Document and Entity Information
Document and Entity Information - $ / shares | Nov. 08, 2018 | Sep. 30, 2018 |
Details | ||
Registrant Name | Kannalife Inc | |
Registrant CIK | 1,615,999 | |
SEC Form | 10-Q | |
Period End date | Sep. 30, 2018 | |
Fiscal Year End | --12-31 | |
Trading Symbol | tygs | |
Tax Identification Number (TIN) | 462,645,343 | |
Number of common stock shares outstanding | 69,854,141 | |
Filer Category | Non-accelerated Filer | |
Current with reporting | Yes | |
Small Business | true | |
Emerging Growth Company | false | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Entity Incorporation, State Country Name | Delaware | |
Entity Address, Address Line One | 3805 Old Easton Road | |
Entity Address, City or Town | Doylestown | |
Entity Address, State or Province | PA | |
City Area Code | 858 | |
Local Phone Number | 883-2642 | |
Entity Listing, Par Value Per Share | $ 0.0001 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 229,033 | $ 4,326 |
Marketable security (available for sale) | 3,742,500 | 0 |
Other receivables | 20,051 | 400 |
Due from related parties, net | 65,326 | 0 |
Total Current Assets | 4,056,910 | 4,726 |
Investment | 0 | 256,359 |
Security deposits | 17,121 | 15,000 |
Deferred tax asset | 0 | 772,000 |
TOTAL ASSETS | 4,074,031 | 1,048,085 |
CURRENT LIABILITIES: | ||
Accounts payable and accrued expenses | 165,147 | 453,632 |
Payroll and related liabilities | 246,586 | 239,924 |
Notes payable - related party | 612,500 | 367,500 |
Loan payable - related party | 16,173 | 0 |
Total Current Liabilities | 1,040,406 | 1,061,056 |
LONG TERM LIABILITIES: | ||
Payroll and related liabilities - long term | 0 | 2,812,810 |
Loan payable - related party - long term | 25,822 | 0 |
Convertible notes payable - long term | 0 | 185,000 |
Convertible notes payable - related party - long term | 500,000 | 288,981 |
Total Long Term Liabilities | 525,822 | 3,286,791 |
TOTAL LIABILITIES | 1,566,228 | 4,347,847 |
STOCKHOLDERS' EQUITY (DEFICIENCY): | ||
Common Stock, Value, Issued | 6,985 | 5,328 |
Additional paid-in capital | 6,379,235 | 2,683,776 |
Accumulated deficit | (3,876,145) | (5,988,866) |
Non-controlling interest | (2,272) | 0 |
TOTAL STOCKHOLDERS' EQUITY (DEFICIENCY) | 2,507,803 | (3,299,762) |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) | 4,074,031 | 1,048,085 |
Series A Preferred Stock | ||
STOCKHOLDERS' EQUITY (DEFICIENCY): | ||
Preferred Stock, Value, Issued | 0 | 0 |
Series B Preferred Stock | ||
STOCKHOLDERS' EQUITY (DEFICIENCY): | ||
Preferred Stock, Value, Issued | $ 0 | $ 0 |
Consolidated Balance Sheets (_2
Consolidated Balance Sheets (Unaudited) - Parenthetical - $ / shares | Sep. 30, 2018 | Dec. 31, 2017 |
Preferred Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 5,000,000 | 5,000,000 |
Common Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 |
Common Stock, Shares Authorized | 200,000,000 | 200,000,000 |
Common Stock, Shares, Issued | 69,854,141 | 53,281,932 |
Common Stock, Shares, Outstanding | 69,854,141 | 53,281,932 |
Series A Preferred Stock | ||
Preferred Stock, Shares Authorized | 75 | 75 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Series B Preferred Stock | ||
Preferred Stock, Shares Authorized | 75 | 75 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
NET REVENUES: | ||||
Grant Revenue | $ 38,101 | $ 0 | $ 104,965 | $ 0 |
TOTAL NET REVENUES | 38,101 | 0 | 104,965 | 0 |
OPERATING EXPENSES: | ||||
Research and development | 67,059 | 2,000 | 125,696 | 4,000 |
General and administrative | 349,782 | 310,732 | 537,217 | 920,470 |
TOTAL OPERATING EXPENSES | 416,841 | 312,732 | 662,913 | 924,470 |
LOSS FROM OPERATIONS | (378,740) | (312,732) | (557,948) | (924,470) |
OTHER (EXPENSE) INCOME: | ||||
Interest income (expense), net | (6,962) | (21,268) | (15,112) | (64,682) |
Other (expense) income, net | 0 | 0 | 31,183 | 1,044 |
Loss on conversion | 0 | 0 | (61,815) | 0 |
Realized gain on investment | 0 | 0 | 3,901,974 | 0 |
Unrealized loss on marketable security | (415,833) | 0 | (415,833) | 0 |
TOTAL OTHER (EXPENSE) INCOME | (422,795) | (21,268) | 3,440,397 | (63,638) |
NET INCOME (LOSS) BEFORE INCOME TAX | (801,535) | (334,000) | 2,882,449 | (988,108) |
Income tax expense (benefit) | 0 | 0 | 772,000 | 0 |
NET INCOME (LOSS) | (801,535) | (334,000) | 2,110,449 | (988,108) |
Net income (loss) attributable to noncontrolling interests | (2,272) | 0 | (2,272) | 0 |
Net income (loss) attributable to Kannalife, Inc. | $ (799,263) | $ (334,000) | $ 2,112,721 | $ (988,108) |
Income (Loss) attributable to Kannalife, Inc. per common share - basic | $ (0.01) | $ (0.01) | $ 0.03 | $ (0.02) |
Income (Loss) attributable to Kannalife, Inc. per common share - diluted | $ (0.01) | $ (0.01) | $ 0.03 | $ (0.02) |
Weighted average common shares outstanding - basic | 67,264,467 | 60,324,141 | 62,585,619 | 53,281,932 |
Weighted average common shares outstanding - diluted | 67,264,467 | 60,324,141 | 67,828,952 | 53,281,932 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income (loss) | $ 2,110,449 | $ (988,108) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||
Issuance of stock options for services | 0 | 1,679 |
Loss on issuance of stock for conversion of notes payable and accrued salaries | 61,815 | 0 |
Realized gain on marketable security | (3,901,974) | 0 |
Unrealized loss on marketable security | 415,833 | 0 |
Amortization of debt discount | 0 | 12,721 |
Issuance of options for services | 7,558 | 0 |
Provision for deferred income taxes | 772,000 | 0 |
Changes in operating assets and liabilities: | ||
Due from related parties, net | (65,326) | 0 |
Security deposits | (2,121) | 0 |
Other receivables | (19,651) | 0 |
Accounts payable and accrued expenses | (148,192) | (16,137) |
Payroll and related liabilities | 6,662 | 750,702 |
NET CASH USED IN OPERATING ACTIVITIES | (762,947) | (239,143) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Cash received upon acquisition | 289,654 | 0 |
NET CASH PROVIDED BY INVESTING ACTIVITIES | 289,654 | 0 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from issuance of Series A Preferred stock | 75,000 | 0 |
Proceeds from issuance of Series B Preferred stock | 75,000 | 0 |
Proceeds from issuance of common stock | 203,000 | 0 |
Proceeds from notes payable | 345,000 | 205,000 |
Proceeds from convertible notes payable - related party | 0 | 20,000 |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 698,000 | 225,000 |
Net increase (decrease) in cash | 224,707 | (14,143) |
Cash and cash equivalents, beginning of period | 4,326 | 33,014 |
Cash and cash equivalents, end of period | 229,033 | 18,871 |
NON-CASH ACTIVITIES: | ||
Issuance of common stock for conversion of notes payable and accrued interest | 236,104 | 0 |
Issuance of common stock for conversion of notes payable and accrued interest - related party | 356,176 | 0 |
Issuance of common stock for conversion of accrued salaries | 2,812,810 | 0 |
Net liabilities assumed from reverse acquisition | $ 130,346 | $ 0 |
Note 1 - General Organization a
Note 1 - General Organization and Business | 9 Months Ended |
Sep. 30, 2018 | |
Notes | |
Note 1 - General Organization and Business | Note 1 Organization and Nature of Operations Kannalife, Inc. (the Company) was incorporated under the laws of the state of Delaware on March 25, 2013 under the name TYG Solutions Corp. The Company consummated a share exchange transaction on July 25, 2018 with Kannalife Sciences, Inc. (Kannalife), a privately held Delaware corporation formed in 2010, the accounting acquirer. Upon completion of the share exchange transaction, Kannalife is treated as the surviving entity and accounting acquirer although the Company was the legal acquirer. Accordingly, the Companys historical financial statements are those of Kannalife the surviving entity and accounting acquirer. All references that refer to (the Company or we or us or our) are Kannalife, unless otherwise differentiated. Kannalife is a phytomedical/pharmaceutical company that specializes in the research and development of synthetic molecules and therapeutic products derived from botanical sources, including the cannabis taxa. Share Exchange and Corporate Restructuring On July 25, 2018, the Company entered into a Share Exchange Agreement (the Share Exchange Agreement) with Kannalife Sciences, Inc., a Delaware corporation (Kannalife) and certain stockholders of Kannalife (the Kannalife Stockholders). Pursuant to the terms of the Share Exchange Agreement, the Company acquired approximately 99.7% of the issued and outstanding shares of Kannalife by means of a share exchange with the Kannalife Stockholders in exchange for 60,324,141 newly issued shares of the common stock of the Company (the Share Exchange), which increased the Company's issued and outstanding shares of common stock to 69,854,141. As a result of the Share Exchange, Kannalife became a 99.7% owned subsidiary of the Company, which on a going forward basis will result in consolidated financial reporting by the Company to include the results of Kannalife. The initial closing of the Share Exchange occurred concurrently with entry into the Share Exchange Agreement (the Initial Closing). After the Initial Closing and for a period of no more than 120 days thereafter, unless extended in the sole discretion of the Company, the Company may issue, on the same terms and conditions as those contained in the Share Exchange Agreement, additional shares of the common stock of the Company to Kannalife Stockholders that did not participate in the Initial Closing, provided that each additional Kannalife Stockholder becomes a party to the transaction documents (the Additional Closing). The Share Exchange has been accounted for as a reverse acquisition of the Company by Kannalife but in substance as a capital transaction, rather than a business combination since the Company had nominal operations and assets prior to and as of the closing of the Share Exchange. The former stockholders of Kannalife represent a significant constituency of the Companys voting power immediately following the Share Exchange and Kannalifes management has assumed operational, financial and governance control. The transaction is deemed a reverse recapitalization and the accounting is similar to that resulting from a reverse acquisition, except that no goodwill or other intangible assets should be recorded. For accounting purposes, Kannalife is treated as the surviving entity and accounting acquirer although the Company was the legal acquirer. Accordingly, the Companys historical financial statements are those of Kannalife. All references to common stock, share and per share amounts have been retroactively restated to reflect the reverse recapitalization as if the transaction had taken place as of the beginning of the earliest period presented. Company assets and liabilities pre-acquisition: Cash and cash equivalents 289,654 Note receivable 142,500 Total assets 432,154 Accounts payable and accrued expenses 20,505 Loan payable - related party - long term 41,995 Convertible notes payable - related party 500,000 Total liabilities 562,500 Total liabilities assumed (130,346) The following summarized unaudited consolidated pro forma information shows the results of operations of the Company had the reverse acquisition occurred on January 1, 2018 and 2017, respectively: Pro Forma (Unaudited) nine months ended September 30, 2018 2017 Total revenues $ 104,965 $ 6,154 Net income (loss) $ 2,028,921 $ (995,719) Net income (loss) per common share, basic $ 0.03 $ (0.02) Net income (loss) per common share, diluted $ 0.03 $ (0.02) The summarized unaudited consolidated pro forma results are not necessarily indicative of results which would have occurred if the acquisition had been in effect for the periods presented. Further, the summarized unaudited consolidated pro forma results are not intended to be a projection of future results. Name Change On November 9, 2018, the Company filed an amendment to its certificate of incorporation with the Delaware Secretary of State to change its name to Kannalife, Inc. The Company has concurrently submitted a request to FINRA for approval of the name change as well as a ticker symbol change and is awaiting approval. Unaudited Interim Financial Information We have prepared the accompanying consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC) for interim financial reporting. These consolidated financial statements are unaudited and, in our opinion, include all adjustments, consisting of normal recurring adjustments and accruals necessary for a fair presentation of our balance sheets, operating results, and cash flows for the periods presented. Operating results for the periods presented are not necessarily indicative of the results that may be expected for 2018 due to seasonal and other factors. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States (GAAP) have been omitted in accordance with the rules and regulations of the SEC. These consolidated financial statements should be read in conjunction with the audited financial statements and accompanying notes. |
Note 2 - Summary of Significant
Note 2 - Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2018 | |
Notes | |
Note 2 - Summary of Significant Accounting Policies | Note 2 - Summary of Significant Accounting Policies The significant accounting policies used in the preparation of the consolidated financial statements are as follows: Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. Principles of Consolidation The Company evaluates the need to consolidate affiliates based on standards set forth in ASC 810 Consolidation (ASC 810). The consolidated financial statements include the accounts of the Company and its majority owned subsidiary, Kannalife. The non-controlling interest in Kannalife represents the 0.03% equity interest held by the original shareholders of Kannalife before the share exchange. All significant consolidated transactions and balances have been eliminated in consolidation. Noncontrolling Interests The Company accounts for its less than 100% interests in Kannalife in accordance with ASC Topic 810, Consolidation, and accordingly the Company presents noncontrolling interests as a component of equity on its consolidated balance sheet and reports the noncontrolling interests share of Kannalifes net loss attributable to noncontrolling interests in the consolidated statement of operations. Development Stage Company The Company is a development stage company as defined by section 915-10-20 of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC). Although the Company has recognized some nominal amount of revenue since inception, the Company is still devoting substantially all of its efforts on establishing the business and, therefore, still qualifies as a development stage company. All losses accumulated since inception have been considered as part of the Companys development stage activities. Use of Estimates The preparation of consolidated financial statements and accompanying notes in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of revenues and expenses during the periods. Actual results could differ from those estimates. Significant matters requiring the use of estimates and assumptions include, but are not necessarily limited to, establishing the fair value of marketable securities and periodically evaluating marketable securities for potential impairment, fair value of the Companys stock, stock based compensation, and valuation allowance relating to the Companys deferred tax assets. Management believes that its estimates and assumptions are reasonable, based on information that is available at the time they are made. Cash and Cash Equivalents Our cash and cash equivalents include short-term, highly liquid investments with original maturities of three months or less when purchased. At times throughout the year, the Company may maintain bank balances that could exceed Federal Deposit Insurance Corporation insured limits. The Company maintains its cash deposit accounts with high credit quality financial institutions, and therefore believes that its loss exposure is minimal. Revenue Recognition The FASB issued Accounting Standards Update (ASU) No. 2014-09, codified as ASC 606: Revenue from Contracts with Customers, which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The Company adopted ASC 606 effective January 1, 2018 using modified retrospective basis and the cumulative effect was immaterial to the consolidated financial statements. Revenue consists of research funding from the Companys National Institute of Health (NIH) Grant. Grant revenue is recognized when qualifying costs are incurred and there is reasonable assurance that the conditions of the award have been met for collection. Proceeds received prior to the costs being incurred or the conditions of the award being met are recognized as deferred revenue until the services are performed and the conditions of the award are met. Equity Investments Effective January 1, 2018 with the adoption of ASU 2016-01, our accounting treatment for equity investments differs for those with and without readily determinable fair values. Equity investments with readily determinable fair values are recorded at fair value with changes in fair value recorded in Unrealized Gain/Loss On Investments. For equity investments without readily determinable fair values we have elected the measurement alternative, and therefore carry these investments at cost, less impairment (if any), plus or minus changes in observable prices. On a quarterly basis, we review our equity investments without readily determinable fair values for impairment. We consider a number of qualitative factors such as whether there is a significant deterioration in earnings performance, credit rating, asset quality, or business prospects of the investee in determining if impairment exists. If the investment is considered impaired, an impairment loss equal to the amount by which the carrying value exceeds its fair value is recorded through a charge to earnings. The impairment loss may be reversed in a subsequent period if there are observable transactions for the identical or similar investment of the same issuer at a higher amount than the carrying amount that was established when the impairment was recognized. Impairment as well as upward or downward adjustments resulting from observable price changes in orderly transactions for identical or similar investments are included in Income - other. Realized gains or losses resulting from the sale of equity investments are calculated using the specific identification method and are included in Other (expense) Income, net." Income Taxes The Company accounts for income taxes under FASB ASC Topic 740, Income Taxes Preferred Stock The Company applies the guidance enumerated in FASB ASC Topic 480, Distinguishing Liabilities from Equity Convertible Instruments The Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC Topic 815, Derivatives and Hedging Activities Applicable U.S. GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria includes circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. The Company accounts for convertible instruments (when the Company has determined that the embedded conversion options should not be bifurcated from their host instruments) as follows. The Company records, when necessary, deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of the transaction and the effective conversion price embedded in the preferred shares. Stock Based Compensation The Company accounts for share-based compensation in accordance with the fair value recognition provision of FASB ASC 718, Compensation Stock Compensation The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC 505, Equitybased Payments to Non-Employees . Net Income (Loss) per Share Basic net loss per share is calculated by dividing the net loss for the period by the weighted-average number of common shares outstanding during the period. Diluted net income per share is calculated by dividing income for the period by the weighted-average number of common shares outstanding during the period, increased by potentially dilutive common shares ("dilutive securities") that were outstanding during the period. Dilutive securities include stock options and warrants granted, convertible debt, and convertible preferred stock. In accordance with ASC 260, Earnings Per Share, the following table reconciles basic shares outstanding to fully diluted shares outstanding for the nine months ended September 30, 2018: September 30, 2018 Weighted average number of common shares outstanding - Basic 62,585,619 Potentially dilutive common stock equivalents 5,243,333 Weighted average number of common and equivalent shares outstanding-Diluted 67,828,952 Common stock equivalents are included in the diluted income per share calculation only when option exercise prices are lower than the average market price of the common shares for the period presented. The weighted average number of common stock equivalents not included in diluted income per share, because the effects are anti-dilutive, was 5,343,333 for the three months ended September 30, 2018. The weighted average number of common stock equivalents not included in diluted income per share, because the effects are anti-dilutive, was 706,513 for three and nine months ended September 30, 2017. Research and Development In accordance with FASB ASC 730, Research and Development Recently Issued Authoritative Guidance In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which is a new comprehensive revenue recognition model that will supersede all existing revenue recognition guidance under U.S. GAAP. The standard requires a company to recognize revenue when it transfers goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. This standard is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, with early adoption permitted for interim and annual periods beginning after December 15, 2016. Entities will have the option of using either a full retrospective approach or a modified approach to adopt the guidance in the ASU. We adopted this ASU in the first quarter of 2018 with no material impact to our consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), requiring lessees to recognize for all leases (with the exception of short-term leases) at the commencement date: (1) a lease liability, which is a lessees obligation to make lease payments arising from a lease, measured on a discounted basis, and (2) a right-of-use (ROU) asset, which is an asset that represents the lessees right to use, or control the use of, a specified asset for the lease term. The update is effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. The Company currently anticipates that upon adoption of the new standard, ROU assets and lease liabilities will be recognized in amounts that will be immaterial to the balance sheets. |
NOTE 3 - GOING CONCERN AND MANA
NOTE 3 - GOING CONCERN AND MANAGEMENT'S LIQUIDITY PLANS | 9 Months Ended |
Sep. 30, 2018 | |
Notes | |
NOTE 3 - GOING CONCERN AND MANAGEMENT'S LIQUIDITY PLANS | Note 3 Going Concern and Managements Liquidity Plans The Companys consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in our accompanying consolidated financial statements, the Company has had a net loss from operations of $557,948 and $924,470 for the nine months ended September 30, 2018 and 2017, respectively. The net cash used in operations were $762,947 and $239,143 for the nine months ended September 30, 2018 and 2017, respectively. Additionally, the Company had an accumulated deficit of $3,876,145 at September 30, 2018, and has not yet established an adequate ongoing source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern. These factors raise substantial doubt regarding the Company to continue as a going concern. As of September 30, 2018, we had approximately $230,000 in cash and cash equivalents. Additionally, we had approximately $3,740,000 in marketable securities (available for sale). Management plans to raise additional capital through the sale of our marketable securities. We expect that between our existing cash, cash equivalents and marketable securities we will be able to sufficiently fund our operations and capital requirements for the next 18 months. The Companys history of recurring losses, and uncertainties as to whether its operations will become profitable and generate operating cash flows raise substantial doubt about its ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. |
NOTE 4 - FAIR VALUE MEASUREMENT
NOTE 4 - FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2018 | |
Notes | |
NOTE 4 - FAIR VALUE MEASUREMENTS | Note 4 Fair Value Measurements The Company follows FASB ASC 820, Fair Value Measurements and Disclosures Level 1 Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. Level 2 Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 3 Pricing inputs that are generally unobservable inputs and not corroborated by market data. Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. The carrying amounts reported in the Companys consolidated financial statements for cash, accounts payable and accrued expenses approximate their fair value because of the immediate or short-term nature of these financial instruments. Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated. The following tables presents assets that are measured and recognized at fair value as of September 30, 2018, on a recurring basis: September 30, 2018 Level 1 Level 2 Level 3 Total Carrying Value Marketable securities Medical Marijuana, Inc. $ 3,742,500 - - $ 3,742,500 |
NOTE 5 - ACCRUED PAYROLL AND PA
NOTE 5 - ACCRUED PAYROLL AND PAYROLL TAXES | 9 Months Ended |
Sep. 30, 2018 | |
Notes | |
NOTE 5 - ACCRUED PAYROLL AND PAYROLL TAXES | Note 5 Accrued Payroll and Payroll Taxes Accrued payroll and payroll taxes at September 30, 2018 and December 31, 2017 consisted of the following: 2018 2017 Payroll $ 1,820 $ 2,812,810 Payroll taxes 244,766 239,924 Totals $ 246,586 $ 3,052,734 As of September 30, 2018 and December 31, 2017, the Company has accrued payroll taxes in connection salaries paid and accrued to four officers of the Company. In July of 2018, the Company entered into a new employment agreement with our CEO. The initial term of the agreement is for two years and automatically renews for successive one year terms. In July of 2018, the Company entered into new employment agreements with three officers. The initial term of these agreements are for one year and automatically renew for successive six month terms. See Note 12 for discussion of accrued payroll converted into common stock. |
NOTE 6 - NOTES PAYABLE - RELATE
NOTE 6 - NOTES PAYABLE - RELATED PARTY | 9 Months Ended |
Sep. 30, 2018 | |
Notes | |
NOTE 6 - NOTES PAYABLE - RELATED PARTY | Note 6 Notes Payable Related Party During the year ended December 31, 2017, the Company borrowed $367,500 and issued a promissory note with a maturity date of October 18, 2017. This note was later amended to extend the maturity to April 18, 2019. During the nine months ended September 30, 2018, the Company borrowed an additional $345,000 and issued a promissory note with a maturity date of April 18, 2019. These loans incur 3% interest per annum. Accrued interest related to these notes is $16,155 and $3,565 as of September 30, 2018 and December 31, 2017, respectively. Upon the consolidation of the Company and Kannalife, $100,000 of the above-mentioned borrowings was eliminated due to it being an intercompany transaction. The total, above mentioned, notes payable due is $612,500 as of September 30, 2018. Prior to the share exchange agreement, the Company borrowed $25,822 and issued a promissory note with a maturity date of March 31, 2020. The loans represent working capital advances from shareholders, are unsecured, interest bearing 0.5%, and grant a security interest in the Companys assets as collateral. Accrued interest related to this note is $194 as of September 30, 2018. As of September 30, 2018, due to related parties amounted to $16,173. The amounts due related parties represent working capital advances and fees for work performed by officers and shareholders, are unsecured, non-interest bearing and are due upon demand. Total interest expense on notes payable, amounted to $12,591 and $1,521 for the nine months ended September 30, 2018 and 2017, respectively. Total interest expense on notes payable, amounted to $4,441 and $1,045 for the three months ended September 30, 2018 and 2017, respectively. |
NOTE 7 - CONVERTIBLE NOTES PAYA
NOTE 7 - CONVERTIBLE NOTES PAYABLE | 9 Months Ended |
Sep. 30, 2018 | |
Notes | |
NOTE 7 - CONVERTIBLE NOTES PAYABLE | Note 7 Convertible Notes Payable On May 15, 2015, the Company borrowed $35,000 and issued a convertible promissory note with a maturity date of April 30, 2016. The loan incurs 10% interest per annum. This note is convertible to the Companys common stock at a price of $1.00 per share. In addition, the Company issued 17,500 warrants to purchase common stock with an exercise price of $1.50 per share and a term of two years. These warrants were valued at $7,525 on a relative fair value basis and were recorded as a debt discount to be amortized over the term. Accrued interest related to this note is $0 and $9,196 as of September 30, 2018 and December 31, 2017, respectively. On August 13, 2015, the Company borrowed $50,000 and issued a convertible promissory note with a maturity date of August 12, 2016. The loan incurs 10% interest per annum and increasing to 17% per annum in the event of a default. This note is convertible to the Companys common stock at a price of $1.00 per share. In addition, the Company issued 25,000 warrants to purchase common stock with an exercise price of $1.50 per share and a term of two years. These warrants were valued at $10,751 on a relative fair value basis and were recorded as a debt discount to be amortized over the term. Accrued interest related to this note is $0 and $16,659 as of September 30, 2018 and December 31, 2017, respectively. On November 25, 2015, the Company borrowed $100,000 and issued a convertible promissory note with a maturity date of November 24, 2016. The loan incurs 10% interest per annum and increasing to 14% per annum in the event of a default. This note is convertible to the Companys common stock at a price of $1.00 per share. In addition, the Company issued 50,000 warrants to purchase common stock with an exercise price of $1.50 per share and a term of two years. These warrants were valued at $21,500 on a relative fair value basis and were recorded as a debt discount to be amortized over the term. Accrued interest related to this note is $0 and $25,249 as of September 30, 2018 and December 31, 2017, respectively. Total interest expense on convertible notes payable, inclusive of amortization of debt discount of $0 and $9,378, amounted to $0 and $19,304 for the nine months ended September 30, 2018 and 2017, respectively. Total interest expense on convertible notes payable, inclusive of amortization of debt discount of $0 and $9,378, amounted to $0 and $6,411 for the three months ended September 30, 2018 and 2017, respectively. On January 3, 2018, prior to the Share Exchange, the Company issued 563,063 shares of common stock (on a post-Share Exchange basis) for the conversion of $236,104 convertible notes payable and related accrued interest. The Company recorded a loss of $3,515 on conversion based upon the difference between the fair market value of the Company's common stock and the liabilities relieved. |
NOTE 8 - CONVERTIBLE NOTES PAYA
NOTE 8 - CONVERTIBLE NOTES PAYABLE - RELATED PARTY | 9 Months Ended |
Sep. 30, 2018 | |
Notes | |
NOTE 8 - CONVERTIBLE NOTES PAYABLE - RELATED PARTY | Note 8 Convertible Notes Payable - Related Party On December 27, 2014, the Company borrowed $150,000 from a stockholder and issued a convertible promissory note with a maturity date of December 31, 2015. The loan incurs 10% interest per annum and increasing to 17% per annum in the event of a default. This note is convertible to the Companys common stock at a price of $1.00 per share. Accrued interest related to this note is $0 and $67,195 as of September 30, 2018 and December 31, 2017, respectively. During the year ended December 31, 2015, the Company borrowed $120,000 from the Chief Executive Officer and issued convertible promissory notes that are due on demand. The loans incur 10% interest per annum. These notes are convertible to the Companys common stock at a price of $1.00 per share. On November 20, 2015, the Company borrowed $5,000 from the Chief Executive Officer and issued a convertible promissory note that is due on demand. The loan incurs 10% interest per annum. This note is convertible to the Companys common stock at a price of $0.40 per share. During the year ended December 31, 2016, the Company borrowed $15,000 from the Chief Executive Officer and issued convertible promissory notes that are due on demand. The loans incur 10% interest per annum. These notes are convertible to the Companys common stock at a price of $0.40 per share. During the year ended December 31, 2016, the Company borrowed $10,000 from the Chief Executive Officer and issued convertible promissory notes with a maturity date of December 31, 2016. The loans incur 10% interest per annum and increasing to 17% per annum in the event of a default. These notes are convertible to the Companys common stock at a price of $0.40 per share. During the year ended December 31, 2016, the Company repaid $7,191 of principal and $21,252 of accrued interest towards the outstanding notes payable. During the year ended December 31, 2017, the Company borrowed $20,000 from the Chief Executive Officer and issued convertible promissory notes with a maturity date of December 31, 2017. The loans incur 10% interest per annum and increasing to 17% per annum in the event of a default. These notes are convertible to the Companys common stock at a price of $0.40 per share. During the year ended December 31, 2017, the Company repaid $23,828 of principal and $16,522 of accrued interest towards the outstanding notes payable. On January 3, 2018, prior to the Share Exchange, the Company converted these notes into 973,946 shares of common stock (on a post-Share Exchange basis) valued at $414,476. The difference of the $58,300 balance of the notes and the fair value of the shares issued was recorded as a loss on conversion of debt. Prior to the Share Exchange, the Company issued a convertible note to a shareholder, face value $500,000, in exchange for $500,000 in cash. The note is unsecured, bears interest at the rate of 3% per annum and matures on February 16, 2030. The note is convertible into common stock of the Company at $0.10 per share at any time at the option of the holder, subject to a 4.9% blocking provision which prohibits the holder from converting into common stock of the Company if such conversion results in the holder owning greater than 4.9% of the outstanding common stock of the Company after giving effect to the conversion. Accrued interest related to this note is $9,333 as of September 30, 2018. Total interest expense on these convertible notes payable amounted to $2,500 and $12,203 for the nine months ended September 30, 2018 and 2017, respectively. Total interest expense on these convertible notes payable amounted to $2,500 and $4,181 for the three months ended September 30, 2018 and 2017, respectively. |
NOTE 9 - COMMITMENTS AND CONTIN
NOTE 9 - COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2018 | |
Notes | |
NOTE 9 - COMMITMENTS AND CONTINGENCIES | Note 9 Commitments and Contingencies Legal Proceedings From time to time the Company may get involved in legal proceedings arising in the ordinary course of business. Other than as set forth in Legal Proceedings in Part II below, the Company believes there is no litigation pending that could have, individually or in the aggregate, a material adverse effect on its results of operations or financial condition. Occupancy Leases On April 1, 2014, the Company entered into a one year lease arrangement for office space, with the option to renew the lease annually. The On September 15, 2015, the Company entered into a one year lease arrangement for office space. The Company has amended this lease to extend the term through September 30, 2018. The On July 1, 2018, the Company entered into a one year lease arrangement for office space, with the option to renew the lease annually. The Royalty Agreements On June 12, 2012, the Company entered into a Patent License Agreement with agencies of the United States Public Health Services within the Department of Health and Human Services (PHS). Under the License Agreement, PHS granted the Company an exclusive right to use and develop certain patents relating to Cannabinoids as Antioxidants and Neuroprotectants. In exchange for the License, the Company has agreed to the following payments: · · · · · · · · On December 31, 2014, the Company executed five exclusive pharmaceutical license agreements with the Companys CEO, the Companys CMO, three advisory board members of the Company, and an unrelated third party. These agreements provide the Company the worldwide exclusive rights to certain drug technologies and methods (and systems) for collection, processing and use of data for the dispensing of phyto-medical and botanically derived materials for consumption. The license agreements grant to the Company from the inventors the rights to develop, market, make, use, and sell certain drug formulations, which are applied to humans through the use of certain drug technology. In return for these exclusive rights from the inventors, the Company has agreed to compensate the inventors under the agreements with royalties ranging from 1.5% to 2.5% on all net sales by the Company of licensed products covered by a valid claim of a patent or patent application of the inventor patent rights. Additionally, the Company retains the rights to sublicense the drug formulations, and upon such sublicense shall pay the inventors from 1.5% up to 5% of all royalties and sublicense fees paid to the Company on account of sublicenses under the inventor patent rights and inventor technology rights, less all appropriate expenses associated with such sublicenses incurred by the Company. However, if the inventor supplies licensed products to sublicensees of the Company pursuant to such sublicenses, the inventor shall supply such licensed products at its cost. Prior to the Share Exchange this royalty agreement was terminated. |
NOTE 10 - RELATED PARTY TRANSAC
NOTE 10 - RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2018 | |
Notes | |
NOTE 10 - RELATED PARTY TRANSACTIONS | Note 10 Related Party Transactions The Companys Chief Executive Officer shares the use of the leased office space for personal living quarters. The CEO reimburses the Company for 50% of the monthly rent, or $2,500 per month. From time to time the Company sends money to Golden Gate Capital (GGCP), a company owned by our CEO, for the advances of certain expenses and to be deposited into the bank account of Kannalife. Due to the timing of the funds transferred and expenses incurred, at times, there remains a balance due from GGCP. As of September 30, 2018, $65,326 is due from GGCP. Subsequent to the period end, GGCP has transferred all the remaining funds to Kannalife. As of the filing of these financial statements, there is no outstanding balance due from GGCP. See Notes 6, 8 and 12 for additional related party transactions. |
NOTE 11 - MARKETABLE SECURITY
NOTE 11 - MARKETABLE SECURITY | 9 Months Ended |
Sep. 30, 2018 | |
Notes | |
NOTE 11 - MARKETABLE SECURITY | Note 11 Marketable Security On June 1, 2018, the Company received 41,583,333 shares of Medical Marijuana, Inc. (MJNA) common stock pursuant to a settlement agreement. In 2014, the Company entered into a revenue sharing agreement with Kannaway LLC, whereas, among the considerations and obligations the parties agreed to a share exchange, whereby the Company issued 6,408,980 shares of its common stock in exchange of 4.99% ownership of Kannaway. A significant shareholder of the Company owned the remaining ownership of Kannaway LLC. Subsequently, Kannaway was sold, by its parent company, to MJNA for 833,333,333 shares of MJNA common stock. The settlement agreement called for the release of all obligations in exchange for the issuance of 41,583,333 shares of common stock in MJNA to the Company. The investment in MJNA has been recorded as an investment in non-consolidated entities and is revalued every quarter with fluctuations in fair value recorded to earnings. The fair value of the investment is based on the closing price of the shares reported on the principal stock exchange on which they are traded. At September 30, 2018 the Company held 41,583,330 shares of MJNA which traded at a closing price of $0.09, or value of $3,742,500. For the nine months ended September 30, 2018, the Company recorded a realized gain of $3,901,974 upon the settlement and receipt of these shares and an unrealized loss of $415,833 related to the investment in MJNA. The gain was netted against the Company's cost basis investment in Kannaway LLC. |
NOTE 12 - STOCKHOLDERS' EQUITY
NOTE 12 - STOCKHOLDERS' EQUITY (DEFICIENCY) | 9 Months Ended |
Sep. 30, 2018 | |
Notes | |
NOTE 12 - STOCKHOLDERS' EQUITY (DEFICIENCY) | Note 12 Stockholders Equity (Deficiency) Series A Preferred Stock Kannalife Pre-Share Exchange As of December 31, 2017, the Company had a total of 20,000,000 shares of Series A Preferred Stock, $0.001 par value authorized for issuance. Each share of Series A Preferred Stock is convertible into one share of common stock without any additional consideration by the holder, at any time after the date of issuance. The holders of shares of Series A Preferred Stock are entitled to receive dividends, if and when declared by the Board of Directors, at the rate of 8% per annum of the original price of Series A Preferred Stock. In the event of the liquidation the holders of the Series A Preferred Stock are entitled to receive an amount equal to the original Series A price for each share of Series A then held by such holder. Each holder of shares of Series A Preferred Stock is entitled to the number of votes equal to the number of shares of common stock into which such holders shares of Series A could be converted on the record date for the vote or written consent of the stockholders. The Series A Preferred Stock is nonredeemable. As of December 31, 2017, there were 4,893,510 shares of Series A Preferred Stock issued and outstanding. In July 2018, prior to the Share Exchange, the Company converted 4,893,510 shares of preferred stock into 4,893,510 shares of common stock (on a post-Share Exchange basis). The presentation on the Balance Sheet shows as if these shares were converted as of December 31, 2017. Series A Preferred Stock Effective May 3, 2018, the Companys Board of Directors authorized and designated 75 shares of the Companys Preferred Stock as Series A Preferred Stock. Each share of the Series A Preferred Stock is entitled to a liquidation preference of $1,000 per share and is convertible into 1,000 shares of the Companys common stock. The holders of a majority of the Series A Preferred Stock are entitled to elect up to four (4) directors to the Companys board of directors and any annual or special meeting and have preferential rights in regard to the election of Series A directors. In all other voting matters, the holders of Series A Preferred Stock are entitled to cast 1,000 votes per share. In July 2018, the Company issued 75 shares of Series A Preferred Stock, to Naturewell, Inc., an entity controlled by the former CEO of TYG Solutions, Inc., in exchange for $75,000. Series B Preferred Stock Effective May 3, 2018, the Companys Board of Directors authorized and designated 75 shares of the Companys Preferred Stock as Series B Preferred Stock. Each share of the Series B Preferred Stock is entitled to a liquidation preference of $1,000 per share and is convertible into 1,000 shares of the Companys common stock. The holders of a majority of the Series B Preferred Stock are entitled to elect up to three (3) directors to the Companys board of directors and any annual or special meeting and have preferential rights in regard to the election of Series B directors. In all other voting matters, the holders of Series B Preferred Stock are entitled to cast 1,000 votes per share. In July 2018, the Company issued 75 shares of Series B Preferred Stock, to our CEO, in exchange for $75,000. Common Stock The Company is authorized to issue 200,000,000 shares of $0.0001 par value common stock. All common stock shares have equal voting rights, are non-assessable and have one vote per share. Voting rights are not cumulative and, therefore, the holders of more than 50% of the common stock could, if they choose to do so, elect all of the directors of the Company, subject to the rights of the preferred stockholders. On January 3, 2018, prior to the Share Exchange, the Company issued 5,505,200 shares of common stock (on a post-Share Exchange basis) to four officers, valued at $2,342,813, for the conversion of accrued salaries. The difference of $469,997 between the balance of accrued salaries and the fair value of the shares issued was recorded as a capital contribution recorded within additional paid-in capital. The transaction was viewed as being on behalf of the Company in connection with the pending share exchange transaction. In July 2018, the Company issued 2,030,000 shares of common stock, to an entity commonly controlled by the $500,000 convertible note holder, in exchange for $203,000. As of September 30, 2018 and December 31, 2017, there were 69,854,141 and 53,281,932 shares of common stock issued and outstanding, respectively. See Note 7 and 8 for discussion of the conversion of notes payable and accrued interest into commons stock. The Company determined fair value of its shares of common and preferred stock based on the price at which the Company was selling its shares of common and preferred stock to third party investors. Stock Options On September 1, 2017, the Company entered into an agreement for consulting services. As compensation the Company issued a stock options to purchase 100,000 shares of common stock at a price of $2.00 per share and are exercisable for five years. The stock option vests in equal monthly installments of 24 months. These options were valued at $20,154 using a Black-Scholes Options Pricing Model. For the nine months ended September 30, 2018, the Company recorded $7,558 as stock based compensation in the statement of operations. The fair value of the options is estimated using a Black-Scholes Options Pricing Model with the following assumptions: Market value of common stock on issuance date $ 0.40 Exercise price $ 2.00 Expected volatility 100% Expected term (in years) 5 Risk-free interest rate 1.73% Expected dividend yields - Warrants The following is a summary of outstanding and exercisable warrants: Number of Shares Weighted Average Exercise Price Year of Expiration Balance at December 31, 2016 92,500 1.50 2017 Issued - - - Expired (92,500) 1.50 2017 Balance at December 31, 2017 - - - Issued - - - Expired - - - Balance at September 30, 2018 - - - The Company did not issue any warrants for the nine months ended September 30, 2018 and 2017. |
NOTE 13 - SUBSEQUENT EVENTS
NOTE 13 - SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2018 | |
Notes | |
NOTE 13 - SUBSEQUENT EVENTS | Note 13 Subsequent Events The Company has evaluated subsequent events through the date these consolidated financial statements were issued. |
Note 2 - Summary of Significa_2
Note 2 - Summary of Significant Accounting Policies: Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Policies | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. |
Note 2 - Summary of Significa_3
Note 2 - Summary of Significant Accounting Policies: Principles of Consolidation (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Policies | |
Principles of Consolidation | Principles of Consolidation The Company evaluates the need to consolidate affiliates based on standards set forth in ASC 810 Consolidation (ASC 810). The consolidated financial statements include the accounts of the Company and its majority owned subsidiary, Kannalife. The non-controlling interest in Kannalife represents the 0.03% equity interest held by the original shareholders of Kannalife before the share exchange. All significant consolidated transactions and balances have been eliminated in consolidation. |
Note 2 - Summary of Significa_4
Note 2 - Summary of Significant Accounting Policies: Noncontrolling Interests (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Policies | |
Noncontrolling Interests | Noncontrolling Interests The Company accounts for its less than 100% interests in Kannalife in accordance with ASC Topic 810, Consolidation, and accordingly the Company presents noncontrolling interests as a component of equity on its consolidated balance sheet and reports the noncontrolling interests share of Kannalifes net loss attributable to noncontrolling interests in the consolidated statement of operations. |
Note 2 - Summary of Significa_5
Note 2 - Summary of Significant Accounting Policies: Development Stage Company (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Policies | |
Development Stage Company | Development Stage Company The Company is a development stage company as defined by section 915-10-20 of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC). Although the Company has recognized some nominal amount of revenue since inception, the Company is still devoting substantially all of its efforts on establishing the business and, therefore, still qualifies as a development stage company. All losses accumulated since inception have been considered as part of the Companys development stage activities. |
Note 2 - Summary of Significa_6
Note 2 - Summary of Significant Accounting Policies: Use of Estimates (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Policies | |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements and accompanying notes in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of revenues and expenses during the periods. Actual results could differ from those estimates. Significant matters requiring the use of estimates and assumptions include, but are not necessarily limited to, establishing the fair value of marketable securities and periodically evaluating marketable securities for potential impairment, fair value of the Companys stock, stock based compensation, and valuation allowance relating to the Companys deferred tax assets. Management believes that its estimates and assumptions are reasonable, based on information that is available at the time they are made. |
Note 2 - Summary of Significa_7
Note 2 - Summary of Significant Accounting Policies: Cash and Cash Equivalents (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Policies | |
Cash and Cash Equivalents | Cash and Cash Equivalents Our cash and cash equivalents include short-term, highly liquid investments with original maturities of three months or less when purchased. At times throughout the year, the Company may maintain bank balances that could exceed Federal Deposit Insurance Corporation insured limits. The Company maintains its cash deposit accounts with high credit quality financial institutions, and therefore believes that its loss exposure is minimal. |
Note 2 - Summary of Significa_8
Note 2 - Summary of Significant Accounting Policies: Revenue Recognition (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Policies | |
Revenue Recognition | Revenue Recognition The FASB issued Accounting Standards Update (ASU) No. 2014-09, codified as ASC 606: Revenue from Contracts with Customers, which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The Company adopted ASC 606 effective January 1, 2018 using modified retrospective basis and the cumulative effect was immaterial to the consolidated financial statements. Revenue consists of research funding from the Companys National Institute of Health (NIH) Grant. Grant revenue is recognized when qualifying costs are incurred and there is reasonable assurance that the conditions of the award have been met for collection. Proceeds received prior to the costs being incurred or the conditions of the award being met are recognized as deferred revenue until the services are performed and the conditions of the award are met. |
Note 2 - Summary of Significa_9
Note 2 - Summary of Significant Accounting Policies: Equity Investments (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Policies | |
Equity Investments | Equity Investments Effective January 1, 2018 with the adoption of ASU 2016-01, our accounting treatment for equity investments differs for those with and without readily determinable fair values. Equity investments with readily determinable fair values are recorded at fair value with changes in fair value recorded in Unrealized Gain/Loss On Investments. For equity investments without readily determinable fair values we have elected the measurement alternative, and therefore carry these investments at cost, less impairment (if any), plus or minus changes in observable prices. On a quarterly basis, we review our equity investments without readily determinable fair values for impairment. We consider a number of qualitative factors such as whether there is a significant deterioration in earnings performance, credit rating, asset quality, or business prospects of the investee in determining if impairment exists. If the investment is considered impaired, an impairment loss equal to the amount by which the carrying value exceeds its fair value is recorded through a charge to earnings. The impairment loss may be reversed in a subsequent period if there are observable transactions for the identical or similar investment of the same issuer at a higher amount than the carrying amount that was established when the impairment was recognized. Impairment as well as upward or downward adjustments resulting from observable price changes in orderly transactions for identical or similar investments are included in Income - other. Realized gains or losses resulting from the sale of equity investments are calculated using the specific identification method and are included in Other (expense) Income, net." |
Note 2 - Summary of Signific_10
Note 2 - Summary of Significant Accounting Policies: Income Taxes (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Policies | |
Income Taxes | Income Taxes The Company accounts for income taxes under FASB ASC Topic 740, Income Taxes |
Note 2 - Summary of Signific_11
Note 2 - Summary of Significant Accounting Policies: Preferred Stock (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Policies | |
Preferred Stock | Preferred Stock The Company applies the guidance enumerated in FASB ASC Topic 480, Distinguishing Liabilities from Equity |
Note 2 - Summary of Signific_12
Note 2 - Summary of Significant Accounting Policies: Convertible Instruments (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Policies | |
Convertible Instruments | Convertible Instruments The Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC Topic 815, Derivatives and Hedging Activities Applicable U.S. GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria includes circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. The Company accounts for convertible instruments (when the Company has determined that the embedded conversion options should not be bifurcated from their host instruments) as follows. The Company records, when necessary, deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of the transaction and the effective conversion price embedded in the preferred shares. |
Note 2 - Summary of Signific_13
Note 2 - Summary of Significant Accounting Policies: Stock Based Compensation (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Policies | |
Stock Based Compensation | Stock Based Compensation The Company accounts for share-based compensation in accordance with the fair value recognition provision of FASB ASC 718, Compensation Stock Compensation The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC 505, Equitybased Payments to Non-Employees . |
Note 2 - Summary of Signific_14
Note 2 - Summary of Significant Accounting Policies: Net Income (Loss) per Share (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Policies | |
Net Income (Loss) per Share | Net Income (Loss) per Share Basic net loss per share is calculated by dividing the net loss for the period by the weighted-average number of common shares outstanding during the period. Diluted net income per share is calculated by dividing income for the period by the weighted-average number of common shares outstanding during the period, increased by potentially dilutive common shares ("dilutive securities") that were outstanding during the period. Dilutive securities include stock options and warrants granted, convertible debt, and convertible preferred stock. In accordance with ASC 260, Earnings Per Share, the following table reconciles basic shares outstanding to fully diluted shares outstanding for the nine months ended September 30, 2018: September 30, 2018 Weighted average number of common shares outstanding - Basic 62,585,619 Potentially dilutive common stock equivalents 5,243,333 Weighted average number of common and equivalent shares outstanding-Diluted 67,828,952 Common stock equivalents are included in the diluted income per share calculation only when option exercise prices are lower than the average market price of the common shares for the period presented. The weighted average number of common stock equivalents not included in diluted income per share, because the effects are anti-dilutive, was 5,343,333 for the three months ended September 30, 2018. The weighted average number of common stock equivalents not included in diluted income per share, because the effects are anti-dilutive, was 706,513 for three and nine months ended September 30, 2017. |
Note 2 - Summary of Signific_15
Note 2 - Summary of Significant Accounting Policies: Research and Development (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Policies | |
Research and Development | Research and Development In accordance with FASB ASC 730, Research and Development |
Note 2 - Summary of Signific_16
Note 2 - Summary of Significant Accounting Policies: Recently Issued Authoritative Guidance (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Policies | |
Recently Issued Authoritative Guidance | Recently Issued Authoritative Guidance In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which is a new comprehensive revenue recognition model that will supersede all existing revenue recognition guidance under U.S. GAAP. The standard requires a company to recognize revenue when it transfers goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. This standard is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, with early adoption permitted for interim and annual periods beginning after December 15, 2016. Entities will have the option of using either a full retrospective approach or a modified approach to adopt the guidance in the ASU. We adopted this ASU in the first quarter of 2018 with no material impact to our consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), requiring lessees to recognize for all leases (with the exception of short-term leases) at the commencement date: (1) a lease liability, which is a lessees obligation to make lease payments arising from a lease, measured on a discounted basis, and (2) a right-of-use (ROU) asset, which is an asset that represents the lessees right to use, or control the use of, a specified asset for the lease term. The update is effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. The Company currently anticipates that upon adoption of the new standard, ROU assets and lease liabilities will be recognized in amounts that will be immaterial to the balance sheets. |
Note 1 - General Organization_2
Note 1 - General Organization and Business: Schedule of pre-acquisition assets and liabilities (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Tables/Schedules | |
Schedule of pre-acquisition assets and liabilities | Cash and cash equivalents 289,654 Note receivable 142,500 Total assets 432,154 Accounts payable and accrued expenses 20,505 Loan payable - related party - long term 41,995 Convertible notes payable - related party 500,000 Total liabilities 562,500 Total liabilities assumed (130,346) |
Note 1 - General Organization_3
Note 1 - General Organization and Business: Schedule of Consolidated Pro-forma Information showing results of operations (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Tables/Schedules | |
Schedule of Consolidated Pro-forma Information showing results of operations | Pro Forma (Unaudited) nine months ended September 30, 2018 2017 Total revenues $ 104,965 $ 6,154 Net income (loss) $ 2,028,921 $ (995,719) Net income (loss) per common share, basic $ 0.03 $ (0.02) Net income (loss) per common share, diluted $ 0.03 $ (0.02) |
Note 2 - Summary of Signific_17
Note 2 - Summary of Significant Accounting Policies: Net Income (Loss) per Share: Schedule of Reconciliation, basic shares outstanding to fully diluted shares outstanding (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Tables/Schedules | |
Schedule of Reconciliation, basic shares outstanding to fully diluted shares outstanding | September 30, 2018 Weighted average number of common shares outstanding - Basic 62,585,619 Potentially dilutive common stock equivalents 5,243,333 Weighted average number of common and equivalent shares outstanding-Diluted 67,828,952 |
NOTE 4 - FAIR VALUE MEASUREME_2
NOTE 4 - FAIR VALUE MEASUREMENTS: Schedule of assets that are measured and recognized at fair value (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Tables/Schedules | |
Schedule of assets that are measured and recognized at fair value | September 30, 2018 Level 1 Level 2 Level 3 Total Carrying Value Marketable securities Medical Marijuana, Inc. $ 3,742,500 - - $ 3,742,500 |
NOTE 5 - ACCRUED PAYROLL AND _2
NOTE 5 - ACCRUED PAYROLL AND PAYROLL TAXES: Schedule of Accrued payroll and payroll taxes (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Tables/Schedules | |
Schedule of Accrued payroll and payroll taxes | 2018 2017 Payroll $ 1,820 $ 2,812,810 Payroll taxes 244,766 239,924 Totals $ 246,586 $ 3,052,734 |
NOTE 12 - STOCKHOLDERS' EQUIT_2
NOTE 12 - STOCKHOLDERS' EQUITY (DEFICIENCY): Schedule of fair value of the options (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Tables/Schedules | |
Schedule of fair value of the options | The fair value of the options is estimated using a Black-Scholes Options Pricing Model with the following assumptions: Market value of common stock on issuance date $ 0.40 Exercise price $ 2.00 Expected volatility 100% Expected term (in years) 5 Risk-free interest rate 1.73% Expected dividend yields - |
NOTE 12 - STOCKHOLDERS' EQUIT_3
NOTE 12 - STOCKHOLDERS' EQUITY (DEFICIENCY): Schedule of outstanding and exercisable warrants (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Tables/Schedules | |
Schedule of outstanding and exercisable warrants | Number of Shares Weighted Average Exercise Price Year of Expiration Balance at December 31, 2016 92,500 1.50 2017 Issued - - - Expired (92,500) 1.50 2017 Balance at December 31, 2017 - - - Issued - - - Expired - - - Balance at September 30, 2018 - - - |
Note 1 - General Organization_4
Note 1 - General Organization and Business (Details) | 9 Months Ended |
Sep. 30, 2018 | |
Details | |
Entity Incorporation, State Country Name | Delaware |
Entity Incorporation, Date of Incorporation | Mar. 25, 2013 |
Entity Information, Former Legal or Registered Name | TYG Solutions Corp |
Note 1 - General Organization_5
Note 1 - General Organization and Business: Schedule of pre-acquisition assets and liabilities (Details) | Sep. 30, 2018USD ($) |
Details | |
Pre-acquisition Assets, Cash and cash equivalents | $ 289,654 |
Pre-acquisition Assets, Note receivable | 142,500 |
Pre-acquisition Assets, Total assets | 432,154 |
Pre-acquisition Liabilities, Accounts payable and accrued expenses | 20,505 |
Pre-acquisition Liabilities, Loan payable - related party - long term | 41,995 |
Pre-acquisition Liabilities, Convertible notes payable - related party | 500,000 |
Pre-acquisition Liabilities, Total liabilities | 562,500 |
Pre-acquisition Liabilities, Total liabilities assumed | $ (130,346) |
Note 1 - General Organization_6
Note 1 - General Organization and Business: Schedule of Consolidated Pro-forma Information showing results of operations (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Details | ||
Pro-forma Information, Total revenues | $ 104,965 | $ 6,154 |
Pro-forma Information, Net income (loss) | $ 2,028,921 | $ (995,719) |
Pro-forma Information, Net income (loss) per common share, basic | $ 0.03 | $ (0.02) |
Pro-forma Information, Net income (loss) per common share, diluted | $ 0.03 | $ (0.02) |
Note 2 - Summary of Signific_18
Note 2 - Summary of Significant Accounting Policies: Net Income (Loss) per Share: Schedule of Reconciliation, basic shares outstanding to fully diluted shares outstanding (Details) - shares | Sep. 30, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 |
Details | |||||
Weighted average common shares outstanding - basic | 62,585,619 | 67,264,467 | 60,324,141 | 62,585,619 | 53,281,932 |
Potentially dilutive common stock equivalents | 5,243,333 | ||||
Weighted average common shares outstanding - diluted | 67,828,952 | 67,264,467 | 60,324,141 | 67,828,952 | 53,281,932 |
NOTE 3 - GOING CONCERN AND MA_2
NOTE 3 - GOING CONCERN AND MANAGEMENT'S LIQUIDITY PLANS (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Details | |||||
LOSS FROM OPERATIONS | $ (378,740) | $ (312,732) | $ (557,948) | $ (924,470) | |
NET CASH USED IN OPERATING ACTIVITIES | (762,947) | $ (239,143) | |||
Accumulated deficit | $ (3,876,145) | $ (3,876,145) | $ (5,988,866) |
NOTE 4 - FAIR VALUE MEASUREME_3
NOTE 4 - FAIR VALUE MEASUREMENTS: Schedule of assets that are measured and recognized at fair value (Details) | Sep. 30, 2018USD ($) |
Fair Value, Inputs, Level 1 | |
Marketable securities - Medical Marijuana, Inc | $ 3,742,500 |
Fair Value, Inputs, Level 2 | |
Marketable securities - Medical Marijuana, Inc | 0 |
Fair Value, Inputs, Level 3 | |
Marketable securities - Medical Marijuana, Inc | 0 |
Marketable securities - Medical Marijuana, Inc | $ 3,742,500 |
NOTE 5 - ACCRUED PAYROLL AND _3
NOTE 5 - ACCRUED PAYROLL AND PAYROLL TAXES: Schedule of Accrued payroll and payroll taxes (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Details | ||
Payroll | $ 1,820 | $ 2,812,810 |
Payroll taxes | 244,766 | 239,924 |
Totals | $ 246,586 | $ 3,052,734 |
NOTE 12 - STOCKHOLDERS' EQUIT_4
NOTE 12 - STOCKHOLDERS' EQUITY (DEFICIENCY): Schedule of fair value of the options (Details) | 9 Months Ended |
Sep. 30, 2018$ / shares | |
Details | |
Fair Value Measurements, Valuation Techniques | Black-Scholes Options Pricing Model |
Market value of common stock on issuance date | $ 0.40 |
Exercise price | $ 2 |
Expected volatility | 1 |
Expected term (in years) | 5 years |
Risk-free interest rate | 0.0173 |
Expected dividend yields | 0 |
NOTE 12 - STOCKHOLDERS' EQUIT_5
NOTE 12 - STOCKHOLDERS' EQUITY (DEFICIENCY): Schedule of outstanding and exercisable warrants (Details) - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Details | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Beginning Balance | 92,500 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Beginning Balance | $ 1.50 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 0 | 0 |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ 0 | $ 0 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Expirations in Period | 0 | (92,500) |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Expirations in Period, Weighted Average Exercise Price | $ 0 | $ 1.50 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Ending Balance | 0 | 92,500 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Ending Balance | $ 0 | $ 1.50 |