Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Aug. 28, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | DIEGO PELLICER WORLDWIDE, INC | |
Entity Central Index Key | 1,559,172 | |
Document Type | 10-Q/A | |
Document Period End Date | Jun. 30, 2017 | |
Amendment Flag | true | |
Amendment Description | The purpose of this Amendment No. 1 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2017, filed with the Securities and Exchange Commission on August 29, 2017 (the "Form 10-Q") is to replace the version of the document that was erroneously filed, and to include updated schedules in the Management Discussion and Analysis section of the Form 10-Q. | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 57,708,297 | |
Trading symbol | DPWW | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,017 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Current Assets: | ||
Cash and equivalents | $ 8,544 | $ 51,333 |
Accounts receivable | 144,503 | |
Prepaid expenses | 71,717 | 482,765 |
Inventory | 32,400 | 47,024 |
Total current assets | 257,164 | 581,123 |
Property and equipment, net | 626,547 | 758,112 |
Investments, at cost | 43,333 | |
Security deposits | 320,000 | 320,000 |
Other assets | 8,000 | |
Total assets | 1,211,711 | 1,702,566 |
Current liabilities: | ||
Accounts Payable | 543,014 | 823,797 |
Accrued Payable - Related Party | 814,233 | 509,294 |
Accrued Expenses | 316,224 | 1,207,803 |
Notes Payable - Related Party | 307,312 | 307,312 |
Notes Payable | 126,000 | 1,310,678 |
Convertible Note, net of discount | 2,645,300 | 334,156 |
Deferred rent | 269,765 | 107,957 |
Deferred Revenue | 53,000 | 53,000 |
Derivative liabilities | 5,783,534 | 338,282 |
Warrant Liabilities | 311,216 | |
Total current liabilities | 11,169,598 | 4,992,279 |
Deferred revenue | 289,000 | 316,000 |
Total liabilities | 11,458,598 | 5,308,279 |
Stockholder’s deficit | ||
Common Stock, $0.000001 par value, 95,000,000 shares authorized, 52,598,307 and 49,081,878 shares were issued and outstanding as of June 30, 2017 and December 31, 2016, respectively | 53 | 49 |
Additional paid-in capital | 26,002,501 | 24,508,365 |
Stock to be issued | 157,096 | |
Accumulated deficit | (36,406,537) | (28,114,125) |
Total stockholder's deficit | (10,246,886) | (3,605,711) |
Total liabilities and stockholder's deficit | 1,211,711 | 1,702,568 |
Series A Preferred Stock [Member] | ||
Stockholder’s deficit | ||
Series A and B Preferred Stock, $0.0001 par value, 5,000,000 shares authorized, 0 share issued and outstanding as of June 30, 2017 and December 31, 2016 | ||
Series B Preferred Stock [Member] | ||
Stockholder’s deficit | ||
Series A and B Preferred Stock, $0.0001 par value, 5,000,000 shares authorized, 0 share issued and outstanding as of June 30, 2017 and December 31, 2016 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Jun. 30, 2017 | Dec. 31, 2016 |
Common stock, par value | $ 0.000001 | $ 0.000001 |
Common stock, shares authorized | 95,000,000 | 95,000,000 |
Common stock, shares issued | 52,598,307 | 49,081,878 |
Common stock, shares outstanding | 52,598,307 | 49,081,878 |
Series A Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Series B Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
REVENUES | ||||
Net Rental Revenue | $ 545,035 | $ 149,601 | $ 854,997 | $ 222,868 |
Rental Expense | (289,918) | (278,921) | (637,121) | (573,663) |
Gross Profit | 255,117 | (129,320) | 217,876 | (350,795) |
Operating expenses: | ||||
General and administrative expenses | 1,674,826 | 2,648,745 | 2,567,821 | 3,342,927 |
Selling Expense | 33,877 | 33,889 | ||
Depreciation Expense | 108,710 | 239,499 | ||
Income (Loss) from Operations | (1,562,296) | (2,778,065) | (2,623,333) | (3,693,722) |
Other Income (Expense) | ||||
Licensing Revenue | 13,500 | 13,500 | 27,000 | 27,000 |
Other Income (Expense) | 3,061 | 45,830 | ||
Interest Expense | (446,762) | (58,370) | (734,998) | (105,656) |
Impairment Loss | (15,833) | (82,478) | ||
Extinguishment of Debt | (5,607,836) | (5,607,836) | ||
Change in derivative liabilities | 943,780 | 110,360 | 994,619 | 106,336 |
Change in value of Warrants | (311,216) | (311,216) | ||
Total Other Income (Loss) | (5,421,306) | 65,490 | (5,669,079) | 27,680 |
Provision for taxes | ||||
NET INCOME (LOSS) | $ (6,983,602) | $ (2,712,575) | $ (8,292,412) | $ (3,666,042) |
Loss per share - basic and fully diluted | $ (0.13) | $ (0.07) | $ (0.16) | $ (0.09) |
Weighted average common shares outstanding - basic and fully diluted | 52,598,308 | 41,312,180 | 52,598,308 | 39,568,485 |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Cash Flow (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Operating Activities | ||
Net Loss | $ (8,292,412) | $ (3,666,042) |
Adjustments to reconcile net loss to net cash used in operations: | ||
Depreciation and amortization | 239,499 | |
Amortization of Debt Costs | 4,141 | |
Amortization of discount | 190,984 | |
Share-based compensation | 1,527,713 | 2,792,544 |
Impairment on investment | 82,478 | |
Change in fair value of derivative liabilities | (994,619) | (106,336) |
Extinguishment of Debt | (5,607,836) | |
Change in value of warrants | 311,216 | |
Change in operating assets and liabilities: | ||
Change in accounts receivable | (144,503) | (151,538) |
Change in inventory | 14,624 | (8,096) |
Prepaid expenses | 411,048 | 24,476 |
Change in other assets | (8,000) | (33,152) |
Change in accounts payable | (302,861) | 512,913 |
Change in accrued liability - Related party | 304,939 | 360,400 |
Change in accrued liability | 388,511 | |
Change in deferred rent | 161,808 | (43,174) |
Change in deferred revenue | (27,000) | (27,000) |
Net cash provided in operating activities | (528,739) | (340,865) |
Investing Activities | ||
Purchase of property and equipment | (125,000) | (394,090) |
Net cash used in investing activities | (125,000) | (394,090) |
Financing Activities | ||
Proceeds from note payable | 470,000 | |
Proceeds from sale of common stock | 245,001 | |
Proceeds from convertible notes payable | 740,000 | |
Repayment of notes payable | (129,050) | |
Net cash provided by financing activities | 610,950 | 715,001 |
Net (Decrease) increase in Cash | (42,789) | (19,954) |
Cash - beginning of period | 51,333 | 36,001 |
Cash - end of the period | 8,544 | 16,047 |
Cash paid for interest | ||
Cash paid for income taxes | ||
Supplemental noncash financing activities: | ||
Stock issued for debt settlement | $ 50,000 |
Organization and Operations
Organization and Operations | 6 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Operations | Note 1 – Organization and Operations History On March 13, 2015 (the “closing date”), Diego Pellicer Worldwide, Inc. f/k/a Type 1 Media, Inc. (the “Company”) closed on a merger and share exchange agreement by and among (i) the Company, and (ii) Diego Pellicer World-wide, Inc., a Delaware corporation, (“Diego”), and (iii) Jonathan White, the majority shareholder of the Company. Diego was merged with and into the Company, with the Company to continue as the surviving corporation in the Merger and the Company succeeding to and assuming all the rights, assets, liabilities, debts, and obligations of Diego. The Merger has been accounted for as a reverse merger and recapitalization in which Diego is treated as the accounting acquirer and Diego Pellicer Worldwide, Inc. is the surviving legal entity. Business Operations The Company leases real estate to licensed marijuana operators providing complete turnkey growing space, processing space, recreational and medical retail sales space and related facilities to licensed marijuana growers, processors, dispensary and recreational store operators. Additionally, the Company plans to explore ancillary opportunities in the regulated marijuana industry as well as offering for wholesale distribution branded non-marijuana clothing and accessories. Until Federal law allows, the Company will not grow, harvest, process, distribute or sell marijuana or any other substances that violate the laws of the United States of America or any other country. |
Significant Accounting Policies
Significant Accounting Policies and Practices | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies and Practices | Note 2 – Significant Accounting Policies and Practices The management of the Company is responsible for the selection and use of appropriate accounting policies and the appropriateness of accounting policies and their application. Critical accounting policies and practices are those that are both most important to the portrayal of the Company’s financial condition and results and require management’s most difficult, subjective, or complex judgments, often because of the need to make estimates about the effects of matters that are inherently uncertain. The Company’s significant and critical accounting policies and practices are disclosed below as required by generally accepted accounting principles. Basis of Presentation The accompanying condensed consolidated financial statements of Diego Pellicer Worldwide, Inc. were prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all disclosures required for financial statements prepared in conformity with U.S. GAAP. This Form 10-Q relates to the three months and six months ended June 30, 2017 (the “Current Quarter”) and the three months and six months ended June 30, 2016 (the “Prior Quarter”). The Company’s annual report on Form 10-K for the year ended December 31, 2016 (“2016 Form 10-K”) includes certain definitions and a summary of significant accounting policies and should be read in conjunction with this Form 10-Q. All material adjustments which, in the opinion of management, are necessary for a fair statement of the results for the interim periods have been reflected. The results for the Current Quarter are not necessarily indicative of the results to be expected for the full year. New accounting pronouncements In August 2014, the Financial Accounting Standards Board (“FASB”) issued Presentation of Financial Statements — Going Concern. This standard requires management to evaluate for each annual and interim reporting period whether it is probable that the reporting entity will not be able to meet its obligations as they become due within one year after the date that the financial statements are issued. If the entity is in such a position, the standard provides for certain disclosures depending on whether or not the entity will be able to successfully mitigate its going concern status. This guidance is effective for annual periods ending after December 15, 2016 and interim periods within annual periods beginning after December 15, 2016. Early application is permitted. The Company does not anticipate that this adoption will have a significant impact on its consolidated financial position, results of operations, or cash flows. In July 2015, the FASB issued Accounting Standards Update (“ASU”) No. 2015-11, Inventory, which requires an entity to measure inventory within the scope at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The effective date for the standard is for fiscal years beginning after December 15, 2016. In September 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. To simplify the accounting for adjustments made to provisional amounts recognized in a business combination, the amendments eliminate the requirement to retrospectively account for those adjustments. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The amendments should be applied prospectively to adjustments to provisional amounts that occur after the effective date with earlier application permitted for financial statements that have not been issued. In May 2014, the FASB issued No. 2014-09, Revenue from Contracts with Customers, which supersedes the revenue recognition requirements in Accounting Standards Codification 605 - Revenue Recognition and most industry-specific guidance throughout the Codification. The standard requires that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In August 2015, the FASB approved a one-year deferral of the effective date of the new revenue recognition standard. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in ASU 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 31, 2016, including interim reporting periods within that reporting period. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606), Principal versus Agent Considerations (Reporting Revenue versus Net). In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606), Identifying Performance Obligations and Licensing. In May 2016, the FASB issued ASU 2016-11, Revenue from Contracts with Customers (Topic 606) and Derivatives and Hedging (Topic 815) - Rescission of SEC Guidance Because of ASU 2014-09 and 2014-16, and ASU 2016-12, Revenue from Contracts with Customers (Topic 606) - Narrow Scope Improvements and Practical Expedients. These ASUs clarify the implementation guidance on a few narrow areas and adds some practical expedients to the guidance Topic 606. The Company is evaluating the effect that these ASUs will have on its consolidated financial statements and related disclosures. In February 2016, the FASB issued guidance that requires a lessee to recognize assets and liabilities arising from leases on the balance sheet. Previous GAAP did not require lease assets and liabilities to be recognized for most leases. Additionally, companies are permitted to make an accounting policy election not to recognize lease assets and liabilities for leases with a term of 12 months or less. For both finance leases and operating leases, the lease liability should be initially measured at the present value of the remaining contractual lease payments. The recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee will not significantly change under this new guidance. This new guidance is effective for us as of the first quarter of fiscal year 2020. The Company is evaluating the effect that this ASU will have on its consolidated financial statements and related disclosures. On March 30, 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, which includes amendments to accounting for income taxes at settlement, forfeitures, and net settlements to cover withholding taxes. The amendments in ASU 2016-09 are effective for public companies for fiscal years beginning after December 31, 2016, and interim periods within those annual periods. In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 clarifies the presentation and classification of certain cash receipts and cash payments in the statement of cash flows. This ASU is effective for public business entities for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted. The Company is currently assessing the potential impact of ASU 2016-15 on its financial statements and related disclosures. In October 2016, the FASB issued ASU No. 2016-16—Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. This ASU improves the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. For public business entities, the amendments in this update are effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company does not anticipate that the adoption of this ASU will have a significant impact on its consolidated financial statements. The Company believes that other recently Reclassifications Certain reclassifications have been made to the prior years’ financial statements to conform to the current year presentation. These reclassifications had no effect on previously reported results of operations, shareholders equity or accumulated deficit. Use of Estimates The preparation of the financial statements in conformity with 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 revenue and expenses during the reporting periods. Actual results could differ from those estimates. These estimates and assumptions include valuing equity securities and derivative financial instruments issued in financing transactions and share based payment arrangements, determining the fair value of the warrants received for the licensing agreement, the collectability of accounts receivable and deferred taxes and related valuation allowances. Certain estimates, including evaluating the collectability of accounts receivable, could be affected by external conditions, including those unique to our industry, and general economic conditions. It is possible that these external factors could influence our estimates that could cause actual results to differ from our estimates. The Company intends to re-evaluate all its accounting estimates at least quarterly based on these conditions and record adjustments when necessary. Fair Value Measurements The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the condensed consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. Fair Value of Financial Instruments As required by the Fair Value Measurements and Disclosures Topic of the FASB ASC, fair value is measured based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2: Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity). Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of June 30, 2017 and December 31, 2016. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, prepaid expenses and accounts payable. Fair values were assumed to approximate carrying values for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand. Cash The Company maintains cash balances at various financial institutions. Accounts at each institution are insured by the Federal Deposit Insurance Corporation, and the National Credit Union Share Insurance Fund, up to $250,000. The Company’s accounts at these institutions may, at times, exceed the federal insured limits. The Company has not experienced any losses in such accounts. Property and Equipment, and Depreciation Policy Property and equipment are stated at cost less accumulated depreciation. Depreciation is provided for on a straight-line basis over the useful lives of the assets. Leasehold improvements are amortized over the term of the lease. Expenditures for additions and improvements are capitalized; repairs and maintenance are expensed as incurred. The Company intends to take depreciation or amortization on a straight-line basis for all properties, beginning when they are put into service, using the following life expectancy: Equipment – 5 years Leasehold Improvements – 10 years, or the term of the lease, whichever is shorter Buildings – 20 years Inventory The Company’s inventory is stated at the lower of cost or estimated realizable value, with cost primarily determined on a cost basis on the first-in, first-out (“FIFO”) method. Inventory consists of finished goods. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are presented at their face amount, less an allowance for doubtful accounts, on the balance sheets. Accounts receivable consist of revenue earned and currently due from sub lessee. We evaluate the collectability of accounts receivable based on a combination of factors. We recognize reserves for bad debts based on estimates developed using standard quantitative measures that incorporate historical write-offs and current economic conditions. As of June 30, 2017, the outstanding balance allowance for doubtful accounts is $9,908. The policy for determining past due status is based on the contractual payment terms of each customer. Once collection efforts by the Company and its collection agency are exhausted, the determination for charging off uncollectible receivables is made. Revenue recognition The Company recognizes revenue from rent, tenant reimbursements, and other revenue sources once all the following criteria are met in accordance with SEC Staff Accounting Bulletin 104, Revenue Recognition When the collectability is reasonably assured, in accordance with ASC Topic 840 “Leases” as amended and interpreted, minimum annual rental revenue is recognized for rental revenues on a straight-line basis over the term of the related lease. When management concludes that the Company is the owner of tenant improvements, management records the cost to construct the tenant improvements as a capital asset. In addition, management records the cost of certain tenant improvements paid for or reimbursed by tenants as capital assets when management concludes that the Company is the owner of such tenant improvements. For these tenant improvements, management records the amount funded or reimbursed by tenants as deferred revenue, which is amortized as additional rental income over the term of the related lease. When management concludes that the tenant is the owner of tenant improvements for accounting purposes, management records the Company’s contribution towards those improvements as a lease incentive, which is amortized as a reduction to rental revenue on a straight-line basis over the term of the lease. In January 2014, the Company entered into an agreement to license certain intellectual property to an unrelated company. In consideration, the Company received warrants to purchase shares of the licensee’s common stock, The value of the warrants were recorded as an investment and the deferred revenue was being amortized over the ten year term of the licensing agreement. Leases as Lessor The Company currently leases properties in locations that meet the regulatory criteria applicable to cannabis operations by the respective regulatory jurisdiction and acceptable to sub-lessees for the sale, production, and development of their products. The Company evaluates the lease to determine its appropriate classification as an operating or capital lease for financial reporting purposes. The Company leases are currently all classified as operating leases. Minimum base rent is recorded on a straight-line basis over the lease term after an initial period during which the tenant is establishing the business and during which the Company may forbear some or all of the rent. The Company is more likely than not to forbear some or all of the rental income which it considers uncollectable during the tenant’s initial ramp-up period (see Revenue Recognition Leases as Lessee The Company recognizes rent expense on a straight-line basis over the non-cancelable lease term and certain option renewal periods where failure to exercise such options would result in an economic penalty in such amount that renewal appears, at the inception of the lease, to be reasonably assured. Deferred rent is presented on current liabilities section on the consolidated balance sheets. Income Taxes Income taxes are provided for using the liability method of accounting in accordance with the Income Taxes Topic of the FASB ASC. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized and when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The computation of limitations relating to the amount of such tax assets, and the determination of appropriate valuation allowances relating to the realizing of such assets, are inherently complex and require the exercise of judgment. As additional information becomes available, the Company continually assesses the carrying value of their net deferred tax assets. Preferred Stock The Company applies the guidance enumerated in ASC Topic 480 “Distinguishing Liabilities from Equity” when determining the classification and measurement of preferred stock. Preferred shares subject to mandatory redemption are classified as liability instruments and are measured at fair value. The Company classifies conditionally redeemable preferred shares which includes preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control, as temporary equity. At all other times, it classifies its preferred shares in stockholders’ equity. Preferred shares do not feature any redemption rights within the holders’ control or conditional redemption features not within our control. Accordingly, all issuances of preferred stock are presented as a component of consolidated stockholders’ equity. Common Stock Purchase Warrants and Other Derivative Financial Instruments The Company classifies as equity any contracts that require physical settlement or net-share settlement or provide us a choice of net cash settlement or settlement in our own shares (physical settlement or net-share settlement) provided that such contracts are indexed to our own stock as defined in ASC Topic 815-40 “Contracts in Entity’s Own Equity.” The Company classifies as assets or liabilities any contracts that require net-cash settlement including a requirement to net cash settle the contract if an event occurs and if that event is outside our control or give the counterparty a choice of net-cash settlement or settlement in shares. The Company assesses classification of its common stock purchase warrants and other free-standing derivatives at each reporting date to determine whether a change in classification between assets and liabilities is required. Stock-Based Compensation The Company recognizes compensation expense for stock-based compensation in accordance with ASC Topic 718. The Company calculates the fair value of the award on the date of grant using the Black-Scholes method for stock options and the quoted price of our common stock for unrestricted shares; the expense is recognized over the service period for awards expected to vest. The estimation of stock-based awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from original estimates, such amounts are recorded as a cumulative adjustment in the period estimates are revised. The Company considers many factors when estimating expected forfeitures, including types of awards, employee class, and historical experience. Earnings (loss) per common share Earnings (loss) per share is provided in accordance with ASC Subtopic 260-10. The Company presents basic loss per share (“EPS”) and diluted EPS on the face of statements of operations. Basic EPS is computed by dividing reported earnings (loss) by the weighted average shares outstanding. Loss per common share has been computed using the weighted average number of common shares outstanding during the year. |
Going Concern
Going Concern | 6 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern | Note 3 – Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred losses since inception, its current liabilities exceed its current assets by $10,912,434, and has an accumulated deficit of $36,406,537 at June 30, 2017. These factors, among others raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Management believes that the Company’s future success is dependent upon its ability to achieve profitable operations, generate cash from operating activities and obtain additional financing. There is no assurance that the Company will be able to generate sufficient cash from operations, sell additional shares of stock or borrow additional funds. The Company’s inability to obtain additional cash could have a material adverse effect on its financial position, results of operations, and its ability to continue in existence. These financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company intends to continue to raise additional capital to be used for ongoing expenses, capital expenditures or repayment of debt. When, in the opinion of the Company, the tenants achieve sufficient profitability to pay full rents, rental revenues should exceed rental expense for the four subleased properties. |
Investment
Investment | 6 Months Ended |
Jun. 30, 2017 | |
Schedule of Investments [Abstract] | |
Investment | Note 4 – Investment In January 2014, the Company entered into an agreement with Plandai Biotechnology, Inc. (a publicly traded company) to license to them certain intellectual property rights in exchange for warrants to purchase 1,666,667 shares of Plandai Biotechnology, Inc. common stock. This licensing agreement carries a 10-year term with an exercise price of $0.01 per share. The Company was to obtain certain trademark rights certified by the government. The warrant has a restriction on them requiring that the sale of such shares must reach a certain traded price of $0.50 per share. In 2014, the Company used a third-party appraisal firm to ascertain the fair value of warrants held by the Company, which was determined to be $525,567 at the date of issuance. During the year ended December 31, 2016, the Company recorded an impairment loss of $73,334. The Company recorded an additional impairment loss for the six months ended June 30, 2017 of $43,333. |
Property and Equipment
Property and Equipment | 6 Months Ended |
Jun. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Note 5– Property and Equipment As of June 30, 2017, and December 31, 2016, fixed assets and the estimated lives used in the computation of depreciation are as follows: Estimated Useful Lives June 30, 2017 December 31, 2016 Machinery and equipment 5 years - $ 39,145 Leasehold improvements 10 years 853,413 728,413 Less: Accumulated depreciation and amortization (226,866 ) (9,447 ) Property and equipment, net $ 626,547 $ 758,111 |
Other Assets
Other Assets | 6 Months Ended |
Jun. 30, 2017 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Assets | Note 6 – Other Assets Security deposits Deposits – end of lease |
Notes Payable
Notes Payable | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Notes Payable | Note 7– Notes Payable On April 11, 2017, the Company issued two convertible notes (see Note 8). These were issued to refinance the following notes: On May 20, 2015, the Company issued a note in total amount of $450,000 with third parties for use as operating capital. As of December 31, 2016, the outstanding principle balance of the note was $450,000. On July 8, 2015, the Company issued a note in total amount of $135,628 with third parties for use as operating capital. As of December 31, 2016, the outstanding principle balance of the note is $135,628. On February 8, 2016, the Company issued notes in total amount of $470,000 with third parties, bearing interest at 12% per annum with a maturity date of February 7, 2017. As of December 31, 2016, the outstanding principle balance of the note is $470,000. In accordance with in accordance with FASB Codification- Liabilities, 470-50-40-10, these liabilities were considered extinguished and the cost of the new financing of $5,607,836 was expensed in the quarter ended June 30, 2017. On August 31, 2015, the Company issued a note in total amount of $126,000 with third parties for use as operating capital. The notes payable agreements required the Company to repay the principal, together with 5% annual interest by the maturity date of October 31, 2015 or the closing of a financing whereby the company receives a minimum of $126,000. In connection with the issuance of these notes, the Company issued 126,000 shares of common stock. The Company allocated the proceeds of the notes and equity based on the relative fair value at inception. The Company allocated $84,000 to the common stock and $42,000 to the debt. The difference between the face value of the notes and the allocated value has been accreted to interest expense over the life of the loan. As of June 30, 2017, and December 31, 2016, the outstanding principal balance of the note is $126,000 |
Convertible Note Payable
Convertible Note Payable | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Convertible Note Payable | Note 8 – Convertible Note Payable In addition to the two notes issued on April 11, 2017 referred to in Footnote 7, the Company issued several convertible notes in the second quarter ended June 30, 2017, The convertible notes require the Company to repay the principal, together with interest. The note holder shall have the right to convert the amount outstanding into shares of common stock at a discounted price. The conversion feature was recognized as an embedded derivative and was valued using a Black Scholes model that resulted in a derivative liability of $5,694,844 for the quarter ended June 30, 2017. In connection with the issuance of certain of these notes, the Company also issued warrants to purchase its common stock. The Company allocated the proceeds of the notes and warrants based on the relative fair value at inception for these notes. The company recorded a derivative liability of $88,690 for accrued interest relating to these notes. The table below provides a reconciliation of the beginning and ending balances for the liabilities measured using fair significant unobservable inputs (Level 3): Convertible notes Discount Convertible Note Net of Discount Derivative Liabilities Balance, December 31, 2016 370,500 36,344 334,156 338,282 Issuance of convertible notes 2,923,842 575,945 2,347,897 6,474,054 Conversion of convertible notes (50,000 ) (13,247 ) (36,753 ) (85,022 ) Change in fair value of derivatives - - - (943,780 ) Balance June 30, 2017 $ 3,244,342 $ 599,042 $ 2,645,300 $ 5,783,534 The following assumptions were used in calculations of the Black Scholes model for the period ended June 30, 2017 and 2016. June 30, 2017 June 30, 2016 Risk-free interest rates 0.52-1.38 % 0.20-1.01 % Expected life 0.49-1.99 year 0.25-1 year Expected dividends 0 % 0 % Expected volatility 157-284 % 142-252 Diego Pellicer Worldwide, Inc. Common Stock fair value $ 0.28-0.28 $ 0.20 -0.77 |
Stockholder_s Equity (Deficit)
Stockholder’s Equity (Deficit) | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
Stockholder's Equity (Deficit) | Note 9 – Stockholder’s Equity (Deficit) As a condition of their employment, the Board of Directors approved employment agreements with two new executives. This agreement provided among other things that additional shares will be granted each year over the term of the agreement should their shares as granted by this agreement fall below an ownership percentage of 7.5% of the outstanding stock. In addition, the board of directors affirmed an oral commitment that will entitle the CEO an annual grant of additional shares each year should his ownership percentage fall below of 10% of the outstanding stock. The Company has recorded an expense in the quarter ended June 30, 2017 related to the shares which will be issuable under these agreements for $157,096. For the six months ended June 30, 2017 the Company issued shares and options as equity compensation and signing bonuses in the amount of $1,527,713. The following table presents our warrants and option features which have no observable market data and are derived using Black-Scholes measured at fair value on a recurring basis, using Level 3 inputs, as of December 31, 2016 and June 30, 2017: For the Six June 30, 2017 For the Year Ended December 31, 2016 Annual dividend yield 0 % 0 % Expected life (years) 3-10 5 Risk-free interest rate 1.10 – 2.34 % 0.90 % Expected volatility 232 - 234 266 The following represents a summary of all common stock warrant activity: Number of Warrants Weighted Average Price Weighted Average Contractual Term Balance outstanding, December 31, 2016 2,027,313 $ 1.18 3.43 Granted 2,650,000 - - Balance outstanding, June 30, 2017 4,677,313 $ 0.65 5.34 Exercisable, June 30, 2017 4,677,313 $ 0.65 5.34 The Company maintains an Equity Incentive Plan pursuant to which 2,480,000 shares of Common Stock are reserved for issuance thereunder. This Plan was established to award certain founding members, who were instrumental in the development of the Company, as well as key employees, directors and consultants, and to promote the success of the Company’s business. The terms allow for each option to vest immediately, with a term no greater than 10 years from the date of grant, at an exercise price equal to par value at date of the grant. As of June 30, 2017, no shares had been granted under the plan. Options have been granted to several executives and consultants as contractual incentives as shown below: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Balance outstanding, December 31, 2016 1,000,000 $ 0.30 4.50 Granted 4,988,180 0.25 4.50 Exercised - - - Forfeited - - - Expired - - - Balance outstanding, June 30, 2017 5,899,180 $ 0.26 8.67 Exercisable, June 30, 2017 200,000 $ 0.30 4.01 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 10 – COMMITMENTS AND CONTINGENCIES The Company’s business is to lease property in appropriate and desirable locations, and to make available such property for sub-lease to specifically assigned businesses that grow, process, and sell certain products to the general public. Currently the Company has four (4) separate properties under lease in the states of Colorado and Washington. In Colorado, there are three properties leased in 2017 and 2016. Properties were leased for a three (3) to five (5) year period with an option for an additional five (5) years, and carry terms requiring triple net (NNN) conditions. Each of the properties, except for one, have fixed monthly rentals (exclusive of the triple net terms). In Washington, there is one property which was leased in 2014. The property was leased for a five (5) year period with an option for an additional five (5) years, and carry terms requiring triple net (NNN) conditions. The property has an escalating annual rental (exclusive of the triple net terms). As of June 30, 2017, the aggregate remaining minimal annual lease payments under these operating leases were as follows: 2017 $ 564,549 2018 1,075,271 2019 681,504 2020 76,163 Total $ 2,397,487 Rent expense for the Company’s operating leases for the three months ended June 30, 2017 and 2016 was $289,918 and $278,921, respectively and for the 6 months ending June 30, 2017 and 2016 was $637,121 and $573,663, respectively. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 11 – Subsequent Events In July 2017, the company closed two convertible notes, one for $63,000 and one for $163,500. Both notes provide that the borrower can convert the principle and accrued interest to a discounted value of common stock at the discretion of the borrower. In addition to the note, 5,109,990 security shares were issued to the note holders. |
Significant Accounting Polici17
Significant Accounting Policies and Practices (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements of Diego Pellicer Worldwide, Inc. were prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all disclosures required for financial statements prepared in conformity with U.S. GAAP. This Form 10-Q relates to the three months and six months ended June 30, 2017 (the “Current Quarter”) and the three months and six months ended June 30, 2016 (the “Prior Quarter”). The Company’s annual report on Form 10-K for the year ended December 31, 2016 (“2016 Form 10-K”) includes certain definitions and a summary of significant accounting policies and should be read in conjunction with this Form 10-Q. All material adjustments which, in the opinion of management, are necessary for a fair statement of the results for the interim periods have been reflected. The results for the Current Quarter are not necessarily indicative of the results to be expected for the full year. |
New Accounting Pronouncements | New accounting pronouncements In August 2014, the Financial Accounting Standards Board (“FASB”) issued Presentation of Financial Statements — Going Concern. This standard requires management to evaluate for each annual and interim reporting period whether it is probable that the reporting entity will not be able to meet its obligations as they become due within one year after the date that the financial statements are issued. If the entity is in such a position, the standard provides for certain disclosures depending on whether or not the entity will be able to successfully mitigate its going concern status. This guidance is effective for annual periods ending after December 15, 2016 and interim periods within annual periods beginning after December 15, 2016. Early application is permitted. The Company does not anticipate that this adoption will have a significant impact on its consolidated financial position, results of operations, or cash flows. In July 2015, the FASB issued Accounting Standards Update (“ASU”) No. 2015-11, Inventory, which requires an entity to measure inventory within the scope at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The effective date for the standard is for fiscal years beginning after December 15, 2016. In September 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. To simplify the accounting for adjustments made to provisional amounts recognized in a business combination, the amendments eliminate the requirement to retrospectively account for those adjustments. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The amendments should be applied prospectively to adjustments to provisional amounts that occur after the effective date with earlier application permitted for financial statements that have not been issued. In May 2014, the FASB issued No. 2014-09, Revenue from Contracts with Customers, which supersedes the revenue recognition requirements in Accounting Standards Codification 605 - Revenue Recognition and most industry-specific guidance throughout the Codification. The standard requires that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In August 2015, the FASB approved a one-year deferral of the effective date of the new revenue recognition standard. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in ASU 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 31, 2016, including interim reporting periods within that reporting period. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606), Principal versus Agent Considerations (Reporting Revenue versus Net). In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606), Identifying Performance Obligations and Licensing. In May 2016, the FASB issued ASU 2016-11, Revenue from Contracts with Customers (Topic 606) and Derivatives and Hedging (Topic 815) - Rescission of SEC Guidance Because of ASU 2014-09 and 2014-16, and ASU 2016-12, Revenue from Contracts with Customers (Topic 606) - Narrow Scope Improvements and Practical Expedients. These ASUs clarify the implementation guidance on a few narrow areas and adds some practical expedients to the guidance Topic 606. The Company is evaluating the effect that these ASUs will have on its consolidated financial statements and related disclosures. In February 2016, the FASB issued guidance that requires a lessee to recognize assets and liabilities arising from leases on the balance sheet. Previous GAAP did not require lease assets and liabilities to be recognized for most leases. Additionally, companies are permitted to make an accounting policy election not to recognize lease assets and liabilities for leases with a term of 12 months or less. For both finance leases and operating leases, the lease liability should be initially measured at the present value of the remaining contractual lease payments. The recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee will not significantly change under this new guidance. This new guidance is effective for us as of the first quarter of fiscal year 2020. The Company is evaluating the effect that this ASU will have on its consolidated financial statements and related disclosures. On March 30, 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, which includes amendments to accounting for income taxes at settlement, forfeitures, and net settlements to cover withholding taxes. The amendments in ASU 2016-09 are effective for public companies for fiscal years beginning after December 31, 2016, and interim periods within those annual periods. In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 clarifies the presentation and classification of certain cash receipts and cash payments in the statement of cash flows. This ASU is effective for public business entities for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted. The Company is currently assessing the potential impact of ASU 2016-15 on its financial statements and related disclosures. In October 2016, the FASB issued ASU No. 2016-16—Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. This ASU improves the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. For public business entities, the amendments in this update are effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company does not anticipate that the adoption of this ASU will have a significant impact on its consolidated financial statements. The Company believes that other recently |
Reclassifications | Reclassifications Certain reclassifications have been made to the prior years’ financial statements to conform to the current year presentation. These reclassifications had no effect on previously reported results of operations, shareholders equity or accumulated deficit. |
Use of Estimates | Use of Estimates The preparation of the financial statements in conformity with 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 revenue and expenses during the reporting periods. Actual results could differ from those estimates. These estimates and assumptions include valuing equity securities and derivative financial instruments issued in financing transactions and share based payment arrangements, determining the fair value of the warrants received for the licensing agreement, the collectability of accounts receivable and deferred taxes and related valuation allowances. Certain estimates, including evaluating the collectability of accounts receivable, could be affected by external conditions, including those unique to our industry, and general economic conditions. It is possible that these external factors could influence our estimates that could cause actual results to differ from our estimates. The Company intends to re-evaluate all its accounting estimates at least quarterly based on these conditions and record adjustments when necessary. |
Fair Value Measurements | Fair Value Measurements The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the condensed consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments As required by the Fair Value Measurements and Disclosures Topic of the FASB ASC, fair value is measured based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2: Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity). Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of June 30, 2017 and December 31, 2016. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, prepaid expenses and accounts payable. Fair values were assumed to approximate carrying values for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand. |
Cash | Cash The Company maintains cash balances at various financial institutions. Accounts at each institution are insured by the Federal Deposit Insurance Corporation, and the National Credit Union Share Insurance Fund, up to $250,000. The Company’s accounts at these institutions may, at times, exceed the federal insured limits. The Company has not experienced any losses in such accounts. |
Property and Equipment and Depreciation Policy | Property and Equipment, and Depreciation Policy Property and equipment are stated at cost less accumulated depreciation. Depreciation is provided for on a straight-line basis over the useful lives of the assets. Leasehold improvements are amortized over the term of the lease. Expenditures for additions and improvements are capitalized; repairs and maintenance are expensed as incurred. The Company intends to take depreciation or amortization on a straight-line basis for all properties, beginning when they are put into service, using the following life expectancy: Equipment – 5 years Leasehold Improvements – 10 years, or the term of the lease, whichever is shorter Buildings – 20 years |
Inventory | Inventory The Company’s inventory is stated at the lower of cost or estimated realizable value, with cost primarily determined on a cost basis on the first-in, first-out (“FIFO”) method. Inventory consists of finished goods. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are presented at their face amount, less an allowance for doubtful accounts, on the balance sheets. Accounts receivable consist of revenue earned and currently due from sub lessee. We evaluate the collectability of accounts receivable based on a combination of factors. We recognize reserves for bad debts based on estimates developed using standard quantitative measures that incorporate historical write-offs and current economic conditions. As of June 30, 2017, the outstanding balance allowance for doubtful accounts is $9,908. The policy for determining past due status is based on the contractual payment terms of each customer. Once collection efforts by the Company and its collection agency are exhausted, the determination for charging off uncollectible receivables is made. |
Revenue Recognition | Revenue recognition The Company recognizes revenue from rent, tenant reimbursements, and other revenue sources once all the following criteria are met in accordance with SEC Staff Accounting Bulletin 104, Revenue Recognition When the collectability is reasonably assured, in accordance with ASC Topic 840 “Leases” as amended and interpreted, minimum annual rental revenue is recognized for rental revenues on a straight-line basis over the term of the related lease. When management concludes that the Company is the owner of tenant improvements, management records the cost to construct the tenant improvements as a capital asset. In addition, management records the cost of certain tenant improvements paid for or reimbursed by tenants as capital assets when management concludes that the Company is the owner of such tenant improvements. For these tenant improvements, management records the amount funded or reimbursed by tenants as deferred revenue, which is amortized as additional rental income over the term of the related lease. When management concludes that the tenant is the owner of tenant improvements for accounting purposes, management records the Company’s contribution towards those improvements as a lease incentive, which is amortized as a reduction to rental revenue on a straight-line basis over the term of the lease. In January 2014, the Company entered into an agreement to license certain intellectual property to an unrelated company. In consideration, the Company received warrants to purchase shares of the licensee’s common stock, The value of the warrants were recorded as an investment and the deferred revenue was being amortized over the ten year term of the licensing agreement. |
Leases as Lessor | Leases as Lessor The Company currently leases properties in locations that meet the regulatory criteria applicable to cannabis operations by the respective regulatory jurisdiction and acceptable to sub-lessees for the sale, production, and development of their products. The Company evaluates the lease to determine its appropriate classification as an operating or capital lease for financial reporting purposes. The Company leases are currently all classified as operating leases. Minimum base rent is recorded on a straight-line basis over the lease term after an initial period during which the tenant is establishing the business and during which the Company may forbear some or all of the rent. The Company is more likely than not to forbear some or all of the rental income which it considers uncollectable during the tenant’s initial ramp-up period (see Revenue Recognition |
Leases as Lessee | Leases as Lessee The Company recognizes rent expense on a straight-line basis over the non-cancelable lease term and certain option renewal periods where failure to exercise such options would result in an economic penalty in such amount that renewal appears, at the inception of the lease, to be reasonably assured. Deferred rent is presented on current liabilities section on the consolidated balance sheets. |
Income Taxes | Income Taxes Income taxes are provided for using the liability method of accounting in accordance with the Income Taxes Topic of the FASB ASC. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized and when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The computation of limitations relating to the amount of such tax assets, and the determination of appropriate valuation allowances relating to the realizing of such assets, are inherently complex and require the exercise of judgment. As additional information becomes available, the Company continually assesses the carrying value of their net deferred tax assets. |
Preferred Stock | Preferred Stock The Company applies the guidance enumerated in ASC Topic 480 “Distinguishing Liabilities from Equity” when determining the classification and measurement of preferred stock. Preferred shares subject to mandatory redemption are classified as liability instruments and are measured at fair value. The Company classifies conditionally redeemable preferred shares which includes preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control, as temporary equity. At all other times, it classifies its preferred shares in stockholders’ equity. Preferred shares do not feature any redemption rights within the holders’ control or conditional redemption features not within our control. Accordingly, all issuances of preferred stock are presented as a component of consolidated stockholders’ equity. |
Common Stock Purchase Warrants and Other Derivative Financial Instruments | Common Stock Purchase Warrants and Other Derivative Financial Instruments The Company classifies as equity any contracts that require physical settlement or net-share settlement or provide us a choice of net cash settlement or settlement in our own shares (physical settlement or net-share settlement) provided that such contracts are indexed to our own stock as defined in ASC Topic 815-40 “Contracts in Entity’s Own Equity.” The Company classifies as assets or liabilities any contracts that require net-cash settlement including a requirement to net cash settle the contract if an event occurs and if that event is outside our control or give the counterparty a choice of net-cash settlement or settlement in shares. The Company assesses classification of its common stock purchase warrants and other free-standing derivatives at each reporting date to determine whether a change in classification between assets and liabilities is required. |
Stock-Based Compensation | Stock-Based Compensation The Company recognizes compensation expense for stock-based compensation in accordance with ASC Topic 718. The Company calculates the fair value of the award on the date of grant using the Black-Scholes method for stock options and the quoted price of our common stock for unrestricted shares; the expense is recognized over the service period for awards expected to vest. The estimation of stock-based awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from original estimates, such amounts are recorded as a cumulative adjustment in the period estimates are revised. The Company considers many factors when estimating expected forfeitures, including types of awards, employee class, and historical experience. |
Earnings (Loss) Per Common Share | Earnings (loss) per common share Earnings (loss) per share is provided in accordance with ASC Subtopic 260-10. The Company presents basic loss per share (“EPS”) and diluted EPS on the face of statements of operations. Basic EPS is computed by dividing reported earnings (loss) by the weighted average shares outstanding. Loss per common share has been computed using the weighted average number of common shares outstanding during the year. |
Significant Accounting Polici18
Significant Accounting Policies and Practices (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Schedule of Estimated Useful of Property and Equipment | The Company intends to take depreciation or amortization on a straight-line basis for all properties, beginning when they are put into service, using the following life expectancy: Equipment – 5 years Leasehold Improvements – 10 years, or the term of the lease, whichever is shorter Buildings – 20 years |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | As of June 30, 2017, and December 31, 2016, fixed assets and the estimated lives used in the computation of depreciation are as follows: Estimated Useful Lives June 30, 2017 December 31, 2016 Machinery and equipment 5 years - $ 39,145 Leasehold improvements 10 years 853,413 728,413 Less: Accumulated depreciation and amortization (226,866 ) (9,447 ) Property and equipment, net $ 626,547 $ 758,111 |
Convertible Note Payable (Table
Convertible Note Payable (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Liabilities Measured Using Fair Significant Unobservable Inputs (Level 3) | The table below provides a reconciliation of the beginning and ending balances for the liabilities measured using fair significant unobservable inputs (Level 3): Convertible notes Discount Convertible Note Net of Discount Derivative Liabilities Balance, December 31, 2016 370,500 36,344 334,156 338,282 Issuance of convertible notes 2,923,842 575,945 2,347,897 6,474,054 Conversion of convertible notes (50,000 ) (13,247 ) (36,753 ) (85,022 ) Change in fair value of derivatives - - - (943,780 ) Balance June 30, 2017 $ 3,244,342 $ 599,042 $ 2,645,300 $ 5,783,534 |
Schedule of Assumptions Used Black Scholes Model | The following assumptions were used in calculations of the Black Scholes model for the period ended June 30, 2017 and 2016. June 30, 2017 June 30, 2016 Risk-free interest rates 0.52-1.38 % 0.20-1.01 % Expected life 0.49-1.99 year 0.25-1 year Expected dividends 0 % 0 % Expected volatility 157-284 % 142-252 Diego Pellicer Worldwide, Inc. Common Stock fair value $ 0.28-0.28 $ 0.20 -0.77 |
Stockholder_s Equity (Deficit)
Stockholder’s Equity (Deficit) (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
Schedule of Fair Value on Recurring Basis | The following table presents our warrants and option features which have no observable market data and are derived using Black-Scholes measured at fair value on a recurring basis, using Level 3 inputs, as of December 31, 2016 and June 30, 2017: For the Six June 30, 2017 For the Year Ended December 31, 2016 Annual dividend yield 0 % 0 % Expected life (years) 3-10 5 Risk-free interest rate 1.10 – 2.34 % 0.90 % Expected volatility 232 - 234 266 |
Schedule of Stock Warrant Activity | The following represents a summary of all common stock warrant activity: Number of Warrants Weighted Average Price Weighted Average Contractual Term Balance outstanding, December 31, 2016 2,027,313 $ 1.18 3.43 Granted 2,650,000 - - Balance outstanding, June 30, 2017 4,677,313 $ 0.65 5.34 Exercisable, June 30, 2017 4,677,313 $ 0.65 5.34 |
Schedule of Stock Option Activity | Options have been granted to several executives and consultants as contractual incentives as shown below: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Balance outstanding, December 31, 2016 1,000,000 $ 0.30 4.50 Granted 4,988,180 0.25 4.50 Exercised - - - Forfeited - - - Expired - - - Balance outstanding, June 30, 2017 5,899,180 $ 0.26 8.67 Exercisable, June 30, 2017 200,000 $ 0.30 4.01 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Minimal Annual Lease Payments Under Operating Leases | As of June 30, 2017, the aggregate remaining minimal annual lease payments under these operating leases were as follows: 2017 $ 564,549 2018 1,075,271 2019 681,504 2020 76,163 Total $ 2,397,487 |
Significant Accounting Polici23
Significant Accounting Policies and Practices (Details Narrative) | Jun. 30, 2017USD ($) |
Accounting Policies [Abstract] | |
Cash insured by FDIC | $ 250,000 |
Allowance for doubtful accounts | $ 9,908 |
Significant Accounting Polici24
Significant Accounting Policies and Practices - Schedule of Estimated Useful of Property and Equipment (Details) | 6 Months Ended |
Jun. 30, 2017 | |
Equipment [Member] | |
Property and equipment life expectancy | 5 years |
Leasehold Improvements [Member] | |
Property and equipment life expectancy | 10 years |
Buildings [Member] | |
Property and equipment life expectancy | 20 years |
Going Concern (Details Narrativ
Going Concern (Details Narrative) | 6 Months Ended | |
Jun. 30, 2017USD ($)Integer | Dec. 31, 2016USD ($) | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Working capital deficit | $ 10,912,434 | |
Accumulated deficit | $ 36,406,537 | $ 28,114,125 |
Number of subleased property | Integer | 4 |
Investment (Details Narrative)
Investment (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jan. 31, 2014 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2014 | |
Fair value of warrants | $ 311,216 | $ 311,216 | |||||
Impairment loss of investment | $ 43,333 | $ 73,334 | |||||
Plandai Biotechnology, Inc. [Member] | |||||||
Fair value of warrants | $ 525,567 | ||||||
License Agreement [Member] | Plandai Biotechnology, Inc. [Member] | |||||||
Issuance of warrants to purchase of common stock, shares | 1,666,667 | ||||||
License agreement term | 10 years | ||||||
Warrants exercise price per share | $ 0.01 | ||||||
Sale of stock price per share | $ 0.50 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Dec. 31, 2016 | |
Less: Accumulated depreciation and amortization | $ (226,866) | $ (9,447) |
Property and equipment, net | 626,547 | 758,112 |
Machinery and Equipment [Member] | ||
Property and equipment, gross | 39,145 | |
Property and Equipment Estimated Useful Lives | 5 years | |
Leasehold Improvements [Member] | ||
Property and equipment, gross | $ 853,414 | $ 728,413 |
Property and Equipment Estimated Useful Lives | 10 years |
Other Assets (Details Narrative
Other Assets (Details Narrative) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Security deposits | $ 170,000 | $ 170,000 |
Deposits - end of lease | $ 150,000 | $ 150,000 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | Apr. 11, 2017 | Feb. 08, 2016 | Aug. 31, 2015 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | Jul. 08, 2015 | May 20, 2015 |
Note payable | $ 126,000 | $ 126,000 | $ 1,310,678 | |||||||
Extinguishment of debt | (5,607,836) | (5,607,836) | ||||||||
Common stock issued during period | 157,096 | |||||||||
Proceeds from debt | (8,500) | |||||||||
Note Payable One [Member] | ||||||||||
Note payable principal amount | $ 450,000 | |||||||||
Note payable | 450,000 | |||||||||
Note Payable Two [Member] | ||||||||||
Note payable principal amount | $ 135,628 | |||||||||
Note payable | 135,628 | |||||||||
Note Payable Three [Member] | ||||||||||
Note payable principal amount | $ 470,000 | |||||||||
Note payable | 470,000 | |||||||||
Annual interest rate | 12.00% | |||||||||
Note maturity date | Apr. 10, 2019 | Feb. 7, 2017 | ||||||||
Note Payable Four [Member] | ||||||||||
Note payable principal amount | $ 126,000 | |||||||||
Note payable | $ 126,000 | $ 126,000 | $ 126,000 | |||||||
Annual interest rate | 5.00% | |||||||||
Note maturity date | Oct. 31, 2015 | |||||||||
Received minimum note payable amount | $ 126,000 | |||||||||
Number of common stock issued, shares | 126,000 | |||||||||
Common stock issued during period | $ 84,000 | |||||||||
Proceeds from debt | $ 42,000 |
Convertible Note Payable (Detai
Convertible Note Payable (Details Narrative) | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Debt Disclosure [Abstract] | |
Derivative liability | $ 5,694,844 |
Accrued interest | $ 88,690 |
Convertible Note Payable - Sche
Convertible Note Payable - Schedule of Liabilities Measured Using Fair Significant Unobservable Inputs (Level 3) (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Issuance of convertible notes | $ 740,000 | |
Conversion of convertible notes | 50,000 | |
Convertible Notes [Member] | ||
Balance, beginning | 370,500 | |
Issuance of convertible notes | 2,923,842 | |
Conversion of convertible notes | (50,000) | |
Change in fair value of derivatives | ||
Balance, ending | 3,244,342 | |
Discount [Member] | ||
Balance, beginning | 36,344 | |
Issuance of convertible notes | 575,945 | |
Conversion of convertible notes | (13,247) | |
Change in fair value of derivatives | ||
Balance, ending | 599,042 | |
Convertible Note Net of Discount [Member] | ||
Balance, beginning | 334,156 | |
Issuance of convertible notes | 2,347,897 | |
Conversion of convertible notes | (36,753) | |
Change in fair value of derivatives | ||
Balance, ending | 2,645,300 | |
Derivative Liabilities [Member] | ||
Balance, beginning | 338,282 | |
Issuance of convertible notes | 6,474,054 | |
Conversion of convertible notes | (85,022) | |
Change in fair value of derivatives | (943,780) | |
Balance, ending | $ 5,783,534 |
Convertible Note Payable - Sc32
Convertible Note Payable - Schedule of Assumptions Used Black Scholes Model (Details) - $ / shares | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Expected dividends | 0.00% | 0.00% |
Minimum [Member] | ||
Risk-free interest rates | 0.52% | 0.20% |
Expected life | 5 months 27 days | 2 months 30 days |
Expected volatility | 157.00% | 142.00% |
Diego Pellicer Worldwide, Inc. Common Stock fair value | $ 0.28 | $ 0.20 |
Maximum [Member] | ||
Risk-free interest rates | 1.38% | 1.01% |
Expected life | 1 year 11 months 26 days | 1 year |
Expected volatility | 284.00% | 252.00% |
Diego Pellicer Worldwide, Inc. Common Stock fair value | $ 0.28 | $ 0.77 |
Stockholder_s Equity (Deficit33
Stockholder’s Equity (Deficit) (Details Narrative) | 6 Months Ended |
Jun. 30, 2017USD ($)shares | |
Expenses related to shares | $ | $ 157,096 |
Equity compensation and signing bonuses | $ | $ 1,527,713 |
Stock option granted | 4,988,180 |
Equity Incentive Plan [Member] | |
Common stock shares reserved | 2,480,000 |
Stock option term | 10 years |
Stock option granted | |
Five Years [Member] | |
Ownership percentage | 7.50% |
Each Years [Member] | |
Ownership percentage | 10.00% |
Stockholder_s Equity (Deficit34
Stockholder’s Equity (Deficit) - Schedule of Fair Value on Recurring Basis (Details) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2017 | Dec. 31, 2016 | |
Annual dividend yield | 0.00% | 0.00% |
Expected life (years) | 5 years | |
Risk-free interest rate | 0.90% | |
Expected volatility | 266.00% | |
Minimum [Member] | ||
Expected life (years) | 3 years | |
Risk-free interest rate | 1.10% | |
Expected volatility | 232.00% | |
Maximum [Member] | ||
Expected life (years) | 10 years | |
Risk-free interest rate | 2.34% | |
Expected volatility | 234.00% |
Stockholder_s Equity (Deficit35
Stockholder’s Equity (Deficit) - Schedule of Stock Warrant Activity (Details) - Warrant [Member] | 6 Months Ended |
Jun. 30, 2017$ / sharesshares | |
Number of Warrants, Outstanding, Beginning balance | shares | 2,027,313 |
Number of Warrants, Granted | shares | 2,650,000 |
Number of Warrants, Outstanding, Ending balance | shares | 4,677,313 |
Number of Warrants, Exercisable | shares | 4,677,313 |
Weighted Average Exercise Price, Outstanding, Beginning balance | $ / shares | $ 1.18 |
Weighted Average Exercise Price, Granted | $ / shares | |
Weighted Average Exercise Price, Outstanding, Ending balance | $ / shares | 0.65 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 0.65 |
Weighted Average Remaining Contractual Term, Beginning | 3 years 5 months 5 days |
Weighted Average Remaining Contractual Term, Ending | 5 years 4 months 2 days |
Weighted Average Remaining Contractual Term, Exercisable | 5 years 4 months 2 days |
Stockholder_s Equity (Deficit36
Stockholder’s Equity (Deficit) - Schedule of Stock Option Activity (Details) | 6 Months Ended |
Jun. 30, 2017$ / sharesshares | |
Equity [Abstract] | |
Number of Options, Beginning balance | shares | 1,000,000 |
Number of Options, Granted | shares | 4,988,180 |
Number of Options, Exercised | shares | |
Number of Options, Forfeited | shares | |
Number of Options, Expired | shares | |
Number of Options, Ending balance | shares | 5,899,180 |
Number of Options, Exercisable | shares | 200,000 |
Weighted Average Exercise Price, Beginning balance | $ / shares | $ 0.30 |
Weighted Average Exercise Price, Granted | $ / shares | 0.25 |
Weighted Average Exercise Price, Exercised | $ / shares | |
Weighted Average Exercise Price, Forfeited | $ / shares | |
Weighted Average Exercise Price, Expired | $ / shares | |
Weighted Average Exercise Price, Ending balance | $ / shares | 0.26 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 0.30 |
Weighted Average Remaining Contractual Term, Beginning balance | 4 years 6 months |
Weighted Average Remaining Contractual Term, Granted | 4 years 6 months |
Weighted Average Remaining Contractual Term, Exercised | 0 years |
Weighted Average Remaining Contractual Term, Forfeited | 0 years |
Weighted Average Remaining Contractual Term, Expired | 0 years |
Weighted Average Remaining Contractual Term, Ending balance | 8 years 8 months 2 days |
Weighted Average Remaining Contractual Term, Exercisable | 4 years 4 days |
Commitments and Contingencies37
Commitments and Contingencies (Details Narrative) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($)Integer | Jun. 30, 2016USD ($) | |
Operating lease rent expenses | $ | $ 289,918 | $ 278,921 | $ 637,121 | $ 573,663 |
Colorado And Washington [Member] | ||||
Number of leased property | 4 | |||
Colorado [Member] | ||||
Number of leased property | 3 | |||
Lease term | 5 years | |||
Colorado [Member] | Minimum [Member] | ||||
Lease term | 3 years | |||
Colorado [Member] | Maximum [Member] | ||||
Lease term | 5 years | |||
Washington [Member] | ||||
Number of leased property | 1 | |||
Lease term | 5 years | |||
Option term | 5 years |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Minimal Annual Lease Payments Under Operating Leases (Details) | Jun. 30, 2017USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,017 | $ 564,549 |
2,018 | 1,075,271 |
2,019 | 681,504 |
2,020 | 76,163 |
Total | $ 2,397,487 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - Subsequent Event [Member] | Jul. 31, 2017USD ($)shares |
Security shares issued to note holders | shares | 5,109,990 |
Convertible Note One [Member] | |
Convertible debt | $ 63,000 |
Convertible Note Two [Member] | |
Convertible debt | $ 163,500 |