| Critical Accounting Policies and Estimates | 2. Critical Accounting Policies and Estimates Management’s Representation of
Interim Financial Statements The accompanying unaudited consolidated financial
statements have been prepared by the Company without audit pursuant to the rules and regulations of the Securities and Exchange
Commission (“SEC”). Certain information and disclosures normally included in financial statements prepared in accordance
with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted as
allowed by such rules and regulations, and management believes that the disclosures are adequate to make the information presented
not misleading. These consolidated financial statements include all of the adjustments, which in the opinion of management are
necessary to a fair presentation of financial position and results of operations. All such adjustments are of a normal and recurring
nature. Interim results are not necessarily indicative of results for a full year. These consolidated financial statements should
be read in conjunction with the audited consolidated financial statements at December 31, 2019 and 2018, as presented in the Company’s
Annual Report on Form 10-K filed on March 30, 2020 with the SEC. Basis of Presentation These accompanying financial statements have
been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”)
and pursuant to the rules and regulations of the Securities and Exchange Commission for financial statements. Use of Estimates The preparation of financial statements in
conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported therein. Due to
the inherent uncertainty involved in making estimates, actual results reported in future periods may be based upon amounts that
differ from these estimates. Reclassifications Certain prior period amounts have been reclassified
to conform to the current period presentation. These reclassifications had no impact on net earnings and financial position. Fair Value Measurements Fair value is defined as the exchange price
that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market
for the asset or liability, in an orderly transaction between market participants on the measurement date. Valuation techniques
used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value
hierarchy is based on three levels of inputs, of which the first two are considered observable and the last unobservable, as follows: Level 1 – Quoted
prices in active markets for identical assets or liabilities. Level 2 – Inputs other than
Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices
in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially
the full term of the assets or liabilities. Level 3 – Unobservable inputs
that are supported by little or no market activity and that are significant to the measurement of the fair value of the assets
or liabilities. The Company’s financial instruments include
cash, accounts receivable, note receivable, accounts payables and tenant deposits. The carrying values of these financial instruments
approximate their fair value due to their short maturities. The carrying amount of the Company’s debt approximates fair value
because the interest rates on these instruments approximate the interest rate on debt with similar terms available to us. The Company’s
derivative liability was adjusted to fair market value at the end of each reporting period, using Level 3 inputs. The following is the Company’s assets
and liabilities measured at fair value on a recurring and nonrecurring basis at June 30, 2020 and December 31, 2019, using quoted
prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable
inputs (Level 3):
June 30, 2020
December 31, 2019
Level 1 – Marketable Securities Available-for-Sale – Recurring 517,514 406,774
Marketable Securities at Fair Value on
a Recurring Basis Certain assets are measured at fair value on
a recurring basis. The Level 1 position consists of an investment in equity securities held in Canada House Wellness Group, Inc.
(CHV), a publicly-traded company whose securities are actively quoted on the Toronto Stock Exchange. At both June 30, 2020 and
December 31, 2019, the Company owned 17,650,540 shares of CHV common stock. The closing share price of CHV’s common stock
on June 30, 2020 was CAD$0.040 per share. Fair Value of Financial Instruments The carrying amounts of cash and current assets
and liabilities approximate fair value because of the short-term maturity of these items. These fair value estimates are subjective
in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes
in assumptions could significantly affect these estimates. Available-for-sale securities are recorded at current market value
as of the date of this report. Accounts Receivable The Company extends unsecured credit to
its customers in the ordinary course of business. Accounts receivable related to licensing and consulting revenues are recorded
at the time the milestone result in the funds being due being achieved, services are delivered, and payment is reasonably assured.
Licensing and consulting revenues are generally collected from 30 to 60 days after the invoice is sent. The following table depicts the composition
of our accounts receivable as of June 30, 2020, and December 31, 2019:
June 30, 2020 December 31, 2019
Accounts receivable – trade $ 1,332,878 $ 384,202
Accounts receivable – related party 124,856 72,658
Accounts receivable – litigation 3,063,968 3,063,968
Allowance for doubtful accounts (41,796 ) (70,885 )
Total accounts receivable $ 4,479,906 $ 3,449,943 The
Company establishes an allowance for doubtful accounts based on management’s assessment of the collectability of trade receivables.
A considerable amount of judgment is required in assessing the amount of the allowance. The Company makes judgments about the
creditworthiness of each customer based on ongoing credit evaluations and monitors current economic trends that might impact the
level of credit losses in the future. If the financial condition of the customers were to deteriorate, resulting in their inability
to make payments, a specific allowance will be required. At June 30, 2020 and December 31, 2019, the Company recorded an allowance
for doubtful accounts of $41,796 and $70,885, respectively. During the six months ended June 30, 2020 and June 30, 2019, the Company
recorded a bad debt expense of $29,089 and $0, respectively. Notes Receivable On July 17, 2018, the Company entered into
an intellectual property license agreement with Abba Medix Corp. (AMC), a wholly owned subsidiary of publicly traded Canada House
Wellness Group, Inc. (CHV). The Company agreed to provide a lending facility to AMC in CAD$125,000 increments of up to CAD$500,000.
The lending facility is for a term of 36 months and bears interest at a rate of 2%. As of June 30, 2020 and December 31, 2019,
the outstanding balance, including accrued interest, on the notes receivable with AMC totaled $292,101 and $241,711, respectively.
The Company classified these loans as noncurrent notes receivable on its consolidated balance sheets as of June 30, 2020 and December
31, 2019, respectively. Other Assets (Current and Non-Current) Other assets at June 30, 2020 and December
31, 2019 were $463,879 and $529,416, respectively. As of June 30, 2020, this balance included $422,000 in prepaid expenses and
$41,879 in security deposits. At December 31, 2019, other assets included $480,881 in prepaid expenses, $21,085 in interest receivable
and $27,450 in security deposits. Prepaid expenses were primarily comprised of insurance premiums, membership dues, conferences
and seminars, and other general and administrative costs. Goodwill and Intangible Assets Goodwill represents the future economic benefit
arising from other assets acquired that could not be individually identified and separately recognized. The goodwill arising from
the Company’s acquisitions is attributable to the value of the potential expanded market opportunity with new customers.
Intangible assets have either an identifiable or indefinite useful life. Intangible assets with identifiable useful lives are amortized
on a straight-line basis over their economic or legal life, whichever is shorter. The Company’s amortizable intangible assets
consist of licensing agreements, product licenses and registrations, and intellectual property or trade secrets. Their estimated
useful lives range from 10 to 15 years. Goodwill and indefinite-lived assets are not
amortized but are subject to annual impairment testing unless circumstances dictate more frequent assessments. The Company performs
an annual impairment assessment for goodwill during the fourth quarter of each year and more frequently whenever events or changes
in circumstances indicate that the fair value of the asset may be less than the carrying amount. Goodwill impairment testing is
a two-step process performed at the reporting unit level. Step one compares the fair value of the reporting unit to its carrying
amount. The fair value of the reporting unit is determined by considering both the income approach and market approaches. The fair
values calculated under the income approach and market approaches are weighted based on circumstances surrounding the reporting
unit. Under the income approach, the Company determines fair value based on estimated future cash flows of the reporting unit,
which are discounted to the present value using discount factors that consider the timing and risk of cash flows. For the discount
rate, the Company relies on the capital asset pricing model approach, which includes an assessment of the risk-free interest rate,
the rate of return from publicly traded stocks, the Company’s risk relative to the overall market, the Company’s size
and industry and other Company-specific risks. Other significant assumptions used in the income approach include the terminal value,
growth rates, future capital expenditures and changes in future working capital requirements. The market approaches use key multiples
from guideline businesses that are comparable and are traded on a public market. If the fair value of the reporting unit is greater
than its carrying amount, there is no impairment. If the reporting unit’s carrying amount exceeds its fair value, then the
second step must be completed to measure the amount of impairment, if any. Step two calculates the implied fair value of goodwill
by deducting the fair value of all tangible and intangible net assets of the reporting unit from the fair value of the reporting
unit as calculated in step one. In this step, the fair value of the reporting unit is allocated to all of the reporting unit’s
assets and liabilities in a hypothetical purchase price allocation as if the reporting unit had been acquired on that date. If
the carrying amount of goodwill exceeds the implied fair value of goodwill, an impairment loss is recognized in an amount equal
to the excess. Determining the fair value of a reporting unit
is judgmental in nature and requires the use of significant estimates and assumptions, including revenue growth rates, strategic
plans, and future market conditions, among others. There can be no assurance that the Company’s estimates and assumptions
made for purposes of the goodwill impairment testing will prove to be accurate predictions of the future. Changes in assumptions
and estimates could cause the Company to perform an impairment test prior to scheduled annual impairment tests. The Company performed its annual fair value
assessment at December 31, 2019, on its subsidiaries with material goodwill and intangible asset amounts on their respective balance
sheets and determined that no impairment exists. No additional factors or circumstances existed at June 30, 2020 that would indicate
impairment. Long-Lived Assets The Company evaluates the recoverability of
its long-lived assets whenever events or changes in circumstances have indicated that an asset may not be recoverable. The long-lived
asset is grouped with other assets at the lowest level for which identifiable cash flows are largely independent of the cash flows
of other groups of assets and liabilities. If the sum of the projected undiscounted cash flows is less than the carrying value
of the assets, the assets are written down to the estimated fair value. The Company evaluated the recoverability of
its long-lived assets on December 31, 2019 on its subsidiaries with material amounts on their respective balance sheets and determined
that no impairment exists. No additional factors or circumstances existed at June 30, 2020 that would indicate impairment. Accounts Payable Accounts payable at June 30, 2020 and December
31, 2019 were $2,808,718 and $699,961, respectively and were comprised of trade payables for various purchases and services rendered
during the ordinary course of business. Accrued Expenses and Other Liabilities Accrued expenses and other liabilities at June
30, 2020 and December 31, 2019 were $1,848,933 and $1,091,204, respectively. At June 30, 2020, this was comprised of customer deposits
of $81,441, accrued payroll of $961,891, and operating expenses of $805,601. At December 31, 2019, accrued expenses and other liabilities
was comprised of customer deposits of $148,109, accrued payroll of $714,220, and operating expenses of $228,875. Revenue Recognition and Related Allowances The Company adopted Accounting Standards Update
(“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606) The Company’s revenue recognition policy
is significant because the amount and timing of revenue is a key component of our results of operations. Certain criteria are required
to be met in order to recognize revenue. If these criteria are not met, then the associated revenue is deferred until the criteria
are met. When consideration is received in advance of the delivery of goods or services, a contract liability is recorded. Revenue
contracts are identified when accepted from customers and represent a single performance obligation to sell the Company’s
products to a customer. The Company has three main revenue streams:
product sales; licensing and consulting fees; and other operating revenues from seminars, reimbursements and other miscellaneous
sources. Product sales are recorded at the time that
control of the products is transferred to customers. In evaluating the timing of the transfer of control of products to customers,
the Company considers several indicators, including significant risks and rewards of products, its right to payment, and the legal
title of the products. Based on the assessment of control indicators, sales are generally recognized when products are delivered
to customers. Revenue from licensing and consulting services
is recognized when the obligations to the client are fulfilled which is determined when milestones in the contract are achieved
and target harvest yields are exceeded. At June 30, 2020, all milestones for contracts were satisfactorily reached and no further
performance obligations were outstanding on contracts through the period. Revenue from seminar fees is related to one-day
seminars and is recognized as earned upon the completion of the seminar. The Company also recognizes expense reimbursement from
clients as revenue for expenses incurred during certain jobs. Costs of Goods and Services Sold Costs of goods and services sold are comprised
of related expenses incurred while supporting the implementation and sales of the Company’s products and services. General and Administrative Expenses General and administrative expense are comprised
of all expenses not linked to the production or advertising of the Company’s services. Advertising and Marketing Costs Advertising and marketing costs are expensed
as incurred and totaled $336,529 and $465,796 for the three and six months ended June 30, 2020, respectively, as compared to $73,088
and $128,489, respectively, for the three and six months ended June 30, 2019. Stock Based Compensation Stock compensation expense for stock options
is recognized over the vesting period of the award or expensed immediately under ASC 718 and Emerging Issues Task Force (“EITF”)
96-18 when stock or options are awarded for previous or current service without further recourse. Share-based expense paid to through direct
stock grants is expensed as occurred. Since the Company’s stock has become publicly traded, the value is determined based
on the number of shares issued and the trading value of the stock on the date of the transaction. On June 20, 2018, the FASB issued ASU 2018-07
which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under the ASU, most of
the guidance on such payments to nonemployees would be aligned with the requirements for share-based payments granted to employees.
Previously, share-based payment arrangements to nonemployees were accounted for under ASC 718, while nonemployee share-based payments
issued for goods and services were accounted for under ASC 505-50. Before the amendment, the major difference for the Company (but
not limited to) was the determination of measurement date, which generally is the date on which the measurement of equity classified
share-based payments becomes fixed. Equity classified share-based payments for employees was fixed at the time of grant. Equity-classified
nonemployee share-based payment awards are no longer measured at the earlier of the date which a commitment for performance by
the counterparty is reached or the date at which the counterparty’s performance is complete. They are now measured at the
grant date of the award, which is the same as share-based payments for employees. The Company adopted the requirements of the new
rule as of January 1, 2019, the effective date of the new guidance. The Company recognized $3,109,091 and
$4,361,822 in expense for stock-based compensation from common stock options issued to employees during the three and six months
ended June 30, 2020, and $2,225,406 and 2,980,406 in expenses for stock-based compensation from the issuance of common stock to
employees, officers, directors and/or contractors during the three and six months ended June 30, 2019. Income Taxes ASC 740, Income Taxes requires the use of
the asset and liability method of accounting for income taxes. Under the asset and liability method of ASC 740, deferred tax assets
and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to
be recovered or settled. Right of Use Assets and Lease Liabilities In February 2016, the FASB issued ASU No. 2016-02,
Leases (Topic 842) Under ASC 842, the Company determines if an
arrangement is a lease at inception. ROU assets and liabilities are recognized at commencement date based on the present value
of remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable
at the time of commencement. As most of the Company's leases do not provide an implicit rate, the Company estimated the incremental
borrowing rate in determining the present value of lease payments. The ROU asset also includes any lease payments made prior to
commencement and is recorded net of any lease incentives received. The Company’s lease terms may include options to extend
or terminate the lease when it is reasonably certain that the Company will exercise such options. Operating leases are included in operating
lease Right-of-Use assets and operating lease liabilities, current and non-current, on the Company's consolidated balance sheets. Basic and Diluted Net Income (Loss) Per
Share The Company computes net income (loss) per
share in accordance with ASC 260, “Earnings per Share” |
