Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 07, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | DIEGO PELLICER WORLDWIDE, INC | |
Entity Central Index Key | 1,559,172 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 263,535,887 | |
Trading symbol | DPWW | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,018 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 146,318 | $ 158,702 |
Accounts receivable | 238,827 | 170,677 |
Prepaid expenses | 7,241 | 21,621 |
Inventory | 28,966 | 32,945 |
Total current assets | 421,352 | 383,945 |
Property and equipment, net | 510,737 | 409,128 |
Investments, at cost | ||
Security deposits | 320,000 | 320,000 |
Total assets | 1,252,089 | 1,113,073 |
Current liabilities: | ||
Accounts payable | 444,942 | 626,258 |
Accrued payable - related party | 418,863 | 449,064 |
Accrued expenses | 375,769 | 207,558 |
Notes payable - related party | 140,958 | 307,312 |
Notes payable | 133,403 | 133,403 |
Convertible notes, net of discount and costs | 410,088 | 468,116 |
Deferred rent | 245,925 | 251,878 |
Deferred revenue | 53,000 | 53,000 |
Derivative liabilities | 1,103,373 | 4,106,521 |
Warrant liabilities | 72,754 | 192,350 |
Total current liabilities | 3,399,075 | 6,795,460 |
Deferred revenue | 248,500 | 262,000 |
Total liabilities | 3,647,575 | 7,057,460 |
Deficiency in stockholders' equity: | ||
Preferred stock, Series A and B, par value $.0001 per share; 5,000,000 shares authorized, none issued and outstanding | ||
Common stock, par value $.000001 per share; 495,000,000 shares authorized, 229,650,261 and 142,576,974 shares issued, respectively | 230 | 143 |
Additional paid-in capital | 36,927,394 | 34,422,338 |
Stock to be issued | 1,580,330 | 2,397,218 |
Accumulated deficit | (40,903,440) | (42,764,086) |
Total deficiency in stockholders' equity | (2,395,486) | (5,944,387) |
Total liabilities and deficiency in stockholders' equity | $ 1,252,089 | $ 1,113,073 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Mar. 31, 2018 | Dec. 31, 2017 |
Common stock, par value | $ .000001 | $ .000001 |
Common stock, shares authorized | 495,000,000 | 495,000,000 |
Common stock, shares issued | 229,650,261 | 142,576,974 |
Series A Preferred Stock [Member] | ||
Preferred stock, par value | $ .0001 | $ .0001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Series B Preferred Stock [Member] | ||
Preferred stock, par value | $ .0001 | $ .0001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
REVENUES | ||
Net Rental Revenue | $ 383,298 | $ 309,962 |
Rental Expense | (269,087) | (347,203) |
Gross Profit | 114,211 | (37,241) |
Operating expenses: | ||
General and administrative expenses | 644,773 | 892,995 |
Selling Expense | 6,269 | 12 |
Depreciation Expense | 127,257 | 130,790 |
Loss from Operations | (664,088) | (1,061,038) |
Other Income (Expense) | ||
Licensing Revenue | 13,500 | 13,500 |
Other Income (Expense) | 2,691 | 3,624 |
Interest Expense | (710,474) | (288,236) |
Impairment Loss | (27,500) | |
Extinguishment of Debt | 42,167 | |
Change in Derivative Liabilities | 3,057,254 | 50,839 |
Change in Value of Warrants | 119,596 | |
Total Other Income (Loss) | 2,524,734 | (247,773) |
Provision for taxes | ||
NET INCOME (LOSS) | $ 1,860,646 | $ (1,308,811) |
Income (loss) per share - basic and diluted | ||
Basic | $ 0.01 | $ (0.03) |
Diluted | $ 0 | $ (0.03) |
Weighted average common shares outstanding - basic and diluted | ||
Basic | 164,940,612 | 50,868,784 |
Diluted | 260,016,862 | 50,868,784 |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Cash Flow (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 1,860,646 | $ (1,308,811) |
Adjustments to reconcile net income (loss) to net cash used by operating activities: | ||
Depreciation | 127,257 | 130,790 |
Impairment | 54,565 | |
Change in fair value of derivative liability | (3,057,254) | (50,839) |
Change in value of warrants | (119,596) | |
Amortization of discount | 643,966 | 53,678 |
Amortization of debt costs | 19,382 | |
Extinguishment of debt | (42,167) | |
Stock based compensation | 423,124 | 1,057,175 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (68,150) | (42,457) |
Inventory | 3,979 | 9,079 |
Prepaid expenses | 14,380 | (2,298) |
Other assets | (555,657) | |
Accounts payable | (134,062) | (235,169) |
Accrued liability - related parties | 88,019 | 167,312 |
Accrued expenses | (15,826) | 34,341 |
Change in derivative liability, net of discount | 186,086 | |
Deferred rent | 5,953 | 153,984 |
Deferred revenue | (13,500) | (13,500) |
Cash used by operating activities | (275,756) | (361,720) |
Cash flows from investing activities: | ||
Purchase of property and equipment | (135,000) | |
Cash used by investing activities | (135,000) | |
Cash flows from financing activities: | ||
Stock issued for convertible notes | 50,000 | |
Debt costs | (16,000) | |
Proceeds from convertible notes payable | 258,500 | 565,000 |
Repayments of notes payable | (50,000) | |
Proceeds from sale of common stock | 20,872 | |
Cash provided by financing activities | 263,372 | 565,000 |
Net increase (decrease) in cash | (12,384) | 68,280 |
Cash, beginning of period | 158,702 | 51,333 |
Cash, end of period | 146,318 | 119,613 |
Cash paid for interest | ||
Cash paid for taxes | ||
Supplemental schedule of noncash financial activities: | ||
Stock issued for debt settlement | 50,000 | |
Notes converted to stock | 568,268 | |
Accrued interest converted to stock | 44,829 | |
Value of common stock to be issued for conversion of notes and accrued interest | 1,078,786 | |
Value of derivative liability extinguished upon conversion of notes and accrued interest | 547,476 | |
Accounts payable and accrued expenses paid with common stock | 165,474 | |
Leasehold improvements paid by tenant | $ 228,866 |
Organization and Operations
Organization and Operations | 3 Months Ended |
Mar. 31, 2018 | |
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 (the “Merger Agreement”) by and among (i) the Company, and (ii) Diego Pellicer World-wide 1, Inc., a Delaware corporation, (“Diego”), and (iii) Jonathan White, the majority shareholder of the Company (the “Majority Shareholder”). Pursuant to the terms of the Merger Agreement, Diego was merged with and into the Company, with the Company to continue as the surviving corporation (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”). Prior to the Merger, 62,700,000 shares of Type 1 Media, Inc. were issued and outstanding. The principal owners of the Company agreed to transfer their 55,000,000 issued and outstanding shares to a third party in consideration for $169,000 and cancellation of their 55,000,000 shares. The remaining issued and outstanding shares are still available for trading in the marketplace. At the time of the Merger, Type 1 Media, Inc. had no assets or liabilities. Accordingly, the business conducted by Type 1 prior to the Merger is not being operated by the combined entity post-Merger. At the closing of the Merger, Diego common stock issued and outstanding immediately prior to the closing of the Merger was exchanged for the right to receive 1 share of the surviving legal entity. An aggregate of 21,632,252 common shares of the surviving entity were issued to the holders of Diego in exchange for their common shares, representing approximately 74% of the combined entity. 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. (f/k/a Type 1 Media, 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 and Critical Accoun
Significant and Critical Accounting Policies and Practices | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Significant and Critical Accounting Policies and Practices | Note 2 – Significant and Critical 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 ended March 31, 2018 (the “Current Quarter”) and the three months March 31, 2017 (the “Prior Quarter”). The Company’s annual report on Form 10-K for the year ended December 31, 2017 (“2017 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. Principles of Consolidation The financial statements include the accounts of Diego Pellicer Worldwide, Inc., and its wholly-owned subsidiary Diego Pellicer World-wide 1, Inc. Intercompany balances and transactions have been eliminated in consolidation. Reclassifications Certain prior year amounts were reclassified to conform to the manner of presentation in the current period. These reclassifications had no effect on the Company’s balance sheet, net loss or stockholders’ equity. 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 a 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 March 31, 2018 and December 31, 2017. 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. 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. The Company records rents due from the tenants on a current basis. The Company has deferred collection of such rents until the tenants receive the proper governmental licenses to begin operation. Prior to 2017, management had reserved these deferred amounts due to the unlikelihood of collection. Leases as Lessor The Company currently leases properties to licensed cannabis operators for locations that meet the regulatory criteria applicable by the respective regulatory jurisdiction for the sale, production, and development of cannabis 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. 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. Income (loss) per common share The Company utilizes ASC 260, “Earnings Per Share” for calculating the basic and diluted loss per share. In accordance with ASC 260, the basic and diluted loss per share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted net loss per share is computed similar to basic loss per share except that the denominator is adjusted for the potential dilution that could occur if stock options, warrants, and other convertible securities were exercised or converted into common stock. Potentially dilutive securities are not included in the calculation of the diluted loss per share if their effect would be anti-dilutive. The Company has 106,252,743 and 12,934,555 common stock equivalents at March 31, 2018 and 2017, respectively. For the three month period ended March 31, 2017 the 12,934,555 potential shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would reduce net loss per share. Diluted earnings per share for the three months ended March 31, 2018 have been calculated as follows: Net income $ 1,860,646 Income attributable to convertible instruments (3,219,017 ) Expense attributable to convertible instruments 455,642 Diluted loss $ (902,729 ) Basic shares outstanding 164,940,612 Shares to be issued 41,096,070 Convertible instruments 53,980,180 Diluted shares outstanding 260,016,862 Diluted EPS $ (0.00 ) Legal and regulatory environment The cannabis industry is subject to numerous laws and regulations of federal, state and local governments. These laws and regulations include, but are not limited to, matters such as licensure, accreditation, and different taxation between federal and state. Federal government activity may increase in the future with respect to companies involved in the cannabis industry concerning possible violations of federal statutes and regulations. Management believes that the Company is in compliance with local, state and federal regulations, While no regulatory inquiries have been made, compliance with such laws and regulations can be subject to future government review and interpretation, as well as regulatory actions unknown or unasserted at this time. Recent accounting pronouncements. On December 22, 2017 the SEC staff issued Staff Accounting Bulletin 118 (SAB 118), which provides guidance on accounting for the tax effects of the Tax Cuts and Jobs Act (the TCJA). SAB 118 provides a measurement period that should not extend beyond one year from the enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the TCJA for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the TCJA is incomplete but for which they are able to determine a reasonable estimate, it must record a provisional amount in the financial statements. Provisional treatment is proper in light of anticipated additional guidance from various taxing authorities, the SEC, the FASB, and even the Joint Committee on Taxation. If a company cannot determine a provisional amount to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the TCJA. The Company has applied this guidance to its financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers for guidance to clarify the principles for recognizing revenue and to develop a common revenue standard for GAAP and International Financial Reporting Standards. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Lease contracts will be excluded from this revenue recognition criteria. For other transactions 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. The Company revenues are principally from leasing. Therefore, this ASU has minimal applicability to the Company. In February 2016, the Financial Accounting Standards Board (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 the company as of the first quarter of fiscal year 2020. The Company is evaluating the effect that this ASU will have on its financial statements and related disclosures. 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. The Company did comply with this for the quarter ended March 31, 2018. The adoption of ASU 2016-15 did not have a material impact on the financial statements and related disclosures. In April 2016 the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606). The core principle of Topic 606 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services This ASU is effective for public business entities for fiscal years, and interim periods within those years, beginning after January 1. 2018. The adoption of ASU 2016-10 did not have a material impact on the financial statements and related disclosures. The Company believes that other recently issued accounting pronouncements and other authoritative guidance for which the effective date is in the future either will not have an impact on its accounting or reporting or that such impact will not be material to its financial position, results of operations and cash flows when implemented. |
Going Concern
Going Concern | 3 Months Ended |
Mar. 31, 2018 | |
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 $2,977,723, and has an accumulated deficit of $40,903,440 at March 31, 2018. 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. The Company believes that it has sufficient cash on hand and cash generated by real estate leases to sustain operations provided that management and board members continue to agree to be paid company stock in exchange for accrued compensation. Through March 31, 2018, management and board members have accepted stock for accrued compensation at the same discount that has been extended to the convertible noteholders of fifty percent. There are other future noncash charges in connection with financing such as a change in derivative liability that will affect income but have no effect on cash flow. Although the Company has been successful raising additional capital, there is no assurance that the company will sell additional shares of stock or borrow additional funds. The Company’s inability to raise 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. 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. However, cash generated from lease revenues is currently exceeding lease costs, but is insufficient to cover operating expenses. |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Note 4 – Property and Equipment As of March 31, 2018 and December 31, 2017, fixed assets and the estimated lives used in the computation of depreciation are as follows: Estimated Useful Lives March 31, 2018 December 31, 2017 Leasehold improvements 10 years 1,082,279 853,413 Less: Accumulated depreciation and amortization (571,542 ) (444,285 ) Property and equipment, net $ 510,737 $ 409,128 |
Related Party
Related Party | 3 Months Ended |
Mar. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Party | Note 5 – Related Party As of March 31, 2018 and December 31, 2017, the Company has accrued fees to related parties in the amount of $418,863 and $449,064, respectively. For the three months ended March 31, 2018 and 2017, total cash-based compensation to related parties was $188,756 and $143,996, respectively. For the three months ended March 31, 2018 and 2017, total share-based compensation to related parties was $377,964 and $509,518, respectively. These amounts are included in general and administrative expenses in the accompanying financial statements. During the three months ended March 31, 2018, we issued 13,381,637 shares of common stock for payment of a related party note in the amount of $166,354, plus accrued interest of $21,658. At March 31, 2018, the Company owed Mr. Throgmartin $140,958 pursuant to a promissory note dated August 12, 2016. This note accrued interest at the rate of 8% per annum and payable upon the earlier date of (i) the second anniversary date of the promissory notes, (ii) the date all of the current investor notes, in the outstanding aggregate principal and accrued interest amount of approximately $1,480,000 at June 30, 2016, have been paid in full and the Company has achieved gross revenues of at least $3,000,000 over any consecutive 12-month period. The balance of related party notes was $140,958 and $307,312 at March 31, 2018 and December 31, 2017, respectively. |
Notes Payable
Notes Payable | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Notes Payable | Note 6 – Notes Payable On August 31, 2015, the Company issued a note in total amount of $126,000 with third parties for use as operating capital. The note was amended to include accrued interest on October 31, 2016 and extended the maturity date to October 31, 2018. As of March 31, 2018 and December 31, 2017 the outstanding principal balance of the note was $133,403. |
Convertible Notes Payable
Convertible Notes Payable | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Convertible Notes Payable | Note 7 – Convertible Notes Payable The Company has issued several convertible notes which are outstanding. The note holders shall have the right to convert principal and accrued interest outstanding into shares of common stock at a discounted price to the market price of our common stock. The conversion feature was recognized as an embedded derivative and was valued using a Black Scholes model that resulted in a derivative liability of $1,103,373 at March 31, 2018. 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. Several convertible note holders elected to convert their notes to stock during the three months ended March 31, 2018. The table below provides a reconciliation of the beginning and ending balances for the liabilities measured using fair significant unobservable inputs (Level 3) for the three months ended March 31, 2018: Convertible notes Discount Convertible Note Net of Discount Derivative Liabilities Balance, December 31, 2017 971,455 503,339 468,116 4,106,521 Issuance of convertible notes 331,459 274,500 56,959 601,582 Conversion of convertible notes (401,914 ) (39,619 ) (362,295 ) (547,476 ) Change in fair value of derivatives — — — (3,057,254 ) Amortization — (247,308 ) 247,308 — Balance March 31, 2018 $ 901,000 $ 490,912 $ 410,088 $ 1,103,373 During the three months ended March 31, 2018, $401,914 of notes and $23,171 of accrued interest was converted into 25,615,827 shares of common stock. A gain on extinguishment of debt of $42,167 has been recorded related to these conversions. The following assumptions were used in calculations of the Black Scholes model for the periods ended March 31, 2018 and December 31, 2017. March 31, 2018 December 31, 2017 Risk-free interest rates 1.28-1.76 % 1.28-1.76 % Expected life 0.05-1 year 0.02-1.23 year Expected dividends 0 % 0 % Expected volatility 70-247 % 211-354 Diego Pellicer Worldwide, Inc. Common Stock fair value $ 0.03 $ 0.08 |
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit) | 3 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
Stockholder's Equity (Deficit) | Note 8 – Stockholders’ Equity (Deficit) On January 14, 2018, the Company’s Board of Directors approved an amendment to our Certificate of Incorporation to increase the number of authorized shares of common stock from 195,000,000 to 495,000,000 shares. During the three months ended March 31, 2018: Holders of convertible notes converted $401,914 of notes and $23,171 of accrued interest into 25,615,827 shares of common stock valued at $890,774. Additionally, 196,983 shares, valued at $18,713, for the conversion of notes, were authorized but not issued as of March 31, 2018. Shares authorized but unissued at December 31, 2017 totaling 370,450 shares were issued during 2018. The Company issued 809,994 common shares as security for the payment of convertible notes. The shares, valued at $26,730 are held in escrow, are refundable and are recorded in a contra equity account. We sold 880,005 shares of common stock and received proceeds of $20,872. Of these shares,395,005 valued at $9,777, were not issued as of March 31, 2018. We issued 336,071 shares of common stock that were sold in 2017 and classified as shares to be issued at December 31, 2017. We issued 10,312,394 shares of common stock, valued at $140,380 as share-based compensation to related parties. Additionally, 25,000 shares, valued at $7,500, were authorized to be issued for related party services, but were not issued as of March 31, 2018. We issued 20,827,986 shares of common stock that were authorized as share-based compensation to related parties in 2017 and classified as shares to be issued at December 31, 2017. We issued 437,902 shares of common stock, valued at $15,433, for services. Additionally, 1,071,245 shares, valued at $36,400 for services, were authorized but not issued as of March 31, 2018. We issued 1,968,335 shares of common stock that were authorized as share-based compensation in 2017 and classified as shares to be issued at December 31, 2017. We issued 13,381,637 shares of common stock for payment of a related party note in the amount of $166,354, plus accrued interest of $21,658. We issued 1,500,000 shares of common stock, valued at $47,254, were issued to settle accounts payable to a consultant. We issued an excess 5,464,891 shares of common stock to a related party; these shares are in the process of being cancelled. As a condition of their employment, the Board of Directors approved employment agreements with three key executives. This agreement provided that additional shares will be granted each year at February 1 over the term of the agreement should their shares as a percentage of the total shares outstanding fall below prescribed ownership percentages. The CEO received an annual grant of additional shares each year to maintain his ownership percentage at 10% of the outstanding stock. The other two executives receive a similar grant to maintain each executive’s ownership percentage at 7.5% of the outstanding stock. At March 31, 2018, there is $1,359,777 accrued for the annual grants at February 1, 2018, representing 38,525,196 shares. We recorded compensation expense of $144,554 for the three months ended March 31, 2018, resulting from the decline in shares price at the vesting date of February 1, 2018. We issued 5,562,806 shares of common stock that were accrued in 2017 and classified as shares to be issued at December 31, 2017. Common stock warrant activity The Company has determined that certain of its warrants are subject to derivative accounting. The table below provides a reconciliation of the beginning and ending balances for the warrant liabilities measured using fair significant unobservable inputs (Level 3) for the three months ended March 31, 2018: Balance at December 31, 2017 $ 192,350 Issuance of warrants - Change in fair value during period (119,596 ) Balance at March 31, 2018 $ 72,754 The following assumptions were used in calculations of the Black Scholes model for the periods ended March 31, 2018 and December 31, 2017. March 31, 2018 December 31, 2017 Annual dividend yield 0 % 0 % Expected life (years) 2-9 3-10 Risk-free interest rate 2.27 - 2.74 % 1.50 – 2.40 % Expected volatility 194 - 235 % 177 - 284 % Common stock option activity During the three months ended March 31, 2018, the Company recorded total option expense of $197,076. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 9 – Subsequent Events In April, 2018, one of the Denver cultivation warehouses experienced a fire, burning 25 percent of the facility. All plants in the facility had to be destroyed. At the time, it had all the most up-to-date growing equipment and was at about 50 percent capacity. However, the other Denver cultivation warehouse was at 100 percent capacity and produced enough plants to completely supply the Denver Diego Pellicer store. Also, the price of the product on the wholesale market had become low enough that the Diego Pellicer Denver retail facility could buy product on the market at the same cost as it took to grow product in its own facilities to. As a result, Diego Pellicer Worldwide and the tenant Diego Pellicer Colorado decided repair the warehouse with the insurance proceeds and to offer both production warehouses for sale rather than restart production at the damaged facility. Management expects this to generate cash for Diego Pellicer Worldwide providing capital for future growth. We issued 22,102,025 shares of common stock that were recorded as shares to be issued at March 31, 2018. We issued 10,783,601 shares of common stock upon the conversion of $46,641 principal amount of notes and $11,166 of accrued interest. We issued 1,000,000 shares of common stock as settlement for services rendered. We entered into two convertible notes with an aggregate principal amount of $350,000 and received proceeds of $330,750. |
Significant and Critical Acco15
Significant and Critical Accounting Policies and Practices (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
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 ended March 31, 2018 (the “Current Quarter”) and the three months March 31, 2017 (the “Prior Quarter”). The Company’s annual report on Form 10-K for the year ended December 31, 2017 (“2017 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. |
Principles of Consolidation | Principles of Consolidation The financial statements include the accounts of Diego Pellicer Worldwide, Inc., and its wholly-owned subsidiary Diego Pellicer World-wide 1, Inc. Intercompany balances and transactions have been eliminated in consolidation. |
Reclassifications | Reclassifications Certain prior year amounts were reclassified to conform to the manner of presentation in the current period. These reclassifications had no effect on the Company’s balance sheet, net loss or stockholders’ equity. |
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 a 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 March 31, 2018 and December 31, 2017. 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. |
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. The Company records rents due from the tenants on a current basis. The Company has deferred collection of such rents until the tenants receive the proper governmental licenses to begin operation. Prior to 2017, management had reserved these deferred amounts due to the unlikelihood of collection. |
Leases as Lessor | Leases as Lessor The Company currently leases properties to licensed cannabis operators for locations that meet the regulatory criteria applicable by the respective regulatory jurisdiction for the sale, production, and development of cannabis 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. |
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. |
Income (Loss) Per Common Share | Income (loss) per common share The Company utilizes ASC 260, “Earnings Per Share” for calculating the basic and diluted loss per share. In accordance with ASC 260, the basic and diluted loss per share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted net loss per share is computed similar to basic loss per share except that the denominator is adjusted for the potential dilution that could occur if stock options, warrants, and other convertible securities were exercised or converted into common stock. Potentially dilutive securities are not included in the calculation of the diluted loss per share if their effect would be anti-dilutive. The Company has 106,252,743 and 12,934,555 common stock equivalents at March 31, 2018 and 2017, respectively. For the three month period ended March 31, 2017 the 12,934,555 potential shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would reduce net loss per share. Diluted earnings per share for the three months ended March 31, 2018 have been calculated as follows: Net income $ 1,860,646 Income attributable to convertible instruments (3,219,017 ) Expense attributable to convertible instruments 455,642 Diluted loss $ (902,729 ) Basic shares outstanding 164,940,612 Shares to be issued 41,096,070 Convertible instruments 53,980,180 Diluted shares outstanding 260,016,862 Diluted EPS $ (0.00 ) |
Legal and Regulatory Environment | Legal and regulatory environment The cannabis industry is subject to numerous laws and regulations of federal, state and local governments. These laws and regulations include, but are not limited to, matters such as licensure, accreditation, and different taxation between federal and state. Federal government activity may increase in the future with respect to companies involved in the cannabis industry concerning possible violations of federal statutes and regulations. Management believes that the Company is in compliance with local, state and federal regulations, While no regulatory inquiries have been made, compliance with such laws and regulations can be subject to future government review and interpretation, as well as regulatory actions unknown or unasserted at this time. |
Recent Accounting Pronouncements | Recent accounting pronouncements. On December 22, 2017 the SEC staff issued Staff Accounting Bulletin 118 (SAB 118), which provides guidance on accounting for the tax effects of the Tax Cuts and Jobs Act (the TCJA). SAB 118 provides a measurement period that should not extend beyond one year from the enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the TCJA for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the TCJA is incomplete but for which they are able to determine a reasonable estimate, it must record a provisional amount in the financial statements. Provisional treatment is proper in light of anticipated additional guidance from various taxing authorities, the SEC, the FASB, and even the Joint Committee on Taxation. If a company cannot determine a provisional amount to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the TCJA. The Company has applied this guidance to its financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers for guidance to clarify the principles for recognizing revenue and to develop a common revenue standard for GAAP and International Financial Reporting Standards. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Lease contracts will be excluded from this revenue recognition criteria. For other transactions 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. The Company revenues are principally from leasing. Therefore, this ASU has minimal applicability to the Company. In February 2016, the Financial Accounting Standards Board (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 the company as of the first quarter of fiscal year 2020. The Company is evaluating the effect that this ASU will have on its financial statements and related disclosures. 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. The Company did comply with this for the quarter ended March 31, 2018. The adoption of ASU 2016-15 did not have a material impact on the financial statements and related disclosures. In April 2016 the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606). The core principle of Topic 606 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services This ASU is effective for public business entities for fiscal years, and interim periods within those years, beginning after January 1. 2018. The adoption of ASU 2016-10 did not have a material impact on the financial statements and related disclosures. The Company believes that other recently issued accounting pronouncements and other authoritative guidance for which the effective date is in the future either will not have an impact on its accounting or reporting or that such impact will not be material to its financial position, results of operations and cash flows when implemented. |
Significant and Critical Acco16
Significant and Critical Accounting Policies and Practices (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Schedule of Calculation of Diluted Earning Per Share | Diluted earnings per share for the three months ended March 31, 2018 have been calculated as follows: Net income $ 1,860,646 Income attributable to convertible instruments (3,219,017 ) Expense attributable to convertible instruments 455,642 Diluted loss $ (902,729 ) Basic shares outstanding 164,940,612 Shares to be issued 41,096,070 Convertible instruments 53,980,180 Diluted shares outstanding 260,016,862 Diluted EPS $ (0.00 ) |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | As of March 31, 2018 and December 31, 2017, fixed assets and the estimated lives used in the computation of depreciation are as follows: Estimated Useful Lives March 31, 2018 December 31, 2017 Leasehold improvements 10 years 1,082,279 853,413 Less: Accumulated depreciation and amortization (571,542 ) (444,285 ) Property and equipment, net $ 510,737 $ 409,128 |
Convertible Notes Payable (Tabl
Convertible Notes Payable (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
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) for the three months ended March 31, 2018: Convertible notes Discount Convertible Note Net of Discount Derivative Liabilities Balance, December 31, 2017 971,455 503,339 468,116 4,106,521 Issuance of convertible notes 331,459 274,500 56,959 601,582 Conversion of convertible notes (401,914 ) (39,619 ) (362,295 ) (547,476 ) Change in fair value of derivatives — — — (3,057,254 ) Amortization — (247,308 ) 247,308 — Balance March 31, 2018 $ 901,000 $ 490,912 $ 410,088 $ 1,103,373 |
Schedule of Assumptions Used Black Scholes Model | The following assumptions were used in calculations of the Black Scholes model for the periods ended March 31, 2018 and December 31, 2017. March 31, 2018 December 31, 2017 Risk-free interest rates 1.28-1.76 % 1.28-1.76 % Expected life 0.05-1 year 0.02-1.23 year Expected dividends 0 % 0 % Expected volatility 70-247 % 211-354 Diego Pellicer Worldwide, Inc. Common Stock fair value $ 0.03 $ 0.08 |
Stockholder's Equity (Deficit)
Stockholder's Equity (Deficit) (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
Schedule of Warrant Liabilities Measured Using Fair Significant Unobservable Inputs (Level 3) | The table below provides a reconciliation of the beginning and ending balances for the warrant liabilities measured using fair significant unobservable inputs (Level 3) for the three months ended March 31, 2018: Balance at December 31, 2017 $ 192,350 Issuance of warrants - Change in fair value during period (119,596 ) Balance at March 31, 2018 $ 72,754 |
Schedule of Fair Value On Assumptions | The following assumptions were used in calculations of the Black Scholes model for the periods ended March 31, 2018 and December 31, 2017. March 31, 2018 December 31, 2017 Annual dividend yield 0 % 0 % Expected life (years) 2-9 3-10 Risk-free interest rate 2.27 - 2.74 % 1.50 – 2.40 % Expected volatility 194 - 235 % 177 - 284 % |
Organization and Operations (De
Organization and Operations (Details Narrative) - Type 1 Media, Inc [Member] | 3 Months Ended |
Mar. 31, 2018USD ($)shares | |
Number of shares issued and outstanding prior merger | 62,700,000 |
Number of shares agreed to issued and outstanding by principal owner | $ | $ 55,000,000 |
Consideration for agreed shares | $ | $ 169,000 |
Number of shares cancellation during the period | 55,000,000 |
Exchanged for right to receive share | 1 |
Stock issued during period convertible securities | 21,632,252 |
Percentage of combined entity | 74.00% |
Significant and Critical Acco21
Significant and Critical Accounting Policies and Practices (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Common stock equivalents | 12,934,555 | |
Common Stock Equivalents [Member] | ||
Common stock equivalents | 106,252,743 | 12,934,555 |
Maximum [Member] | ||
Cash insured by FDIC | $ 250,000 |
Significant and Critical Acco22
Significant and Critical Accounting Policies and Practices - Schedule of Calculation of Diluted Earning Per Share (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Accounting Policies [Abstract] | ||
Net income | $ 1,860,646 | $ (1,308,811) |
Income attributable to convertible instruments | (3,219,017) | |
Expense attributable to convertible instruments | 455,642 | |
Diluted loss | $ (902,729) | |
Basic shares outstanding | 164,940,612 | 50,868,784 |
Shares to be issued | 41,096,070 | |
Convertible instruments | 53,980,180 | |
Diluted shares outstanding | 260,016,862 | 50,868,784 |
Diluted EPS | $ 0 | $ (0.03) |
Going Concern (Details Narrativ
Going Concern (Details Narrative) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Working capital deficit | $ 2,977,723 | |
Accumulated deficit | $ 40,903,440 | $ 42,764,086 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | |
Leasehold Improvements, gross | $ 1,082,279 | $ 853,413 |
Less: Accumulated depreciation and amortization | (571,542) | (444,285) |
Property and equipment, net | $ 510,737 | $ 409,128 |
Leasehold Improvements [Member] | ||
Property and equipment estimated useful lives | 10 years |
Related Party (Details Narrativ
Related Party (Details Narrative) - USD ($) | 3 Months Ended | |||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | Jun. 30, 2016 | |
Accrued fees - related parties | $ 418,863 | $ 449,064 | ||
Cash based compensation - related parties | 188,756 | $ 143,996 | ||
Gross revenues | 114,211 | (37,241) | ||
Notes payable related parties | 140,958 | $ 307,312 | ||
Related Party [Member] | ||||
Share based compensation - related parties | 377,964 | $ 509,518 | ||
Accrued interest | $ 21,658 | |||
Related Party Note [Member] | ||||
Debt instruments conversion into shares | 13,381,637 | |||
Debt instruments conversion into shares, value | $ 166,354 | |||
Mr. Throgmartin [Member] | ||||
Accrued interest | $ 1,480,000 | |||
Debt instrument face amount | $ 140,958 | |||
Debt instrument interest rate | 8.00% | |||
Gross revenues | $ 3,000,000 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | Aug. 31, 2015 | Mar. 31, 2018 | Dec. 31, 2017 |
Note payable | $ 133,403 | $ 133,403 | |
Third Parties [Member] | |||
Note payable principal amount | $ 126,000 | ||
Note maturity date | Oct. 31, 2018 |
Convertible Notes Payable (Deta
Convertible Notes Payable (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | |
Debt Disclosure [Abstract] | ||
Derivative liability | $ 1,103,373 | $ 4,106,521 |
Gain on extinguishment of debt | $ 42,167 |
Convertible Notes Payable - Sch
Convertible Notes Payable - Schedule of Liabilities Measured Using Fair Significant Unobservable Inputs (Level 3) (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Issuance of convertible notes | $ 258,500 | $ 565,000 |
Change in fair value of derivatives | $ 186,086 | |
Convertible Notes [Member] | ||
Balance, beginning | 971,455 | |
Issuance of convertible notes | 331,459 | |
Conversion of convertible notes | (401,914) | |
Change in fair value of derivatives | ||
Amortization | ||
Balance, ending | 901,000 | |
Discount [Member] | ||
Balance, beginning | 503,339 | |
Issuance of convertible notes | 274,500 | |
Conversion of convertible notes | (39,619) | |
Change in fair value of derivatives | ||
Amortization | (247,308) | |
Balance, ending | 490,912 | |
Convertible Note Net of Discount [Member] | ||
Balance, beginning | 468,116 | |
Issuance of convertible notes | 56,959 | |
Conversion of convertible notes | (362,295) | |
Change in fair value of derivatives | ||
Amortization | 247,308 | |
Balance, ending | 410,088 | |
Derivative Liabilities [Member] | ||
Balance, beginning | 4,106,521 | |
Issuance of convertible notes | 601,582 | |
Conversion of convertible notes | (547,476) | |
Change in fair value of derivatives | (3,057,254) | |
Amortization | ||
Balance, ending | $ 1,103,373 |
Convertible Notes Payable - S29
Convertible Notes Payable - Schedule of Assumptions Used Black Scholes Model (Details) - $ / shares | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Expected dividends | 0.00% | 0.00% |
Diego Pellicer Worldwide, Inc. Common Stock fair value | $ 0.03 | $ 0.08 |
Minimum [Member] | ||
Risk-free interest rates | 1.28% | 1.28% |
Expected life | 18 days | 7 days |
Expected volatility | 70.00% | 211.00% |
Maximum [Member] | ||
Risk-free interest rates | 1.76% | 1.76% |
Expected life | 1 year | 1 year 2 months 23 days |
Expected volatility | 247.00% | 354.00% |
Stockholder's Equity (Deficit30
Stockholder's Equity (Deficit) (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2018 | Dec. 31, 2017 | Feb. 01, 2018 | Jan. 14, 2018 | |
Common stock shares authorized | 495,000,000 | 495,000,000 | ||
Number of unissued shares during period, value | $ 9,777 | $ 370,450 | ||
Number of common stock issued, shares | 880,005 | 336,071 | ||
Stock issued during period, value, new issues | $ 20,872 | |||
Number of unissued shares during period | 395,005 | |||
Stock issued during period, shares, share-based compensation, gross | 10,312,394 | 1,968,335 | ||
Stock issued during period, value, share-based compensation | $ 140,380 | |||
Number of common stock issued for services, shares | 437,902 | |||
Number of common stock issued for services | $ 15,433 | |||
Shares authorized for services but not issued, shares | 1,071,245 | |||
Shares authorized for services but not issued, value | $ 36,400 | |||
Ownership interest | 10.00% | |||
Accrued value annual grant | $ 1,359,777 | |||
Shares available for future grants | 38,525,196 | |||
Net credit of compensation | $ 144,554 | |||
Number of common stock accrued during period | 5,562,806 | |||
Stock option expenses | $ 197,076 | |||
Convertible Notes [Member] | ||||
Number of shares issued for conversion of notes, value | $ 890,774 | |||
Debt converted into share | 25,615,827 | |||
Accrued interest | $ 23,171 | |||
Convertible notes | 401,914 | |||
Related Party Note [Member] | ||||
Accrued interest | $ 21,658 | |||
Number of common stock issued, shares | 13,381,637 | |||
Stock issued during period, value, new issues | $ 166,354 | |||
Related Party [Member] | ||||
Stock issued during period, shares, share-based compensation, gross | 20,827,986 | |||
Board of Directors[Member] | Minimum [Member] | ||||
Common stock shares authorized | 195,000,000 | |||
Board of Directors[Member] | Maximum [Member] | ||||
Common stock shares authorized | 495,000,000 | |||
Holder [Member] | ||||
Common stock shares authorized | 196,983 | |||
Number of shares issued for conversion of notes, value | $ 401,914 | |||
Debt converted into share | 25,615,827 | |||
Accrued interest | $ 23,171 | |||
Common stock, shares authorized but not issued, value | $ 18,713 | |||
Related Party [Member] | ||||
Stock issued during period, shares, share-based compensation, gross | 25,000 | |||
Stock issued during period, value, share-based compensation | $ 7,500 | |||
Stock issued during period of cancellation, shares | 5,464,891 | |||
Consultant [Member] | ||||
Number of shares issued to settle accounts payable, shares | 1,500,000 | |||
Number of shares issued to settle accounts payable | $ 47,254 | |||
Two Executives [Member] | ||||
Ownership interest | 7.50% |
Stockholder's Equity (Deficit31
Stockholder's Equity (Deficit) - Schedule of Warrant Liabilities Measured Using Fair Significant Unobservable Inputs (Level 3) (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Change in fair value during period | $ (119,596) | |
Fair Value, Inputs, Level 3 [Member] | ||
Balance at December 31, 2017 | 192,350 | |
Issuance of warrants | ||
Change in fair value during period | (119,596) | |
Balance at March 31, 2018 | $ 72,754 |
Stockholder's Equity (Deficit32
Stockholder's Equity (Deficit) - Schedule of Fair Value On Assumptions (Details) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Annual dividend yield | 0.00% | 0.00% |
Minimum [Member] | ||
Expected life (years) | 2 years | 3 years |
Risk-free interest rate | 2.27% | 1.50% |
Expected volatility | 194.00% | 177.00% |
Maximum [Member] | ||
Expected life (years) | 9 years | 10 years |
Risk-free interest rate | 2.74% | 2.40% |
Expected volatility | 235.00% | 284.00% |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |
Apr. 30, 2018 | Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Number of common stock shares issued | 880,005 | 336,071 | ||
Number of shares issued for services rendered | 437,902 | |||
Proceeds from convertible debt | $ 258,500 | $ 565,000 | ||
Subsequent Event [Member] | ||||
Damage from fire, explosion | one of the Denver cultivation warehouses experienced a fire, burning 25 percent of the facility. All plants in the facility had to be destroyed. At the time, it had all the most up-to-date growing equipment and was at about 50 percent capacity. However, the other Denver cultivation warehouse was at 100 percent capacity and produced enough plants to completely supply the Denver Diego Pellicer store. | |||
Number of common stock shares issued | 22,102,025 | |||
Number of shares issued for conversion of notes | 10,783,601 | |||
Number of shares issued for conversion of notes, value | $ 46,641 | |||
Accrued interest | $ 11,166 | |||
Number of shares issued for services rendered | 1,000,000 | |||
Subsequent Event [Member] | Two Convertible Notes [Member] | ||||
Convertible notes principal amount | $ 350,000 | |||
Proceeds from convertible debt | $ 330,750 |