Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Mar. 31, 2021 | Jun. 30, 2020 | |
Document And Entity Information | |||
Entity Registrant Name | DIEGO PELLICER WORLDWIDE, INC | ||
Entity Central Index Key | 0001559172 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2020 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filer | No | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity's Reporting Status Current | Yes | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity File Number | 333-189731 | ||
Entity Interactive Data Current | Yes | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Common Stock, Shares Outstanding | 222,327,908 | ||
Entity Public Float | $ 1,730,402 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2020 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash | $ 327,864 | $ 317,446 |
Accounts receivable | 523,958 | 391,273 |
Prepaid expenses | 11,275 | 12,111 |
Total current assets | 863,097 | 720,830 |
Other receivables | 1,030,422 | 788,177 |
Security deposits | 90,000 | 150,000 |
Right of Use Assets | 1,062,592 | 3,009,163 |
Total assets | 3,046,111 | 4,668,170 |
Current liabilities: | ||
Accounts payable | 526,377 | 514,196 |
Accrued payable - related parties | 1,332,756 | 1,293,238 |
Accrued expenses | 931,825 | 587,707 |
Notes payable - related party | 140,958 | 140,958 |
Notes payable | 133,403 | 133,403 |
Convertible notes, net of discount and costs | 3,239,274 | 2,352,530 |
Derivative liabilities | 5,997,865 | 5,024,321 |
Lease Liabilities | 327,685 | 676,336 |
Warrant liabilities | 476 | 967 |
Total current liabilities | 12,630,619 | 10,723,656 |
Notes payable - long term | 206,444 | |
Lease Liabilities, net of current portion | 715,488 | 2,299,152 |
Total liabilities | 13,552,551 | 13,022,808 |
Redeemable convertible preferred stock, Series C, par value $.00001 per share; 1,500,000 shares authorized, no shares and 140,000 shares issued and outstanding, net of discount of $0 and $131,250, respectively, | 8,750 | |
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; 840,000,000 shares authorized, 217,271,495 and 113,926,332 shares issued and outstanding, respectively | 216 | 114 |
Additional paid-in capital | 44,554,119 | 43,478,139 |
Stock to be issued | 49,225 | 127,261 |
Accumulated deficit | (55,110,000) | (51,968,902) |
Total deficiency in stockholders' equity | (10,506,440) | (8,363,388) |
Total liabilities and deficiency in stockholders' equity | $ 3,046,111 | $ 4,668,170 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Common stock, par value | $ 0.000001 | $ 0.000001 |
Common stock, shares authorized | 840,000,000 | 840,000,000 |
Common stock, shares issued | 217,271,495 | 113,926,332 |
Common stock, shares outstanding | 217,271,495 | 113,926,332 |
Redeemable convertible preferred stock, Series C [Member] | ||
Preferred stock, par value | $ .00001 | $ .00001 |
Preferred stock, shares authorized | 1,500,000 | 1,500,000 |
Preferred stock, shares issued | 0 | 140,000 |
Preferred stock, shares outstanding | 0 | 140,000 |
Discount | $ 0 | $ 131,250 |
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 |
Consolidated Statements Of Oper
Consolidated Statements Of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Revenues | ||
Net rental revenue | $ 1,265,137 | $ 1,646,369 |
Rental expense | (1,006,581) | (1,189,352) |
Gross profit | 258,556 | 457,017 |
Operating expenses: | ||
General and administrative expenses | 1,029,185 | 2,521,649 |
Selling expense | 32,940 | 52,605 |
Depreciation expense | 139,595 | |
Loss from Operations | (803,569) | (2,256,832) |
Other income (expense) | ||
Interest income | 150,577 | 153,782 |
Other income | 236,705 | |
Interest expense | (1,994,199) | (3,184,951) |
Lease termination payments | 33,851 | |
Gain on sale/termination of lease | 55,256 | 534,649 |
Extinguishment of debt | (9,387) | 218,196 |
Change in derivative liabilities | (670,152) | 1,948,643 |
Change in value of warrants | 491 | 15,609 |
Total other loss, net | (2,196,858) | (314,072) |
Provision for taxes | ||
Net loss | (3,000,427) | (2,570,904) |
Accrued dividends and accretion of conversion feature | ||
Deemed dividend on preferred stock | (140,671) | (43,968) |
Net loss attributable to common stockholders | $ (3,141,098) | $ (2,614,872) |
Loss per share - basic and diluted | $ (0.02) | $ (0.04) |
Weighted average common shares outstanding - basic and diluted | 150,896,077 | 59,828,096 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Deficit - USD ($) | Redeemable Convertible Preferred Stock | Common Stock | Preferred Stock | Additional Paid-In Capital | Accumulated Deficit | Common Stock to be issued | Total |
Balance, beginning at Dec. 31, 2018 | $ 28 | $ 40,378,973 | $ (49,354,030) | $ 710,838 | $ (8,264,191) | ||
Balance, beginning, shares at Dec. 31, 2018 | 28,287,414 | ||||||
Sale of common stock | 2,648 | (2,648) | |||||
Sale of common stock, shares | 5,000 | ||||||
Issuance of common shares for services | $ 5 | 481,179 | (310,836) | 170,348 | |||
Issuance of common shares for services, shares | 4,987,610 | ||||||
Issuance of common shares for services - related parties | $ 25 | 977,200 | (245,196) | 732,029 | |||
Issuance of common shares for services - related parties, shares | 24,566,400 | ||||||
Common stock issued upon conversion of notes payable | $ 48 | 1,583,887 | (133,018) | 1,450,917 | |||
Common stock issued upon conversion of notes payable, shares | 48,684,667 | ||||||
Shares cancelled for convertible note | (108,121) | 108,121 | |||||
Shares cancelled for convertible note, shares | (675,759) | ||||||
Cashless warrant exercise | $ 8 | $ (8) | |||||
Cashless warrant exercise (Shares) | 8,071,000 | ||||||
Series C preferred stock issued for cash, net of costs and discounts | |||||||
Series C preferred stock issued for cash, net of costs and discounts, shares | 140,000 | ||||||
Accretion of conversion feature on Series C preferred stock | $ 8,750 | $ (8,750) | $ (8,750) | ||||
Fair value of warrants and options granted for services | 162,381 | 162,381 | |||||
Deemed dividends related to conversion feature of Series C preferred stock | (35,218) | (35,218) | |||||
Net loss | (2,570,904) | (2,570,904) | |||||
Balance, ending at Dec. 31, 2019 | $ 8,750 | $ 114 | 43,478,139 | (51,968,902) | 127,261 | (8,363,388) | |
Balance, ending, shares at Dec. 31, 2019 | 140,000 | 113,926,332 | |||||
Issuance of common shares for services | $ 4 | 51,196 | 2,719 | 53,919 | |||
Issuance of common shares for services, shares | 4,000,000 | ||||||
Issuance of common shares for services - related parties | $ 13 | 177,311 | (66,772) | 110,552 | |||
Issuance of common shares for services - related parties, shares | 12,219,836 | ||||||
Common stock issued upon conversion of notes payable | $ 39 | $ 328,847 | $ (13,983) | $ 314,903 | |||
Common stock issued upon conversion of notes payable, shares | 39,489,099 | ||||||
Series C preferred stock issued for cash, net of costs and discounts | |||||||
Series C preferred stock issued for cash, net of costs and discounts, shares | 111,600 | ||||||
Series C preferred stock converted to common stock | $ (89,295) | $ 46 | $ 432,020 | $ 432,066 | |||
Series C preferred stock converted to common stock, shares | (251,600) | 47,636,228 | |||||
Accretion of conversion feature on Series C preferred stock | $ 80,545 | (80,545) | (80,545) | ||||
Fair value of warrants and options granted for services | 86,606 | 86,606 | |||||
Deemed dividends related to conversion feature of Series C preferred stock | (60,126) | (60,126) | |||||
Net loss | (3,000,427) | (3,000,427) | |||||
Balance, ending at Dec. 31, 2020 | $ 216 | $ 44,554,119 | $ (55,110,000) | $ 49,225 | $ (10,506,440) | ||
Balance, ending, shares at Dec. 31, 2020 | 217,271,495 |
Consolidated Statement Of Cash
Consolidated Statement Of Cash Flow - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Cash flows from operating activities: | ||
Net loss | $ (3,000,427) | $ (2,570,904) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Depreciation | 139,595 | |
Change in fair value of derivative liability | 670,152 | (1,948,643) |
Change in value of warrants | (491) | (15,609) |
Amortization of debt related costs | 942,601 | 2,833,612 |
Noncash finance cost | 100,000 | |
Expense related to additional derivative liability | 584,553 | |
Extinguishment of debt | 9,387 | (218,196) |
Stock based compensation | 192,475 | 1,014,756 |
Common stock payable issued for services | 44,619 | |
Gain on sale/termination of lease | (55,256) | (534,649) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (132,685) | (222,414) |
Prepaid expenses | 836 | 42,059 |
Other assets | (242,243) | (463,416) |
Security deposits | 60,000 | |
Accounts payable | 12,181 | (98,385) |
Accrued liability - related parties | 39,518 | 879,132 |
Accrued expenses | 358,820 | 294,217 |
Lease liabilities | 69,512 | (107,236) |
Contingent liabilities | (207,910) | |
Cash used by operating activities | (346,448) | (1,183,991) |
Cash flows from investing activities: | ||
Proceeds from sale of lease | 550,000 | |
Cash flows from investing activities | 550,000 | |
Cash flows from financing activities: | ||
Debt costs | (16,225) | |
Proceeds from notes payable | 206,444 | |
Net proceeds from convertible notes payable | 100,000 | 897,725 |
Repayments of convertible notes payable, net | (49,578) | (120,500) |
Proceeds from sale of preferred stock, net | 100,000 | 130,000 |
Cash provided by financing activities | 356,866 | 891,000 |
Net increase in cash | 10,418 | 257,009 |
Cash, beginning of year | 317,446 | 60,437 |
Cash, end of year | 327,864 | 317,446 |
Cash paid for interest | ||
Cash paid for taxes | ||
Supplemental schedule of noncash financial activities: | ||
Lease liability related to termination of lease | 1,325,445 | |
Notes converted to stock | 180,922 | 842,712 |
Discount related to convertible notes and convertible Preferred C shares | 214,600 | 905,500 |
Accrued interest converted to stock | 14,702 | 60,627 |
Value of derivative liability extinguished upon conversion of notes and preferred stock and payment of notes | 530,042 | 891,922 |
Accounts payable and accrued expenses paid with common stock | 50,000 | |
Debt issuance costs deducted from proceeds of notes | 16,225 | |
Debt discount extinguished with note conversion | 53,567 | |
Debt discount extinguished with note repayment | 21,075 | |
Conversion of preferred stock to common stock | 265,115 | |
Discount extinguished with preferred stock conversion | 175,820 | |
Accrued dividends and accretion of conversion feature | 80,545 | |
Deemed dividends related to conversion feature of Series C preferred stock | $ 60,126 |
Organization and Operations
Organization and Operations | 12 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Operations | Note 1 – Organization and Operations History On March 13, 2015, Diego Pellicer Worldwide, Inc. (the Company) (f/k/a Type 1 Media, Inc.) closed on a merger and share exchange 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. Diego was merged with and into the Company with the Company to continue as the surviving corporation in the merger. 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. The properties generating rents in 2020 and 2019 are as follows: Purpose Size City State Retail store (recreational and medical) 3,300 sq. Denver CO Cultivation warehouse – terminated October 2020 18,600 sq. Denver CO Cultivation warehouse 14,800 sq. Denver CO Retail store (recreational and medical) – sold in May 2019 4,500 sq. Seattle WA The Company’s three properties in Denver, CO (one terminated in October 2020) are leased to Royal Asset Management, LLC (“RAM”). RAM opened the Diego Denver branded flagship store in February 2017. This store is known as “Diego Colorado”. The retail facilities have shown steady growth in sales since opening. For the other two properties subleased (one terminated in October 2020), RAM uses these properties for its cultivation facilities in Denver, CO. Production at these facilities began in late 2016. The Company is currently exploring the acquisition of this entity, and the parties are in negotiations (see Note 5). In regards to the Seattle property, on May 6, 2019 the Company entered into an agreement with a third party, and sold the Seattle leased location. The sale provided $550,000 in capital and executive resources for possible expansion and working capital purposes. In October 2020, the master lease and sublease associated with the 18,600 sq. cultivation warehouse in Denver were terminated (see Note 5). |
Significant and Critical Accoun
Significant and Critical Accounting Policies and Practices | 12 Months Ended |
Dec. 31, 2020 | |
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 for 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 of operations and that 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 consolidated financial statements and related notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and presented in accordance with accounting principles generally accepted in the United States of America (US GAAP). 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. 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, the collectability of accounts receivable and other receivables (See Note 5), valuation of right of use assets and lease liabilities 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 and 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 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 December 31, 2020 and December 31, 2019. 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. The following table reflects assets and liabilities that are measured at fair value on a recurring basis (in thousands): As of December 31, 2020 Fair Value Measurement Using Level 1 Level 2 Level 3 Total Derivative liabilities $ — $ — $ 5,998 $ 5,998 Stock warrant liabilities — — 1 1 $ — $ — $ 5,999 $ 5,999 As of December 31, 2019 Fair Value Measurement Using Level 1 Level 2 Level 3 Total Derivative Liabilities $ — $ — $ 5,024 $ 5,024 Stock warrant Liabilities — — 1 1 $ — $ — $ 5,025 $ 5,025 Derivative liabilities and stock warrant liabilities were valued using the Binomial Option Pricing Model in calculating the embedded conversion features for the years ended December 31, 2020 and 2019. 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. Uninsured balances were approximately $73,000 and $63,000 at December 31, 2020 and 2019, respectively. Revenue recognition In accordance with ASC 842, Leases, During the initial term of the lease, management has a policy of partial rent forbearance when the tenant first opens the facility to assure that the tenant has the opportunity for success. Management may be required to exercise considerable judgment in estimating revenue to be recognized. When management concludes that the Company is the owner of tenant improvements, the Company records the cost to construct the tenant improvements as a capital asset. In addition, the Company 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, the Company 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, we record 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 has adopted the new revenue recognition guidelines in accordance with ASC 606, Revenue from Contracts with Customers (ASC 606), commencing from January 1, 2019. The adoption of ASC 606 did not have a material impact on the financial statements and related disclosures since the Company is primarily a lessor for revenue purposes and recognizes rent income under ASC 842, Leases The Company analyzes its contracts to assess that they are within the scope and in accordance with ASC 606. In determining the appropriate amount of revenue to be recognized as the Company fulfills its obligations under each of its agreements, whether for goods and services or licensing, the Company performs the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations based on estimated selling prices; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. Advertising During the years ended December 31, 2020 and 2019, advertising expense was $32,940 and $52,605, respectively. 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 common 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 1,462,069,888 and 631,737,597 common stock equivalents at December 31, 2020 and 2019, respectively. For the years ended December 31, 2020 and 2019, these potential shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would reduce net loss per share. There are 840,000,000 shares authorized resulting in 839,341,383 insufficient shares as of December 31, 2020. 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 and, 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. The Company believes 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 | 12 Months Ended |
Dec. 31, 2020 | |
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 $11,767,522 at December 31, 2020, and it has an accumulated deficit of $55,110,000 at December 31, 2020. These factors raise substantial doubt about its ability to continue as a going concern over the next twelve months. 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. There are other future noncash charges in connection with financings 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 | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Note 4 – Property and Equipment On May 6, 2019, the Company entered into an agreement with a third party, by which the Company sold the Seattle leased location for $550,000 in cash. The Company plans to allocate its efforts to new locations and cannabis grow facilities in Colorado. In connection with the sale, fully amortized leasehold improvements with a historical cost of $566,830 were sold. During the years ended December 31, 2020 and 2019, the Company recorded depreciation expense of $0 and $139,595, respectively. The Company’s assets were fully depreciated at December 31, 2020 and 2019. |
Accounts Receivables and Other
Accounts Receivables and Other Receivables | 12 Months Ended |
Dec. 31, 2020 | |
Common shares issued for security payment of convertible notes, value | |
Accounts Receivables and Other Receivables | Note 5 – Accounts Receivables and Other Receivables As disclosed in Note 1, the Company subleases three properties in Colorado to Royal Asset Management. At December 31, 2020 and 2019, the Company had outstanding receivables from the subleases totaling $523,958 and $391,273, respectively, and during 2020 and 2019 the Company’s subleases with RAM accounted for 100% and 93% of the Company’s revenues, respectively. In addition to the receivables from the subleases, the Company has agreed to provide RAM and affiliates of RAM up to an aggregate amount of $1,030,000 in financing. These notes accrue interest at the rates ranging from 12% to 18% per annum. As of December 31, 2020 and 2019, the outstanding balance of these notes receivable total $1,030,422 and $788,177, respectively, including accrued interest of $300,422 and $153,509, respectively. The amount presented in our balance sheet at December 31, 2019 is $788,177, which represents $1,017,143 due to us, less $228,966 that we owed to RAM for leasehold improvements. At December 31, 2020 it was determined that we did not owe the $228,966 amount to RAM for the improvements, and we included the increase in the notes balance as Other Income in the consolidated financial statements for the year ended December 31, 2020. The notes are secured by a UCC filing and also $400,000 of the balance is personally guaranteed by the managing member of RAM. Our position is subordinate to the CEO’s note described in Note 7. We have recorded interest income of $146,913 and $153,509 during the years ended December 31, 2020 and 2019, respectively. If we do consummate any agreement to acquire Royal Asset Management, part of the purchase price will be paid through receivables that are owed to us (see below). On September 9, 2020, we closed on a Membership Interest Purchase Agreement dated September 4, 2020, and obtained the right to acquire a 15.13% membership interest in Blue Bronco, LLC. The purchase of the 15.13% interest in Blue Bronco LLC is subject to the approval of the Colorado Marijuana Enforcement Division. Necessary approval by governing authorities is expected to be received in the second quarter of 2021. As part of these transactions, we received full payment of a promissory note receivable in the principal amount of $300,000, as well as full payment of an outstanding promissory note receivable, dated February 27, 2020, in the principal amount of $50,000. Upon receipt of this payment of $50,000, we made a payment of $34,265 in order to “true up” our obligations under that certain promissory note, dated July 25, 2019, in the principal amount of $400,000 made in favor of the Company. Additionally, accrued interest receivable under the $300,000 note of approximately $68,000 will be applied to the purchase of the membership interest upon approval of the purchase by the Colorado Marijuana Enforcement Division. During the year ended December 31, 2020 we made additional advances under the note aggregating $254,448 and we received payments on the notes aggregating $388,082. These amounts include those transactions discussed in the preceding paragraph. Lease Termination On October 1, 2020, the master and sublease associated with the 18,600 sq. cultivation warehouse in Denver were terminated. In connection with that termination, we entered into a Sublease Termination Agreement (“Termination Agreement”) with RAM and an affiliate of RAM Venture Product Consulting, LLC (“VPC”). Pursuant to this agreement, RAM acknowledged a debt of deferred rent to the Company in the amount of $1,418,480 and VPC acknowledged a debt of deferred rent to the Company in the amount of $64,344. RAM and VPC executed promissory notes for these amounts, respectively. The notes accrue interest on the unpaid balance at a rate equal to the Applicable Federal Rate for mid-term obligations as published by the Internal Revenue Service. No payment under the promissory notes will be due to the Company until the earlier of (i) the date on which RAM and the Company consummate a change of control event, which is defined as: the acquisition of RAM by the Company or an affiliated entity by means of any transaction or series of related transactions to which RAM is a party (including, without limitation, any membership interest acquisition, reorganization, merger or consolidation, (generally, a “Merger”), or, (ii) the date one (1) business day following the earlier of (x) at any time, receipt by the Company from RAM or VPC of a written notice stating such party no longer desires to pursue the Merger, or (y) beginning eighteen (18) months after the date of this Agreement, receipt by RAM or VPC from The Company of a written notice stating that the Company no longer desires to pursue the Merger (the “Maturity Date”). We have recorded the promissory notes as long term notes receivable of $1,482,824 at December 31, 2020. Due to the uncertainty of the collectability, we have also recorded a long term deferred credit in the same amount. We will record income under the deferred rent notes as payments are received or deemed collectible. This asset and related credit have been netted on the accompanying consolidated balance sheet. Additionally, in connection with the termination of the sublease, RAM will continue to pay the remaining future sublease premium payments due to the company on the Denver sublease (the “Future Rent Debt”) beginning on the termination date, and until the earlier of the Maturity Date or June 30, 2024, notwithstanding the termination of the Subleases. However, no payment under the Future Rent Debt agreement will be due to the Company until the Maturity Date, at which time the entire Future Rent Debt shall be due and payable in full, except for any month in which RAM earns $725,000 of gross sales revenue, including taxes, at its Alameda location, in which case RAM shall pay the Future Rent Debt for the following month to the Company on or before the 5th day of the following month, and such amount will not accrue as a Future Rent Debt. RAM shall continue to accrue debt to the company, assessed on the first day of each month, according to the schedule below: Monthly Payments Accrued October 1, 2020 to June 30, 2021 $ 11,284 July 1, 2021 to June 30, 2022 11,622 July 1, 2022 to June 30, 2023 11,971 July 1, 2023 to June 30, 2024 12,330 We will record income pursuant to the Future Rent Debt as payments are received based on the Company’s analysis of collectability including, but not limited to, the potential application toward the purchase price. During 2020, we received three months of payments and have recorded $33,851 as Lease Termination Payments in the Statement of Operations. |
Other Assets
Other Assets | 12 Months Ended |
Dec. 31, 2020 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Assets | Note 6 – Other Assets Security deposits: |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 7 – Related Party Transactions As of December 31, 2020 and 2019, the Company has accrued compensation to its CEO and director and to its CFO aggregating $289,897 and $155,841, respectively. As of December 31, 2020 and 2019, accrued payable due to former officers was $1,042,859 and $1,137,397, respectively. For the years ended December 31, 2020 and 2019, total cash-based compensation to related parties was $360,000 and $507,430, respectively. For the years ended December 31, 2020 and 2019, total share-based compensation to related parties was $192,474 and $894,408, respectively. These amounts are included in general and administrative expenses in the accompanying financial statements. From 2017 to 2019, Mr. Gonfiantini, CEO, personally and through his Company, Crystal Bay Financial LLC, loaned an aggregate amount of $1,020,000 to Royal Asset Management. These notes accrue interest at 17%-18% per annum, and require monthly payment approximately from $5,000 to $20,000. These notes are personally guaranteed by the managing member of Royal Asset Management, and are secured by certain equipment and other tangible properties of Royal Asset Management. Among these notes, $500,000 note was also secured by the medical marijuana licenses held by Royal Asset Management. At December 31, 2020 and 2019, the Company owed Mr. Throgmartin, former CEO (See Note 11), $140,958 pursuant to a promissory note dated August 12, 2016. This note accrues interest at the rate of 8% per annum and was past the maturity date, however the Company has not yet received a default notice. The balance of related party note was $140,958 at December 31, 2020 and December 31, 2019 and accrued interest on the note was $49,401 and $38,124 at December 31, 2020 and 2019, respectively. |
Notes Payable
Notes Payable | 12 Months Ended |
Dec. 31, 2020 | |
Notes Payable [Abstract] | |
Notes Payable | Note 8 – Notes Payable On August 31, 2015, the Company issued a note in the amount of $126,000 to a third party for use as operating capital. The note was amended to include accrued interest on October 31, 2016 and extend the maturity date to October 31, 2018. As of December 31, 2020 and 2019 the outstanding principal balance of the note was $133,403, and accrued interest on the note was $70,101 and $63,413 at December 31, 2020 and 2019, respectively. As of December 31, 2020 the note was past the maturity date, however the Company has not yet received a default notice. On April 22, 2020, the Company was granted a loan from Numerica Credit Union, in the aggregate amount of $56,444, pursuant to the Paycheck Protection Program, (the “PPP”) under Division A, Title I of the CARES Act, which was enacted March 27, 2020. The loan, which was in the form of a note dated April 22, 2020 issued by the Borrower, matures on April 22, 2022 and bears interest at a rate of 1.0% per annum, payable monthly commencing October 22, 2020. There have not been any payments made towards this loan, as the full amount of the loan expects to be forgiven when the company applies for forgiveness. Application for loan forgiveness is due ten months from the last day of the twenty-four week window that the company has to spend the money from the disbursement date of the loan on April 22, 2020. The loan may be prepaid by the Borrower at any time prior to maturity with no prepayment penalty. Funds from the Loan may only be used for payroll costs, costs used to continue group health care benefits, mortgage payments, rent, utilities, and interest on other debt obligations incurred before February 15, 2020. The Company used the entire Loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. The PPP loan was fully forgiven in February 2021. On June 30, 2020, the Company was granted a loan from the Small Business Association, in the aggregate amount of $150,000, pursuant to the Economic Injury Disaster Loan, (the “EIDL”) under Division A, Title I of the CARES Act. The Company received the net funds of $149,900 on July 2, 2020. The loan, which is in the form of a note dated June 30, 2020 issued by the Borrower, matures on June 30, 2050 and bears interest at a rate of 3.75% per annum, payable monthly commencing June 30, 2021. The loan may be prepaid by the Borrower at any time prior to maturity with no prepayment penalty. Funds from the Loan may be used solely for working capital to alleviate economic injury caused by disaster occurring in the month of January 31, 2020 and continuing thereafter and to pay Uniform Commercial Code (UCC) lien filing fees and a third-party UCC handling charge of $100 which was deducted from the loan amount stated above. The Company used the entire Loan amount for qualifying expenses. |
Convertible Notes Payable
Convertible Notes Payable | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Convertible Notes Payable | Note 9 – Convertible Notes Payable The Company has issued several convertible notes which are outstanding. The note holders 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 features were recognized as embedded derivatives and are valued using a Binomial Option Pricing Model that resulted in a derivative liability of $5,997,865 and $4,834,190 at December 31, 2020 and 2019, respectively. All notes accrue interest at rates ranging from 8% to 12% and the majority of the notes had matured at December 31, 2020. In connection with the issuance of certain of these notes, the Company also issued warrants to purchase its common stock. Several convertible note holders elected to convert their notes to stock during the years ended December 31, 2020 and 2019. The table below provides the note payable activity for the years ended December 31, 2020 and 2019, and also a reconciliation of the beginning and ending balances for the derivative liabilities measured using fair significant unobservable inputs (Level 3) for the years ended December 31, 2020 and 2019: Convertible Discount Convertible Derivative Balance, December 31, 2019 $ 3,266,775 $ 914,245 $ 2,352,530 $ 4,834,190 Issuance of convertible notes 103,000 103,000 — 518,678 Extensions of convertible notes 100,000 — 100,000 149,500 Conversion of convertible notes (180,922 ) (53,567 ) (127,355 ) (177,037 ) Repayment of convertible notes (49,579 ) (21,075 ) (28,504 ) (28,930 ) Change in fair value of derivatives — — — 701,464 Amortization — (942,603 ) 942,603 — Balance December 31, 2020 $ 3,239,274 $ — $ 3,239,274 $ 5,997,865 Convertible Discount Convertible Derivative Balance, December 31, 2018 $ 3,324,487 $ 2,151,168 $ 1,173,319 $ 6,000,830 Issuance of convertible notes 905,500 905,500 — 1,803,495 Conversion of convertible notes (842,712 ) (233,571 ) (609,141 ) (940,382 ) Repayment of convertible notes (120,500 ) (3,659 ) (116,841 ) (56,197 ) Change in fair value of derivatives — — — (1,973,556 ) Amortization — (1,905,193 ) 1,905,193 — Balance December 31, 2019 $ 3,266,775 $ 914,245 $ 2,352,530 $ 4,834,190 During 2020, the Company entered into a convertible note in an aggregate amount of $103,000 with a twelve month maturity, bearing 12% interest per year. The note is convertible at a 35% discount to the average of the two lowest Volume Weighted Average Prices (VWAPs) during the previous ten trading days to the date of a Conversion Notice. This note was partially converted to common stock in the amount of $60,922 during 2020 along with accrued interest in the amount of $1,884, for a total of 14,079,305 shares issued upon conversion, with a value of $98,080. A loss on extinguishment of debt of $11,761, extinguishment of debt discount of $28,190 and reduction of derivative liabilities of $51,703 have been recorded related to the conversion. The remaining balance on this convertible loan of $42,078 was paid in cash along with accrued interest in the amount of $6,736. A loss on extinguishment of debt of $21,460, extinguishment of debt discount of $21,075 and reduction of derivative liabilities of $18,551 have been recorded related to the payment of $67,750. During 2020, an additional $120,000 of notes and $12,818 of accrued interest and fees was converted into 25,409,794 shares of common stock with a value of $230,807. A gain on extinguishment of debt of $1,968, extinguishment of debt discount of $25,377 and reduction of derivative liabilities of $125,334 have been recorded related to these conversions. During 2020, an additional $7,500 of note principal and $819 of accrued interest were repaid to debt holders. We recorded gain on extinguishment of debt of $3,925. During 2020, we recorded noncash additions to convertible notes aggregating $100,000 as a result of extensions to the maturity dates. As of December 31, 2020, convertible notes in the aggregate principal amount of $2,839,274 were past their maturity dates; however the Company has not yet received any default notices. No default or penalty was paid or required to be paid. During the year ended December 31, 2019, the Company entered into several convertible notes in an aggregate amount of $905,500, bearing interest ranging from 10% to 12% per annum. During the year ended December 31, 2019, $120,500 of notes principal and $14,195 of accrued interest were repaid to a debt holder. During the year ended December 31, 2019, $842,712 of notes and $60,627 of accrued interest was converted into 48,684,667 shares of common stock and 434,783 shares were issued which had been authorized as of December 31, 2018. A gain on extinguishment of debt of $159,233, extinguishment of debt discount of $233,571 and reduction of derivative liabilities of $940,382 have been recorded related to these conversions. On July 17, 2018, the Company entered into a certain Equity and Debt Restructure Agreement with two long-time investors in the Company (the “Restructure Agreement”). Pursuant to the material terms of the Restructure Agreement, the investors agreed to return and cancel their collective 2,774,093 restricted Company common shares, which had been received from the prior conversion of their older convertible notes, in exchange for the Company’s issue to them of recast convertible promissory notes. Accordingly, on the same date, these investors were each issued a First Priority Secured Promissory Note (the “Note” or “Notes”), in the principal amount of $1,683,558 and $545,607, respectively. In connection with this transaction, one of these investors agreed to loan the Company an additional $700,000. In 2018, the Company received $220,000 cash proceeds of the additional $700,000 loan. Fair value of the 2,774,093 restricted Company common shares was determined to be $443,855 using market price and the fair value of the embedded conversion feature was determined to be $3,555,888 using Black Sholes Option Model. As a result of the transaction, the Company recorded $2,892,033 in financing costs and $2,449,275 as debt discount during year ended December 31, 2018. On March 29, 2019, the Company received $100,000 cash proceeds from the additional $700,000 loan. The conversion feature related to $100,000 was determined to be $154,861 using the Binomial Option Pricing Model. During year ended December 31, 2019, the Company received $380,000 cash proceeds from the additional $700,000 loan. The conversion feature related to $380,000 was determined to be $586,710 using the Binomial Option Pricing Model. During the year ended December 31, 2019, we recorded $206,710 of expense related to financing costs and $380,000 as debt discount. The following assumptions were used in the Binomial Option Pricing Model in calculating the embedded conversion features and current liabilities for the years ended December 31, 2020 and 2019: December 31, December 31, Risk-free interest rates 0.08 % 1.53 – 2.60 % Expected life (years) 0.25 0.08 – 1.25 Expected dividends 0 % 0 % Expected volatility 164 % 70-557 % |
Stockholder's Equity (Deficit)
Stockholder's Equity (Deficit) | 12 Months Ended |
Dec. 31, 2020 | |
Equity [Abstract] | |
Stockholder's Equity (Deficit) | Note 10 – Stockholders’ Equity (Deficit) Series C Preferred Stock On December 16, 2019, the Company sold 140,000 of its Series C Convertible Preferred Shares, with an annual accruing dividend of 10%, to Geneva Roth Remark Holdings, Inc. (“Geneva”), for $130,000 pursuant to a Series C Preferred Purchase Agreement with Geneva. To accommodate this transaction, The Company’s Board of Directors approved and filed a certain Certificate of Designations with the Secretary of State of Delaware, designating 1,500,000 of its available preferred shares as Series C Preferred Convertible Stock, Stated Value of $1.00 per share, and with a par value of $0.0001 per share. This Certificate of Designation provides the Company with the opportunity to redeem the Series C Shares at various increased prices at time intervals up to the 6-month anniversary of the closing and mandates full redemption on the 24-month anniversary. Geneva may convert the Series C Shares into our common shares, commencing on the 6-month anniversary of the closing at a 30% discount to the public market price. The Company recorded a derivative liability associated with Series C Preferred Shares of $165,218, valued using a Binomial Option Pricing Model. On December 31, 2019, the fair value of the conversion feature associated with Series C Preferred Shares was a derivative liability of $190,131, valued using a Binomial Option Pricing Model. The Series C Preferred Stock is classified as temporary equity due to the fact that the shares are immediately convertible at the option of the note holder. During the year ended December 31, 2019, we recorded $8,750 accretion of discount. As of December 31, 2019, there were 140,000 shares outstanding and a discount of $131,250. For the year ended December 31, 2020, the holders converted 140,000 shares of series C preferred stock along with related discount into 21,744,479 shares of common stock per the terms of the Agreement. As of December 31, 2020, there were no shares outstanding related to this issuance. On March 3, 2020, the Company sold 55,800 of its Series C Convertible Preferred Shares, with an annual accruing dividend of 10%, to Geneva for $50,000, pursuant to a Series C Preferred Purchase Agreement with Geneva. The Company recorded a derivative liability associated with Series C Preferred Shares of $88,868, valued using a Binomial Option Pricing Model. During the year ended December 31, 2020, the holder converted 55,800 shares of series C preferred stock along with related discount into 10,598,864 shares of common stock per the terms of the Agreement. As of December 31, 2020, there were no shares outstanding related to this issuance. The Series C Preferred Stock was classified as temporary equity due to that the shares are immediately convertible at the option of the note holder. On April 14, 2020, the Company sold 55,800 of its Series C Convertible Preferred Shares, with an annual accruing dividend of 10%, to Geneva for $50,000, pursuant to a Series C Preferred Purchase Agreement with Geneva. The Company recorded a derivative liability associated with Series C Preferred Shares of $82,028 valued using a Binomial Option Pricing Model. During the year ended December 31, 2020, the holder converted 55,800 shares of series C preferred stock along with related discount into 15,292,885 shares of common stock per the terms of the Agreement. As of December 31, 2020, there were no shares outstanding related to this issuance. The Series C Preferred Stock was classified as temporary equity due to that the shares are immediately convertible at the option of the note holder. Preferred Discount Preferred Derivative Balance , January 1, 2019 $ — — — — Issuance of Series C Preferred shares 140,000 140,000 — 165,218 Accretion of discount — (8,750 ) 8,750 — Change in fair value of derivatives — — — 24,913 Balance, December 31, 2019 140,000 131,250 8,750 190,131 Issuance of Series C Preferred shares 111,600 111,600 — 170,896 Conversion of Series C Preferred shares and accrued dividend (265,115 ) (175,820 ) (89,295 ) (353,005 ) Accretion of conversion feature on Series C preferred stock 13,515 (67,030 ) 80,545 23,290 Change in fair value of derivatives — — — (31,312 ) Balance December 31, 2020 $ — $ — $ — $ — The following assumptions were used in the Binomial Option Pricing Model in calculating the embedded conversion features and current liabilities for the years ended December 31, 2020 and 2019: 2020 2019 Risk-free interest rates 0.11 – 0.23% 1.58 – 1.66% Expected life (years) 1.5 – 2.0 1.95 – 2.0 Expected dividends 0% 0% Expected volatility 172 – 262% 248 - 250% Common Stock 2020 Transactions During the year ended December 31, 2020, $180,922 of notes and $14,702 of accrued interest and fees were converted into 39,489,099 shares of common stock with a value of $328,887. A loss on extinguishment of debt of $5,835, extinguishment of debt discount of $53,567 and reduction of derivative liabilities of $180,995 have been recorded related to these conversions. During the year ended December 31, 2020, 10,935,040 shares of common stock, valued at $117,887, were accrued for related party services. We issued 12,219,836 shares of common stock, valued at $177,323 during 2020, and these shares have been removed from shares to be issued at December 31, 2020. Additionally, we reversed the over accrual of 283,182 common shares, valued at $6,914, and reduced shares to be issued at December 31, 2020. At December 31, 2020 and 2019, shares to be issued for related party services were 1,731,687 and 3,299,665, respectively, and the value of shares to be issued at December 31, 2020 and 2019 was $13,467 and $79,817, respectively. During the year ended December 31, 2020, 905,658 shares of common stock, valued at $8,003, were accrued for services. We issued no shares during 2020 for this accrual. We reversed the over accrual of 9,583 common shares, valued at $5,601 and reduced shares to be issued at December 31, 2020. At December 31, 2020 and 2019, shares to be issued for services were 1,105,857 and 209,782, respectively, and the value of shares to be issued at December 31, 2020 and 2019 was $14,000 and $11,598, respectively. During the year ended December 31, 2020, we reversed the over accrual of 3,884 common shares, valued at $13,983, related to notes payable that were converted in prior years, and reduced shares to be issued at December 31, 2020. We recorded the reversal of the value of the shares as gain on extinguishment of debt. At December 31, 2020 and 2019, shares to be issued for debt conversions were 31,960 and 35,844, respectively, and the value of shares to be issued at December 31, 2020 and 2019 was $21,861 and $35,844, respectively. During the year ended December 31, 2020, we issued 4,000,000 shares of common stock, valued at $51,200, for legal services. During the year ended December 31, 2020, 47,636,228 shares of common stock were issued as a result of the conversion of 251,600 shares of Series C Preferred shares. 2019 Transactions During the year ended December 31, 2019, $842,712 of notes and $60,627 of accrued interest was converted into 48,684,667 shares of common stock and 434,783 shares were issued which were authorized as of December 31, 2018. A gain on extinguishment of debt of $159,233, extinguishment of debt discount of $233,571 and reduction of derivative liabilities of $940,382 have been recorded related to these conversions. As of December 31, 2019, 35,844 shares, valued at $35,844 for debt conversion were authorized, but not issued as of December 31, 2019. We issued 4,987,610 shares of common stock, valued at $170,348, for services. As December 31, 2019, 209,782 shares, valued at $11,598 for services were authorized, but not issued as of December 31, 2019, and included in stock to be issued in the accompanying consolidated balance sheet. In connection with Debt Restructure Agreements dated on July 17, 2018, 675,759 shares of common stock were cancelled, valued at $108,121. We issued 24,566,400 shares of common stock, valued at $732,029, for related party services. As December 31, 2019, 3,299,665 shares, valued at $79,817 for services, were authorized but not issued as of December 31, 2019. During the year ended December 31, 2019, 8,071,000 shares were issued for cashless warrant exercise. During the year ended December 31, 2019, we issued 5,000 shares for $2,648, which were authorized in prior period. 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 years ended December 31, 2020 and 2019: Year ended December 31, 2020 2019 Balance at beginning of year $ 967 $ 16,576 Additions to derivative instruments — — Loss (gain) on change in fair value of derivative liability (491 ) (15,609 ) Balance at end of year $ 476 $ 967 The following assumptions were used in the Binomial Option Pricing Model in calculating the embedded conversion features and current liabilities for the years ended December 31, 2020 and 2019: December 31, 2020 December 31, 2019 Annual dividend yield 0 % 0 % Expected life (years) 0.42 – 7.38 0.42 – 8.13 Risk-free interest rate 0.10 – 1.83 % 1.56 – 2.40 % Expected volatility 186 - 240 % 165 - 318 % The following table summarizes stock warrant activity for the years ended December 31, 2020 and 2019: Number of Weighted- Weighted- Outstanding at December 31, 2018 263,866 $ 12.04 Granted — $ — Exercised (12,500 ) 2.95 Expired (39,540 ) $ 20.00 Outstanding at December 31, 2019 211,826 $ 10.08 3.5 Granted — $ — Expired (78,031 ) $ 18.72 Outstanding at December 31, 2020 133,795 $ 5.04 4.4 Exercisable at December 31, 2020 133,795 $ 5.04 4.4 Common stock option activity: The Company maintains an Equity Incentive Plan pursuant of which 124,000 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 December 31, 2020, 88,750 shares had been granted, with 10,000 of those shares granted with warrants attached. There remain 35,250 shares available for future grants. During the years ended December 31, 2020 and 2019, the Company recorded total option expense of $86,606 and $162,381, respectively. There was no unamortized stock option expense at December 31, 2020. The aggregate intrinsic value of stock options outstanding at December 31, 2020 is $0. The following table summarizes stock option activity for the years ended December 31, 2020 and 2019: Number of Weighted- Weighted- Outstanding at December 31, 2018 294,959 $ 5.17 Granted — $ — Exercised — — Expired (122,480 ) $ 5.00 Outstanding at December 31, 2019 172,479 $ 5.29 5.5 Granted — $ — Forfeited — $ — Outstanding at December 31, 2020 172,479 $ 5.29 4.5 Exercisable at December 31, 2020 172,479 $ 5.29 4.5 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 11 – COMMITMENTS AND CONTINGENCIES Leases The Company leases property under operating leases. Property leases include retail and warehouse space with fixed rent payments and lease terms ranging from three to five years. The Company is obligated to pay the lessor for maintenance, real estate taxes, insurance and other operating expenses on certain property leases. These expenses are variable and are not included in the measurement of the lease asset or lease liability. These expenses are recognized as variable lease expense when incurred. The Company records the lease asset and lease liability at the present value of lease payments over the lease term. The leases typically do not provide an implicit rate; therefore, the Company uses its estimated incremental borrowing rate at the time of lease commencement to discount the present value of lease payments. The Company’s discount rate for operating leases at December 31, 2020 was 12%. Leases often include rental escalation clauses, renewal options and/or termination options that are factored into the determination of lease payments when appropriate. Lease expense is recognized on a straight-line basis over the lease term to the extent that collection is considered probable. As a result the Company been recognizing rents as they become payable. Our weighted-average remaining lease term is 4.24 years. As of December 31, 2020, the maturities of operating leases liabilities are as follows (in thousands): Operating Leases 2021 427 2022 270 2023 270 2024 270 2025 45 Total 1,282 Less: amount representing interest (239 ) Present value of future minimum lease payments 1,043 Less: current obligations under leases 328 Long-term lease obligations $ 715 The Company executed a series of agreements that canceled the master lease on its Elizabeth street cannabis cultivation facility in Denver on October 21, 2020. This has allowed the Company to reduce its liability exposure in the Elizabeth Street cultivation facility while securing deferred rents due and future sublet payments for 3 years and 9 months, valued at $1,325,443 (see Note 5). In addition, a $60,000 deposit on the property has been returned to the Company. Rent expense is recognized on a straight-line basis over the life of the lease. Rent expense consists of the following: Year ended December 31, 2020 2019 Operating lease costs $ 610,374 $ 756,515 Variable rent costs 396,207 432,837 Total rent expense $ 1,006,581 $ 1,189,352 As of December 31, 2020, the aggregate remaining minimal annual lease payments under these operating leases plus NNN were as follows: (in thousands): 2021 $ 328 2022 197 2023 222 2024 250 2025 46 Total $ 1,043 Other information related to leases is as follows: Year ended Other information: Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 606,870 Lease liability related to termination of lease 1,325,445 Weighted-average remaining lease term - operating leases 3.54 yr Weighted-average discount rate - operating leases 12 % The Company recognized sublease income of $1,265,137 and $1,646,369 during the years ended December 31, 2020 and 2019, respectively. These two leases have six months and 4.2 year terms with optional extension, expiration dates range from July 2021 to June 2025, and monthly base rent approximately $22,000-$25,000 plus variable NNN. As of December 31, 2020, the maturities of expected base sublease income are as follows (in thousands): Operating Leases 2021 $ 582 2022 346 2023 346 2024 346 2025 and beyond 58 Total $ 1,678 COVID-19 On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency in response to a new strain of a coronavirus (the “COVID-19 outbreak”). In March 2020, the WHO classified the COVID-19 outbreak as a pandemic based on the rapid increase in exposure globally. The full impact of the COVID-19 outbreak continues to evolve as of the date of this report. Management is actively monitoring the global situation and its effects on the Company’s industry, financial condition, liquidity, and operations. Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, the Company is not able to estimate the effects of the COVID-19 outbreak on its results of operations, financial condition, or liquidity for fiscal year 2021. However, if the pandemic continues, it may have a material adverse effect on the Company’s results of future operations, financial position, and liquidity in fiscal year 2021. Employment Agreements As a condition of their employment, the Board of Directors approved employment agreements with three key executives. These agreements provided that additional shares will be granted each year over the term of the agreements should their shares as a percentage of the total shares outstanding fall below prescribed ownership percentages. Nello Gonfiantini III, who became the Company’s CEO in October 2019 receives an annual grant of additional shares each year to maintain his ownership percentage at 10% of the outstanding stock. The Company’s CFO received a similar grant each to maintain his ownership percentage at 2% of the outstanding stock. In addition, prior to his departure in October 2019, Ron Throgmartin, the Company’s previous CEO, would receive a grant of additional shares to maintain his ownership at 7.5% of the Company’s outstanding stock. During the year ended December 31, 2020, the Company accrued compensation expense of approximately $118,000 on 10,935,040 shares of common stock under these agreements. During the year ended December 31, 2019, the Company accrued compensation expense of approximately $593,000 on 20,782,014 shares of common stock under these agreements. As of December 31, 2020 and 2019, the ending balance of accrued compensation was $13,467 and $79,817, respectively. The number of shares accrued to be issued was 1,731,687 at December 31, 2020. Departure of Executive Officer On January 30, 2019, the Company executed a Separation Agreement and Release with David Thompson, its former Senior Vice President- Finance, finalizing his departure from the Company as an employee. Pursuant to its material terms, the Company agreed to pay Mr. Thompson aggregate cash payments of $206,250, based upon the Company’s receipt of certain gross sales receipts derived from its Alameda Store in Colorado, and certain stock grants based upon the Company’s outstanding common shares as of February 1, 2019, including a stock grant of 53,717 restricted common shares for accrued salary and 122,934 restricted common shares in exchange for his approximate 122,000 of stock options. During the years ended December 31, 2020 and 2019, $34,538 and $9,450, respectively, were paid under this agreement. As of December 31, 2020, the outstanding balance was $162,262, and is included in Accrued payable – related party in the accompanying consolidated balance sheet. On October 29, 2019, the Company accepted the resignation of Ron Throgmartin from his positions as CEO, President and Director. Mr. Throgmartin’s resignation was not the result of any disagreements with Registrant’s plan of operations, policies or management. On the same date, we appointed Christopher D. Strachan, our Chief Financial Officer, to membership on our Board of Directors and appointed Nello Gonfiantini III, our Chief Operations Officer, to the additional post of Chief Executive Officer. Ron Throgmartin signed a 5-year term Separation Agreement which, among other matters, terminated his Employment Agreement, as amended. On the date of the Separation Agreement, the Company acknowledged it owed Mr. Throgmartin the amount of $517,252 in principal and accrued interest of note payable, salary and fees, accrued during the 5 years of his employment. In addition, the Corporation further acknowledged that it will pay Mr. Throgmartin fifty (50%) percent of his compensation due under the remaining Employment Agreement, or $614,583 under certain conditions, which the Company accrued in full as the date of Mr. Throgmartin’s separation. This agreement provides that the Registrant will pay him $5,000 monthly against his accrued salary/fees and 50% of future compensation due under his terminated Employment Agreement, with certain accelerated payments in the event Registrant’s financial results attain certain EBITA benchmarks. Registrant shall have the right to require Mr. Throgmartin to provide consulting services to Registrant for a per diem fee of $500. During the years ended December 31, 2020 and 2019, $60,000 and $15,000, respectively, were paid under this agreement. As of December 31, 2020, the outstanding balance was $880,597, and is included in Accrued payable – related party in the accompanying consolidated balance sheet. |
Deferred Tax Assets and Income
Deferred Tax Assets and Income Tax Provision | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Deferred Tax Assets and Income Tax Provision | Note 12 – Deferred Tax Assets and Income Tax Provision The reconciliation of income tax benefit at the U.S. statutory rate of 21% for the years ended December 31, 2020 and 2019 respectively to the Company’s effective tax rate is as follows: Year Ended Year Ended December 31, 2020 December 31, 2019 Statutory federal income tax rate (21 )% (21 )% State income tax, net of federal benefits (5 )% (5 )% Change in federal tax rate — % — % Change in valuation allowance 26 % 26 % Income tax provision (benefit) — % — % The benefit for income tax is summarized as follows: Year Ended Year Ended Federal Current $ — $ — Deferred 79,000 479,000 State Current — — Deferred 17,000 105,000 Change in valuation allowance (96,000 ) (584,000 ) Income tax provision (benefit) $ — $ — Deferred tax assets (liabilities) consist of the following: Year Ended Year Ended December 31, December 31, Net operating loss carry forwards $ (6,492,759 ) $ (6,413,626 ) Warrants issued for services 1,467,413 1,417,025 Impairment of investment 111,662 111,662 Depreciation 54,066 101,728 Interest expense on convertible notes 2,688,874 2,140,769 Total gross deferred tax asset/liabilities (2,170,744 ) (2,642,442 ) Valuation allowance 2,170,744 2,642,442 Net deferred taxes $ — $ — As of December 31, 2020, the Company had accumulated Federal net operating loss carryovers (“NOLs”) of $30,917,902. These NOLs can be carried forward indefinitely and the utilization of NOLs may be subject to limitation under the Internal Revenue Code Section 382 should there be a greater than 50% ownership change as determined under the regulations. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the assessment, management has established a full valuation allowance against the entire deferred tax asset relating to NOLs for every period because it is more likely than not that all of the deferred tax asset will not be realized. The Company files U.S. Federal and various State tax returns that are subject to audit by tax authorities beginning with the year ended December 31, 2017. The Company’s policy is to classify assessments, if any, for tax and related interest and penalties as tax expense. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 13 – Subsequent Events The Company evaluated subsequent events and transactions that occur after the balance sheet date up to the date that the consolidated financial statements are available to be issued. Any material events that occur between the balance sheet date and the date that the consolidated financial statements were available for issuance are disclosed as subsequent events, while the consolidated financial statements are adjusted to reflect any conditions that existed at the balance sheet date. Based upon this review, except as disclosed within the footnotes or as discussed below, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the consolidated financial statements. During the period from January 1, 2021 through March 31, 2021: The PPP loan described in Note 8 was fully forgiven in February 2021. We issued 5,026,413 shares of common stock upon the conversion of $100,000 principal amount of notes plus $6,256 of accrued interest. We paid $200,000 in principal amount of notes at maturity. We sold 293,700 shares of Series C preferred stock for net proceeds of $260,000. We issued 30,000 shares of common stock for services |
Significant and Critical Acco_2
Significant and Critical Accounting Policies and Practices (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements and related notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and presented in accordance with accounting principles generally accepted in the United States of America (US GAAP). |
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 $344,761 of other receivable of prior year amounts were reclassified from current assets to long term assets 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, the collectability of accounts receivable and other receivables (See Note 5), valuation of right of use assets and lease liabilities 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 and 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 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 December 31, 2020 and December 31, 2019. 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. The following table reflects assets and liabilities that are measured at fair value on a recurring basis (in thousands): As of December 31, 2020 Fair Value Measurement Using Level 1 Level 2 Level 3 Total Derivative liabilities $ — $ — $ 5,998 $ 5,998 Stock warrant liabilities — — 1 1 $ — $ — $ 5,999 $ 5,999 As of December 31, 2019 Fair Value Measurement Using Level 1 Level 2 Level 3 Total Derivative Liabilities $ — $ — $ 5,024 $ 5,024 Stock warrant Liabilities — — 1 1 $ — $ — $ 5,025 $ 5,025 Derivative liabilities and stock warrant liabilities were valued using the Binomial Option Pricing Model in calculating the embedded conversion features for the years ended December 31, 2020 and 2019. |
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. Uninsured balances were approximately $73,000 and $63,000 at December 31, 2020 and 2019, respectively. |
Revenue Recognition | Revenue recognition In accordance with ASC 842, Leases, During the initial term of the lease, management has a policy of partial rent forbearance when the tenant first opens the facility to assure that the tenant has the opportunity for success. Management may be required to exercise considerable judgment in estimating revenue to be recognized. When management concludes that the Company is the owner of tenant improvements, the Company records the cost to construct the tenant improvements as a capital asset. In addition, the Company 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, the Company 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, we record 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 has adopted the new revenue recognition guidelines in accordance with ASC 606, Revenue from Contracts with Customers (ASC 606), commencing from January 1, 2019. The adoption of ASC 606 did not have a material impact on the financial statements and related disclosures since the Company is primarily a lessor for revenue purposes and recognizes rent income under ASC 842, Leases The Company analyzes its contracts to assess that they are within the scope and in accordance with ASC 606. In determining the appropriate amount of revenue to be recognized as the Company fulfills its obligations under each of its agreements, whether for goods and services or licensing, the Company performs the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations based on estimated selling prices; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. |
Advertising | Advertising During the years ended December 31, 2020 and 2019, advertising expense was $32,940 and $52,605, respectively. |
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 common 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 1,462,069,888 and 631,737,597 common stock equivalents at December 31, 2020 and 2019, respectively. For the years ended December 31, 2020 and 2019, these potential shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would reduce net loss per share. There are 840,000,000 shares authorized resulting in 839,341,383 insufficient shares as of December 31, 2020. |
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 and, 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. The Company believes 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. |
Organization and Operations (Ta
Organization and Operations (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of properties generating rents | The properties generating rents in 2020 and 2019 are as follows: Purpose Size City State Retail store (recreational and medical) 3,300 sq. Denver CO Cultivation warehouse – terminated October 2020 18,600 sq. Denver CO Cultivation warehouse 14,800 sq. Denver CO Retail store (recreational and medical) – sold in May 2019 4,500 sq. Seattle WA |
Significant and Critical Acco_3
Significant and Critical Accounting Policies and Practices (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Schedule of fair value, assets and liabilities measured on recurring basis | The following table reflects assets and liabilities that are measured at fair value on a recurring basis (in thousands): As of December 31, 2020 Fair Value Measurement Using Level 1 Level 2 Level 3 Total Derivative liabilities $ — $ — $ 5,998 $ 5,998 Stock warrant liabilities — — 1 1 $ — $ — $ 5,999 $ 5,999 As of December 31, 2019 Fair Value Measurement Using Level 1 Level 2 Level 3 Total Derivative Liabilities $ — $ — $ 5,024 $ 5,024 Stock warrant Liabilities — — 1 1 $ — $ — $ 5,025 $ 5,025 |
Accounts Receivables and Othe_2
Accounts Receivables and Other Receivables (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Common shares issued for security payment of convertible notes, value | |
Schedule of monthly payments accrued | RAM shall continue to accrue debt to the company, assessed on the first day of each month, according to the schedule below: Monthly Payments Accrued October 1, 2020 to June 30, 2021 $ 11,284 July 1, 2021 to June 30, 2022 11,622 July 1, 2022 to June 30, 2023 11,971 July 1, 2023 to June 30, 2024 12,330 |
Convertible Notes Payable (Tabl
Convertible Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Liabilities Measured Using Fair Significant Unobservable Inputs (Level 3) | The table below provides the note payable activity for the years ended December 31, 2020 and 2019, and also a reconciliation of the beginning and ending balances for the derivative liabilities measured using fair significant unobservable inputs (Level 3) for the years ended December 31, 2020 and 2019: Convertible Discount Convertible Derivative Balance, December 31, 2019 $ 3,266,775 $ 914,245 $ 2,352,530 $ 4,834,190 Issuance of convertible notes 103,000 103,000 — 518,678 Extensions of convertible notes 100,000 — 100,000 149,500 Conversion of convertible notes (180,922 ) (53,567 ) (127,355 ) (177,037 ) Repayment of convertible notes (49,579 ) (21,075 ) (28,504 ) (28,930 ) Change in fair value of derivatives — — — 701,464 Amortization — (942,603 ) 942,603 — Balance December 31, 2020 $ 3,239,274 $ — $ 3,239,274 $ 5,997,865 Convertible Discount Convertible Derivative Balance, December 31, 2018 $ 3,324,487 $ 2,151,168 $ 1,173,319 $ 6,000,830 Issuance of convertible notes 905,500 905,500 — 1,803,495 Conversion of convertible notes (842,712 ) (233,571 ) (609,141 ) (940,382 ) Repayment of convertible notes (120,500 ) (3,659 ) (116,841 ) (56,197 ) Change in fair value of derivatives — — — (1,973,556 ) Amortization — (1,905,193 ) 1,905,193 — Balance December 31, 2019 $ 3,266,775 $ 914,245 $ 2,352,530 $ 4,834,190 |
Schedule of Assumptions Used Black Scholes Model | The following assumptions were used in the Binomial Option Pricing Model in calculating the embedded conversion features and current liabilities for the years ended December 31, 2020 and 2019: December 31, December 31, Risk-free interest rates 0.08 % 1.53 – 2.60 % Expected life (years) 0.25 0.08 – 1.25 Expected dividends 0 % 0 % Expected volatility 164 % 70-557 % |
Stockholder's Equity (Deficit)
Stockholder's Equity (Deficit) (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Equity [Abstract] | |
Schedule of temporary equity | The Series C Preferred Stock was classified as temporary equity due to that the shares are immediately convertible at the option of the note holder. Preferred Discount Preferred Derivative Balance , January 1, 2019 $ — — — — Issuance of Series C Preferred shares 140,000 140,000 — 165,218 Accretion of discount — (8,750 ) 8,750 — Change in fair value of derivatives — — — 24,913 Balance, December 31, 2019 140,000 131,250 8,750 190,131 Issuance of Series C Preferred shares 111,600 111,600 — 170,896 Conversion of Series C Preferred shares and accrued dividend (265,115 ) (175,820 ) (89,295 ) (353,005 ) Accretion of conversion feature on Series C preferred stock 13,515 (67,030 ) 80,545 23,290 Change in fair value of derivatives — — — (31,312 ) Balance December 31, 2020 $ — $ — $ — $ — |
Schedule of assumptions | The following assumptions were used in the Binomial Option Pricing Model in calculating the embedded conversion features and current liabilities for the years ended December 31, 2020 and 2019: 2020 2019 Risk-free interest rates 0.11 – 0.23% 1.58 – 1.66% Expected life (years) 1.5 – 2.0 1.95 – 2.0 Expected dividends 0% 0% Expected volatility 172 – 262% 248 - 250% |
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 years ended December 31, 2020 and 2019: Year ended December 31, 2020 2019 Balance at beginning of year $ 967 $ 16,576 Additions to derivative instruments — — Loss (gain) on change in fair value of derivative liability (491 ) (15,609 ) Balance at end of year $ 476 $ 967 |
Schedule of Fair Value on Assumptions | The following assumptions were used in the Binomial Option Pricing Model in calculating the embedded conversion features and current liabilities for the years ended December 31, 2020 and 2019: December 31, 2020 December 31, 2019 Annual dividend yield 0 % 0 % Expected life (years) 0.42 – 7.38 0.42 – 8.13 Risk-free interest rate 0.10 – 1.83 % 1.56 – 2.40 % Expected volatility 186 - 240 % 165 - 318 % |
Schedule of stock warrant activity | The following table summarizes stock warrant activity for the years ended December 31, 2020 and 2019: Number of Weighted- Weighted- Outstanding at December 31, 2018 263,866 $ 12.04 Granted — $ — Exercised (12,500 ) 2.95 Expired (39,540 ) $ 20.00 Outstanding at December 31, 2019 211,826 $ 10.08 3.5 Granted — $ — Expired (78,031 ) $ 18.72 Outstanding at December 31, 2020 133,795 $ 5.04 4.4 Exercisable at December 31, 2020 133,795 $ 5.04 4.4 |
Schedule of Stock Option Activity | The following table summarizes stock option activity for the years ended December 31, 2020 and 2019: Number of Weighted- Weighted- Outstanding at December 31, 2018 294,959 $ 5.17 Granted — $ — Exercised — — Expired (122,480 ) $ 5.00 Outstanding at December 31, 2019 172,479 $ 5.29 5.5 Granted — $ — Forfeited — $ — Outstanding at December 31, 2020 172,479 $ 5.29 4.5 Exercisable at December 31, 2020 172,479 $ 5.29 4.5 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of maturities of operating leases liabilities | As of December 31, 2020, the maturities of operating leases liabilities are as follows (in thousands): Operating Leases 2021 427 2022 270 2023 270 2024 270 2025 45 Total 1,282 Less: amount representing interest (239 ) Present value of future minimum lease payments 1,043 Less: current obligations under leases 328 Long-term lease obligations $ 715 |
Schedule of rent expense is recognized on a straight-line basis | Rent expense is recognized on a straight-line basis over the life of the lease. Rent expense consists of the following: Year ended December 31, 2020 2019 Operating lease costs $ 610,374 $ 756,515 Variable rent costs 396,207 432,837 Total rent expense $ 1,006,581 $ 1,189,352 |
Schedule of cash flows of operating leases over the next five years | As of December 31, 2020, the aggregate remaining minimal annual lease payments under these operating leases plus NNN were as follows: (in thousands): 2021 $ 328 2022 197 2023 222 2024 250 2025 46 Total $ 1,043 |
Schedule of other information related to leases | Other information related to leases is as follows: Year ended Other information: Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 606,870 Lease liability related to termination of lease 1,325,445 Weighted-average remaining lease term - operating leases 3.54 yr Weighted-average discount rate - operating leases 12 % |
Sublease income | As of December 31, 2020, the maturities of expected base sublease income are as follows (in thousands): Operating Leases 2021 $ 582 2022 346 2023 346 2024 346 2025 and beyond 58 Total $ 1,678 |
Deferred Tax Assets and Incom_2
Deferred Tax Assets and Income Tax Provision (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of Reconciliation of Effective Income Tax Benefit Rate | The reconciliation of income tax benefit at the U.S. statutory rate of 21% for the years ended December 31, 2020 and 2019 respectively to the Company’s effective tax rate is as follows: Year Ended Year Ended December 31, 2020 December 31, 2019 Statutory federal income tax rate (21 )% (21 )% State income tax, net of federal benefits (5 )% (5 )% Change in federal tax rate — % — % Change in valuation allowance 26 % 26 % Income tax provision (benefit) — % — % |
Schedule of Income Tax Benefit | The benefit for income tax is summarized as follows: Year Ended Year Ended Federal Current $ — $ — Deferred 79,000 479,000 State Current — — Deferred 17,000 105,000 Change in valuation allowance (96,000 ) (584,000 ) Income tax provision (benefit) $ — $ — |
Schedule of Deferred Tax Assets | Deferred tax assets (liabilities) consist of the following: Year Ended Year Ended December 31, December 31, Net operating loss carry forwards $ (6,492,759 ) $ (6,413,626 ) Warrants issued for services 1,467,413 1,417,025 Impairment of investment 111,662 111,662 Depreciation 54,066 101,728 Interest expense on convertible notes 2,688,874 2,140,769 Total gross deferred tax asset/liabilities (2,170,744 ) (2,642,442 ) Valuation allowance 2,170,744 2,642,442 Net deferred taxes $ — $ — |
Organization and Operations (De
Organization and Operations (Details) | 12 Months Ended |
Dec. 31, 2020ft² | |
State | DE |
Retail store (recreational and medical) | |
Area | 3,300 |
City | Denver |
State | CO |
Cultivation warehouse | |
Area | 18,600 |
City | Denver |
State | CO |
Cultivation warehouse | |
Area | 14,800 |
City | Denver |
State | CO |
Retail store (recreational and medical) - sold | |
Area | 4,500 |
City | Seattle |
State | WA |
Organization and Operations (_2
Organization and Operations (Details Narrative) | May 06, 2019USD ($) | Oct. 31, 2020ft² |
Proceeds from seattle property | $ | $ 550,000 | |
Cultivation warehouse | ||
Area terminated | ft² | 18,600 |
Significant and Critical Acco_4
Significant and Critical Accounting Policies and Practices (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Derivative liabilities | $ 5,998 | $ 5,024 |
Stock warrant liabilities | 1 | 1 |
Total | 5,999 | 5,025 |
Level 1 [Member] | ||
Derivative liabilities | ||
Stock warrant liabilities | ||
Total | ||
Level 2 [Member] | ||
Derivative liabilities | ||
Stock warrant liabilities | ||
Total | ||
Level 3 [Member] | ||
Derivative liabilities | 5,998 | 5,024 |
Stock warrant liabilities | 1 | 1 |
Total | $ 5,999 | $ 5,025 |
Significant and Critical Acco_5
Significant and Critical Accounting Policies and Practices (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Uninsured balances | $ 73,000 | $ 63,000 |
Common stock equivalents | 1,462,069,888 | 631,737,597 |
Advertising expense | $ 32,940 | $ 52,605 |
Shares authorized | 840,000,000 | 840,000,000 |
Insufficient shares | 839,341,383 | |
Maximum [Member] | ||
Cash insured by FDIC | $ 250,000 |
Going Concern (Details Narrativ
Going Concern (Details Narrative) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Working capital deficit | $ (11,767,522) | |
Accumulated deficit | $ (55,110,000) | $ (51,968,902) |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | May 06, 2019 | Dec. 31, 2020 | Dec. 31, 2019 |
Property, Plant and Equipment [Abstract] | |||
Sale of seattle leased location | $ 550,000 | ||
Amortized of leasehold improvements | $ 566,830 | ||
Depreciation expense | $ 139,595 |
Accounts Receivables and Othe_3
Accounts Receivables and Other Receivables (Details) | Dec. 31, 2020USD ($) |
Monthly Payments Accrued | |
October 1, 2020 to June 30, 2021 | $ 11,284 |
July 1, 2021 to June 30, 2022 | 11,622 |
July 1, 2022 to June 30, 2023 | 11,971 |
July 1, 2023 to June 30, 2024 | $ 12,330 |
Accounts Receivables and Othe_4
Accounts Receivables and Other Receivables (Details Narrative) | Sep. 09, 2020USD ($) | Apr. 02, 2018 | Feb. 27, 2020USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Oct. 31, 2020USD ($)ft² | Jul. 25, 2018USD ($) |
Notes receivable | $ 1,030,422 | $ 788,177 | |||||
Accrued interest receivable | 300,422 | 153,509 | |||||
Leasing hold improvement paid | 228,966 | 228,966 | |||||
Receivables guaranteed | 400,000 | ||||||
Other receivables | 1,030,422 | 788,177 | |||||
Receivables from subleases | 523,958 | 391,273 | |||||
Interest income | 146,913 | 153,509 | |||||
Advances from related party | 254,448 | ||||||
Proceeds from related party | 388,082 | ||||||
Principal amount | $ 400,000 | ||||||
Long term notes receivable | 1,482,824 | ||||||
Lease Termination Payments | $ 33,851 | ||||||
Maturity date | Oct. 31, 2018 | Jun. 30, 2024 | |||||
Accrued interest receivable | $ 300,000 | ||||||
Cultivation warehouse | |||||||
Area terminated | ft² | 18,600 | ||||||
Membership Interest Purchase Agreement [Member] | |||||||
Ownership percentage | 15.13% | ||||||
Minimum [Member] | |||||||
Interest rate | 12.00% | ||||||
Maximum [Member] | |||||||
Interest rate | 18.00% | ||||||
RAM [Member] | |||||||
Debt of deferred rent | $ 1,418,480 | ||||||
Revenues | $ 725,000 | ||||||
VPC [Member] | |||||||
Debt of deferred rent | $ 64,344 | ||||||
Third Parties [Member] | |||||||
Other Receivables | $ 1,030,000 | ||||||
E2T2, LLC [Member] | Membership Interest Purchase Agreement [Member] | |||||||
Proceeds from receivables | $ 300,000 | $ 50,000 | |||||
Payment to related party debt | $ 34,265 |
Other Assets (Details Narrative
Other Assets (Details Narrative) - USD ($) | May 06, 2019 | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||
Security deposits | $ 90,000 | $ 150,000 | |
Settlement of security deposit | $ 20,000 | ||
Refund of security deposit | $ 60,000 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Jul. 25, 2018 | |
Accrued fees - related parties | $ 289,897 | $ 155,841 | |
Accrued payable | 1,042,859 | 1,137,397 | |
Cash based compensation - related parties | 360,000 | 507,430 | |
Share based compensation - related parties | 192,474 | 894,408 | |
Accrued interest | 70,101 | 63,413 | |
Debt instrument face amount | $ 400,000 | ||
Notes payable related parties | $ 140,958 | 140,958 | |
Related party description | From 2017 to 2019, Mr. Gonfiantini, CEO, personally and through his Company, Crystal Bay Financial LLC, loaned an aggregate amount of $1,020,000 to Royal Asset Management. These notes accrue interest at 17%-18% per annum, and require monthly payment approximately from $5,000 to $20,000. These notes are personally guaranteed by the managing member of Royal Asset Management, and are secured by certain equipment and other tangible properties of Royal Asset Management. Among these notes, $500,000 note was also secured by the medical marijuana licenses held by Royal Asset Management. | ||
Mr. Throgmartin [Member] | |||
Accrued interest | $ 49,401 | 38,124 | |
Debt instrument face amount | $ 140,958 | $ 140,958 | |
Debt instrument interest rate | 8.00% |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | Apr. 02, 2018 | Jul. 02, 2020 | Jun. 30, 2020 | Apr. 22, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Jul. 25, 2018 | Aug. 31, 2015 |
Note payable principal amount | $ 400,000 | |||||||
Note maturity date | Oct. 31, 2018 | Jun. 30, 2024 | ||||||
Note payable | $ 133,403 | $ 133,403 | ||||||
Accrued interest | $ 70,101 | $ 63,413 | ||||||
Numerica Credit Union [Member] | ||||||||
Proceeds from loan | $ 56,444 | |||||||
Interest rate | 1.00% | |||||||
Small Business Association [Member] | ||||||||
Proceeds from loan | $ 149,900 | $ 150,000 | ||||||
Interest rate | 3.75% | |||||||
Third Parties [Member] | ||||||||
Note payable principal amount | $ 126,000 |
Convertible Notes Payable (Deta
Convertible Notes Payable (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Issuance of convertible notes | $ 100,000 | $ 897,725 |
Repayment of convertible notes | (49,578) | (120,500) |
Convertible Notes [Member] | ||
Balance, beginning | 3,266,775 | 3,324,487 |
Issuance of convertible notes | 103,000 | 905,500 |
Extensions of convertible notes | 100,000 | |
Conversion of convertible notes | (180,922) | (842,712) |
Repayment of convertible notes | (49,579) | (120,500) |
Change in fair value of derivatives | ||
Amortization | ||
Balance, ending | 3,239,274 | 3,266,775 |
Discount [Member] | ||
Balance, beginning | 914,245 | 2,151,168 |
Issuance of convertible notes | 103,000 | 905,500 |
Extensions of convertible notes | ||
Conversion of convertible notes | (53,567) | (233,571) |
Repayment of convertible notes | (21,075) | (3,659) |
Change in fair value of derivatives | ||
Amortization | (942,603) | (1,905,193) |
Balance, ending | 914,245 | |
Convertible Note Net of Discount [Member] | ||
Balance, beginning | 2,352,530 | 1,173,319 |
Issuance of convertible notes | ||
Extensions of convertible notes | 100,000 | |
Conversion of convertible notes | (127,355) | (609,141) |
Repayment of convertible notes | (28,504) | (116,841) |
Change in fair value of derivatives | ||
Amortization | 942,603 | 1,905,193 |
Balance, ending | 3,239,274 | 2,352,530 |
Derivative Liabilities [Member] | ||
Balance, beginning | 4,834,190 | 6,000,830 |
Issuance of convertible notes | 518,678 | 1,803,495 |
Extensions of convertible notes | 149,500 | |
Conversion of convertible notes | (177,037) | (940,382) |
Repayment of convertible notes | (28,930) | (56,197) |
Change in fair value of derivatives | 701,464 | (1,973,556) |
Amortization | ||
Balance, ending | $ 5,997,865 | $ 4,834,190 |
Convertible Notes Payable (De_2
Convertible Notes Payable (Details 1) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Risk Free Interest Rates [Member] | ||
Fair value assumptions, percentage | 0.08% | |
Risk Free Interest Rates [Member] | Minimum [Member] | ||
Fair value assumptions, percentage | 1.53% | |
Risk Free Interest Rates [Member] | Maximum [Member] | ||
Fair value assumptions, percentage | 2.60% | |
Expected Life [Member] | ||
Fair value assumptions, term | 2 months 30 days | |
Expected Life [Member] | Minimum [Member] | ||
Fair value assumptions, term | 29 days | |
Expected Life [Member] | Maximum [Member] | ||
Fair value assumptions, term | 1 year 2 months 30 days | |
Expected Dividends [Member] | ||
Fair value assumptions, percentage | 0.00% | 0.00% |
Expected Volatility [Member] | ||
Fair value assumptions, percentage | 164.00% | |
Expected Volatility [Member] | Minimum [Member] | ||
Fair value assumptions, percentage | 70.00% | |
Expected Volatility [Member] | Maximum [Member] | ||
Fair value assumptions, percentage | 557.00% |
Convertible Notes Payable (De_3
Convertible Notes Payable (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | ||||
Mar. 29, 2019 | Jul. 17, 2018 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Jul. 25, 2018 | |
Derivative liability | $ 5,997,865 | $ 4,834,190 | ||||
Common stock Issued | 217,271,495 | 113,926,332 | ||||
Gain (Loss) on extinguishment of debt | $ (9,387) | $ 218,196 | ||||
Principal amount | $ 400,000 | |||||
Proceeds from convertible notes | 100,000 | 897,725 | ||||
Black Sholes Merton Option Model [Member] | ||||||
Loan | 700,000 | |||||
Proceeds from loan | $ 100,000 | 380,000 | ||||
Fair value of embedded conversion feature | $ 154,861 | 586,710 | ||||
Financing costs | 206,710 | |||||
Debt discount | 380,000 | |||||
Equity and Debt Restructure Agreement [Member] | Investors [Member] | ||||||
Number of restricted common shares cancelled | 2,774,093 | |||||
Fair value of restricted common shares | $ 443,855 | |||||
Fair value of embedded conversion feature | 3,555,888 | |||||
Equity and Debt Restructure Agreement [Member] | Second Investors [Member] | ||||||
Principal amount | 545,607 | |||||
Equity and Debt Restructure Agreement [Member] | First Investors [Member] | ||||||
Principal amount | 1,683,558 | |||||
Loan | 700,000 | |||||
Proceeds from loan | $ 220,000 | |||||
Holder [Member] | ||||||
Convertible notes | 842,712 | |||||
Conversion of convertible notes | 180,922 | 842,712 | ||||
Accrued interest | $ 14,702 | $ 60,627 | ||||
Debt instruments conversion into shares | 39,489,099 | 48,684,667 | ||||
Debt Conversion, Converted Instrument, Amount | $ 328,887 | |||||
Common stock Issued | 434,783 | |||||
Gain (Loss) on extinguishment of debt | $ 159,233 | |||||
Convertible notes past due | 2,839,274 | |||||
Repayment of debt | 120,500 | |||||
Accrued interest repaid | 14,195 | |||||
Extinguishment of debt discount | 53,567 | 233,571 | ||||
Reduction of derivative liabilities | 180,995 | 940,382 | ||||
Convertible debt | $ 905,500 | |||||
Holder [Member] | ||||||
Gain (Loss) on extinguishment of debt | 3,925 | |||||
Repayment of debt | 7,500 | |||||
Accrued interest repaid | 819 | |||||
Proceeds from convertible notes | $ 100,000 | |||||
Minimum [Member] | ||||||
Interest rate | 8.00% | |||||
Maximum [Member] | ||||||
Interest rate | 12.00% | |||||
Several Convertible Notes [Member] | ||||||
Financing costs | $ 2,892,033 | |||||
Debt discount | $ 2,449,275 | |||||
Several Convertible Notes [Member] | Minimum [Member] | ||||||
Interest rate | 10.00% | |||||
Several Convertible Notes [Member] | Maximum [Member] | ||||||
Interest rate | 12.00% | |||||
Convertible Notes [Member] | ||||||
Derivative liability | $ 51,703 | |||||
Convertible notes | 103,000 | |||||
Conversion of convertible notes | 60,922 | |||||
Accrued interest | $ 1,884 | |||||
Debt instruments conversion into shares | 14,079,305 | |||||
Debt Conversion, Converted Instrument, Amount | $ 98,080 | |||||
Interest rate | 12.00% | |||||
Gain (Loss) on extinguishment of debt | $ (11,761) | |||||
Extinguishment of debt discount | 28,190 | |||||
Reduction of derivative liabilities | 55,669 | |||||
Convertible debt | 42,078 | |||||
Convertible Notes 1 [Member] | ||||||
Accrued interest | 6,736 | |||||
Gain (Loss) on extinguishment of debt | (21,460) | |||||
Repayment of debt | 67,750 | |||||
Extinguishment of debt discount | 21,075 | |||||
Reduction of derivative liabilities | 18,551 | |||||
Convertible Notes 2 [Member] | ||||||
Conversion of convertible notes | 120,000 | |||||
Accrued interest | $ 12,818 | |||||
Debt instruments conversion into shares | 25,409,794 | |||||
Debt Conversion, Converted Instrument, Amount | $ 230,807 | |||||
Gain (Loss) on extinguishment of debt | 1,968 | |||||
Extinguishment of debt discount | 25,377 | |||||
Reduction of derivative liabilities | $ 125,334 |
Stockholder's Equity (Deficit_2
Stockholder's Equity (Deficit) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Accretion of conversion feature on Series C preferred stock | $ (80,545) | $ (8,750) |
Preferred Stock and Accrued Dividends [Member] | ||
Balance at beginning | 140,000 | |
Issuance of Series C Preferred shares | 111,600 | 140,000 |
Accretion of discount | ||
Conversion of Series C Preferred shares and accrued dividend | (265,115) | |
Accretion of conversion feature on Series C preferred stock | 13,515 | |
Change in fair value of derivatives | ||
Balance at end | 140,000 | |
Preferred Stock and Accrued Dividends Net of Discount [Member] | ||
Balance at beginning | 8,750 | |
Issuance of Series C Preferred shares | ||
Accretion of discount | 8,750 | |
Conversion of Series C Preferred shares and accrued dividend | (89,295) | |
Accretion of conversion feature on Series C preferred stock | 80,545 | |
Change in fair value of derivatives | ||
Balance at end | 8,750 | |
Discount [Member] | ||
Balance at beginning | 131,250 | |
Issuance of Series C Preferred shares | 111,600 | 140,000 |
Accretion of discount | (8,750) | |
Conversion of Series C Preferred shares and accrued dividend | (175,820) | |
Accretion of conversion feature on Series C preferred stock | (67,030) | |
Change in fair value of derivatives | ||
Balance at end | 131,250 | |
Derivative Liabilities [Member] | ||
Balance at beginning | 190,131 | |
Issuance of Series C Preferred shares | 170,896 | 165,218 |
Accretion of discount | ||
Conversion of Series C Preferred shares and accrued dividend | (353,005) | |
Accretion of conversion feature on Series C preferred stock | 23,290 | |
Change in fair value of derivatives | (31,312) | 24,913 |
Balance at end | $ 190,131 |
Stockholder's Equity (Deficit_3
Stockholder's Equity (Deficit) (Details 1) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Expected dividends | 0.00% | 0.00% |
Minimum [Member] | ||
Risk-free interest rate | 0.11% | 1.58% |
Expected life (years) | 1 year 6 months | 1 year 11 months 12 days |
Expected volatility | 172.00% | 248.00% |
Maximum [Member] | ||
Risk-free interest rate | 0.23% | 1.66% |
Expected life (years) | 2 years | 2 years |
Expected volatility | 262.00% | 250.00% |
Stockholder's Equity (Deficit_4
Stockholder's Equity (Deficit) (Details 2) - Level 3 [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Balance at beginning | $ 967 | $ 16,576 |
Additions to derivative instruments | ||
Loss (gain) on change in fair value of derivative liability | (491) | (15,609) |
Balance at end | $ 476 | $ 967 |
Stockholder's Equity (Deficit_5
Stockholder's Equity (Deficit) (Details 3) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Annual dividend yield | 0.00% | 0.00% |
Minimum [Member] | ||
Expected life (years) | 5 months 1 day | 5 months 1 day |
Risk-free interest rate | 0.10% | 1.56% |
Expected volatility | 186.00% | 165.00% |
Maximum [Member] | ||
Expected life (years) | 7 years 4 months 17 days | 8 years 1 month 16 days |
Risk-free interest rate | 1.83% | 2.40% |
Expected volatility | 240.00% | 318.00% |
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit) (Details 4) - $ / shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Weighted average exercise price, Beginning balance | $ 5.29 | $ 5.17 |
Weighted average exercise price, Granted | ||
Weighted average exercise price, Exercised | ||
Weighted average exercise price, Ending balance | 5.29 | $ 5.29 |
Weighted average exercise price, Exercisable ending balance | $ 5.29 | |
Weighted average aemaining contractual term | 4 years 6 months | 5 years 6 months |
Weighted average aemaining contractual term, Exercisable ending balance | 4 years 6 months | |
Warrant [Member] | ||
Number of shares, Beginning balance | 211,826 | 263,866 |
Number of shares, Granted | ||
Number of shares, Exercised | (12,500) | |
Number of shares, Expired | (78,031) | (39,540) |
Number of shares, Ending balance | 133,795 | 211,826 |
Number of shares,Exercisable ending balance | 133,795 | |
Weighted average exercise price, Beginning balance | $ 10.08 | $ 12.04 |
Weighted average exercise price, Granted | ||
Weighted average exercise price, Exercised | 2.95 | |
Weighted average exercise price, Expired | 18.72 | 20 |
Weighted average exercise price, Ending balance | 5.04 | $ 10.08 |
Weighted average exercise price, Exercisable ending balance | $ 5.04 | |
Weighted average aemaining contractual term | 4 years 4 months 24 days | 3 years 6 months |
Weighted average aemaining contractual term, Exercisable ending balance | 4 years 4 months 24 days |
Stockholders' Equity (Deficit_2
Stockholders' Equity (Deficit) (Details 5) - $ / shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Equity [Abstract] | ||
Number of shares, Beginning balance | 172,479 | 294,959 |
Number of shares, Granted | ||
Number of shares, Exercised | ||
Number of shares, Expired | (122,480) | |
Number of shares, Forfeited | ||
Number of shares, Ending balance | 172,479 | 172,479 |
Number of shares, Exercisable ending balance | 172,479 | |
Weighted average exercise price, Beginning balance | $ 5.29 | $ 5.17 |
Weighted average exercise price, Granted | ||
Weighted average exercise price, Exercised | ||
Weighted average exercise price, Expired | 5 | |
Weighted average exercise price, Forfeited | ||
Weighted average exercise price, Ending balance | 5.29 | $ 5.29 |
Weighted average exercise price, Exercisable ending balance | $ 5.29 | |
Weighted average remaining contractual term | 4 years 6 months | 5 years 6 months |
Weighted average remaining contractual term, Exercisable ending balance | 4 years 6 months |
Stockholder's Equity (Deficit_6
Stockholder's Equity (Deficit) (Details Narrative) - USD ($) | Apr. 14, 2020 | Feb. 01, 2019 | Dec. 31, 2020 | Dec. 31, 2019 |
Derivative liability | $ 5,998 | $ 5,024 | ||
Sale of stock | 5,000 | |||
Common stock issued | 217,271,495 | 113,926,332 | ||
Common Stock payable issued for services - related parties | $ 117,887 | |||
Common Stock payable issued for services - related parties, shares | 10,935,040 | |||
Additionally shares reversed | $ 6,914 | |||
Additionally shares reversed, shares | 283,182 | |||
Unissued shares for related party, shares | 1,731,687 | 3,299,665 | ||
Unissued shares for related party, value | $ 13,467 | $ 79,817 | ||
Number of common stock issued for services, shares | 12,219,836 | 4,987,610 | ||
Number of common stock issued for services, value | $ 177,323 | $ 170,348 | ||
Common stock issued for accrued for services, shares | 905,658 | |||
Common stock issued for accrued for services, value | $ 8,003 | |||
Common stock issued for accrued for services reserved, shares | 9,583 | |||
Common stock issued for accrued for services reserved, value | $ 5,601 | |||
Number of shares to be issued for services, shares | 1,105,857 | 209,782 | ||
Number of shares to be issued for services, value | $ 14,000 | $ 11,598 | ||
Common Stock issued for notes payable, shares | 3,884 | |||
Common Stock issued for notes payable, value | $ 13,983 | |||
Number of shares to be issued for debt conversions, shares | 31,960 | 35,844 | ||
Number of shares to be issued for debt conversions, Value | $ 21,861 | $ 35,844 | ||
Common stock issued for legal services, shares | 4,000,000 | |||
Common stock issued for legal services, value | $ 51,200 | |||
Additionally Shares authorized for services but not issued, shares | 209,782 | |||
Additionally Shares authorized for services but not issued, value | $ 11,598 | |||
Stock issued for cashless warrant exercise | 8,071,000 | |||
Shares available for future grants | 114,000 | |||
Common stock cancelled | 675,759 | |||
Common stock cancelled, value | $ 108,121 | |||
Stock option expenses | $ 86,606 | $ 162,381 | ||
Unamortized stock option | 0 | |||
Number of common stock sold | 5,000 | |||
Proceeds from sale of common stock | $ 2,648 | |||
Intrinsic value of stock options outstanding | $ 0 | |||
Reserved for issuance | 124,000 | |||
Redeemable convertible preferred stock, Series C [Member] | ||||
Preferred stock, shares outstanding | 0 | 140,000 | ||
Derivative liability | $ 88,868 | $ 165,218 | ||
Conversion feature | 75,652 | 190,131 | ||
Accretion of discount | $ 9,096 | $ 8,750 | ||
Preferred stock, converted shares | 140,000 | |||
Debt converted into share | 21,744,479 | |||
Number of common stock converted | 55,800 | |||
Number of stock issued | 251,600 | |||
Geneva [Member] | Series C Convertible Preferred Shares [Member] | ||||
Preferred stock, converted shares | 55,800 | |||
Debt converted into share | 15,292,885 | |||
Geneva [Member] | Series C Convertible Preferred Shares [Member] | ||||
Preferred stock, converted shares | 55,800 | |||
Debt converted into share | 10,598,864 | |||
Geneva [Member] | Redeemable convertible preferred stock, Series C [Member] | ||||
Preferred stock, shares outstanding | 55,800 | |||
Cash received from sale of preferred stock | $ 130,000 | |||
Designation of Series C shares | 1,500,000 | |||
Common stock discount percentage | 30.00% | |||
Derivative liability | $ 82,028 | |||
Accretion of discount | $ 67,201 | |||
Sale of stock | 55,800 | |||
Number of common stock sold | 55,800 | |||
Number of common stock converted | 47,636,228 | |||
Debt discount | $ 131,250 | |||
Related Party Note [Member] | ||||
Stock issued during period, shares, share-based compensation, gross | 3,299,665 | |||
Stock issued during period, value, share-based compensation | $ 79,817 | |||
Number of common stock issued for services, shares | 24,566,400 | |||
Number of common stock issued for services, value | $ 732,029 | |||
Holder [Member] | ||||
Number of shares issued for conversion of notes, value | $ 180,922 | $ 842,712 | ||
Debt converted into share | 39,489,099 | 48,684,667 | ||
Accrued interest | $ 14,702 | $ 60,627 | ||
Debt Conversion, Converted Instrument, Amount | 328,887 | |||
Extinguishment of debt discount | 53,567 | 233,571 | ||
Reduction of derivative liabilities | 180,995 | $ 940,382 | ||
Common stock issued | 434,783 | |||
Common stock, shares authorized but not issued, shares | 35,844 | |||
Common stock, shares authorized but not issued, value | $ 35,844 | |||
Gain on extinguishment of debt | $ 5,835 | $ 159,233 | ||
CEO [Member] | ||||
Shares granted | 122,000 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) | Dec. 31, 2020USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2021 | $ 427,000 |
2022 | 270,000 |
2023 | 270,000 |
2024 | 270,000 |
2025 | 45,000 |
Total | 1,282,000 |
Less: amount representing interest | (239,000) |
Present value of future minimum lease payments | 1,043,000 |
Less: current obligations under leases | 328,000 |
Long-term lease obligations | $ 715,000 |
Commitments and Contingencies_3
Commitments and Contingencies (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating lease costs | $ 610,374 | $ 756,515 |
Variable rent costs | 396,207 | 432,837 |
Total rent expense | $ 1,006,581 | $ 1,189,352 |
Commitments and Contingencies_4
Commitments and Contingencies (Details 2) | Dec. 31, 2019USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2021 | $ 328,000 |
2022 | 197,000 |
2023 | 222,000 |
2024 | 250,000 |
2024 | 46,000 |
Total | $ 1,043,000 |
Commitments and Contingencies_5
Commitments and Contingencies (Details 3) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows from operating leases | $ 606,870 | |
Lease liability related to termination of lease | $ 1,325,445 | |
Weighted-average remaining lease term - operating leases | 3 years 6 months 14 days | |
Weighted-average discount rate - operating leases | 12.00% |
Commitments and Contingencies_6
Commitments and Contingencies (Details 4) | Dec. 31, 2020USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2021 | $ 582,000 |
2022 | 346,000 |
2023 | 346,000 |
2024 | 346,000 |
2025 and beyond | 58,000 |
Total | $ 1,678,000 |
Commitments and Contingencies_7
Commitments and Contingencies (Details Narrative) - USD ($) | Feb. 01, 2019 | Oct. 29, 2019 | Dec. 31, 2020 | Dec. 31, 2019 |
Operating leases discount rate | 12.00% | |||
Weighted-average remaining lease term | 4 years 2 months 27 days | |||
Sublease income | $ 1,265,137 | $ 1,646,369 | ||
Stock issued for employment agreements | $ 593,000 | |||
Stock issued for employment agreements, Shares | 20,782,014 | |||
Accrued compensation | $ 13,467 | 79,817 | ||
Accrued compensastion, shares | 1,731,687 | |||
Proceeds from deposits | $ 60,000 | |||
Sublease payment | 1,325,443 | |||
Outstanding balance | 880,597 | |||
Refund of security deposit | $ 60,000 | |||
Colorado [Member] | Minimum [Member] | ||||
Lease term | 6 months | |||
Colorado [Member] | Maximum [Member] | ||||
Lease term | 4 years 2 months 12 days | |||
CEO [Member] | ||||
Stock grant for restricted common shares for accrued salary | 53,717 | |||
Restricted common share issued for stock option | 122,934 | |||
Stock options issued | 122,000 | |||
Payment of compensation | $ 34,538 | 9,450 | ||
Accrued compensation | $ 162,262 | |||
Employment Agreements [Member] | CEO [Member] | ||||
Ownership percentage | 10.00% | |||
Employment Agreements [Member] | Other Executives [Member] | ||||
Ownership percentage | 2.00% | |||
Employment Agreements [Member] | Ron Throgmartin | ||||
Term | 5 years | |||
Accrued salary | $ 5,000 | |||
Diem fee | $ 500 | |||
Debt description | Company acknowledged it owed Mr. Throgmartin the amount of $517,252 in principal and accrued interest of note payable, salary and fees, accrued during the 5 years of his employment. In addition, the Corporation further acknowledged that it will pay Mr Throgmartin fifty (50%) percent of his compensation due under the remaining Employment Agreement, or $614,583 under certain conditions | |||
Payment of compensation | $ 60,000 | $ 15,000 | ||
Accrued compensation | $ 118,000 | |||
Accrued compensastion, shares | 10,935,040 |
Deferred Tax Assets and Incom_3
Deferred Tax Assets and Income Tax Provision - Schedule of Reconciliation of Effective Income Tax Benefit Rate (Details) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Statutory federal income tax rate | (21.00%) | (21.00%) |
State income tax, net of federal benefits | (5.00%) | (5.00%) |
Change in federal tax rate | 0.00% | 0.00% |
Change in valuation allowance | 26.00% | 26.00% |
Income tax provision (benefit) | 0.00% | 0.00% |
Deferred Tax Assets and Incom_4
Deferred Tax Assets and Income Tax Provision - Schedule of Income Tax Benefit (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Federal Current | ||
Federal Deferred | 79,000 | 479,000 |
State Current | ||
State Deferred | 17,000 | 105,000 |
Change in valuation allowance | (96,000) | (584,000) |
Income tax provision (benefit) |
Deferred Tax Assets and Incom_5
Deferred Tax Assets and Income Tax Provision - Schedule of Deferred Tax Assets Liabilities (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Income Tax Disclosure [Abstract] | ||
Net operating loss carry forwards | $ (6,492,759) | $ (6,413,626) |
Warrants issued for services | 1,467,413 | 1,417,025 |
Impairment of investment | 111,662 | 111,662 |
Depreciation | 54,066 | 101,728 |
Interest expense on convertible notes | 2,688,874 | 2,140,769 |
Total gross deferred tax asset/liabilities | (2,170,744) | (2,642,442) |
Valuation allowance | 2,170,744 | 2,642,442 |
Net deferred taxes |
Deferred Tax Assets and Incom_6
Deferred Tax Assets and Income Tax Provision (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Percentage of reconciliation of income tax benefit at U.S. statutory rate | 21.00% | 21.00% |
Federal net operating loss carryovers | $ 30,917,902 | |
Percentage of changes in ownership | 50.00% |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - Subsequent Event [Member] | 1 Months Ended |
Feb. 28, 2021USD ($)shares | |
Number of common stock issued | shares | 5,026,413 |
Debt conversion amount | $ 100,000 |
Debt conversion, accrued interest | 6,256 |
Repayment of debt | $ 200,000 |
Common stock issued for services, shares | shares | 30,000 |
Redeemable convertible preferred stock, Series C [Member] | |
Stock sold for cash | $ 260,000 |
Stock sold for cash, shares | shares | 293,700 |