (Topic 842) - Narrow-Scope Improvements for Lessors,” which provides for certain policy elections and changes lessor accounting for sales and similar taxes and certain lessor costs. As of January 1, 2019, the Company adopted ASU 2016-02 and has recorded a right-of-use asset and lease liability on the balance sheet for its operating leases. We elected to apply certain practical expedients provided under ASU 2016-02 whereby we will not reassess(i) whether any expired or existing contracts are or contain leases, (ii) the lease classification for any expired or existing leases and (iii) initial direct costs for any existing leases. We also do not expect to apply the recognition requirements of ASU 2016-02 to any short-term leases (as defined by related accounting guidance). We expect to account for lease and non-lease components separately because such amounts are readily determinable under our lease contracts and because we expect this election will result in a lower impact on our balance sheet. In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory”, which eliminates the exception that prohibits the recognition of current and deferred income tax effects for intra-entity transfers of assets other than inventory until the asset has been sold to an outside party. The updated guidance is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption of the update is permitted. The Company is currently evaluating the impact of the new standard. In April 2016, the FASB issued ASU No. 2016-10, “Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing” (topic 606). In March 2016, the FASB issued ASU No. 2016-08, “Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net)” (topic 606). These amendments provide additional clarification and implementation guidance on the previously issued ASU 2014-09, “Revenue from Contracts with Customers”. The amendments in ASU 2016-10 provide clarifying guidance on materiality of performance obligations; evaluating distinct performance obligations; treatment of shipping and handling costs; and determining whether an entity’s promise to grant a license provides a customer with either a right to use an entity’s intellectual property or a right to access an entity’s intellectual property. The amendments in ASU 2016-08 clarify how an entity should identify the specified good or service for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements. The adoption of ASU 2016-10 and ASU 2016-08 is to coincide with an entity’s adoption of ASU 2014-09, which we adopted for interim and annual reporting periods beginning after December 15, 2017. The Company is currently evaluating the impact of adopting this guidance. In May 2016, the FASB issued ASU No. 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients”, which narrowly amended the revenue recognition guidance regarding collectability, noncash consideration, presentation of sales tax and transition and is effective during the same period as ASU 2014-09. The Company is currently evaluating the impact of adopting this guidance. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”). ASU 2016-15 will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017. The new standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case it would be required to apply the amendments prospectively as of the earliest date practicable. The Company is currently evaluating the impact of adopting this guidance. In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory”, which eliminates the exception that prohibits the recognition of current and deferred income tax effects for intra-entity transfers of assets other than inventory until the asset has been sold to an outside party. The updated guidance is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption of the update is permitted. The Company is currently evaluating the impact of the new standard. In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230)”, requiring that the statement of cash flows explain the change in the total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. This guidance is effective for fiscal years, and interim reporting periods therein, beginning after December 15, 2017 with early adoption permitted. The provisions of this guidance are to be applied using a retrospective approach which requires application of the guidance for all periods presented. The Company is currently evaluating the impact of adopting this guidance. In July 2017, the FASB issued ASU 2017-11, “Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception”. Part I of this update addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instru |
Inventory and Capitalized Agric
Inventory and Capitalized Agricultural Costs | 3 Months Ended |
Mar. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Inventory and Capitalized Agricultural Costs | NOTE 3 – INVENTORY AND CAPITALIZED AGRICULTURAL COSTS Inventories and capitalized agricultural costs are generally kept for a short period of time. Finished goods Growing costs Biomass Raw materials Capitalized agricultural Costs at March 31, 2017 and December 31, 2016 consisted of the following: March 31, 2017 December 31, 2016 Biomass 288,003 160,131 Less Discontinued Operations - - Total inventory, net $ 288,003 $ 160,131 |
PCH Investment
PCH Investment | 3 Months Ended |
Mar. 31, 2017 | |
Investments Schedule [Abstract] | |
PCH Investment | NOTE 4 – PCH INVESTMENT Effective as of March 21, 2017, through a series of related transactions, Notis intended to acquire, indirectly, an aggregate of 459,999 of the then-issued and outstanding shares of capital stock (the “PCH To-Be-Purchased Shares”) of PCH Investment Group, Inc., a California corporation (“PCH”) for a proposed purchase price of $300,000.00 in cash and the proposed issuance of shares of Common Stock. The PCH To-Be-Purchased Shares represented 51% of the outstanding capital stock of PCH. In connection with the Company’s then-intended acquisition of the PCH To-Be-Purchased Shares, the Company (or its affiliates) was also to be granted an indirect option to acquire the remaining 49% (the “PCH Optioned Shares”) of the capital stock of PCH. The option was to expire on February 10, 2019 (the “PCH Optioned Shares Expiry Date”). Located in San Diego, California, PCH was a management services business that focused on the management of cannabis production and manufacturing businesses. On November 1, 2016, PCH entered into a Management Services Agreement (the “PCH Management Agreement”) with California Cannabis Group (“CalCan”) and Devilish Delights, Inc. (“DDI”), both of which then were California nonprofit corporations in the cannabis production and manufacturing business (“their business”). CalCan and Mr. Pyatt represented that CalCan was then licensed by the City of San Diego, California, to cultivate cannabis and manufacture cannabis products, as well as to sell, at wholesale, the cultivated and manufactured products at wholesale to legally operated medical marijuana dispensaries. The PCH Management Agreement provided that PCH was responsible for the day-to-day operations and business activities of their business. In that context, PCH was to be responsible for the payment of all operating expenses of their business (including the rent and related expenditures for CalCan and DDI) from the revenue generated by their business, or on an out-of- pocket basis if the revenue should be insufficient. In exchange for PCH’s services and payment obligations, PCH was to be entitled to 75% of the gross profits of their business. The PCH Management Agreement did not provide for any gross profit milestone during its first 12 months; thereafter, it provided for an annual $8 million gross profit milestone, with any amount in excess thereof to be carried forward to the next annual period. In the event that, during any annual period, the gross profit thereunder was less than $8 million (including any carry-forward amounts), then, on a one- time basis, PCH would have been permitted to carry-forward such deficit to the following annual period. If, in that following annual period, the gross profit was to have exceeded $6 million, then PCH would have been entitled to an additional “one-time basis” carry-forward of a subsequent deficit. The term of the PCH Management Agreement was for five years, subject to two extensions, each for an additional five-year period, in all cases subject to earlier termination for an uncured material breach by PCH of its obligations thereunder. Mr. Pyatt, the Company’s then- current Chief Operating Officer and Senior Vice President, Government Affairs, was also then a member of the Board of Directors of CalCan and DDI. Pursuant to a Securities Purchase Agreement, that was made and entered into as of March 16, 2017 (five days before the presumed closing of the transaction; the “SPA”), “PASE” was to have acquired the PCH To-Be-Purchased Shares from the three PCH shareholders: (i) Mystic, LLC, a California limited liability company that Mr. Goh, the Company’s then-Chief Executive Officer, formed and controlled for his investments in cannabis projects, (ii) Mr. Pyatt, and (iii) Mr. Kaller, then the general manager of PCH (collectively, the “PCH Shareholders”). As a condition to the Lender entering into the Note Purchase Agreement and the PCH-Related Note (both as noted below) and providing any additional funding to the Company in connection with its intended acquisition of the PCH To-Be-Purchased Shares, the Board ratified the forms of employment agreements for Mr. Goh, as the Company’s then-Chief Executive Officer, and for Clint Pyatt, as the Company’s then-prospective President. If the agreements became effective, and following the second anniversary thereof, the terms were to have become “at- will.” In addition to payment of a base salary, the agreements provided for certain cash, option, and equity bonuses, in each case to become subject both to each individual and to the Company meeting certain performance goals to be acknowledged by them and to be approved by a disinterested majority of the Board. Due to the nature of the above-described intended transaction, and the related parties involved with PCH, the Company formed a special committee of its Board to consider all of the aspects thereof, as well as the related financing proposed to be provided by the Lender. The special committee consisted of three of the four directors: Ambassador Ned L. Siegel, Mitch Lowe, and Manual Flores. In the context of the special committee’s charge, it engaged an otherwise independent investment banking firm (the “Banker”) to analyze the potential acquisition of the PCH To-Be-Purchased Shares through the SPA (noted above) and the Stock Purchase Option Agreement (the “PCH Option Agreement”; the parties to which are PASE, PCH, the PCH Shareholders, as noted below), the related financing agreements (all as noted below), other related business and financial arrangements, and the above-referenced employment agreements. After the Banker completed its full review of those agreements and its own competitive analysis, it provided its opinion that the consideration to be paid in connection with the acquisition of the PCH To- Be-Purchased Shares and the terms of the PCH-Related Note were fair to the Company from a financial point of view. Following the Banker’s presentation of its analysis and opinion, and the special committee’s own analysis, the special committee unanimously recommended to the full Board that all of such transactions should be approved and that the Company could consummate the acquisition of the PCH To-Be-Purchased Shares, accept the option to acquire the PCH Optioned Shares, enter into the PCH-Related Note, the documents ancillary thereto, and the Employment Agreements. In connection with the Company’s intended acquisition of the PCH To-Be-Purchased Shares and the Company’s intended option to acquire the PCH Optioned Shares, PASE, EWSD, PCH, and the Company entered into a Convertible Note Purchase Agreement (the “Note Purchase Agreement”) with a third-party lender (the “PCH Lender”). Concurrently, PASE and the Company (with EWSD and PCH as co-obligors) entered into a related 10% Senior Secured Convertible Promissory Note (the “PCH-Related Note”) in favor of the PCH Lender. The initial principal sum under the PCH-Related Note was $1,000,000.00 and it bears interest at the rate of 10% per annum. Principal and interest are subject to certain conversion rights in favor of the PCH Lender. So long as any principal is outstanding or any interest remains accrued, but unpaid, at any time and from time to time, at the option of the PCH Lender, any or all of such amounts may be converted into shares of Common Stock. Notwithstanding such conversion right, and except in the circumstance described in the next sentence, the PCH Lender may not exercise its conversion rights if, in so doing, it would then own more than 4.99% of the Company’s issued and outstanding shares of Common Stock. However, upon not less than 61 days’ notice, the PCH Lender may increase its limitation percentage to a maximum of 9.99%. The PCH Lender’s conversion price is fixed at $0.0001 per share. Principal and accrued interest may be pre-paid from time to time or at any time, subject to 10 days’ written notice to the PCH Lender. Any prepayment of principal or interest shall be increased to be at the rate of 130% of the amount so to be prepaid and, during the 10-day notice period, the PCH Lender may exercise its conversion rights in respect of any or all of the amounts otherwise to be prepaid. In a series of other loan transactions prior to the intended closing of the acquisition of the PCH To-Be-Purchased Shares, a different third party lender (the “Ongoing Lender”) had lent to the Company, in five separate tranches, an aggregate amount of approximately $414,000 (the “Pre-acquisition Loans”), that, in turn, the Company lent to PCH to use for its working capital obligations. Upon the purported closing of the acquisition of the PCH To-Be-Purchased Shares and, pursuant to the terms of the PCH-Related Note, the PCH Lender lent to the Company (i) approximately $86,000, that, in turn, the Company lent to PCH to use for its additional working capital obligations, (ii) $300,000 for the purported acquisition of the PCH To-Be-Purchased Shares, and (iii) $90,000 for various transaction-related fees and expenses. Immediately subsequent to the closing of the purported acquisition of the PCH To-Be-Purchased Shares, the PCH Lender lent to the Company (x) approximately $170,000 for the Company’s operational obligations and (y) approximately $114,000 for the Company partially to repay an equivalent amount of the Pre-acquisition Loans. In connection with the Pre-acquisition Loans and the PCH-Related Note, the makers and co-obligors thereof entered into an Amended and Restated Security and Pledge Agreement in favor of the Lender, pursuant to which such parties, jointly and severally, granted to the Lender a security interest in all, or substantially all, of their respective property. Further, PCH entered into a Guarantee in favor of the PCH Lender in respect of the other parties’ obligations under the PCH-Related Note. PCH’s obligation to the PCH Lender under these agreements is limited to a maximum of $500,000. As of the intended closing of the acquisition of the PCH To-Be-Purchased Shares, the Company paid $300,000 to the PCH Shareholders. If that transaction had closed, the Company would also have become obligated to issue to the PCH Shareholders 1,500,000,000 shares (the “Purchase Price Shares”) of Common Stock. That number of issuable shares was to be subject to certain provisions detailed in the PCH-Related Note, which are summarized herein. Notwithstanding the number of issuable shares referenced above, the number of issued Purchase Price Shares was to have been equal to 15% of the then-issued and outstanding shares of Common Stock at the time that the Company exercised its option to acquire the PCH Optioned Shares under the PCH Option Agreement. Further, in the event that the Company were to have issued additional equity securities prior to the date on which it in fact had issued the Purchase Price Shares at a price per share that was less than the value referenced above, the PCH Shareholders would have been entitled to “full ratchet” anti-dilution protection in the calculation of the number of Purchase Price Shares to be issued (with the exception of a recapitalization by the Lender to reduce the Company’s overall dilution). If the Company did not exercise the intended option to acquire the PCH Optioned Shares prior to PCH Optioned Shares Expiry Date, the PCH Shareholders would have had the right to reacquire the PCH To-Be-Purchased Shares from the Company for the same cash consideration ($300,000.00) that was to have been paid to them for those shares. Further, if the Company were to be in default of its material obligations under the SPA, or if PASE were the subject of any bankruptcy proceedings, then the PCH Shareholders have the same reacquisition rights noted in the preceding sentence. Pursuant the PCH Option Agreement, PASE was granted the option to purchase all 49%, but not less than all 49%, of the PCH Optioned Shares. The exercise price for the PCH Optioned Shares is an amount equivalent to five times PCH’s “EBITDA” for the 12-calendar month period, on a look-back basis, that concludes on the date of exercise of the Option, less $10.00 (which was the purchase price of the option). The calculation of the 12-month EBITDA was to be determined by PASE’s (or its) then-currently engaged independent auditors. If the Company were to exercise the option prior to the first anniversary of the closing of the acquisition of the PCH To-Be-Purchased Shares, then the exercise price for the PCH Optioned Shares was to be based on the EBITDA for the entire 12-calendar month period that commenced with the effective date of the PCH Option Agreement. PCH Investment Group, Inc. – San Diego Project Termination On March 27, 2017, the Company filed a Current Report on Form 8-K to announce the above-described series of events. Subsequently, it became clear to the Company that the PCH Parties failed to make key closing deliveries, including, without limitation, actual transfer of the PCH To-Be-Purchased Shares, the PCH Lease (as defined below) and related marijuana licenses. Thereafter, the parties entered into litigation and eventual settlement as described below. The Settlement Agreement and Mutual General Release The Company, PACE, and EWSD (collectively, the “Notis Parties”) and PCH, Messrs. Pyatt, Kaller, and Goh (solely in connection with his status as an equity holder of PCH, collectively, the “PCH Individuals”; and, with PCH, collectively, the “PCH Parties”) entered into a Settlement Agreement and Mutual General Release, with an effective date of August 16, 2017 (the “Settlement Agreement”), inter alia, to “unwind” the SPA’s intended transactions, to confirm that the transactions never officially closed, and to enter into a series of mutual releases with such parties. Some of the salient recitals from the Settlement Agreement are: 1. One or both of the PCH Lender and the Ongoing Lender (collectively, the “Notis Lenders”) and PCH have certain disagreements in respect of their respective rights and obligations in and related to certain of the SPA and related documents; 2. Some or all of the Notis Parties and the Notis Lenders, on the one hand, and PCH and the PCH Individuals, on the other hand, have certain disagreements in respect of the conduct of PCH’s business; 3. Some or all of the Notis Parties and PCH have certain disagreements in respect of the ownership and possessory right of certain of the furniture and equipment utilized by PCH on its own behalf or on behalf of others in respect of the conduct of PCH’s business located at 9212 Mira Este Court, San Diego, California (the location for the “PCH Lease”); 4. The Notis Parties and the PCH Parties have certain disagreements in respect of their respective rights and obligations in and related to the SPA; 5. PCH and Trava LLC, a Florida limited liability company and a material lender to PCH, have certain disagreements in respect of their respective rights and obligations in and related to the PCH / Trava Master Service Agreement (as defined in the Settlement Agreement); 6. Notis and Mr. Pyatt have certain disagreements in respect of their respective rights and obligations in and related to the Pyatt Employment Agreement (as defined in the Settlement Agreement), as manifested in part by Mr. Pyatt’s filing of the Pyatt Labor Complaint (as defined in the Settlement Agreement); 7. The Notis Parties and the PCH Parties have certain disagreements in respect of the Notis Parties and the PCH Parties’ respective conduct in connection with PCH’s rights and obligations in and related to the PCH / SDO Master Service Agreement (as defined in the Settlement Agreement); 8. The Notis Lenders and PCH have certain disagreements in respect of the PCH’s conduct in connection with PCH’s rights and obligation in and related to certain of the Notis Financing Documents (as defined in the Settlement Agreement); 9. The Notis Lenders and PCH have certain disagreements in respect of the ownership and possessory rights of certain of the Equipment (as defined in the Settlement Agreement); and 10. Some or all of the Notis Parties and the PCH Individuals, among others, have certain disagreements in respect of the operation of the PCH Shareholder/Buy-Sell Agreement (as defined in the Settlement Agreement). See, also, Change of Officers and Directors in connection with the severance by each of Messrs. Pyatt and Goh of their respective employment and directorship relationships with us. In connection with the PCH investment, the Company recorded $799,910 as a loss in connection with the failed and unconsummated business combination for the period ended March 31, 2017. The $799,910 is the amount the Company invested in the PCH transaction. |
Convertible Notes Payable and D
Convertible Notes Payable and Derivative Liability | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Convertible Notes Payable and Derivative Liability | NOTE 5 – CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITY Convertible notes payable consists of: March 31, 2017 (unaudited) December 31, 2016 Investor #1 $ 13,990,304 $ 6,642,745 Investor #2 2,089,133 1,857,146 Investor #3 293,009 231,142 Investor #4 1,500,000 - 17,872,446 8,731,033 Less discounts (2,375,356 ) (85,591 ) Less current maturities 15,497,090 8,645,442 Convertible notes payable, net of current maturities $ - $ - Investor #1 During the year ended December 31, 2016 the Company issued 30 convertible notes to third-party lenders totaling $9,700,170. The Company received cash of $2,695,000 and original issue discounts of $119,737. The lender also paid $161,401 on advancements on fixed assets and consolidated principal and interest of $6,818,744. These convertible notes accrue interest at a rate of 10% per annum and mature with interest and principal both due between July 13, 2016 through September 9, 2017. This note is secured by the Company’s assets. The convertible notes convert at a fixed rate of $0.75 or a 49% to 40% discount with a lookback of 30 trading days. Due to the fact that these convertible notes have an option to convert at a variable amount, they are subject to derivative liability treatment. The Company has applied ASC 815, due to the potential for settlement in a variable quantity of shares. During the three months ended March 31, 2017 the Company issued 13 convertible notes to third-party lenders totaling $711,957. The Company received cash of $261,000, $37,500 paid for vendor liabilities, and paid $413,457 from the PCH-Related Note. These convertible notes accrue interest at a rate of 10% per annum and mature with interest and principal both due between February 2017 through February 2018. The notes convert at a fixed rate of $0.0001 or a 50% discount with a lookback of 30 trading days. Due to the fact that these convertible notes have an option to convert at a variable amount, they are subject to derivative liability treatment. The Company has applied ASC 815, due to the potential for settlement in a variable quantity of shares. The conversion feature of Investor #1’s convertible notes during the three months ended March 31, 2017, gave rise to a derivative liability of $845,342, $230,901 of which was recorded as a debt discount. The debt discount is charged to accretion of debt discount and issuance cost ratably over the term of the convertible note. During the three months ended March 31, 2017 the Company went into default on all of Investor #1’s convertible notes. These notes now accrue interest at a rate of 24% per annum, a late fee of 18% on interest outstanding compounding quarterly and the principal increases by 50%-30%. The increase of principal of $3,296,010 was recorded to interest expense. Upon default, 18 promissory notes held by Investor #1 became convertible. The Company reclassed $3,691,199 from notes payable to convertible notes payable. During the three months ended March 31, 2017, the Company repaid $363,547 in principal and $37,148 in interest. Investor #2 During the year ended December 31, 2016, the Company issued two convertible notes to third-party lenders totaling $278,000. The Company received cash of $235,000 and the lender paid $43,000 on behalf of the Company for vendor liabilities. These convertible notes accrue interest at a rate of 5% per annum and mature with interest and principal both due between July 13, 2016 through April 30, 2017. This note is secured by the Company’s assets. The convertible notes convert at a fixed rate of $0.75 or a 49% discount with a lookback of 20 trading days. Due to the fact that these convertible notes have an option to convert at a variable amount, they are subject to derivative liability treatment. The Company has applied ASC 815, due to the potential for settlement in a variable quantity of shares. During the three months ended March 31, 2017, the Company went into default on all of Investor #2’s convertible notes. These notes now accrue interest at a rate of 24% per annum and a late fee of 18% on interest outstanding compounding quarterly. The default caused a derivative expense of $549,535. Upon default, the promissory note held by Investor #2 became convertible. The Company reclassed $275,000 from notes payable to convertible notes payable. Investor #3 During the year ended December 31, 2016, the Company issued two convertible notes to third-party lenders totaling $282,500. The Company received cash of $236,500, original issue discounts of $34,750 and the lender paid $11,250 on behalf of the Company for vendor liabilities. These convertible notes accrue interest at a rate of 10% per annum and mature with interest and principal both due between September 14, 2016 through August 20, 2017. This note is secured by the Company’s assets. These notes are convertible upon default at a rate of $0.75 or a 49% discount with a lookback of 30 trading days. Due to the fact that these notes have an option to convert at a variable amount upon default, they are subject to derivative liability treatment. The Company has applied ASC 815, due to the potential for settlement in a variable quantity of shares. During the three months ended March 31, 2017 Investor #3 notes were increased by $61,867. Investor #4 During the three months ended March 31, 2017, the Company issued one convertible note to third-party lenders totaling $1,000,000. The Company received cash of $1,000,000. These convertible note accrue interest at a rate of 10% per annum and mature with interest and principal both due between March 15, 2018. This note is secured by the Company’s assets. The note convert at a fixed rate of $0.0001 or a 50% discount with a lookback of 30 trading days. Due to the fact that these convertible note have an option to convert at a variable amount, they are subject to derivative liability treatment. The Company has applied ASC 815, due to the potential for settlement in a variable quantity of shares. The conversion feature of Investor #4’s note during the three months ended March 31, 2017, gave rise to a derivative liability of $1,621,944. In addition, the Company issued warrants to purchase 10,000,000,000 shares of common stock. The warrant entitles the holder to purchase shares of Common Stock at a purchase price of $0.0001 per share for a period of four years from the issue date. The Company recorded a $2,979,230 debt discount relating to the warrants issued to the investor. The debt discounts are charged to accretion of debt discount and issuance cost ratably over the term of the convertible note. During the three months ended March 31, 2017, the Company went into default on the Investor #4 convertible note. This note now accrue interest at a rate of 24% per annum, a late fee of 18% on interest outstanding compounding quarterly and the principal increases by 50%. The increase of principal of $500,000 was recorded to interest expense. |
Notes Payable
Notes Payable | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Notes Payable | NOTE 6 – NOTES PAYABLE Notes payable consists of: March 31, 2017 (unaudited) December 31, 2016 Southwest Farms $ 3,580,016 $ 3,590,241 East West Secured Development 491,594 503,031 Investor #1 7,500 3,691,200 Investor #2 - 275,000 4,079,110 8,059,472 Less discounts - (598,721 ) 7,460,751 Less current maturities 4,079,110 3,367,479 Notes payable, net of current maturities $ - $ 4,093,272 Southwest Farms During the three months ended March 31, 2017 the Company repaid $10,225 in principal. East West Secured Development During the three months ended March 31, 2017 the Company repaid $11,437 in principal. Investor #1 During the year ended December 31, 2016, the Company issued 18 notes to third-party lenders totaling $3,691,199. The Company received cash of $1,095,741, original issue discounts of $996,199 and the lender paid $145,000 on behalf of the Company for vendor liabilities. These notes accrue interest at a rate between 5% to 10% per annum and mature with interest and principal both due between December 12, 2016 through November 18, 2017. This note is secured by the Company’s assets. These notes are convertible upon default at a rate of $0.75 or a 40% discount with a lookback of 20 trading days. During the three months ended March 31, 2017, the Company went into default on all of Investor #1’s notes. The notes now accrue interest at a rate of 24% per annum. Upon default, 18 promissory notes held by Investor #1 became convertible. The Company reclassed $3,691,199 from notes payable to convertible notes payable. Investor #2 During the three months ended March 31, 2017, the Company went into default on all of Investor #2’s notes. The notes now accrue interest at a rate of 24% per annum. Upon default, the promissory note held by Investor #2 became convertible. The Company reclassed $275,000 from notes payable to convertible notes payable. |
Stockholders' Deficit
Stockholders' Deficit | 3 Months Ended |
Mar. 31, 2017 | |
Equity [Abstract] | |
Stockholders' Deficit | NOTE 7 – Stockholders’ Deficit Preferred Stock The Series A Preferred Stock has special voting rights when voting as a class with the Common Stock as follows: (i) the holders of Series A Preferred Stock shall have such number of votes as is determined by multiplying (a) the number of shares of Series A Preferred Stock held by such holder, (b) the number of issued and outstanding shares of the Corporation’s Series A Preferred Stock and Common Stock (collectively, the “Common Stock”) on a Fully-Diluted Basis (as hereinafter defined), as of the record date for the vote, or, if no such record date is established, as of the date such vote is taken or any written consent of stockholders is solicited, and (c) 0.00000025; and (ii) the holders of Common Stock shall have one vote per share of Common Stock held as of such date. “Fully-Diluted Basis” mean that the total number of issued and outstanding shares of Common Stock shall be calculated to include (a) the shares of Common Stock issuable upon exercise and/or conversion of all of the following securities (collectively, “Common Stock Equivalents”): all outstanding (a) securities convertible into or exchangeable for Common Stock, whether or not then convertible or exchangeable (collectively, “Convertible Securities”), (b) subscriptions, rights, options and warrants to purchase shares of Common Stock, whether or not then exercisable (collectively, “Options”), and (c) securities convertible into or exchangeable or exercisable for Options or Convertible Securities and any such underlying Options and/or Convertible Securities. As of March 31, 2017 and 2016, there were no shares of Series A Preferred Stock outstanding. Common Stock On January 20, 2017, the Company issued 2,000,000 shares of Common Stock to in connection with the settlement of the Crystal v. Medbox Share-based awards, restricted stock and restricted stock units (“RSUs”) The Board resolved that, beginning with the fourth calendar quarter of 2015, the Company shall pay each member of the Board, who is not also then an employee of the Company, for each calendar quarter during which such member continues to serve on the Board, compensation in the amount of $15,000 in cash and 325,000 shares of Common Stock. A summary of the activity related to RSUs for the three months ended March 31, 2017 is presented below: Restricted stock units (RSUs) Total shares Grant date fair value RSUs non-vested at January 1, 2017 7,142,856 $ 0.51 - $0.007 RSUs granted 250,975,000 $ 0.0002 - $0.0003 RSUs vested (4,546,429 ) $ 0.0003 - $0.0007 RSUs forfeited - $ - RSUs non-vested March 31, 2017 253,571,427 $ 0.0002-$0.0007 A summary of the expense related to restricted stock, RSUs and stock option awards for the three months ended March 31, 2017 is presented below: Three months ended March 31, 2017 RSUs $ 54,776 Total $ 54,776 Warrant Activities The Company applied fair value accounting for all share-based payments awards. The fair value of each warrant granted is estimated on the date of grant using the Black-Scholes-Merton model. The assumptions used for warrants granted during the three months ended March 31, 2017 are as follows: March 31, 2017 Exercise price $ 0.0001 Expected dividends 0 % Expected volatility 249.30 % Risk free interest rate 1.54 % Expected life of warrant 4 years The following is a summary of the Company’s warrant activity: Weighted Weighted Average Average Remaining Warrants Price Price Outstanding – December 31, 2016 65,757,081 $ 0.11 $ 1.97 Granted 10,000,000,000 0.0001 4.00 Exercised - - - Forfeited/Cancelled - - - Outstanding – March 31, 2017 10,065,757,748 $ 0.0008 $ 3.98 At March 31, 2017, the aggregate intrinsic value of warrants outstanding and exercisable was $2,000,000 and $1,000,000, respectively. During the three months ended March 31, 2017, there were no warrants exercised. The Company adopted a sequencing policy that reclassifies contracts, with the exception of stock options, from equity to assets or liabilities for those with the earliest inception date first. Any future issuance of securities, as well as period-end reevaluations, will be evaluated as to reclassification as a liability under the sequencing policy of earliest inception date first until all of the convertible debentures are either converted or settled. For warrants issued in 2015, the Company determined that the warrants were properly classified in equity as there is no cash settlement provision and the warrants have a fixed exercise price and, therefore, result in an obligation to deliver a known number of shares. The Company reevaluated the warrants as of March 31, 2017 and determined that they did not have a sufficient number of authorized and unissued shares to settle all existing commitments, and the fair value of the warrants for which there was insufficient authorized shares, were reclassified out of equity to a liability. Under the sequencing policy, of the approximately 10,065,757,748 warrants outstanding at March 31, 2017. The fair value of these warrants was re-measured on March 31, 2017 using the Black Scholes Merton Model, with key valuation assumptions used that consist of the price of the Company’s stock on March 31, 2017, a risk-free interest rate based on the average yield of a 2 or 3 year Treasury note and expected volatility of shares of Common Stock, resulting in the fair value for the Warrant liability of approximately $2,994,260. The resulting change in fair value of approximately $599 for the three months ended March 31, 2017, was recognized as a loss in the Consolidated Statement of Comprehensive Income(loss). During the three months ended March 31, 2017, a total of 10,000,000,000 warrants were issued with convertible notes payable (See Note 5 above). The warrants have a grant date fair value of $2,979,230 using a Black-Scholes option-pricing model and the above assumptions. |
Discontinued Operations
Discontinued Operations | 3 Months Ended |
Mar. 31, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | NOTE 8 – DISCONTINUED OPERATIONS Management deemed the vapor and medical cannabis dispensing line of operations discontinued in the 4th quarter of 2016. This determination was due to poor performance and decreasing gross profit of the Company businesses and resulted in an overall halt of operations of the Company in the 4th quarter of 2016. Upon analysis of the individual business lines, the Company’s newly formed special committee decided not to continue in the vapor and medical cannabis dispensing industries. On March 28, 2016, the Company sold the assets of the vapor subsidiary for $70,000. At the time of the asset disposal, it was disclosed as not a strategic shift in operations; however, with the inclusion of the medical cannabis dispensing operations, the definition of a strategic shift was met. One definition of a strategic shift is a disposal of “80 percent interest in one of two product lines that account for 40 percent of total revenue”. The disposal of both operations meets the definition of a strategic shift and should therefore be shown as discontinued operations in the Condensed Consolidated Financial Statements. The following subsidiaries of the Company qualify as a discontinued operation for Notis Global. ● Prescription Vending Machines, Inc. ● Medbox Management Services, Inc. ● Medbox Rx, Inc. ● Vaporfection International, Inc. ● MJ Property Investments, Inc. The income (loss) from discontinued operations presented in the income statement for the three months ended March 31, 2017 and 2016, consisted of the following: For the three months ended March 31, 2017 2016 Revenue $ - $ 58,686 Revenue, related party - 24,644 Net revenue - 83,330 Cost of revenues - 46,656 Gross profit (loss) - 36,674 Operating expenses Operating expenses - 337,979 General and administrative 2,823 - Total operating expenses 2,823 337,979 Loss from operations 2,823 (301,305 ) Other income (expense ) Interest expense, net - (2,637 ) Gain on sale of assets of subsidiary - 5,498 Other income (expense) 372 20,000 Total other income (expense) 372 22,861 Net income (loss) $ 3,195 $ (278,444 ) |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 9 – COMMITMENTS AND CONTINGENCIES The Company previously leased property for its day-to-day operations and facilities for possible retail dispensary locations and cultivation locations as part of the process of applying for retail dispensary and cultivation licenses. Entry into Agreement to Acquire Real Property On June 17, 2016, EWSD entered into a Contract to Buy and Sell Real Estate (the “Acquisition Agreement”) with Tammy J. Sciumbato and Donnie J. Sciumbato (collectively, the “Sellers”) to purchase certain real property comprised of 116 acres of agricultural land, a barn and a farmhouse in Pueblo, Colorado (the “Property”). The closing of the Acquisition Agreement was scheduled to occur on or about September 22, 2016 (the “Closing”), with possession of the land and barn occurring 12 days after the Closing and possession of the farm house occurring on or before January 1, 2017. The Sellers were to rent back the farm house from the Company until January 1, 2017. The purchase price to acquire the Property is $650,000, including $10,000 paid by the Company as a deposit into the escrow for the Property. During the third quarter of 2017 the Acquisition Agreement was cancelled and the deposit was forfeited. Office Leases On August 1, 2011, the Company entered into a lease agreement for office space located in West Hollywood, California through June 30, 2017 at a current monthly rate of $14,828 per month. The Company moved to different offices in Los Angeles, CA in April 2015. The sublease on the office has a term of 18 months with monthly rent of $7,486. The landlord for the West Hollywood space has filed a suit against the Company and independent guarantors on the West Hollywood lease. The Company has expensed all lease payments due under the West Hollywood lease. The Company’s liability for the West Hollywood lease will be adjusted, if required, upon settlement of the suit with the landlord. On September 8, 2016, the court approved the landlord’s application for writ of attachment in the State of California in the amount of $374,402 against Prescription Vending Machines, Inc. (“PVM”). A trial date has been set for May 2017 (Note 11). On July 18, 2017, plaintiff filed a Request for Dismissal with Prejudice of the litigation in respect of PVM. Total rent expense under operating leases for the three months ended March 31, 2017 and 2016 was $9,261 and $289,000 respectively. Consulting Agreements On December 7, 2015, the Company entered into a consulting agreement for marketing and PR services, for a term of six months, which was subsequently extended through August 30, 2016. Compensation under this agreement through May 30, 2016 was $25,000 per month, with twenty percent, or $5,000, of this amount to be paid in shares of Common Stock. Pursuant to the terms of the agreement, the number of shares issued is determined at the end of each quarter. Upon extension, the terms were adjusted to $15,000 per month for services, with $5,000 to be paid in shares of Common Stock. On November 30, 2017, the Court granted plaintiff’s request for a Default Judgment in the amount of $89,000. Further, the Court scheduled a hearing for December 14, 2017, in respect of expenses, attorney’s fees, and interest at a rate of 6.25%. Litigation On May 22, 2013, the Company, then known as Medbox , Inc., initiated litigation in the United States District Court in the District of Arizona against three stockholders of MedVend Holdings LLC (“MedVend”) in connection with a contemplated transaction that Medbox entered into for the purchase of an approximate 50% ownership stake in MedVend for $4.1 million. The lawsuit alleges fraud and related claims arising out of the contemplated transaction during the quarter ended June 30, 2013. The litigation is pending and Medbox has sought cancellation due to a fraudulent sale of the stock because the selling stockholders lacked the power or authority to sell their ownership stake in MedVend, and their actions were a breach of representations made by them in the agreement. On November 19, 2013, the litigation was transferred to United States District Court for the Eastern District of Michigan. MedVend recently joined the suit pursuant to a consolidation order executed by a new judge assigned to the matter. In the litigation, the selling stockholder defendants and MedVend seek to have the transaction performed, or alternatively be awarded damages for the alleged breach of the agreement by the Company. MedVend and the stockholder defendants seek $4.55 million in damages, plus costs and attorneys’ fees. The Company denied liability with respect to all such claims. On June 5, 2014, the Company entered into a purchase and sale agreement (the “MedVend PSA”) with PVM International, Inc. (“PVMI”) concerning this matter. Pursuant to the MedVend PSA, the Company sold to PVMI the Company’s rights and claims attributable to or controlled by the Company against those three certain stockholders of MedVend, known as Kaplan, Tartaglia and Kovan (the “MedVend Rights and Claims”), in exchange for the return by PVMI to the Company of 30,000 shares of Common Stock. PVMI is owned by Pejman Vincent Mehdizadeh, formerly the Company’s largest stockholder. On December 17, 2015, the Company entered into a revocation of the MedVend PSA, which provided that from that date forward, the Company would take over the litigation and be responsible for the costs and attorneys’ fees associated with the MedVend Litigation from December 17, 2015 forward. All costs and attorneys’ fees through December 16, 2015 will be borne by PVMI. After the filing of a motion for substitution of the Company for PVMI, Defendants agreed, via a stipulated order, to permit the substitution. The Court entered the order substituting Notis Global, Inc. for PVMI on February 17, 2016. A new litigation schedule was recently issued which resulted in an adjournment of the trial. A new trial date will be set by the court following its ruling on a motion for summary judgment filed by Defendants and MedVend, which is set for hearing on November 16, 2016. At this time, the Company cannot determine whether the likelihood of an unfavorable outcome of the dispute is probable or remote, nor can they reasonably estimate a range of potential loss, should the outcome be unfavorable. In January 2017, the Company entered into a Settlement Agreement with the three stockholders, pursuant to which we agreed to pay to them $375,000 in six payments commencing August 2017 and concluding on or before February 2020. In connection with the settlement, the Company executed a Consent Judgment in the amount of $937,000 in their favor. The Company did not make the first payment and the Consent Judgment was recorded against it on August 25, 2017. Plaintiffs have attempted to collect on the judgment and, in November 2017, garnished approximately $10,000 from the Company’s bank account. Class Settlement On December 1, 2015, Medbox and the class plaintiffs in Josh Crystal v. Medbox, Inc., et al. ● a cash payment to a settlement escrow account in the amount of $1,850,000 of which $150,000 will be paid by the Company and $1,700,000 will be paid by the Company’s insurers; ● a transfer of 2,300,000 shares of Common Stock to the settlement escrow account, of which 2,000,000 shares would be contributed by the Company and 300,000 shares of Common Stock by Bruce Bedrick; ● the net proceeds of the settlement escrow, after deduction of Court-approved administrative costs and any Court-approved attorneys’ fees and costs would be distributed to the Class; and ● releases of claims and dismissal of the action. By entering into the settlement, the settling parties have resolved the class claims to their mutual satisfaction. Defendants have not admitted the validity of any claims or allegations and the settling plaintiffs have not admitted that any claims or allegations lack merit or foundation. If the global settlement does not receive final court approval, it could have a material adverse effect on the financial condition, results of operations and/or cash flows of the Company and its ability to raise funds in the future. As of March 31, 2017, all obligations have been settled in connection with this class settlement. Derivative Settlements As previously announced on October 22, 2015, on October 16, 2015, the Company, in its capacity as a nominal defendant, entered into a memorandum of understanding of settlement (the “Settlements”) in the following stockholder derivative actions: (1) Mike Jones v. Guy Marsala, et al Jennifer Scheffer v. P. Vincent Mehdizadeh, et al. Kimberly Y. Freeman v. Pejman Vincent Mehdizadeh, et al Tyler Gray v. Pejman Vincent Mehdizadeh, et al. Robert J. Calabrese v. Ned L. Siegel, et al. Patricia des Groseilliers v. Pejman Vincent Mehdizadeh, et al. Michael A. Glinter v. Pejman Vincent Mehdizadeh, et al. On December 3, 2015, the parties in the Jones v. Marsala By entering into the Settlements, the settling parties have resolved the derivative claims to their mutual satisfaction. The Individual Defendants have not admitted the validity of any claims or allegations and the settling plaintiffs have not admitted that any claims or allegations lack merit or foundation. Under the terms of the Settlements, the Company agrees to adopt and adhere to certain corporate governance processes in the future. In addition to these corporate governance measures, the Company’s insurers, on behalf of the Individual Defendants, will make a payment of $300,000 into the settlement escrow account and Messrs. Mehdizadeh and Bedrick will deliver 2,000,000 and 300,000 shares, respectively, of their shares of Common Stock into the Settlement escrow account. The funds and Common Stock in the Settlement escrow account will be paid as attorneys’ fees and expenses, or as service awards to plaintiffs. On September 16, 2016, solely to avoid the costs, risks, and uncertainties inherent in litigation, the parties entered into a settlement regarding the Merritts Action. The settlement provides, among other things, for the release and dismissal of all asserted claims. Under the terms of the settlement, the Company agrees to adopt and to adhere to certain corporate governance processes in the future. In addition to these corporate governance measures, the Company will make a payment of $135,000 in cash to be used to pay Merritts’ counsel for any attorneys’ fees and expenses, or as service awards to Merritts, that are approved and awarded by the Court. The Settlements have been approved by the court. As of March 31, 2017, all obligations have been settled in connection with this derivative settlement. SEC Investigation In October 2014, the Board appointed a special committee (the “Special Committee”) to investigate issues arising from a federal grand jury subpoena pertaining to the Company’s financial reporting which was served upon the Company’s predecessor independent registered public accounting firm as well as certain alleged wrongdoing raised by a former employee of the Company. The Company was subsequently served with two SEC subpoenas in early November 2014. The Company is fully cooperating with the grand jury and SEC investigations. In connection with its investigation of these matters, the Special Committee in conjunction with the Audit Committee initiated an internal review by management and by an outside professional advisor of certain prior period financial reporting of the Company. The outside professional advisor reviewed the Company’s revenue recognition methodology for certain contracts for the third and fourth quarters of 2013. As a result of certain errors discovered in connection with the review by management and its professional advisor, the Audit Committee, upon management’s recommendation, concluded on December 24, 2014 that the Condensed Consolidated Financial Statements for the year ended December 31, 2013 and for the third and fourth quarters therein, as well as for the quarters ended March 31, 2014, June 30, 2014 and September 30, 2014, should no longer be relied upon and would be restated to correct the errors. On March 6, 2015 the audit committee determined that the Condensed Consolidated Financial Statements for the year ended December 31, 2012, together with all three, six and nine month financial information contained therein, and the quarterly information for the first two quarters of the 2013 fiscal year should also be restated. On March 11, 2015, the Company filed its restated Form 10 Registration Statement with the SEC with restated financial information for the years ended December 31, 2012 and December 31, 2013, and on March 16, 2015, the Company filed amended and restated quarterly reports on Form 10-Q, with restated financial information for the periods ended March 31, June 30 and September 30, 2014, respectively. In March 2016, the staff of the Los Angeles Regional Office of the U.S. Securities and Exchange Commission advised counsel for the Company in a telephone conversation, followed by a written “Wells” notice, that it is has made a preliminary determination to recommend that the Commission file an enforcement action against the Company in connection with misstatements by prior management in the Company’s financial statements for 2012, 2013 and the first three quarters of 2014. A Wells Notice is neither a formal allegation of wrongdoing nor a finding that any violations of law have occurred. Rather, it provides the Company with an opportunity to respond to issues raised by the Staff and offer its perspective prior to any SEC decision to institute proceedings. In March 2017, the SEC and the Company settled this matter. The Company consented to the entry of a final judgment permanently enjoining it from violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 (Securities Act) and Sections 10(b), 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5, 12b-20, 13a-11, and 13a-13 thereunder. In connection with the settlement, the Company did not have any monetary sanctions or penalties assessed against it. Other litigation Whole Hemp complaint A complaint was filed by Whole Hemp Company, LLC d/b/a Folium Biosciences (“Whole Hemp”) on June 1, 2016, naming Notis Global, Inc. and EWSD (collectively, “Notis”), as defendants in Pueblo County, CO district court. The complaint alleges five causes of action against Notis: misappropriation of trade secrets, civil theft, intentional interference with prospective business advantage, civil conspiracy, and breach of contract. All claims concern contracts between Whole Hemp and Notis for the Farming Agreement and the Distributor Agreement. The court entered an ex parte On August 12, 2016, the court ordered that all of Whole Hemp’s plants in Notis’ possession be destroyed, which occurred by August 24, 2016, at which time the temporary restraining order was dissolved and the parties will soon file a motion to dismiss the district court action. On June 29, 2017, the parties jointly stipulated to the dismissal of all claims and counterclaims with prejudice. Notis commenced arbitration in Denver, CO on August 2, 2016, seeking injunctive relief and alleging breaches of the contracts between the parties. Whole Hemp filed is Answer and counterclaims on September 6, 2016, asserting similar allegations that were asserted to the court. On September 30, 2016, the arbitrator held an initial status conference and agreed to allow EWSD and Notis to file a motion to dismiss some or all of Whole Hemp’s claims by no later than October 28, 2016. The parties were also ordered to make initial disclosures of relevant documents and persons with knowledge of relevant information by October 21, 2016. In light of the court order to destroy all Whole Hemp plants, the Company has immediately expensed all Capitalized agricultural costs of $73,345 related to Whole Hemp plants. As of December 31, 2016, the Company capitalized $160,131 that related to Whole Hemp plants. As noted above, the Company’s long-term strategy is to maintain tight control of its supply chain. The continuing default by Whole Hemp was conductive to the Company’s efforts to eliminate outside vendors in the supply chain and control production from “Seed to Sale.” The Company’s decision to terminate the Whole Hemp Agreements comports with its long-term strategy to maintain tight control of its supply chain. West Hollywood Lease The lease for the former office at 8439 West Sunset Blvd. in West Hollywood, CA has been partially subleased. The Company plans to sublease the remainder of the office in West Hollywood, CA and continues to incur rent expense while the space is being marketed. The landlord for the prior lease filed a suit in Los Angeles Superior Court in April 2015 against the Company for damages they allege have been incurred from unpaid rent and otherwise. In January 2016, the landlord filed a first amended complaint adding the independent guarantors under the lease as co-defendants and specifying damages claim of approximately $300,000. On September 8, 2016, the court approved Mani Brothers’ application for writ of attachment in the State of California in the amount of $374,402 against PVM. A trial date was set in May 2017. On March 16, 2017, the Company and Mani Brothers agree to settle the amount owed if the Company paid $40,000 before July 2017. The Company paid the $40,000 in four monthly payments commencing in April 2017. On July 24, 2017, the case was dismissed against the Company. Los Angeles Lease The Company’s former landlord, Bank Leumi, filed an action against the Company in Los Angeles Superior Court for breach of lease on August 31, 2016, seeking $29,977 plus fees and interest, in addition to rent payment for September 2016. The Company filed a response to the complaint on September 21, 2016, and a case management conference is scheduled for December 9, 2016. In November 2016, the parties entered into a Settlement Agreement and General Release, pursuant to which the Company agreed to an eight-payment plan in favor of the Bank, commencing December 2016 and terminating July 2017. All of the payments, which aggregated $46,522 for rent, fees, and costs, have been made. Jeffery Goh We are a party to certain litigation that was filed by Jeff Goh, one of our former directors and executive officers in Superior Court for the state of California, County of Orange, styled JEFF GOH, an individual, Plaintiff, vs. MEDBOX HOLDINGS, INC., a Nevada corporation; NOTIS GLOBAL, INC., a Nevada corporation; and DOES 1 through 100, inclusive, |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 10 – SUBSEQUENT EVENTS The Company evaluates events that have occurred after the balance sheet date of March 31, 2017, through the date which the Consolidated Financial Statements were issued. Based upon the review, other than described in Note 11 – Subsequent Events, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the Consolidated Financial Statements. Subsequent to March 31, 2017, the Company issued 42 convertible notes to third party lenders totaling $4,612,147. These notes accrue interest at a rate of 10% to 24% per annum and mature with interest and principal both due between August 2018 through September 2020. Subsequent to March 31, 2017, the Company issued 5 notes to third party lenders totaling $296,347. These notes accrue interest at a rate of 5% to 24% per annum and mature with interest and principal both due between May 2017 through April 2019. Subsequent to March 31, 2017, the Company settled Investor #2 notes with a principal balance of $2,595,895 for $2,350,000. The Company is currently in default on the settlement agreement. Sheppard Mullin On October 27, 2017, Sheppard, Mullin, Richter, & Hampton LLP (“Sheppard Mullin”) filed a complaint in the Superior Court of the State of California for the County of Los Angeles, styled Sheppard, Mullin, Richter, & Hampton LLP, a California limited liability partnership, plaintiff v. Notis Global, Inc., a Nevada corporation, formerly known as Medbox, Inc.; and Does 1-10, inclusive, Defendants Pueblo Farm – Management Services Agreement On May 31, 2017, the Company, and two of its subsidiaries, EWSD and Pueblo Agriculture Supply and Equipment LLC, and Trava LLC, a Florida limited liability company that has lent various sums to the Company (“Trava”; referenced above as the “PCH Lender”), entered into a Management Services Agreement (the “MS Agreement”) in respect of the Company’s hemp grow-and-extraction operations located in Pueblo, Colorado (the “Pueblo Farm”). The MS Agreement has a 36-month term with two consecutive 12-month unilateral options exercisable in the sole discretion of Trava. Pursuant to the provisions of the MS Agreement, Trava shall collect all revenue generated by the Pueblo Farm operations. Further, Trava is to satisfy all of the Pueblo Farm-related past due expenses and, subject to certain limitations, to pay all current and future operational expenses of the Pueblo Farm operations. Finally, commencing October 2017, Trava is obligated to make the monthly mortgage payments on the Pueblo Farm, although the Company remains responsible for any and all “balloon payments” due under the mortgage. On a cumulative calendar monthly cash-on-cash basis, Trava is obligated to tender to the Company or, at the Company’s option, to either or both of those subsidiaries, an amount equivalent to 51% of the net cash for each such calendar month. Such monthly payments are on the 10 th On January 29, 2018, the parties to the MS Agreement entered into a subsequent agreement (the “Termination Agreement”), pursuant to which they agreed to terminate the MS Agreement in full. By its terms, the Termination Agreement did not modify any of the then-extant agreements among the parties. In connection with the termination of the MS Agreement and in lieu of any compensation and reimbursement that otherwise was to have been tendered by Trava, the parties agreed that, on or before March 31, 2019, the Company would tender to Trava the sum of not less than $250,000.00, subject to increase depending upon the results of the Farm’s 2018 harvest season. Pursuant to the terms of the Termination Agreement, on March 31, 2019, the Company tendered the sum of approximately $265,000 to Trava. Commencing in September 2017 in connection with Trava’s monthly lending to the Company funds sufficient for the Pueblo Farm’s monthly operational expenses of the Pueblo Farm operations, the Company amended the MS Agreement to provide that, from time to time, Trava may exercise its rights to convert some or all of the notes that evidence its lending of funds into shares of Common Stock at a fixed conversion price of $.0001 pre-share. If Trava converts, in whole or in part, any one or more of such notes, then (unless (i) thereafter, the Company is unable to accommodate any future such conversions because of a lack of authorized, but unissued or unreserved, shares or (ii) the public market price for a share of Common Stock becomes “no bid”), Trava shall continue to exercise its conversion rights in respect of all of such notes (to the 4.9% limitations set forth therein) and shall diligently sell the shares of Common Stock into which any or all of such notes may be converted (collectively, the “Underlying Shares”) in open market or other transactions (subject to any limitations imposed by the Federal securities laws and set forth in any “leak-out” type of arrangements in respect of the “underlying shares” to which Trava is a party). Trava acknowledged that any proceeds derived by it from such sales of the underlying shares shall, on a dollar-for-dollar basis, reduce the Company’s financial obligations under the notes. Once Trava has received sufficient proceeds from such sales to reduce the aggregate obligations thereunder to nil (which reductions shall include any and all funds that Trava may have otherwise received in connection with the respective rights and obligations of the parties to the MSA), then the MSA shall be deemed to have been cancelled without any further economic obligations between Trava and the Company and Trava’s purchase right shall, accordingly, be extinguished. Southwest Farms Note Modification On June 20, 2018, Shi Farms entered into a loan modification agreement (the “Agreement”) to extend the term of the EWSD Secured Note. Pursuant to the Agreement, the maturity date of the EWSD Secured Note is extended to August 1, 2020, and Shi Farms will continue to make payments in the same manner as previously required through and including July 1, 2020, with the final balloon payment due and payable on August 1, 2020. Additionally, on May 31, 2019, Shi Farms paid Southwest Farms an additional required principal payment of $250,000, which does not reduce any regularly scheduled payments, but will reduce the final balloon payment. Office Lease On January 25, 2019, the Company entered into a seven-year operating lease for approximately 1,840 square feet of office space for employees in Red Bank, New Jersey. Currently, the Company is operating out of a temporary space while the full space is prepared. The monthly rent is $1,200 for the temporary space which ends August 30, 2019. The minimum monthly lease payments, once the space is complete, will be $3,000. Canbiola Joint Venture On July 11, 2019, NY – SHI, LLC, a New York limited liability company (“NY – SHI”), and Shi Farms (collectively, the “Company Subs”) entered into a joint venture agreement (the “Joint Venture Agreement”) with Canbiola Inc., a Florida corporation (“Canbiola”), and NY Hemp Depot, LLC, a Nevada limited liability company (“Canbiola Sub”). The purpose of the joint venture is to develop and implement a business model referred to as the “Depot Model” to aggregate and purchase fully-grown, harvested industrial hemp from third-party farmers in the State of New York to be processed in any processing facility chosen by NY – SHI (the “Joint Venture”). Pursuant to the Joint Venture Agreement, the Company Subs will jointly seek farmers to grow and cultivate industrial hemp in the State of New York for the Joint Venture. In addition, the Joint Venture may sell to the farmers feminized hemp seeds, clone plants, and additional materials required to grow and cultivate industrial hemp and provide to the farmers the initial training reasonably required for them to grow industrial hemp. Canbiola Sub is responsible for securing the building on behalf of the Joint Venture in the State of New York to house certain of the operations of the business of the Joint Venture (the “NY Hemp Depot Facility”). Canbiola Sub will manage and direct the day-to-day operations of the Joint Venture and provide farmer recruitment services. NY – SHI is responsible for providing to the Joint Venture technical expertise regarding the growth and cultivation of industrial hemp, a license from the New York State Department of Agriculture and Markets that permits the growth of industrial hemp (the “Cultivating License”), and the farmer recruitment services. Upon the execution of the Joint Venture Agreement, Canbiola Sub delivered to NY – SHI a cash payment of $500,000 and, on July 22, 2019, Canbiola issued and delivered $500,000 in value of Canbiola’s common stock (a total of 12,074,089 shares) to NY– SHI, upon NY – SHI’s amendment of the Cultivating License to add the NY Hemp Depot Facility. Additionally, SHI Farms has agreed to sell certain isolate to Canbiola or its designated affiliate at the cost of processing the isolate from biomass and granted Canbiola Sub an interest in the one and one-half percent payments due to SHI Farms in connection with its agreements with Mile High Labs. The “gross profits” from the Joint Venture, which are defined as gross revenues less certain direct operational costs, will be distributed quarterly in arrears with the first distribution scheduled to be made on March 31, 2020, of which 70% is to be distributed to Canbiola Sub and 30% is to be distributed to NY – SHI. Aeon Investment and Royalty Agreement On March 12, 2018, Shi Farms entered into an investment and royalty agreement (the “March 2018 Aeon Agreement”) with Aeon Funds, LLC (“Aeon”), whereby Aeon committed to use its best efforts to invest $1 million in Shi Farms. These funds will be used for growing and harvesting 100 acres of industrial hemp at the Farm from March 1, 2018 through November 30, 2019 (the “2018-2019 Crop”), and, thereafter, for processing and marketing Shi Farms’ products. Pursuant to the terms of the March 2018 Aeon Agreement, Shi Farms will pay royalties to Aeon in an amount equal to 50% of gross sales of product from the 2018-2019 Crop until the principal investment is fully repaid. Shi Farms will then pay 20% of gross sales of the 2018-2019 Crop to Aeon until gross sales equal $10 million. Once gross sales exceed $10 million, Shi Farms will pay Aeon 10% of gross sales. Payments will be made monthly until all products from the 2018-2019 harvest are sold. The March 2018 Aeon Agreement provides that the Company will also issue to Aeon shares of Common Stock valued at $100,000 and grants Aeon a five-year right of first negotiation, in the event Shi Farms seeks additional financing. As of July 31, 2019, in connection with the March 2018 Aeon Agreement, Shi Farms had received an investment of $1,000,000.00 from Aeon and has repaid $1,374,892 of that investment. AAG Harvest 2019 Revenue Sharing Agreement On May 1, 2019, Shi Farms entered into a revenue sharing agreement (the “RS Agreement”) with AAG Harvest 2019, LLC, a Delaware limited liability company (“AAG Harvest”), whereby AAG Harvest agreed to invest a portion of the proceeds from its offering of limited liability company interests in Shi Farms. The RS Agreement provides that AAG Harvest will use its best efforts to provide up to $3,910,000 of funding (the “Funding”) to Shi Farms, and allows funding to increase to $7,100,000 by mutual agreement of Shi Farms and AAG Harvest. Shi Farms will use the funding to grow and harvest approximately 1,200 acres of industrial hemp at the Farm in Pueblo, Colorado, its co-op location in Oklahoma, and its co-op location in Southern Colorado from approximately May 2019 through November 2019 (the “2019 Crop”). In exchange for the investment, AAG Harvest will receive payments equal to 25% of Shi Farms’ gross sales of the 2019 Crop until AAG Harvest has received an amount equivalent to the amount of capital raised by AAG Harvest to fund the Funding (approximately 118% of the Funding). After AAG Harvest has received this amount, Shi Farms will pay 12.5% of gross sales of the 2019 Crop to AAG Harvest. Payments to AAG Harvest are due within 45 days of each calendar quarter until the 2019 Crop is entirely sold. As of August 22, 2019, in connection with the RS Agreement, Shi Farms has received funding of $2,854,775 from AAG Harvest. Preferred Units Placement Agreement On November 19, 2018, Shi Farms entered into an agreement with AEON Capital, Inc. (“Aeon Capital”), whereby Aeon Capital provided placement agent services with respect to certain preferred membership units of the Company. In consideration for the services provided, Shi Farms has agreed to pay Aeon Capital a cash fee of up to 10% of the gross proceeds from the sale of units to investors introduced by Aeon Capital, and 2.5% of the gross proceeds from the sale of units to investors introduced by the Company. In connection with this agreement, Aeon Capital has placed $3,915,000 in preferred membership units, for which Shi Farms has paid fees of $193,490 . Mile High Labs – Partner Farm and Supply Agreements Partner Farm Agreement On May 10, 2019, Shi Farms entered into a partner farm agreement (the “Partner Farm Agreement”) with Mile High Labs, Inc., a Colorado corporation (“Mile High”), whereby Shi Farms has agreed to produce, sell and/or deliver certain dried hemp products (the “Product”) to Mile High, and Mile High has agreed to purchase such Product from Shi Farms and/or provide certain processing services (the “Processing Services”). Among other obligations, Shi Farms has agreed to provide a physical location to perform such Processing Services on the Farm, the infrastructure necessary to access the Farm and the construction of certain structures for the purpose of conducting the Processing Services on the Farm. Among other obligations, Mile High is required to provide, transport and install all necessary equipment to operate the processing facilities located on the Farm, subject to the terms and provisions therein. Mile High has also agreed to provide Shi Farms with priority processing services for the Product specified in the Partner Farm Agreement, of up to 25% of the production capacity of the processing facilities operated by Mile High on the Farm. The Partner Farm Agreement will have an initial term of five years and shall renew automatically thereafter for one-year increments and is terminable by either Mile High or Shi Farms upon 60 days’ written notice. Shi Farms will receive 20% of all sales of the Product and Mile High will receive 80% of the sales price, subject to the payment schedule and terms attached thereto. Supply Agreement In connection with, and pursuant to, the Partner Farm Agreement, Shi Farms also entered into a supply agreement (the “Supply Agreement”), on May 10, 2019, with Mile High, whereby Shi Farms will produce and sell to Mile High, and Mile High will purchase and accept from Shi Farms, the Products enumerated in the Partner Farm Agreement and the Supply Agreement in quantities specified in the two agreements and by Mile High. Pursuant to the Supply Agreement, Mile High and Shi Farms have agreed, among other things, to sell the Product as partners and to co-brand the finished Product. Should Mile High establish a cooperative advertising and promotional program, Shi Farms will be required to pay additional fees. The initial term of the Supply Agreement is five years and shall renew automatically thereafter for one-year increments and is terminable by either Mile High or Shi Farms upon 60 days’ written notice. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Going Concern | Going Concern The Condensed Consolidated Financial Statements were prepared on a going concern basis. The going concern basis assumes that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of business. During the three months ended March 31, 2017, the Company had a net loss from operations of approximately $10.2 million, negative cash flow from operations of $638,601 and negative working capital of $51.9 million. . During the year ended December 31, 2016, the Company had a net loss of approximately $17.7 million, negative cash flow from operations of $3.5 million and negative working capital of $38 million. The Company will need to raise capital in order to fund its operations. On September 22, 2016, the Company received notice of an Event of Default and Acceleration from one of its lenders regarding a Promissory Note issued on March 14, 2016. As of the date of this filing, the Company is in default on all notes outstanding. The Company is unable to predict the outcome of these matters, however, legal action taken by the Company’s lenders could have a material adverse effect on the financial condition, results of operations and/or cash flows of the Company and its ability to raise funds in the future. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the issuance of these financial statements. The ability to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan. The Condensed Consolidated Financial Statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Management’s plans include: The Company expects that the acquisition of EWSD, which owns a 320-acre farm in Pueblo, Colorado, will generate recurring revenues for the Company through farming hemp, extracting and selling CBD oil, and collecting fees from production related to extracting CBD oil for other farmers, while controlling the full production cycle to ensure consistent quality. Lastly, management is actively seeking additional financing over the next few months to fund operations. The Company will continue to execute on its business model by attempting to raise additional capital through the sales of debt or equity securities or other means. However, there is no guarantee that such financing will be available on terms acceptable to the Company, or at all. It is uncertain whether the Company can obtain financing to fund operating deficits until profitability is achieved. This need may be adversely impacted by: unavailability of financing, uncertain market conditions, the success of the crop growing season, the demand for CBD oil, the ability of the Company to obtain financing for the equipment and labor needed to cultivate hemp and extract the CBD oil, and adverse operating results. The outcome of these matters cannot be predicted at this time. On May 24, 2016, the Company received a notice from the OTC Markets Group, Inc. (“OTC Markets”) that the Company’s bid price was below $0.01 and that the Company did not meet the Standards for Continued Eligibility for OTCQB pursuant to OTC Markets’ Standards. If the bid price did not close at or above $0.01 for ten consecutive trading days by November 20, 2016, the Company would be moved to the OTC Pink marketplace. Additionally, on September 9, 2016, the Company received notice from the OTC that OTC Markets would move the Company’s listing from the OTCQB market to OTC Pink marketplace, if the Company did not file its Quarterly Report on Form 10-Q for the period ended June 30, 2016 by September 30, 2016. On or about October 1, 2016, the Company moved to the OTC Pink marketplace. These actions might also impact the Company’s ability to obtain funding. |
Basis of Presentation - Unaudited Interim Financial Information | Basis of Presentation - Unaudited Interim Financial Information The accompanying unaudited interim condensed consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) with respect to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim condensed consolidated financial statements furnished reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s annual report on Form 10-K for the year ended December 31, 2016. |
Principles of Consolidation | Principles of Consolidation The Condensed Consolidated Financial Statements include the accounts of Notis Global, Inc. and its wholly-owned subsidiaries, as named in Note 1 above. All intercompany transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Critical accounting estimates are estimates for which (a) the nature of the estimate is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and (b) the impact of the estimate on financial condition or operating performance is material. The Company’s critical accounting estimates and assumptions affecting the financial statements were: (i) Assumption as a going concern (ii) Fair value of long-lived assets: (iii) Valuation allowance for deferred tax assets (iv) Estimates and assumptions used in valuation of equity instruments These significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to these estimates or assumptions, and certain estimates or assumptions are difficult to measure or value. Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience, and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly. Actual results could differ from those estimates. |
Discontinued Operations | Discontinued Operations US GAAP requires the results of operations of a component of an equity that either has been disposed of or is classified as held for sale to be reported as discontinued operations in the Condensed Consolidated Financial Statements if the sale or disposition represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results . |
Concentrations of Credit Risk | Concentrations of Credit Risk The Company maintains cash balances at several financial institutions that are insured by the Federal Deposit Insurance Corporation up to $250,000. The Company has not experienced any losses in such accounts and periodically evaluates the credit worthiness of the financial institutions and has determined the credit exposure to be negligible. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Pursuant to ASC No. 825, Financial Instruments Embedded derivative – The Company’s convertible notes payable include embedded features that require bifurcation due to a reset provision and are accounted for as a separate embedded derivative (see Note 5). The Company estimated the fair value of the conversion feature derivatives embedded in the convertible debentures based on a Monte Carlo Simulation model (“MCS”). The MCS model was used to simulate the stock price of the Company from the valuation date through to the maturity date of the related debenture and to better estimate the fair value of the derivative liability due to the complex nature of the convertible debentures and embedded instruments. Management believes that the use of the MCS model compared to the Black-Scholes-Merton model as previously used would provide a better estimate of the fair value of these instruments The Company valued these embedded derivatives using a “with-and-without method,” where the value of the Convertible Debentures including the embedded derivatives, is defined as the “with”, and the value of the Convertible Debentures excluding the embedded derivatives, is defined as the “without.” This method estimates the value of the embedded derivatives by observing the difference between the value of the Convertible Debentures with the embedded derivatives and the value of the Convertible Debentures without the embedded derivatives. The Company believes the “with-and-without method” results in a measurement that is more representative of the fair value of the embedded derivatives. For each simulation path, the Company used the Geometric Brownian Motion (“GBM”) model to determine future stock prices at the maturity date. The inputs utilized in the application of the GBM model included a starting stock price, an expected term of each debenture remaining from the valuation date to maturity, an estimated volatility, and a risk-free rate. For the three months ended March 31, 2017, the Company estimated the fair value of the conversion feature derivatives embedded in the convertible debentures based on an internally calculated adjustment to the MCS valuation determined at December 31, 2016. This adjustment took into consideration the changes in the assumptions, such as market value and expected volatility of the Common Stock and the discount rate used in the March 31, 2017, valuation as compared to December 31, 2016. The Company believes this methodology results in a reasonable fair value of the embedded derivatives for the interim period. |
Warrants | Warrants The Company reexamined the determination made as of December 31, 2015, that it did not have sufficient authorized shares available for all of their outstanding warrants to be classified in equity at March 31, 2016 and concluded there still were insufficient authorized shares (Note 7). Therefore, the Company recognized a warrant liability as of December 31, 2016. The Company estimated the fair value of the warrant liability based on the Black-Scholes-Merton model. The key assumptions used consist of the price of the Company’s stock, a risk-free interest rate based on the average yield of a one to three-year Treasury note (based on remaining term of the related warrants) and expected volatility of the Common Stock over the remaining life of the warrants. A three-tier fair value hierarchy is used to prioritize the inputs in measuring fair value as follows: Level 1 Quoted prices in active markets for identical assets or liabilities. Level 2 Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable, either directly or indirectly. Level 3 Significant unobservable inputs that cannot be corroborated by market data. The assets or liabilities’ fair value measurement within the fair value hierarchy is based upon the lowest level of any input that is significant to the fair value measurement. The following table provides a summary of the relevant assets and liabilities that are measured at fair value on a recurring basis: March 31, 2017 Total Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) Quoted Prices for Similar Assets or Liabilities in Active Markets (Level 2) Significant Unobservable Inputs (Level 3) Warrant liability 2,994,260 - - 2,994,260 Derivative liability 17,996,473 - - 17,996,473 Total liabilities $ 20,990,733 $ - $ - $ 20,990,733 December 31, 2016 Total Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) Quoted Prices for Similar Assets or Liabilities in Active Markets (Level 2) Significant Unobservable Inputs (Level 3) Warrant liability 14,430 - - 14,430 Derivative liability 15,635,947 - - 15,635,947 Total liabilities $ 15,650,377 $ - $ - $ 15,650,377 The following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial liabilities that are measured at fair value on a recurring basis: For the three months ended March 31, 2017 Total January 1, 2017 15,650,377 Initial recognition of conversion feature 3,016,821 Initial recognition of warrant liability 2,979,231 Change in fair value of conversion feature (656,295 ) Change in fair value of warrant liability 599 Ending Balance, March 31, 2017 $ 20,990,733 |
Revenue Recognition | Revenue Recognition Revenues from Cannabidiol oil product The Company recognizes revenue from the sale of Cannabidiol oil products (“CBD oil”) upon shipment, when title passes, and when collectability is reasonably assured. Cost of Revenue Cost of revenue consists primarily of expenses associated with the delivery and distribution of the Company’s products and services. Under the Company’s prior business model, the Company only began capitalizing costs when it obtained a license and a site for operation of a customer dispensary or cultivation center. The previously capitalized costs are charged to cost of revenue in the same period that the associated revenue is earned. In the case where it is determined that previously inventoried costs are in excess of the projected net realizable value of the sale of the licenses, then the excess cost above net realizable value is written off to cost of revenues. Cost of revenues also includes the rent expense on master leases held in the Company’s name, which are subleased to the Company’s operators. In addition, cost of revenue related to the Company’s vaporizer line of products consists of direct procurement cost of the products along with costs associated with order fulfillment, shipping, inventory storage and inventory management costs. |
Cash and Cash Equivalents | Cash and cash equivalents The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. As of March 31, 2017 and December 31, 2016, the Company held no cash equivalents. The Company’s policy is to place its cash with high credit quality financial instruments and institutions and limit the amounts invested with any one financial institution or in any type of instrument. Deposits held with banks may exceed the amount of insurance provided on such deposits. The Company has not experienced any losses on its deposits of cash. |
Accounts Receivable and Allowances | Accounts Receivable and Allowances Accounts receivable are recorded at the invoiced amount and are not interest bearing. The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The Company makes ongoing assumptions relating to the collectability of its accounts receivable in its calculation of the allowance for doubtful accounts. In determining the amount of the allowance, the Company makes judgments about the creditworthiness of customers based on ongoing credit evaluations and assesses current economic trends affecting its customers that might impact the level of credit losses in the future and result in different rates of bad debts than previously seen. The Company also considers its historical level of credit losses. As of March 31, 2017 and December 31, 2016, there was an allowance for doubtful accounts of $0. |
Inventory | Inventory The Company utilizes lower of standard cost or net realizable value method. During the three months ended March 31, 2017 the Company recorded an impairment of $0 that was recorded to cost of revenues. |
Capitalized Agricultural Costs | Capitalized agricultural costs Capitalized agricultural costs consists of pre-harvest agricultural costs, including irrigation, fertilization, seeding, laboring, other ongoing crop and land maintenance activities and work-in-progress activities. All capitalized agricultural costs are accumulated and capitalized as incurred. The Company has reflected the capitalized agriculture costs as a current asset as the growing cycle of the crops are estimated to be six months to a year. |
Basic and Diluted Net Income/Loss Per Share | Basic and Diluted Net Income/Loss Per Share Basic net loss per share of Common Stock is computed by dividing net loss attributable to common stockholders by the weighted-average number of shares of Common Stock outstanding during the period. Diluted net loss per share of Common Stock is determined using the weighted-average number of shares of Common Stock outstanding during the period, adjusted for the dilutive effect of Common Stock equivalents. In periods when losses are reported, which is the case for the three months ended March 31, 2017 presented in these Condensed Consolidated Financial Statements, the weighted-average number of shares of Common Stock outstanding excludes Common Stock equivalents because their inclusion would be anti-dilutive. As of March 31, 2016 the Company had approximately 50,119,000 warrants to purchase common stock outstanding as of March 31, 2016, which were not included in the computation of diluted loss per share, as based on their exercise prices they would all have an anti-dilutive effect on net loss per share. The Company also had approximately $7,661,000 in convertible debentures outstanding at March 31, 2016, that are convertible at the holders’ option at a conversion price of the lower of $0.75 or 51% to 60% of either the lowest trading price or the VWAP over the last 20 to 30 days prior to conversion (subject to reset upon a future dilutive financing), whose underlying shares resulted in an additional 5,746,769,206 dilutive shares being included in the computation of diluted net income per share. The Company had the following Common Stock equivalents at March 31, 2017: March 31, 2017 Warrants 10,065,757,748 Convertible notes – related party 10,500,000 Convertible notes 192,715,257,452 Totals 202,791,515,200 |
Property and Equipment | Property and Equipment Property and equipment are recorded at cost. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes. The Company uses accelerated depreciation methods for tax purposes where appropriate. The estimated useful lives for significant property and equipment categories are as follows: Vehicles 5 years Furniture and Fixtures 3 - 5 years Office equipment 3 years Machinery 2 years Buildings 10 - 39 years |
Income Taxes | Income Taxes The Company accounts for income taxes under the asset and liability method. The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the Condensed Consolidated Financial Statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The components of the deferred tax assets and liabilities are classified as current and non-current based on their characteristics. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. In addition, the Company’s management performs an evaluation of all uncertain income tax positions taken or expected to be taken in the course of preparing the Company’s income tax returns to determine whether the income tax positions meet a “more likely than not” standard of being sustained under examination by the applicable taxing authorities. This evaluation is required to be performed for all open tax years, as defined by the various statutes of limitations, for federal and state purposes. |
Commitments and Contingencies | Commitments and Contingencies Certain conditions may exist as of the date the Condensed Consolidated Financial Statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Condensed Consolidated Financial Statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed. The Company accrues all legal costs expected to be incurred per event. For legal matters covered by insurance, the Company accrues all legal costs expected to be incurred per event up to the amount of the deductible. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers,” which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for annual reporting periods for public business entities beginning after December 15, 2017, including interim periods within that reporting period. The new standard permits the use of either the retrospective or cumulative effect transition method. The Company is currently evaluating the effect that ASU 2014-09 will have on its financial statements and related disclosures. The Company has not yet selected a transition method nor determined the effect of the standard on its ongoing financial reporting. In February 2016, the FASB issued “Leases (Topic 842)” (ASU 2016-02). This update amends leasing accounting requirements. The most significant change will result in the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under current guidance. The new guidance will also require significant additional disclosures about the amount, timing, and uncertainty of cash flows from leases. ASU 2016-02 is effective for fiscal years and interim periods beginning after December 15, 2018, which for the Company is December 31, 2018, the first day of its 2019 fiscal year. Upon adoption, entities are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. Early adoption is permitted, and a number of optional practical expedients may be elected to simplify the impact of adoption. The Company is currently evaluating the impact of adopting this guidance. The overall impact is that assets and liabilities arising from leases are expected to increase based on the present value of remaining estimated lease payments at the time of adoption. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting Compensation – Stock Compensation In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” Under ASU 2016-02, lessees will, among other things, require lessees to recognize a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors; however, certain changes were made to align, where necessary, lessor accounting with the lessee accounting model and ASC Topic 606, “Revenue from Contracts with Customers.” ASU 2016-02 will be effective for us on January 1, 2019 and initially required transition using a modified retrospective approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. In July 2018, the FASB issued ASU 2018-11 , “Leases (Topic 842) - Targeted Improvements,” which, among other things, provides an additional transition method that would allow entities to not apply the guidance in ASU 2016-02 in the comparative periods presented in the financial statements and instead recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. In December 2018, the FASB also issued ASU 2018-20, “Leases (Topic 842) - Narrow-Scope Improvements for Lessors,” which provides for certain policy elections and changes lessor accounting for sales and similar taxes and certain lessor costs. As of January 1, 2019, the Company adopted ASU 2016-02 and has recorded a right-of-use asset and lease liability on the balance sheet for its operating leases. We elected to apply certain practical expedients provided under ASU 2016-02 whereby we will not reassess(i) whether any expired or existing contracts are or contain leases, (ii) the lease classification for any expired or existing leases and (iii) initial direct costs for any existing leases. We also do not expect to apply the recognition requirements of ASU 2016-02 to any short-term leases (as defined by related accounting guidance). We expect to account for lease and non-lease components separately because such amounts are readily determinable under our lease contracts and because we expect this election will result in a lower impact on our balance sheet. In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory”, which eliminates the exception that prohibits the recognition of current and deferred income tax effects for intra-entity transfers of assets other than inventory until the asset has been sold to an outside party. The updated guidance is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption of the update is permitted. The Company is currently evaluating the impact of the new standard. In April 2016, the FASB issued ASU No. 2016-10, “Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing” (topic 606). In March 2016, the FASB issued ASU No. 2016-08, “Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net)” (topic 606). These amendments provide additional clarification and implementation guidance on the previously issued ASU 2014-09, “Revenue from Contracts with Customers”. The amendments in ASU 2016-10 provide clarifying guidance on materiality of performance obligations; evaluating distinct performance obligations; treatment of shipping and handling costs; and determining whether an entity’s promise to grant a license provides a customer with either a right to use an entity’s intellectual property or a right to access an entity’s intellectual property. The amendments in ASU 2016-08 clarify how an entity should identify the specified good or service for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements. The adoption of ASU 2016-10 and ASU 2016-08 is to coincide with an entity’s adoption of ASU 2014-09, which we adopted for interim and annual reporting periods beginning after December 15, 2017. The Company is currently evaluating the impact of adopting this guidance. In May 2016, the FASB issued ASU No. 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients”, which narrowly amended the revenue recognition guidance regarding collectability, noncash consideration, presentation of sales tax and transition and is effective during the same period as ASU 2014-09. The Company is currently evaluating the impact of adopting this guidance. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”). ASU 2016-15 will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017. The new standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case it would be required to apply the amendments prospectively as of the earliest date practicable. The Company is currently evaluating the impact of adopting this guidance. In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory”, which eliminates the exception that prohibits the recognition of current and deferred income tax effects for intra-entity transfers of assets other than inventory until the asset has been sold to an outside party. The updated guidance is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption of the update is permitted. The Company is currently evaluating the impact of the new standard. In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230)”, requiring that the statement of cash flows explain the change in the total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. This guidance is effective for fiscal years, and interim reporting periods therein, beginning after December 15, 2017 with early adoption permitted. The provisions of this guidance are to be applied using a retrospective approach which requires application of the guidance for all periods presented. The Company is currently evaluating the impact of adopting this guidance. In July 2017, the FASB issued ASU 2017-11, “Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception”. Part I of this update addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. Part II of this update addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification. This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable noncontrolling interests. The amendments in Part II of this update do not have an accounting effect. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. The Company is currently evaluating the impact of adopting this guidance. In May 2017, the FASB issued ASU 2017-09, “Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting,” which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The Company is currently evaluating the impact of adopting this guidance. Management does not believe that any recently issued, but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying consolidated financial statements. |
Management's Evaluation of Subsequent Events | Management’s Evaluation of Subsequent Events The Company evaluates events that have occurred after the balance sheet date of March 31, 2017, through the date which the Condensed Consolidated Financial Statements were issued. Based upon the review, other than described in Note 11 – Subsequent Events, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the Condensed Consolidated Financial Statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Schedule of Fair Value Measurement On a Recurring Basis of Assets and Liabilities | The following table provides a summary of the relevant assets and liabilities that are measured at fair value on a recurring basis: March 31, 2017 Total Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) Quoted Prices for Similar Assets or Liabilities in Active Markets (Level 2) Significant Unobservable Inputs (Level 3) Warrant liability 2,994,260 - - 2,994,260 Derivative liability 17,996,473 - - 17,996,473 Total liabilities $ 20,990,733 $ - $ - $ 20,990,733 December 31, 2016 Total Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) Quoted Prices for Similar Assets or Liabilities in Active Markets (Level 2) Significant Unobservable Inputs (Level 3) Warrant liability 14,430 - - 14,430 Derivative liability 15,635,947 - - 15,635,947 Total liabilities $ 15,650,377 $ - $ - $ 15,650,377 |
Schedule of Fair Value of Company's Level 3 Financial Liabilities Measured at Fair Value On a Recurring Basis | The following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial liabilities that are measured at fair value on a recurring basis: For the three months ended March 31, 2017 Total January 1, 2017 15,650,377 Initial recognition of conversion feature 3,016,821 Initial recognition of warrant liability 2,979,231 Change in fair value of conversion feature (656,295 ) Change in fair value of warrant liability 599 Ending Balance, March 31, 2017 $ 20,990,733 |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The Company had the following Common Stock equivalents at March 31, 2017: March 31, 2017 Warrants 10,065,757,748 Convertible notes – related party 10,500,000 Convertible notes 192,715,257,452 Totals 202,791,515,200 |
Schedule of Estimated Useful Lives for Significant Property and Equipment | The estimated useful lives for significant property and equipment categories are as follows: Vehicles 5 years Furniture and Fixtures 3 - 5 years Office equipment 3 years Machinery 2 years Buildings 10 - 39 years |
Inventory and Capitalized Agr_2
Inventory and Capitalized Agricultural Costs (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Capitalized agricultural Costs at March 31, 2017 and December 31, 2016 consisted of the following: March 31, 2017 December 31, 2016 Biomass 288,003 160,131 Less Discontinued Operations - - Total inventory, net $ 288,003 $ 160,131 |
Convertible Notes Payable and_2
Convertible Notes Payable and Derivative Liability (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Convertible Notes Payable | Convertible notes payable consists of: March 31, 2017 (unaudited) December 31, 2016 Investor #1 $ 13,990,304 $ 6,642,745 Investor #2 2,089,133 1,857,146 Investor #3 293,009 231,142 Investor #4 1,500,000 - 17,872,446 8,731,033 Less discounts (2,375,356 ) (85,591 ) Less current maturities 15,497,090 8,645,442 Convertible notes payable, net of current maturities $ - $ - |
Notes Payable (Tables)
Notes Payable (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Notes Payable | Notes payable consists of: March 31, 2017 (unaudited) December 31, 2016 Southwest Farms $ 3,580,016 $ 3,590,241 East West Secured Development 491,594 503,031 Investor #1 7,500 3,691,200 Investor #2 - 275,000 4,079,110 8,059,472 Less discounts - (598,721 ) 7,460,751 Less current maturities 4,079,110 3,367,479 Notes payable, net of current maturities $ - $ 4,093,272 |
Stockholders' Deficit (Tables)
Stockholders' Deficit (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Activity Related to Restricted Stock Units (RSU's) | A summary of the activity related to RSUs for the three months ended March 31, 2017 is presented below: Restricted stock units (RSUs) Total shares Grant date fair value RSUs non-vested at January 1, 2017 7,142,856 $ 0.51 - $0.007 RSUs granted 250,975,000 $ 0.0002 - $0.0003 RSUs vested (4,546,429 ) $ 0.0003 - $0.0007 RSUs forfeited - $ - RSUs non-vested March 31, 2017 253,571,427 $ 0.0002-$0.0007 |
Schedule of Expense Related to Restricted Stock | A summary of the expense related to restricted stock, RSUs and stock option awards for the three months ended March 31, 2017 is presented below: Three months ended March 31, 2017 RSUs $ 54,776 Total $ 54,776 |
Schedule of Valuation Assumption | The assumptions used for warrants granted during the three months ended March 31, 2017 are as follows: March 31, 2017 Exercise price $ 0.0001 Expected dividends 0 % Expected volatility 249.30 % Risk free interest rate 1.54 % Expected life of warrant 4 years |
Summary of Warrant Activity | The following is a summary of the Company’s warrant activity: Weighted Weighted Average Average Remaining Warrants Price Price Outstanding – December 31, 2016 65,757,081 $ 0.11 $ 1.97 Granted 10,000,000,000 0.0001 4.00 Exercised - - - Forfeited/Cancelled - - - Outstanding – March 31, 2017 10,065,757,748 $ 0.0008 $ 3.98 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Income (Loss) from Discontinued Operation | The income (loss) from discontinued operations presented in the income statement for the three months ended March 31, 2017 and 2016, consisted of the following: For the three months ended March 31, 2017 2016 Revenue $ - $ 58,686 Revenue, related party - 24,644 Net revenue - 83,330 Cost of revenues - 46,656 Gross profit (loss) - 36,674 Operating expenses Operating expenses - 337,979 General and administrative 2,823 - Total operating expenses 2,823 337,979 Loss from operations 2,823 (301,305 ) Other income (expense ) Interest expense, net - (2,637 ) Gain on sale of assets of subsidiary - 5,498 Other income (expense) 372 20,000 Total other income (expense) 372 22,861 Net income (loss) $ 3,195 $ (278,444 ) |
Business Organization, Nature_2
Business Organization, Nature of Operations (Details Narrative) | 3 Months Ended | |||
Mar. 31, 2017Integershares | Dec. 31, 2016shares | Apr. 15, 2016shares | Dec. 31, 2015a | |
Real Estate [Line Items] | ||||
Number of operating subsidiaries | Integer | 3 | |||
Common stock, shares authorized | shares | 10,000,000,000 | 10,000,000,000 | 400,000,000 | |
EWSD I, LLC [Member] | ||||
Real Estate [Line Items] | ||||
Area of land aquired | a | 320 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | May 24, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 |
AccountingPoliciesLineItems [Line Items] | ||||
Net income loss | $ (10,258,680) | $ 1,247,802 | $ 17,700,000 | |
Negative cash flow from operations | (638,601) | $ (4,169,234) | (3,500,000) | |
Working capital | (51,900,000) | (38,000,000) | ||
FDIC insured amount | 250,000 | |||
Allowance for doubtful accounts | 0 | $ 0 | ||
Impairment of inventory | $ 0 | |||
Warrants outstanding | 10,065,757,748 | 50,119,000 | ||
Convertible debentures | $ 7,661,000 | |||
Debt conversion, description | The Company also had approximately $7,661,000 in convertible debentures outstanding at March 31, 2016, that are convertible at the holders’ option at a conversion price of the lower of $0.75 or 51% to 60% of either the lowest trading price or the VWAP over the last 20 to 30 days prior to conversion (subject to reset upon a future dilutive financing), whose underlying shares resulted in an additional 5,746,769,206 dilutive shares being included in the computation of diluted net income per share. | |||
Antidilutive securities | 202,791,515,200 | 5,746,769,206 | ||
OTC Markets Group, Inc. [Member] | ||||
AccountingPoliciesLineItems [Line Items] | ||||
Debt instrument stock price | $ 0.01 | |||
Debt instrument stock price, description | On May 24, 2016, the Company received a notice from the OTC Markets Group, Inc. ("OTC Markets") that the Company's bid price was below $0.01 and that the Company did not meet the Standards for Continued Eligibility for OTCQB pursuant to OTC Markets' Standards. If the bid price did not close at or above $0.01 for ten consecutive trading days by November 20, 2016, the Company would be moved to the OTC Pink marketplace. |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Fair Value Measurement on a Recurring Basis of Assets and Liabilities (Details) - Fair Value, Measurements, Recurring [Member] - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total liabilities | $ 20,990,733 | $ 15,650,377 |
Warrant Liability [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total liabilities | 2,994,260 | 14,430 |
Derivative Liability [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total liabilities | 17,996,473 | 15,635,947 |
Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total liabilities | ||
Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) [Member] | Warrant Liability [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total liabilities | ||
Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) [Member] | Derivative Liability [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total liabilities | ||
Quoted Prices for Similar Assets or Liabilities in Active Markets (Level 2) [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total liabilities | ||
Quoted Prices for Similar Assets or Liabilities in Active Markets (Level 2) [Member] | Warrant Liability [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total liabilities | ||
Quoted Prices for Similar Assets or Liabilities in Active Markets (Level 2) [Member] | Derivative Liability [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total liabilities | ||
Significant Unobservable Inputs (Level 3) [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total liabilities | 20,990,733 | 15,650,377 |
Significant Unobservable Inputs (Level 3) [Member] | Warrant Liability [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total liabilities | 2,994,260 | 14,430 |
Significant Unobservable Inputs (Level 3) [Member] | Derivative Liability [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total liabilities | $ 17,996,473 | $ 15,635,947 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Schedule of Fair Value of Company's Level 3 Financial Liabilities Measured at Fair Value on a Recurring Basis (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Accounting Policies [Abstract] | ||
Beginning balance | $ 15,650,377 | |
Initial recognition of conversion feature | 3,016,821 | |
Initial recognition of warrant liability | 2,979,231 | |
Change in fair value of conversion feature | (656,295) | |
Change in fair value of warrant liability | 599 | $ (555,973) |
Ending Balance | $ 20,990,733 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Class of Stock [Line Items] | ||
Totals | 202,791,515,200 | 5,746,769,206 |
Warrant [Member] | ||
Class of Stock [Line Items] | ||
Totals | 10,065,757,748 | |
Convertible Notes - Related Party [Member] | ||
Class of Stock [Line Items] | ||
Totals | 10,250,000 | |
Convertible Notes [Member] | ||
Class of Stock [Line Items] | ||
Totals | 192,715,257,452 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Schedule of Estimated Useful Lives for Significant Property and Equipment (Details) | 3 Months Ended |
Mar. 31, 2017 | |
Vehicles [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 5 years |
Furniture and Fixtures [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3 years |
Furniture and Fixtures [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 5 years |
Office Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3 years |
Machinery [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 2 years |
Buildings [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 10 years |
Buildings [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 39 years |
Inventory and Capitalized Agr_3
Inventory and Capitalized Agricultural Costs - Schedule of Inventory (Details Narrative) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Inventory [Line Items] | ||
Less Discontinued Operations | ||
Total inventory, net | 288,003 | 160,131 |
Biomass [Member] | ||
Inventory [Line Items] | ||
Inventory, gross | $ 288,003 | $ 160,131 |
PCH Investment (Details Narrati
PCH Investment (Details Narrative) - USD ($) | Mar. 21, 2017 | Nov. 02, 2016 | Mar. 31, 2017 |
PCH Investment Group, Inc [Member] | |||
Investment [Line Items] | |||
Loss in connection with failed and unconsummated business | $ 799,910 | ||
Investment in PCH transaction | 799,910 | ||
PCH Investment Group, Inc [Member] | PCH Shareholders [Member] | |||
Investment [Line Items] | |||
Stock acquired during period | 1,500,000,000 | ||
Business combination, consideration transferred | $ 300,000 | ||
Percentage of purchase price shares equal to stock | 15.00% | ||
Restated Security and Pledge Agreement [Member] | PCH-Related Note [Member] | Maximum [Member] | |||
Investment [Line Items] | |||
Value of lending obligation | $ 500,000 | ||
PCH Option Agreement [Member] | PCH Investment Group, Inc [Member] | |||
Investment [Line Items] | |||
Option agreement, description | Pursuant the PCH Option Agreement, PASE was granted the option to purchase all 49%, but not less than all 49%, of the PCH Optioned Shares. The exercise price for the PCH Optioned Shares is an amount equivalent to five times PCH's "EBITDA" for the 12-calendar month period, on a look-back basis, that concludes on the date of exercise of the Option, less $10.00 (which was the purchase price of the option). The calculation of the 12-month EBITDA was to be determined by PASE's (or its) then-currently engaged independent auditors. If the Company were to exercise the option prior to the first anniversary of the closing of the acquisition of the PCH To-Be-Purchased Shares, then the exercise price for the PCH Optioned Shares was to be based on the EBITDA for the entire 12-calendar month period that commenced with the effective date of the PCH Option Agreement. | ||
PCH Investment Group, Inc [Member] | |||
Investment [Line Items] | |||
Business combination, consideration transferred | $ 300,000 | ||
Optioned shares expiry date | Feb. 10, 2019 | ||
PCH Investment Group, Inc [Member] | Share-based Compensation Award, Tranche One [Member] | |||
Investment [Line Items] | |||
Debt instrument, face amount | $ 86,000 | ||
PCH Investment Group, Inc [Member] | Share-based Compensation Award, Tranche Two [Member] | |||
Investment [Line Items] | |||
Debt instrument, face amount | 300,000 | ||
PCH Investment Group, Inc [Member] | Share-based Compensation Award, Tranche Three [Member] | |||
Investment [Line Items] | |||
Debt instrument, face amount | 90,000 | ||
PCH Investment Group, Inc [Member] | Share-based Compensation Award, Tranche Four [Member] | |||
Investment [Line Items] | |||
Debt instrument, face amount | 170,000 | ||
PCH Investment Group, Inc [Member] | Share-based Compensation Award, Tranche Five [Member] | |||
Investment [Line Items] | |||
Debt instrument, face amount | 114,000 | ||
PCH Investment Group, Inc [Member] | Pre-acquisition Loans [Member] | |||
Investment [Line Items] | |||
Debt instrument, face amount | 414,000 | ||
PCH Investment Group, Inc [Member] | PCH Management Agreement [Member] | |||
Investment [Line Items] | |||
Gross profit of business, percentage | 75.00% | ||
Annual gross profit, milestone | $ 8,000,000 | ||
Gross profit milestone method, description | In the event that, during any annual period, the gross profit thereunder was less than $8 million (including any carry-forward amounts), then, on a one- time basis, PCH would have been permitted to carry-forward such deficit to the following annual period. If, in that following annual period, the gross profit was to have exceeded $6 million, then PCH would have been entitled to an additional "one-time basis" carry-forward of a subsequent deficit. | ||
Term of agreement | 5 years | ||
PCH Investment Group, Inc [Member] | Convertible Note Purchase Agreement [Member] | PCH-Related Note [Member] | |||
Investment [Line Items] | |||
Debt instrument, face amount | $ 1,000,000 | ||
Debt instrument, interest rate percentage | 10.00% | ||
Debt instrument, description | Principal and interest are subject to certain conversion rights in favor of the PCH Lender. So long as any principal is outstanding or any interest remains accrued, but unpaid, at any time and from time to time, at the option of the PCH Lender, any or all of such amounts may be converted into shares of Common Stock. Notwithstanding such conversion right, and except in the circumstance described in the next sentence, the PCH Lender may not exercise its conversion rights if, in so doing, it would then own more than 4.99% of the Company's issued and outstanding shares of Common Stock. However, upon not less than 61 days' notice, the PCH Lender may increase its limitation percentage to a maximum of 9.99%. The PCH Lender's conversion price is fixed at $0.0001 per share. Principal and accrued interest may be pre-paid from time to time or at any time, subject to 10 days' written notice to the PCH Lender. Any prepayment of principal or interest shall be increased to be at the rate of 130% of the amount so to be prepaid and, during the 10-day notice period, the PCH Lender may exercise its conversion rights in respect of any or all of the amounts otherwise to be prepaid. | ||
Convertible conversion price per share | $ 0.0001 | ||
PCH Investment Group, Inc [Member] | To be Purchased Shares [Member] | |||
Investment [Line Items] | |||
Stock acquired during period | 459,999 | ||
Percentage of voting interests acquired | 51.00% | ||
PCH Investment Group, Inc [Member] | PCH Optioned Shares [Member] | |||
Investment [Line Items] | |||
Percentage of voting interests acquired | 49.00% |
Convertible Notes Payable and_3
Convertible Notes Payable and Derivative Liability (Details Narrative) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017USD ($)Days$ / sharesshares | Mar. 31, 2016USD ($) | Dec. 31, 2016USD ($)Days$ / shares | |
Debt Instrument [Line Items] | |||
Proceeds from convertible note | $ 1,261,000 | $ 1,040,001 | |
Original issue discount | $ 598,721 | ||
Payments for debt | 2,500 | ||
Loss on PCH | 799,910 | ||
Repayments of debt | $ 363,547 | ||
Investor #2 [Member] | |||
Debt Instrument [Line Items] | |||
Accrued interest, percentage | 24.00% | ||
Reclassified convertible notes payable | shares | 275,000 | ||
30 Convertible Notes [Member] | Investor #1 [Member] | |||
Debt Instrument [Line Items] | |||
Principal amount | 9,700,170 | ||
Proceeds from convertible note | 2,695,000 | ||
Original issue discount | 119,737 | ||
Proceeds from advancements on fixed assets | 161,401 | ||
Debt instrument, annual principal payment | $ 6,818,744 | ||
Debt interest rate | 10.00% | ||
Debt instrument maturity description | Mature with interest and principal both due between July 13, 2016 through September 9, 2017. | ||
Conversion price | $ / shares | $ 0.75 | ||
Trading days | Days | 30 | ||
30 Convertible Notes [Member] | Investor #1 [Member] | Maximum [Member] | |||
Debt Instrument [Line Items] | |||
Debt discount rate | 49.00% | ||
30 Convertible Notes [Member] | Investor #1 [Member] | Minimum [Member] | |||
Debt Instrument [Line Items] | |||
Debt discount rate | 40.00% | ||
13 Convertible Notes [Member] | Investor #1 [Member] | |||
Debt Instrument [Line Items] | |||
Principal amount | $ 711,957 | ||
Proceeds from convertible note | $ 261,000 | ||
Debt interest rate | 10.00% | ||
Debt instrument maturity description | Mature with interest and principal both due between February 2017 through February 2018. | ||
Conversion price | $ / shares | $ 0.0001 | ||
Debt discount rate | 50.00% | ||
Trading days | Days | 30 | ||
Derivative liability | $ 845,342 | ||
Debt discount | 230,901 | ||
Accrued interest | 37,148 | ||
Payments for debt | 37,500 | ||
Loss on PCH | $ 413,457 | ||
Accrued interest, percentage | 24.00% | ||
Late fee, percentage | 18.00% | ||
Repayments of debt | $ 363,547 | ||
13 Convertible Notes [Member] | Investor #1 [Member] | Maximum [Member] | |||
Debt Instrument [Line Items] | |||
Debt principal increase, percentage | 50.00% | ||
13 Convertible Notes [Member] | Investor #1 [Member] | Minimum [Member] | |||
Debt Instrument [Line Items] | |||
Debt principal increase, percentage | 30.00% | ||
Promissory Note [Member] | Investor #1 [Member] | |||
Debt Instrument [Line Items] | |||
Reclassified convertible notes payable | shares | 3,691,199 | ||
Promissory Note [Member] | Investor #2 [Member] | |||
Debt Instrument [Line Items] | |||
Reclassified convertible notes payable | shares | 275,000 | ||
Two Convertible Notes [Member] | Investor #2 [Member] | |||
Debt Instrument [Line Items] | |||
Principal amount | $ 278,000 | ||
Proceeds from convertible note | $ 235,000 | ||
Debt interest rate | 5.00% | ||
Debt instrument maturity description | Mature with interest and principal both due between July 13, 2016 through April 30, 2017. | ||
Conversion price | $ / shares | $ 0.75 | ||
Debt discount rate | 49.00% | ||
Trading days | Days | 20 | ||
Derivative liability | $ 549,535 | ||
Payments for debt | $ 43,000 | ||
Accrued interest, percentage | 24.00% | ||
Late fee, percentage | 18.00% | ||
Two Convertible Notes [Member] | Investor #3 [Member] | |||
Debt Instrument [Line Items] | |||
Principal amount | 282,500 | ||
Proceeds from convertible note | 236,500 | ||
Original issue discount | $ 34,750 | ||
Debt interest rate | 10.00% | ||
Debt instrument maturity description | Mature with interest and principal both due between September 14, 2016 through August 20, 2017. | ||
Conversion price | $ / shares | $ 0.75 | ||
Debt discount rate | 49.00% | ||
Trading days | Days | 30 | ||
Payments for debt | $ 11,250 | ||
1 Convertible Notes [Member] | Investor #3 [Member] | |||
Debt Instrument [Line Items] | |||
Principal amount | $ 61,687 | ||
1 Convertible Notes [Member] | Investor #4 [Member] | |||
Debt Instrument [Line Items] | |||
Principal amount | 1,000,000 | ||
Proceeds from convertible note | $ 1,000,000 | ||
Debt interest rate | 10.00% | ||
Debt instrument maturity description | Mature with interest and principal both due between March 15, 2018. | ||
Conversion price | $ / shares | $ 0.0001 | ||
Debt discount rate | 50.00% | ||
Trading days | Days | 30 | ||
Derivative liability | $ 1,621,944 | ||
Debt discount | $ 2,979,230 | ||
Accrued interest, percentage | 24.00% | ||
Late fee, percentage | 18.00% | ||
Debt principal increase, percentage | 50.00% | ||
Interest expense | $ 500,000 | ||
Warrants to purchase of common stock | shares | 10,000,000,000 | ||
Share price | $ / shares | $ 0.0001 |
Convertible Notes Payable and_4
Convertible Notes Payable and Derivative Liability - Schedule of Convertible Notes Payable (Details) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | ||
Less discounts | $ (598,721) | |
Less current maturities | 15,497,090 | 8,645,442 |
Convertible Notes Payable [Member] | ||
Debt Instrument [Line Items] | ||
Convertible notes payable, gross | 17,872,446 | 8,731,033 |
Less discounts | (2,375,356) | (85,591) |
Less current maturities | 15,497,090 | 8,645,442 |
Convertible notes payable, net of current maturities | ||
Convertible Notes Payable [Member] | Investor #1 [Member] | ||
Debt Instrument [Line Items] | ||
Convertible notes payable, gross | 13,990,304 | 6,642,745 |
Convertible Notes Payable [Member] | Investor #2 [Member] | ||
Debt Instrument [Line Items] | ||
Convertible notes payable, gross | 2,089,133 | 1,857,146 |
Convertible Notes Payable [Member] | Investor #3 [Member] | ||
Debt Instrument [Line Items] | ||
Convertible notes payable, gross | 293,009 | 231,142 |
Convertible Notes Payable [Member] | Investor #4 [Member] | ||
Debt Instrument [Line Items] | ||
Convertible notes payable, gross | $ 1,500,000 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2019USD ($) | Mar. 31, 2017USD ($)shares | Mar. 31, 2016USD ($) | Dec. 31, 2016USD ($)Days$ / shares | Dec. 14, 2017 | |
Debt Instrument [Line Items] | |||||
Proceeds from convertible note | $ 1,261,000 | $ 1,040,001 | |||
Original issue discount | $ 598,721 | ||||
Investor #2 [Member] | |||||
Debt Instrument [Line Items] | |||||
Accrued interest, percentage | 24.00% | ||||
Reclassified convertible notes payable | shares | 275,000 | ||||
18 Convertible Notes [Member] | Investor #1 [Member] | |||||
Debt Instrument [Line Items] | |||||
Repayments of debt | 145,000 | ||||
Debt instrument, face amount | 3,691,199 | ||||
Proceeds from convertible note | 1,095,741 | ||||
Original issue discount | $ 996,199 | ||||
Debt instrument maturity description | Mature with interest and principal both due between December 12, 2016 through November 18, 2017. | ||||
Conversion price | $ / shares | $ 0.75 | ||||
Debt discount rate | 40.00% | ||||
Trading days | Days | 20 | ||||
Accrued interest, percentage | 24.00% | ||||
18 Convertible Notes [Member] | Investor #1 [Member] | Minimum [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 5.00% | ||||
18 Convertible Notes [Member] | Investor #1 [Member] | Maximum [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 10.00% | ||||
18 Promissory Notes [Member] | Investor #1 [Member] | |||||
Debt Instrument [Line Items] | |||||
Reclassified convertible notes payable | shares | 3,691,199 | ||||
Subsequent Event [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 6.25% | ||||
Southwest Farms, Inc. [Member] | Subsequent Event [Member] | |||||
Debt Instrument [Line Items] | |||||
Repayments of debt | $ 10,225 | ||||
East West Secured Development, LLC [Member] | Subsequent Event [Member] | |||||
Debt Instrument [Line Items] | |||||
Repayments of debt | $ 11,437 |
Notes Payable - Schedule of Not
Notes Payable - Schedule of Notes Payable (Details) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | ||
Notes payable gross | $ 4,079,110 | $ 8,059,472 |
Less discounts | (598,721) | |
Notes payable total | 7,460,751 | |
Less current maturities | 4,079,110 | 3,367,479 |
Notes payable noncurrent | 4,093,272 | |
Investor #1 [Member] | ||
Debt Instrument [Line Items] | ||
Notes payable gross | 7,500 | 3,691,200 |
Investor #2 [Member] | ||
Debt Instrument [Line Items] | ||
Notes payable gross | 275,000 | |
Southwest Farms, Inc. [Member] | ||
Debt Instrument [Line Items] | ||
Notes payable gross | 3,580,016 | 3,590,241 |
East West Secured Development, LLC [Member] | ||
Debt Instrument [Line Items] | ||
Notes payable gross | $ 491,594 | $ 503,031 |
Stockholders' Deficit (Details
Stockholders' Deficit (Details Narrative) - USD ($) | Jan. 20, 2017 | Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 |
Class of Stock [Line Items] | |||||
Preferred stock, voting rights | The Series A Preferred Stock has special voting rights when voting as a class with the Common Stock as follows: (i) the holders of Series A Preferred Stock shall have such number of votes as is determined by multiplying (a) the number of shares of Series A Preferred Stock held by such holder, (b) the number of issued and outstanding shares of the Corporation's Series A Preferred Stock and Common Stock (collectively, the "Common Stock") on a Fully-Diluted Basis (as hereinafter defined), as of the record date for the vote, or, if no such record date is established, as of the date such vote is taken or any written consent of stockholders is solicited, and (c) 0.00000025; and (ii) the holders of Common Stock shall have one vote per share of Common Stock held as of such date. "Fully-Diluted Basis" mean that the total number of issued and outstanding shares of Common Stock shall be calculated to include (a) the shares of Common Stock issuable upon exercise and/or conversion of all of the following securities (collectively, "Common Stock Equivalents"): all outstanding (a) securities convertible into or exchangeable for Common Stock, whether or not then convertible or exchangeable (collectively, "Convertible Securities"), (b) subscriptions, rights, options and warrants to purchase shares of Common Stock, whether or not then exercisable (collectively, "Options"), and (c) securities convertible into or exchangeable or exercisable for Options or Convertible Securities and any such underlying Options and/or Convertible Securities. | ||||
Preferred stock, shares outstanding | 0 | 0 | |||
Aggregate intrinsic value of warrants outstanding | $ 2,000,000 | ||||
Aggregate intrinsic value of warrants exercisable | $ 1,000,000 | ||||
Warrants exercised | |||||
Warrants outstanding, shares | 10,065,757,748 | 50,119,000 | |||
Fair value of warrant liability | $ 2,994,260 | ||||
Change in fair value of warrant liability | $ 599 | $ (555,973) | |||
Warrants issued with convertible notes | 10,000,000,000 | ||||
Warrants, grant date fair value | $ 2,979,230 | ||||
Common Stock [Member] | Crystal v. Medbox, Inc [Member] | |||||
Class of Stock [Line Items] | |||||
Number of common stock, shares issued | 2,000,000 | ||||
Director [Member] | |||||
Class of Stock [Line Items] | |||||
Value of shares issued for compensation | $ 15,000 | ||||
Number of shares issued for compensation | 325,000 | ||||
Series A Preferred Stock [Member] [Member] | |||||
Class of Stock [Line Items] | |||||
Preferred stock, shares outstanding |
Stockholders' Deficit - Schedul
Stockholders' Deficit - Schedule of Activity Related to Restricted Stock Units (RSU's) (Details) - Restricted Stock Units (RSUs) [Member] | 3 Months Ended |
Mar. 31, 2017$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
RSU's non-vested, beginning balance | shares | 7,142,856 |
RSU's granted | shares | 250,975,000 |
RSU's vested | shares | (4,546,429) |
RSU's forfeited | shares | |
RSU's non-vested, ending balance | shares | 253,571,427 |
RSU's Grant date fair value, forfeited | |
Minimum [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
RSU's non-vested Grant date fair value, beginning balance | 0.51 |
RSU's Grant date fair value, granted | 0.0002 |
RSU's Grant date fair value, vested | 0.0003 |
RSU's non-vested Grant date fair value, ending balance | 0.0002 |
Maximum [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
RSU's non-vested Grant date fair value, beginning balance | 0.007 |
RSU's Grant date fair value, granted | 0.0003 |
RSU's Grant date fair value, vested | 0.0007 |
RSU's non-vested Grant date fair value, ending balance | $ 0.0007 |
Stockholders' Deficit - Sched_2
Stockholders' Deficit - Schedule of Expense Related to Restricted Stock (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share based compensation | $ 54,776 | $ 576,098 |
Restricted Stock Units (RSUs) [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share based compensation | 54,776 | |
Restricted Stock, RSUs and Stock Option Awards [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share based compensation | $ 54,776 |
Stockholders' Deficit - Sched_3
Stockholders' Deficit - Schedule of Valuation Assumption (Details) | 3 Months Ended |
Mar. 31, 2017$ / shares | |
Equity [Abstract] | |
Exercise price | $ 0.0001 |
Expected dividends | 0.00% |
Expected volatility | 249.30% |
Risk free interest rate | 1.54% |
Expected life of warrant | 4 years |
Stockholders' Deficit - Summary
Stockholders' Deficit - Summary of Warrant Activity (Details) | 3 Months Ended |
Mar. 31, 2017$ / sharesshares | |
Equity [Abstract] | |
Warrants outstanding, beginning balance | shares | 65,757,081 |
Warrants granted | shares | 10,000,000,000 |
Warrants exercised | shares | |
Warrants forfeited/cancelled | shares | |
Warrants outstanding, ending balance | shares | 10,065,757,748 |
Weighted average exercise price outstanding,beginning balance | $ 0.11 |
Weighted average exercise price, granted | 0.0001 |
Weighted average exercise price, exercised | |
Weighted average exercise price, forfeited/cancelled | |
Weighted average exercise price outstanding, ending balance | 0.0008 |
Weighted average remaining days price outstanding, beginning balance | 1.97 |
Weighted average remaining days price, granted | 4 |
Weighted average remaining days price, exercised | |
Weighted average remaining days price, forfeited/cancelled | |
Weighted average remaining days price outstanding, ending balance | $ 3.98 |
Discontinued Operations (Detail
Discontinued Operations (Details Narrative) - USD ($) | Mar. 28, 2016 | Mar. 31, 2017 | Dec. 31, 2016 |
Discontinued Operations and Disposal Groups [Abstract] | |||
Sale of assets | $ 70,000 | $ 2,492 | $ 2,522 |
Disposal interest rate, description | 80 percent interest in one of two product lines that account for 40 percent of total revenue. |
Discontinued Operations - Sched
Discontinued Operations - Schedule of Income (Loss) from Discontinued Operation (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | ||
Revenue | $ 58,686 | |
Revenue, related party | 24,644 | |
Net revenue | 83,330 | |
Cost of revenues | 46,656 | |
Gross profit (loss) | 36,674 | |
Operating expenses | 337,979 | |
General and administrative | 2,823 | |
Total operating expenses | 2,823 | 337,979 |
Loss from operations | 2,823 | (301,305) |
Interest expense, net | (2,637) | |
Gain on sale of assets of subsidiary | 5,498 | |
Other income (expense) | 372 | 20,000 |
Total other income (expense) | 372 | 22,861 |
Net income (loss) | $ 3,195 | $ (278,444) |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) | Nov. 30, 2017 | Sep. 16, 2016 | Sep. 08, 2016 | Aug. 31, 2016 | Jun. 17, 2016 | May 30, 2016 | Jun. 05, 2014 | Nov. 19, 2013 | Aug. 01, 2011 | Jan. 31, 2017 | Nov. 30, 2016 | Jan. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | Dec. 14, 2017 | Dec. 31, 2016 | May 22, 2013 |
Loss Contingencies [Line Items] | |||||||||||||||||
Rent expenses | $ 46,522 | $ 9,261 | $ 289,000 | ||||||||||||||
Litigation damages awarded | $ 300,000 | ||||||||||||||||
Compensation cost per month | $ 15,000 | ||||||||||||||||
Payment of common stock | 5,000 | 16,000 | |||||||||||||||
Capitalized agricultural costs | 288,003 | $ 160,131 | |||||||||||||||
Cash payment to a settlement | $ 1,850,000 | ||||||||||||||||
Number of shares issued for settlement escrow account | 2,300,000 | ||||||||||||||||
Payment in settlement of escrow account | $ 300,000 | ||||||||||||||||
Litigation payment, description | On March 16, 2017, the Company and Mani Brothers agree to settle the amount owed if the Company paid $40,000 before July 2017. The Company paid the $40,000 in four monthly payments commencing in April 2017. On July 24, 2017, the case was dismissed against the Company. | ||||||||||||||||
Whole Hemp Plants [Member] | |||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||
Capitalized agricultural costs | $ 73,345 | ||||||||||||||||
Parent Company [Member] | |||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||
Cash payment to a settlement | $ 150,000 | ||||||||||||||||
Number of shares issued for settlement escrow account | 2,300,000 | ||||||||||||||||
Insurers [Member] | |||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||
Cash payment to a settlement | $ 1,700,000 | ||||||||||||||||
Messrs. Mehdizadeh [Member] | |||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||
Number of shares issued for settlement escrow account | 2,000,000 | ||||||||||||||||
Bruce Bedrick [Member] | |||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||
Number of shares issued for settlement escrow account | 300,000 | ||||||||||||||||
Plaintiff Merritts [Member] | |||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||
Litigation settlement | $ 135,000 | ||||||||||||||||
Bank Leumi [Member] | |||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||
Litigation damages awarded | $ 29,977 | ||||||||||||||||
Prescription Vending Machines, Inc [Member] | |||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||
Litigation damages awarded | $ 374,402 | ||||||||||||||||
Litigation settlement | $ 374,402 | ||||||||||||||||
MedVend Holdings LLC [Member] | |||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||
Litigation damages awarded | $ 4,550,000 | ||||||||||||||||
Ownership percentage | 50.00% | ||||||||||||||||
Investment owned | $ 4,100,000 | ||||||||||||||||
Subsequent Event [Member] | |||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||
Litigation settlement | $ 89,000 | ||||||||||||||||
Debt interest rate | 6.25% | ||||||||||||||||
Acquisition Agreement [Member] | |||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||
Purchase price to acquire property | $ 650,000 | ||||||||||||||||
Escrow deposit | $ 10,000 | ||||||||||||||||
Lease Agreement [Member] | |||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||
Rent expenses | $ 7,486 | ||||||||||||||||
Sublease term | 18 months | ||||||||||||||||
Lease Agreement [Member] | West Hollywood, California [Member] | |||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||
Rent expenses | $ 14,828 | ||||||||||||||||
Consulting Agreement [Member] | |||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||
Compensation cost per month | 25,000 | ||||||||||||||||
Payment of common stock | $ 5,000 | ||||||||||||||||
Purchase and Sale Agreement [Member] | PVM International Inc [Member] | |||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||
Shares repurchased during the period | 30,000 | ||||||||||||||||
Settlement Agreement [Member] | |||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||
Litigation damages awarded | $ 937,000 | ||||||||||||||||
Litigation settlement | 10,000 | ||||||||||||||||
Settlement Agreement [Member] | Three Shareholders [Member] | |||||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||||
Litigation settlement | $ 375,000 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) | Jul. 31, 2019USD ($) | Jul. 11, 2019USD ($)shares | Jun. 29, 2019USD ($) | May 31, 2019USD ($) | May 10, 2019 | May 01, 2019USD ($) | Jan. 25, 2019USD ($)a | Nov. 19, 2018USD ($) | Jun. 29, 2018USD ($) | Jun. 20, 2018 | May 17, 2018USD ($) | Mar. 12, 2018USD ($)a | Jan. 29, 2018USD ($)$ / shares | Oct. 27, 2017USD ($) | May 30, 2016USD ($) | Jan. 31, 2016USD ($) | Mar. 31, 2017USD ($) | Mar. 31, 2016USD ($) | Nov. 26, 2019USD ($) | Aug. 22, 2019USD ($) | Dec. 14, 2017 |
Subsequent Event [Line Items] | |||||||||||||||||||||
Proceeds from convertible note | $ 367,750 | ||||||||||||||||||||
Loss contingency, amount awarded | $ 300,000 | ||||||||||||||||||||
Number of common stock, value issued | $ 5,000 | $ 16,000 | |||||||||||||||||||
Subsequent Event [Member] | |||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||
Debt interest rate | 6.25% | ||||||||||||||||||||
Operating lease term | 7 years | ||||||||||||||||||||
Area of land | a | 1,840 | ||||||||||||||||||||
Monthly rent expense | $ 1,200 | ||||||||||||||||||||
Minimum monthly lease payments | $ 3,000 | ||||||||||||||||||||
Subsequent Event [Member] | Termination Agreement [Member] | |||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||
Agreement description | In connection with the termination of the MS Agreement and in lieu of any compensation and reimbursement that otherwise was to have been tendered by Trava, the parties agreed that, on or before March 31, 2019, the Company would tender to Trava the sum of not less than $250,000.00, subject to increase depending upon the results of the Farm's 2018 harvest season. Pursuant to the terms of the Termination Agreement, on March 31, 2019, the Company tendered the sum of approximately $265,000 to Trava. | ||||||||||||||||||||
Tendered amount | $ 265,000 | ||||||||||||||||||||
Debt description | If Trava converts, in whole or in part, any one or more of such notes, then (unless (i) thereafter, the Company is unable to accommodate any future such conversions because of a lack of authorized, but unissued or unreserved, shares or (ii) the public market price for a share of Common Stock becomes "no bid"), Trava shall continue to exercise its conversion rights in respect of all of such notes (to the 4.9% limitations set forth therein) and shall diligently sell the shares of Common Stock into which any or all of such notes may be converted (collectively, the "Underlying Shares") in open market or other transactions (subject to any limitations imposed by the Federal securities laws and set forth in any "leak-out" type of arrangements in respect of the "underlying shares" to which Trava is a party). | ||||||||||||||||||||
Debt conversion price per share | $ / shares | $ .0001 | ||||||||||||||||||||
Subsequent Event [Member] | Partner Farm Agreement [Member] | |||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||
Agreement description | Mile High has also agreed to provide Shi Farms with priority processing services for the Product specified in the Partner Farm Agreement, of up to 25% of the production capacity of the processing facilities operated by Mile High on the Farm. The Partner Farm Agreement will have an initial term of five years and shall renew automatically thereafter for one-year increments and is terminable by either Mile High or Shi Farms upon 60 days' written notice. Shi Farms will receive 20% of all sales of the Product and Mile High will receive 80% of the sales price, subject to the payment schedule and terms attached thereto. | ||||||||||||||||||||
Subsequent Event [Member] | Sheppard Mullin [Member] | |||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||
Loss contingency, seeking amount | $ 240,000 | ||||||||||||||||||||
Loss contingency, amount awarded | $ 277,999 | ||||||||||||||||||||
Loss contingency, amount paid | $ 25,000 | $ 50,000 | |||||||||||||||||||
Subsequent Event [Member] | Canbiola Sub [Member] | Joint Venture Agreement [Member] | |||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||
Cash payments to joint venture | $ 500,000 | ||||||||||||||||||||
Number of common stock, shares issued | shares | 12,074,089 | ||||||||||||||||||||
Percentage of gross profit | 70.00% | ||||||||||||||||||||
Subsequent Event [Member] | NY - SHI, LLC [Member] | Joint Venture Agreement [Member] | |||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||
Percentage of gross profit | 30.00% | ||||||||||||||||||||
Subsequent Event [Member] | NY - SHI, LLC [Member] | RS Agreement [Member] | |||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||
Received funding amount | $ 2,854,775 | ||||||||||||||||||||
Subsequent Event [Member] | NY - SHI, LLC [Member] | Partner Farm Agreement [Member] | |||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||
Percentage of gross profit | 20.00% | ||||||||||||||||||||
Subsequent Event [Member] | Aeon Funds, LLC [Member] | |||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||
Agreement description | In consideration for the services provided, Shi Farms has agreed to pay Aeon Capital a cash fee of up to 10% of the gross proceeds from the sale of units to investors introduced by Aeon Capital, and 2.5% of the gross proceeds from the sale of units to investors introduced by the Company. | ||||||||||||||||||||
Preferred membership units | $ 3,915,000 | ||||||||||||||||||||
Cash fees paid | $ 193,490 | ||||||||||||||||||||
Subsequent Event [Member] | Aeon Funds, LLC [Member] | March 2018 Aeon Agreement [Member] | |||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||
Agreement description | Shi Farms will pay royalties to Aeon in an amount equal to 50% of gross sales of product from the 2018-2019 Crop until the principal investment is fully repaid. Shi Farms will then pay 20% of gross sales of the 2018-2019 Crop to Aeon until gross sales equal $10 million. Once gross sales exceed $10 million, Shi Farms will pay Aeon 10% of gross sales. | ||||||||||||||||||||
Area of land | a | 100 | ||||||||||||||||||||
Investments | $ 1,000,000 | ||||||||||||||||||||
Number of common stock, value issued | $ 100,000 | ||||||||||||||||||||
Subsequent Event [Member] | Aeon Funds, LLC [Member] | March 2018 Aeon Agreement [Member] | Principal Investment Fully Repaid [Member] | |||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||
Percentage of gross profit | 50.00% | ||||||||||||||||||||
Subsequent Event [Member] | Aeon Funds, LLC [Member] | March 2018 Aeon Agreement [Member] | Gross Sales Equal $10 Million [Member] | |||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||
Percentage of gross profit | 20.00% | ||||||||||||||||||||
Subsequent Event [Member] | Aeon Funds, LLC [Member] | March 2018 Aeon Agreement [Member] | Gross Sales Exceeds $10 Million [Member] | |||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||
Percentage of gross profit | 10.00% | ||||||||||||||||||||
Subsequent Event [Member] | Shi Farms [Member] | March 2018 Aeon Agreement [Member] | |||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||
Investments | $ 1,000,000 | ||||||||||||||||||||
Repayments of debt | $ 1,374,892 | ||||||||||||||||||||
Subsequent Event [Member] | AAG Harvest 2019, LLC [Member] | RS Agreement [Member] | |||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||
Agreement description | In exchange for the investment, AAG Harvest will receive payments equal to 25% of Shi Farms" gross sales of the 2019 Crop until AAG Harvest has received an amount equivalent to the amount of capital raised by AAG Harvest to fund the Funding (approximately 118% of the Funding). After AAG Harvest has received this amount, Shi Farms will pay 12.5% of gross sales of the 2019 Crop to AAG Harvest. | ||||||||||||||||||||
Percentage of gross profit | 25.00% | ||||||||||||||||||||
Maximum funding amount | $ 3,910,000 | ||||||||||||||||||||
Increase in funding amount | $ 7,100,000 | ||||||||||||||||||||
Subsequent Event [Member] | Mile High Labs, Inc [Member] | Partner Farm Agreement [Member] | |||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||
Percentage of gross profit | 80.00% | ||||||||||||||||||||
Subsequent Event [Member] | 42 Convertible Notes [Member] | |||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||
Proceeds from convertible note | $ 4,612,147 | ||||||||||||||||||||
Debt maturity date description | Due between August 2018 through September 2020 | ||||||||||||||||||||
Subsequent Event [Member] | 42 Convertible Notes [Member] | Minimum [Member] | |||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||
Debt interest rate | 10.00% | ||||||||||||||||||||
Subsequent Event [Member] | 42 Convertible Notes [Member] | Maximum [Member] | |||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||
Debt interest rate | 24.00% | ||||||||||||||||||||
Subsequent Event [Member] | 5 Notes [Member] | |||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||
Proceeds from convertible note | $ 296,347 | ||||||||||||||||||||
Debt maturity date description | Due between May 2017 through April 2019 | ||||||||||||||||||||
Subsequent Event [Member] | 5 Notes [Member] | Minimum [Member] | |||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||
Debt interest rate | 5.00% | ||||||||||||||||||||
Subsequent Event [Member] | 5 Notes [Member] | Maximum [Member] | |||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||
Debt interest rate | 24.00% | ||||||||||||||||||||
Subsequent Event [Member] | Investor #2 Notes [Member] | |||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||
Principal amount | $ 2,595,895 | ||||||||||||||||||||
Notes payable | $ 2,350,000 | ||||||||||||||||||||
Subsequent Event [Member] | EWSD Secured Note [Member] | Loan Modification Agreement [Member] | |||||||||||||||||||||
Subsequent Event [Line Items] | |||||||||||||||||||||
Debt maturity date | Aug. 1, 2020 | ||||||||||||||||||||
Additional principal payment | $ 250,000 |