Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2021 | Aug. 16, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2021 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2021 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 000-55450 | |
Entity Registrant Name | MEDICINE MAN TECHNOLOGIES, INC. | |
Entity Central Index Key | 0001622879 | |
Entity Tax Identification Number | 46-5289499 | |
Entity Incorporation, State or Country Code | NV | |
Entity Address, Address Line One | 4880 Havana Street | |
Entity Address, Address Line Two | Suite 201 | |
Entity Address, City or Town | Denver | |
Entity Address, State or Province | CO | |
Entity Address, Postal Zip Code | 80239 | |
City Area Code | 303 | |
Local Phone Number | 371-0387 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Elected Not To Use the Extended Transition Period | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 45,139,297 |
CONDENSED BALANCE SHEETS (Unaud
CONDENSED BALANCE SHEETS (Unaudited) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Current assets | ||
Cash and cash equivalents | $ 21,130,769 | $ 1,231,235 |
Accounts receivable, net of allowance for doubtful accounts | 3,204,941 | 1,270,380 |
Accounts receivable – related party | 0 | 80,494 |
Inventory | 9,182,942 | 2,619,145 |
Note receivable – current, net | 144,223 | 0 |
Notes receivable – related party | 0 | 181,911 |
Prepaid expenses | 1,865,138 | 614,200 |
Total current assets | 35,528,013 | 5,997,365 |
Non-current assets | ||
Fixed assets, net accumulated depreciation of $1,291,349 and $872,579, respectively | 3,476,546 | 2,584,798 |
Goodwill | 41,505,944 | 53,046,729 |
Intangible assets, net accumulated amortization of $4,553,827 and $200,456, respectively | 94,861,253 | 3,082,044 |
Marketable securities, net of unrealized gain (loss) of $221,257 and $(129,992), respectively | 498,039 | 276,782 |
Note receivable – noncurrent, net | 71,667 | 0 |
Accounts receivable – litigation | 3,063,968 | 3,063,968 |
Other noncurrent assets | 419,472 | 51,879 |
Operating lease right of use assets | 3,934,370 | 2,579,036 |
Total non-current assets | 147,831,259 | 64,685,236 |
Total assets | 183,359,272 | 70,682,601 |
Current liabilities | ||
Accounts payable | 2,335,217 | 3,508,478 |
Accounts payable – related party | 40,323 | 48,982 |
Accrued expenses | 10,279,124 | 2,705,445 |
Derivative liabilities | 436,554 | 1,047,481 |
Deferred revenue | 0 | 50,000 |
Notes payable – related party | 0 | 5,000,000 |
Total current liabilities | 13,091,218 | 12,360,386 |
Long-term liabilities | ||
Long term debt | 54,250,000 | 13,901,759 |
Lease liabilities | 4,078,375 | 2,645,597 |
Total long-term liabilities | 58,328,375 | 16,547,356 |
Total liabilities | 71,419,593 | 28,907,742 |
Shareholders’ equity | ||
Common stock $0.001 par value. 250,000,000 authorized, 42,925,303 shares issued and 42,408,259 outstanding as of June 30, 2021 and 42,601,773 shares issued and 42,169,041 outstanding as of December 31, 2020, respectively. | 42,925 | 42,602 |
Preferred stock $0.001 par value. 10,000,000 authorized. 87,266 shares issued and outstanding as of June 30, 2021 and 19,716 shares issued and outstanding as of December 31, 2020, respectively. | 87 | 20 |
Additional paid-in capital | 158,787,183 | 85,357,835 |
Accumulated deficit | (45,373,480) | (42,293,098) |
Common stock held in treasury, at cost, 517,044 shares held as of June 30, 2021 and 432,732 shares held as of December 31, 2020. | (1,517,036) | (1,332,500) |
Total shareholders' equity | 111,939,679 | 41,774,859 |
Total liabilities and stockholders’ equity | $ 183,359,272 | $ 70,682,601 |
CONDENSED BALANCE SHEETS (Una_2
CONDENSED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
Statement of Financial Position [Abstract] | ||
Accumulated depreciation | $ 1,291,349 | $ 872,579 |
Accumulated amortization | 4,553,827 | 200,456 |
Marketable Securities, Unrealized Gain (Loss) | $ 221,257 | $ (129,992) |
Common stock par value | $ 0.001 | $ 0.001 |
Common stock authorized | 250,000,000 | 250,000,000 |
Common stock issued | 42,925,303 | 42,601,773 |
Common stock outstanding | 42,408,259 | 42,169,041 |
Preferred stock par value | $ 0.001 | $ 0.001 |
Preferred stock authorized | 10,000,000 | 10,000,000 |
Preferred stock issued | 87,266 | 19,716 |
Preferred stock outstanding | 87,266 | 19,716 |
Treasury Stock, Common, Shares | 517,044 | 432,732 |
CONDENSED STATEMENT OF COMPREHE
CONDENSED STATEMENT OF COMPREHENSIVE (LOSS) AND INCOME (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Operating revenues | ||||
Total revenue | $ 30,728,841 | $ 5,424,329 | $ 50,068,955 | $ 8,627,463 |
Cost of goods and services | ||||
Cost of goods and services | 15,826,341 | 3,106,686 | 27,913,451 | 5,255,221 |
Total cost of goods and services | 15,826,341 | 3,106,686 | 27,913,451 | 5,255,221 |
Gross profit | 14,902,500 | 2,317,643 | 22,155,504 | 3,372,242 |
Operating Expenses | ||||
Selling, general and administrative expenses | 4,797,495 | 1,088,479 | 7,987,134 | 1,755,398 |
Professional services | 1,519,016 | 2,371,743 | 3,714,124 | 3,620,731 |
Salaries | 2,992,055 | 2,098,291 | 4,861,413 | 4,095,327 |
Stock based compensation | 1,153,018 | 3,109,091 | 2,636,824 | 4,361,822 |
Total operating expenses | 10,461,584 | 8,667,604 | 19,199,494 | 13,833,278 |
Income (loss) from operations | 4,440,916 | (6,349,961) | 2,956,010 | (10,461,036) |
Other income (expense) | ||||
Interest income (expense), net | (1,713,770) | (11,447) | (2,675,053) | 36,595 |
Gain on forfeiture of contingent consideration | 0 | 0 | 0 | 1,462,636 |
Unrealized gain (loss) on derivative liabilities | 1,864,741 | (348,535) | 610,927 | 843,428 |
Other income (expense) | 0 | 32,621 | 0 | 32,621 |
Gain (loss) on sale of assets | 0 | 0 | 292,479 | 0 |
Unrealized gain (loss) on investments | 6,627 | 81,615 | 221,257 | 110,739 |
Total other income (expense) | 157,598 | (245,746) | (1,550,390) | 2,486,019 |
Provision for income tax (benefit) expense | 228,474 | 0 | 685,088 | 0 |
Net income (loss) | $ 4,370,040 | $ (6,595,707) | $ 720,532 | $ (7,975,017) |
Earnings (loss) per share attributable to common shareholders: | ||||
Basic earnings (loss) per share | $ 0.10 | $ (0.16) | $ 0.02 | $ (0.20) |
Diluted earnings (loss) per share | $ 0.08 | $ (0.16) | $ 0.01 | $ (0.20) |
Weighted average number of shares outstanding - basic | 42,332,144 | 41,568,147 | 42,286,168 | 40,742,462 |
Weighted average number of shares outstanding - diluted | 53,975,521 | 41,568,147 | 53,886,727 | 40,742,462 |
Comprehensive income (loss) | $ 4,370,040 | $ (6,595,707) | $ 720,532 | $ (7,975,017) |
Retail [Member] | ||||
Operating revenues | ||||
Total revenue | 21,525,816 | 732,457 | 33,342,016 | 732,457 |
Wholesale [Member] | ||||
Operating revenues | ||||
Total revenue | 9,186,181 | 4,106,197 | 16,632,445 | 6,635,128 |
Other [Member] | ||||
Operating revenues | ||||
Total revenue | $ 16,844 | $ 585,675 | $ 94,494 | $ 1,259,878 |
STATEMENT OF CHANGES IN STOCKHO
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) - USD ($) | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Treasury Stock [Member] | Total |
Beginning balance, value at Dec. 31, 2019 | $ 39,953 | $ 50,356,469 | $ (22,816,477) | $ (1,000,000) | $ 26,579,945 | |
Beginning balance, shares at Dec. 31, 2019 | 39,952,628 | 257,732 | ||||
Net income (loss) | (7,975,017) | (7,975,017) | ||||
Issuance of common stock as payment for Mesa | $ 2,555 | 4,167,253 | 4,169,808 | |||
Issuance of common stock as payment for Mesa, shares | 2,554,750 | |||||
Return of common stock as compensation to employees, officers and/or directors | $ (500) | (500) | ||||
Return of common stock as compensation to employees, officers and/or directors, shares | (500,000) | |||||
Issuance of stock in connection with sales made under private or public offerings | $ 187 | 374,813 | 375,000 | |||
Issuance of common stock in connection with sales made under private or public offerings, shares | 187,500 | |||||
Stock based compensation expense related to common stock options | 4,361,822 | 4,361,822 | ||||
Ending balance, value at Jun. 30, 2020 | $ 42,195 | 59,260,357 | (30,791,494) | $ (1,000,000) | 27,511,058 | |
Ending balance, shares at Jun. 30, 2020 | 42,194,878 | 257,732 | ||||
Beginning balance, value at Dec. 31, 2019 | $ 39,953 | 50,356,469 | (22,816,477) | $ (1,000,000) | 26,579,945 | |
Beginning balance, shares at Dec. 31, 2019 | 39,952,628 | 257,732 | ||||
Ending balance, value at Dec. 31, 2020 | $ 20 | $ 42,602 | 85,357,835 | (42,293,098) | $ (1,332,500) | 41,774,859 |
Ending balance, shares at Dec. 31, 2020 | 19,716 | 42,601,773 | 432,732 | |||
Beginning balance, value at Mar. 31, 2020 | $ 39,953 | 51,609,200 | (24,195,787) | $ (1,000,000) | 26,453,366 | |
Beginning balance, shares at Mar. 31, 2020 | 39,952,628 | 257,732 | ||||
Net income (loss) | (6,595,707) | (6,595,707) | ||||
Issuance of common stock as payment for Mesa | $ 2,555 | 4,167,253 | 4,169,808 | |||
Issuance of common stock as payment for Mesa, shares | 2,554,750 | |||||
Return of common stock as compensation to employees, officers and/or directors | $ (500) | (500) | ||||
Return of common stock as compensation to employees, officers and/or directors, shares | (500,000) | |||||
Issuance of stock in connection with sales made under private or public offerings | $ 187 | 374,813 | 375,000 | |||
Issuance of common stock in connection with sales made under private or public offerings, shares | 187,500 | |||||
Stock based compensation expense related to common stock options | 3,109,091 | 3,109,091 | ||||
Ending balance, value at Jun. 30, 2020 | $ 42,195 | 59,260,357 | (30,791,494) | $ (1,000,000) | 27,511,058 | |
Ending balance, shares at Jun. 30, 2020 | 42,194,878 | 257,732 | ||||
Beginning balance, value at Dec. 31, 2020 | $ 20 | $ 42,602 | 85,357,835 | (42,293,098) | $ (1,332,500) | 41,774,859 |
Beginning balance, shares at Dec. 31, 2020 | 19,716 | 42,601,773 | 432,732 | |||
Net income (loss) | 720,532 | 720,532 | ||||
Issuance of stock as payment for acquisitions | $ 20 | 20,239,980 | 20,240,000 | |||
Issuance of stock as payment for acquisitions, shares | 20,240 | |||||
Issuance of common stock as compensation to employees, officers, and/or directors | $ 323 | 680,538 | 680,861 | |||
Issuance of common stock as compensation to employees, officers, and/or directors, shares | 323,530 | |||||
Issuance of stock in connection with sales made under private or public offerings | $ 47 | 50,449,159 | 50,449,206 | |||
Issuance of common stock in connection with sales made under private or public offerings, shares | 47,310 | |||||
Dividends declared | (3,800,914) | (3,800,914) | ||||
Return of common stock | $ (184,536) | (184,536) | ||||
Return of common stock, shares | 84,312 | |||||
Stock based compensation expense related to common stock options | 2,059,671 | 2,059,671 | ||||
Ending balance, value at Jun. 30, 2021 | $ 87 | $ 42,925 | 158,787,183 | (45,373,480) | $ (1,517,036) | 111,939,679 |
Ending balance, shares at Jun. 30, 2021 | 87,266 | 42,925,303 | 517,044 | |||
Beginning balance, value at Mar. 31, 2021 | $ 87 | $ 42,820 | 157,530,563 | (46,823,076) | $ (1,445,696) | 109,304,698 |
Beginning balance, shares at Mar. 31, 2021 | 87,266 | 42,819,815 | 488,220 | |||
Net income (loss) | 4,370,040 | 4,370,040 | ||||
Issuance of stock as payment for acquisitions | ||||||
Issuance of common stock as compensation to employees, officers, and/or directors | $ 105 | 235,950 | 236,056 | |||
Issuance of common stock as compensation to employees, officers, and/or directors, shares | 105,488 | |||||
Issuance of stock in connection with sales made under private or public offerings | ||||||
Dividends declared | (2,920,446) | (2,920,446) | ||||
Return of common stock | $ (71,340) | (71,340) | ||||
Return of common stock, shares | 28,824 | |||||
Stock based compensation expense related to common stock options | 1,020,671 | 1,020,671 | ||||
Ending balance, value at Jun. 30, 2021 | $ 87 | $ 42,925 | $ 158,787,183 | $ (45,373,480) | $ (1,517,036) | $ 111,939,679 |
Ending balance, shares at Jun. 30, 2021 | 87,266 | 42,925,303 | 517,044 |
STATEMENT OF CASH FLOWS (Unaudi
STATEMENT OF CASH FLOWS (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Cash flows from operating activities | ||
Net income (loss) for the period | $ 720,532 | $ (7,975,017) |
Adjustments to reconcile net income to net cash provided by operating activities | ||
Depreciation and amortization | 4,807,147 | 94,269 |
Gain on forfeiture of contingent consideration | 0 | 0 |
(Gain) loss on change in derivative liabilities | (610,927) | (2,306,064) |
(Gain) loss on investment, net | (221,257) | (110,739) |
(Gain) loss on sale of asset | (292,479) | 0 |
Stock based compensation | 2,636,824 | 4,361,822 |
Changes in operating assets and liabilities | ||
Accounts receivable | (1,854,067) | 780,772 |
Inventory | (3,368,807) | 445,345 |
Prepaid expenses and other current assets | (1,250,938) | 107,417 |
Other assets | (367,593) | (41,879) |
Operating lease right of use assets and liabilities | 77,444 | 16,773 |
Accounts payable and other liabilities | 1,169,537 | 575,153 |
Deferred Revenue | (50,000) | 0 |
Income taxes payables | 0 | (1,940) |
Net cash provided by (used in) operating activities | 1,395,416 | (4,054,088) |
Cash flows from investing activities | ||
Purchase of fixed assets - net | (1,203,180) | (593,785) |
Cash consideration for acquisition of business | (66,082,072) | (2,609,500) |
Collection (issuance) of notes receivable | 181,911 | (50,390) |
Purchase of intangible assets | (29,580) | 0 |
Net cash (used in) investing activities | (67,132,921) | (3,253,675) |
Cash flows from financing activities | ||
Proceeds from issuance of debt, net | 40,348,241 | 374,500 |
Repayment of notes payable | (5,000,000) | 0 |
Proceeds from issuance of stock, net of issuance costs | 50,282,798 | 0 |
Net cash provided by financing activities | 85,631,039 | 374,500 |
Net (decrease) increase in cash and cash equivalents | 19,893,534 | (6,933,263) |
Cash and cash equivalents at beginning of period | 1,237,235 | 12,351,580 |
Cash and cash equivalents at end of period | 21,130,769 | 5,418,317 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | $ 2,131,495 | $ 0 |
Organization and Nature of Oper
Organization and Nature of Operations | 6 Months Ended |
Jun. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Nature of Operations | Organization and Nature of Operations Medicine Man Technologies, Inc. (“we,” “us,” “our” or the “Company”) was incorporated in Nevada on March 20, 2014. On May 1, 2014, we entered into a non-exclusive Technology License Agreement with Futurevision, Inc., f/k/a Medicine Man Production Corp., dba Medicine Man Denver (“Medicine Man Denver”) pursuant to which Medicine Man Denver granted us a license to use all of the proprietary processes that they had developed, implemented and practiced at their cannabis facilities relating to the commercial growth, cultivation, marketing and distribution of medical and recreational marijuana pursuant to relevant state laws and the right to use and to license such information, including trade secrets, skills and experience (present and future) (the “License Agreement”) for 10 years. In 2017, the Company acquired additional cultivation intellectual property through the acquisition of Success Nutrients™ and Pono Publications, including the rights to the book titled “Three A Light” and its associated cultivation techniques, which have been part of the Company’s products and services offerings since the acquisition. The Company acquired Two J’s LLC d/b/a The Big Tomato (“The Big Tomato”) in 2018, which operates a retail location in Aurora, Colorado. It has been a leading supplier of hydroponics and indoor gardening supplies in the metro Denver area since May 2001. The Company was focused on cannabis dispensary and cultivation consulting and providing equipment and nutrients to cannabis cultivators until its first plant touching acquisition in April of 2020. In 2019, due to the changes in Colorado law permitting non-Colorado resident and publicly traded investment into “plant-touching” cannabis companies, the Company made a strategic decision to move toward direct plant-touching operations. The Company developed a plan to roll up a number of direct plant-touching dispensaries, manufacturing facilities, and cannabis cultivations with a target to be one of the largest seed to sale cannabis businesses in Colorado. In April 2020, the Company acquired its first plant-touching business, Mesa Organics Ltd. (“Mesa Organics”), which consists of four dispensaries and one manufacturing infused products facility (“MIP”), d/b/a Purplebee’s. On April 20, 2020, the Company rebranded and conducts its business under the trade name, Schwazze. The corporate name of the Company continues to be Medicine Man Technologies, Inc. Effective April 21, 2020, the Company commenced trading under the OTC ticker symbol SHWZ. On December 17, 2020, the Company acquired the assets of (i) Starbuds Pueblo LLC; and (ii) Starbuds Alameda LLC under the applicable Asset Purchase Agreements (“APAs”). On December 18, 2020, the Company acquired the assets of (i) Starbuds Commerce City LLC; (ii) Lucky Ticket LLC; (iii) Starbuds Niwot LLC; and (iv) LM MJC LLC under the applicable APAs. On February 4, 2021, the Company acquired the assets of Colorado Health Consultants LLC and Mountain View 44th LLC under the applicable APAs. On March 2, 2021, the Company acquired the assets of (i) Starbuds Aurora LLC, (ii) SB Arapahoe LLC; (iii) Citi-Med LLC; (iv) Starbuds Louisville LLC; and (v) KEW LLC under the applicable APAs. From December 2020 through March 2021 the Company completed a private placement of Series A Cumulative Convertible Preferred Stock (“Series A Preferred Stock”) for aggregate gross proceeds of $ 57.7 57,700 1,000 8 In addition, on December 16, 2020, the Company issued and sold a Convertible Promissory Note and Security Agreement in the original principal amount of $ 5,000,000 5,060 The Company is focused on growing through internal growth, acquisition, and new licenses in the Colorado cannabis market. The Company is focused on building the premier vertically integrated cannabis company in Colorado. The company's leadership team has deep expertise in mainstream consumer packaged goods, retail, and product development at Fortune 500 companies as well as in the cannabis sector. The Company has a high-performance culture and a focus on analytical decision making, supported by data. Customer-centric thinking inspires the Company’s strategy and provides the foundation for the Company’s operational playbooks. The Company’s operations are organized into three different segments as follows: (i) retail, consisting of retail locations for sale of cannabis products, (ii) wholesale, consisting of manufacturing and sale of wholesale cannabis products, nutrients for cannabis, and hydroponics and indoor gardening supplies, and (iii) other, consisting of all other income and expenses, including those related to licensing and consulting services, facility design services, facility management services, and corporate operations. |
Liquidity and Capital Resources
Liquidity and Capital Resources | 6 Months Ended |
Jun. 30, 2021 | |
Liquidity And Capital Resources | |
Liquidity and Capital Resources | 1. Liquidity and Capital Resources During the quarters ended June 30, 2021 and 2020, the Company primarily used revenues from its operations to fund its operations. Cash and cash equivalents are carried at cost and represent cash on hand, deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date. The Company had $ 21,130,769 1,231,235 The Company maintains its cash balances with a high-credit-quality financial institution. At times, such cash may be more than the insured limit of $250,000. The Company has not experienced any losses in such accounts, and management believes the Company is not exposed to any significant credit risk on its cash and cash equivalents. |
Critical Accounting Policies an
Critical Accounting Policies and Estimates | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Critical Accounting Policies and Estimates | 2. Critical Accounting Policies and Estimates Management’s Representation of Interim Financial Statements Basis of Presentation 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, notes receivable, accounts payable 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, 2021 and December 31, 2020, using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3): Schedule of fair value measurement June 30, 2021 December 31, 2020 Level 1 – Marketable Securities Available-for-Sale – Recurring 498,039 276,782 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., a publicly-traded company whose securities are actively quoted on the Toronto Stock Exchange. 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. These accounts receivable relates to the Company’s wholesale and other revenue segments. Accounts receivable are recorded when a milestone is reached at a point in time resulting in funds being due for delivered goods or services, and where payment is reasonably assured. Wholesale revenues are generally collected within 14 to 30 days after invoice is sent. 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, 2021, and December 31, 2020: Schedule of Accounts Receivable June 30, 2021 December 31, 2020 Accounts receivable – trade $ 3,377,879 $ 1,315,188 Accounts receivable – related party – 80,494 Accounts receivable – litigation, non-current 3,063,968 3,063,968 Allowance for doubtful accounts (172,938 ) (44,808 ) Total accounts receivable $ 6,268,909 $ 4,414,842 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. 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.. 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 60 months and bears interest at a rate of 2%. On April 30, 2019, the terms of the loan were amended to reduce the term from 60 months to 36 months. As of June 30, 2021 and December 31, 2020, the outstanding balance, including accrued interest, on the notes receivable with AMC totaled $ 246,765 246,765 On March 12, 2021, the Company sold equipment to Colorado Cannabis. The terms of sale included a zero interest note receivable, payable $11,944 on the first of each month for 24 months. As of June 30, 2021, the outstanding balance, including penalties for late payments, on the notes receivable with Colorado Cannabis totaled $ 215,890 Other Assets (Current and Non-Current) Other assets as of June 30, 2021 and December 31, 2020 were $ 2,284,610 666,079 1,865,138 419,472 345,777 268,423 51,879 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 15 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 as of December 31, 2020, 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 as of June 30, 2021 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, 2020 on its subsidiaries with material amounts on their respective balance sheets and determined that no impairment exists. Accounts Payable Accounts payable as of June 30, 2021 and December 31, 2020 were $ 2,375,540 3,557,461 Accrued Expenses and Other Liabilities Accrued expenses and other liabilities as of June 30, 2021 and December 31, 2020 were $ 10,279,124 2,705,445 17,169 741,299 5,719,742 3,800,914 26,826 1,154,887 1,523,732 Revenue Recognition and Related Allowances 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 is 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: retail; wholesale; and other. Retail and wholesale 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. Other revenue consists of other income and expenses, including related to, licensing and consulting services, facility design services, facility management services, the Company’s Three A Light™ publication, and corporate operations. Revenue 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 or 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 $ 196,908 308,593 336,529 465,796 Stock Based Compensation The Company accounts for share-based payments pursuant to ASC 718, Stock 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 through direct stock grants is expensed as occurred. Since the Company’s common stock is publicly traded, the value is determined based on the number of shares of common stock issued and the trading value of the common stock on the date of the transaction. On June 20, 2018, the Financial Accounting Standards Board (“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 $ 1,153,018 2,636,824 4,361,822 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 are regularly assessed to determine the likelihood they will be recovered from future taxable income. A valuation allowance is established when we believe it is more likely than not the future realization of all or some of a deferred tax asset will not be achieved. In evaluating our ability to recover deferred tax assets within the jurisdiction which they arise, we consider all available positive and negative evidence. Factors reviewed include the cumulative pre-tax book income for the past three years, scheduled reversals of deferred tax liabilities, our history of earnings and reliability of our forecasts, projections of pre-tax book income over the foreseeable future, and the impact of any feasible and prudent tax planning strategies. The Company assesses all material positions taken in any income tax return, including all significant uncertain positions, in all tax years that are still subject to assessment or challenge by relevant taxing authorities. Assessing an uncertain tax position begins with the initial determination of the position’s sustainability, and the tax benefit to be recognized is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. We recognize the impact of a tax position in our financial statements only if that position is more likely than not of being sustained upon examination by taxing authorities, based on the technical merits of the position. Tax authorities regularly examine our returns in the jurisdictions in which we do business and we regularly assess the tax risk of our return filing positions. Due to the complexity of some of the uncertainties, the ultimate resolution may result in payments that are materially different from our current estimate of the tax liability. These differences, as well as any interest and penalties, will be reflected in the provision for income taxes in the period in which they are determined. As the Company operates in the cannabis industry, it is subject to the limits of the Internal Revenue Code (IRC) Section 280E under which the Company is only allowed to deduct expenses directly related to sales of product. This results in permanent differences between ordinary and necessary business expenses deemed non-allowable under IRC Section 280E. 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 ROU assets and operating lease liabilities, current and non-current, on the Company's consolidated balance sheets. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
Recent Accounting Pronouncements | 3. Recent Accounting Pronouncements The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new pronouncements that have been issued that might have a material impact on its financial position or results of operations except as noted below: In January 2017, the FASB issued ASU 2017-01, Clarifying the Definition of a Business (Topic 805) In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) In February 2020, the FASB issued ASU 2020-02, Financial Instruments-Credit Losses (Topic 326) and Leases (Topic 842) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842), |
Property and Equipment
Property and Equipment | 6 Months Ended |
Jun. 30, 2021 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | 4. Property and Equipment Property and equipment are recorded at cost, net of accumulated depreciation and are comprised of the following: Property and equipment table June 30, December 31, Furniture and fixtures $ 294,204 $ 228,451 Leasehold improvements 656,314 90,314 Machinery and tools 1,502,417 1,456,752 Office equipment 238,837 104,059 Software 1,308,387 1,308,387 Work in process 767,736 269,414 $ 4,767,895 $ 3,457,377 Less: Accumulated depreciation (1,291,349 ) (872,579 ) Total property and equipment, net of depreciation $ 3,476,546 $ 2,584,798 Depreciation on equipment is provided on a straight-line basis over its expected useful lives at the following annual rates. Schedule of property and equipment useful lives Furniture and fixtures 3 Leasehold improvements Lesser of the lease term or estimated useful life Machinery and tools 3 Office equipment 3 Software 3 5 Depreciation expense for the three and six months ended June 30, 2021 was $ 260,843 455,480 |
Intangible Asset
Intangible Asset | 6 Months Ended |
Jun. 30, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Asset | 5. Intangible Asset Intangible assets as of June 30, 2021 and December 31, 2020 were comprised of the following: Intangible assets June 30, December 31, License agreements $ 88,775,280 $ 1,667,000 Tradenames 4,270,000 350,000 Customer relationships 5,150,000 1,055,000 Non-compete 1,130,000 120,000 Product license and registration 57,300 57,300 Trade secret – intellectual property 32,500 32,500 99,415,080 3,282,500 Less: accumulated amortization (4,553,827 ) (200,456 ) Total intangible assets, net of amortization $ 94,861,253 $ 3,082,044 Amortization expense for the three and six months ended June 30, 2021 was $ 2,755,736 4,351,667 |
Derivative Liability
Derivative Liability | 6 Months Ended |
Jun. 30, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Liability | 6. Derivative Liability In 2019, the Company entered into certain employment agreements with key officers that contained contingent consideration provisions based upon the achievement of certain market condition milestones. The Company determined that each of these vesting conditions represented derivative instruments. On January 8, 2019, the Company granted the right to receive 500,000 On April 23, 2019, the Company granted the right to receive 1,000,000 1,462,636 On June 11, 2019, the Company granted the right to receive 1,000,000 The Company accounts for derivative instruments in accordance with the US GAAP accounting guidance under ASC 815, Derivatives and Hedging Activities As of June 30, 2021, the fair value of these derivative liabilities is $ 436,554 1,864,741 610,927 |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2021 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 7. Related Party Transactions Transactions Involving Former Directors, Executive Officers or Their Affiliated Entities During the year ended December 31, 2020, the Company recorded sales to Medicine Man Denver, totaling $ 997,262 72,109 During the year ended December 31, 2020, the Company recorded sales to MedPharm Holdings LLC (“MedPharm”) totaling $ 73,557 5,885 Also, during the year ended December 31, 2019, the Company issued various notes receivable to MedPharm totaling $ 767,695 767,695 47,161 100,000 175,000 181,911 0 During the year ended December 31, 2020, the Company recorded sales to Baseball 18, LLC (“Baseball”) totaling $ 14,605 16,125 16,605 52,244 31,250 93,944 Transactions with Entities Affiliated with Justin Dye The Company has participated in several transaction involving Dye Capital, Dye Capital Cann Holdings, LLC (“Dye Cann I”) and Dye Cann II. Justin Dye, the Company’s Chief Executive Officer, one of its directors, and the largest beneficial owner of the Company’s common stock and Series A Preferred Stock, controls Dye Capital and Dye Capital controls Dye Cann I and Dye Cann II. Dye Cann I is the largest holder of the Company’s outstanding common stock. Dye Cann II is a significant holder of the Series A Preferred Stock. Mr. Dye has sole voting and dispositive power over the securities held by Dye Capital, Dye Cann I, and Dye Cann II. The Company entered into a Securities Purchase Agreement with Dye Cann I on June 5, 2019, (as amended, the “Dye Cann I SPA”) pursuant to which the Company agreed to sell to Dye Cann I up to between 8,187,500 and 10,687,500 shares of the Company’s common stock in several tranches at $2.00 per share and warrants to purchase 100% of the number of shares of common stock sold at a purchase price of $3.50 per share. At the initial closing on June 5, 2019, the Company sold to Dye Cann I 1,500,000 1,500,000 3,000,000 9,287,500 9,287,500 18,575,000 The Company granted Dye Cann I certain demand and piggyback registration rights with respect to the shares of common stock sold under the Dye Cann I SPA and issuable upon exercise of the warrants sold under the Dye Cann I SPA. The Company also granted Dye Cann I the right to designate one or more individuals for election or appointment to the Company’s board of directors (the “Board”) and Board observer rights. Further, under the Dye Cann I SPA, until June 5, 2022, if the Company desires to pursue debt or equity financing, the Company must first give Dye Cann I an opportunity to provide a proposal to the Company with the terms upon which Dye Cann I would be willing to provide or secure such financing. If the Company does not accept Dye Cann I’s proposal, the Company may pursue such debt or equity financing from other sources but Dye Cann I has a right to participate in such financing to the extent required to enable Dye Cann I to maintain the percentage of the Company’s common stock (on a fully-diluted basis) that it then owns, in the case of equity securities, or, in the case of debt, a pro rata portion of such debt based on the percentage of the Company’s common stock (on a fully-diluted basis) that it then owns. The Company entered into a Securities Purchase Agreement (as amended, the “Dye Cann II SPA”) with Dye Cann II on November 16, 2020 pursuant to which the Company agreed to sell to Dye Cann II shares of Series A Preferred Stock in one or more tranches at a price of $1,000 per share. The terms of the Dye Cann II SPA are disclosed in the Company’s Current Report on Form 8-K filed on December 23, 2020. The Company and Dye Cann II entered into an amendment to the Dye Cann II SPA on December 16, 2020, as described in the Company’s Current Report on Form 8-K filed on December 23, 2020, a second amendment to the Dye Cann II SPA on February 3, 2021, as described in the Company’s Form 8-K filed on February 9, 2021, and a third amendment to the Dye Cann II SPA on March 30, 2021, as described under Item 9B of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. The Company issued and sold to Dye Cann II 7,700 1,450 1,300 3,100 3,800 4,000 21,350 21,350,000 The Company granted Dye Cann II certain demand and piggyback registration rights with respect to the shares of common stock issuable upon conversion of the Series A Preferred Stock under the Dye Cann II SPA. Further, the Company granted Dye Can II the right to designate one or more individuals for election or appointment to the Board and Board observer rights. On December 16, 2020, the Company entered into a Secured Convertible Note Purchase Agreement with Dye Capital and issued and sold to Dye Capital a Convertible Note and Security Agreement in the principal amount of $ 5,000,000 5,000,000 60,250 5,060 230 The Company previously reported the terms of the Series A Preferred Stock in the Company’s Current Report on Form 8-K filed on December 23, 2020 and under Item 1 of this Report, which disclosure is incorporated herein by reference. During the year ended December 31, 2020, the Company recorded expenses of $ 66,264 193,120 Transactions with CRW and Affiliated Entities On February 26, 2021, the Company entered into a Securities Purchase Agreement (the “CRW SPA”) with CRW pursuant to which the Company issued and sold 25,350 25,350,000 Transactions with Entities Affiliated with Brian Ruden The Company has participated in several transactions involving entities owned or affiliated with Brian Ruden, one of its directors and a beneficial owner of more than 5% of the Company’s common stock and a beneficial owner of more than 5% of the Series A Preferred Stock. Between December 17, 2020 and March 2, 2021, the Company’s wholly-owned subsidiary SBUD, LLC acquired the Star Buds assets. The Company previously reported the terms of the applicable purchase agreements and related amendments in the Company’s Current Reports on Form 8-K filed June 8, 2020, September 21, 2020, December 22, 2020, and March 8, 2021. The aggregate purchase price for the Star Buds assets was $ 118,000,000 44,250,000 44,250,000 29,500 5,531,250 44,250,000 1,752,662 13,727,490 13,727,490 9,152 1,715,936 544,889 Mr. Ruden was a part-owner of each of the Star Buds companies that sold assets to SBUD, LLC. Mr. Ruden owned 50% of Colorado Health Consultants LLC, 50% of Starbuds Aurora LLC, 50% of Starbuds Pueblo LLC, 50% of Starbuds Alameda LLC, 48% of SB Arapahoe LLC, 36% of Starbuds Commerce City LLC, 30% of Starbuds Louisville LLC, 25% of Starbuds Niwot LLC, 16.66% of Lucky Ticket LLC, 15% of KEW LLC, and 10% of LM MJC LLC. In connection with acquiring the Star Buds assets for our Pueblo West and Commerce City locations, SBUD LLC entered into a lease with each of 428 S. McCulloch LLC and 5844 Ventures LLC on substantially the same terms. Each of the leases is for an initial three-year term. The lease with 428 S. McCulloch LLC is for the Company’s Pueblo West Star Buds location and was effective on December 17, 2020. The lease with 45844 Ventures LLC is for the Company’s Commerce City Star Buds location and was effective on December 18, 2020. Each lease provides for a monthly rent payment of $5,000. SBUD LLC expect to pay each landlord an aggregate of $180,000 during the initial term of the leases. During 2020, SBUD LLC made aggregate rent payments of $10,000. Between January 1, 2021 and June 30, 2021, SBUD LLC made aggregate rent payments of $60,000. In addition, SBUD LLC must pay each landlord’s expenses and disbursements incurred in connection with the ownership, operation, maintenance, repair and replacement of the premises. SBUD LLC has the option to renew each lease for two additional three-year terms. The rent increase to $5,500 per month during the first three-year renewal period, and to $6,050 during the second three-year renewal period. The Company has an option to purchase the premises at fair market value at any time during the lease term and also has a right of first refusal if the landlords desire to sell the premises to a third party. On December 17, 2020, SBUD, LLC entered into a Trademark License Agreement with Star Brands LLC under which Star Brands LLC licenses certain trademarks to SBUD, LLC effective as of the closing of the acquisitions of all of the Star Buds assets. SBUD LLC has no payment obligation under this agreement. Mr. Ruden is a part-owner of Star Brands LLC. In connection with the Star Buds acquisitions, the Company granted Mr. Ruden and Naser Joudeh the right designate individuals for election or appointment to the Board. |
Inventory
Inventory | 6 Months Ended |
Jun. 30, 2021 | |
Inventory Disclosure [Abstract] | |
Inventory | 8. Inventory As of June 30, 2021, and December 31, 2020, respectively, the Company had $ 5,948,853 2,090,887 858,628 2,375,461 500,917 27,342 no |
Goodwill
Goodwill | 6 Months Ended |
Jun. 30, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | 9. Goodwill On June 3, 2017, the Company issued an aggregate of 7,000,000 6,301,080 On July 21, 2017, the Company issued 2,258,065 3,003,226 On September 17, 2018, we closed the acquisition of The Big Tomato. The Company issued an aggregate of 1,933,329 3,000,000 On April 20, 2020, the Company closed the acquisition of Mesa Organics. The aggregate purchase price after working capital adjustments was $ 2,609,500 2,554,750 2,147,613 From December 2020 through March 2021, the Company closed the acquisition of thirteen Star Buds dispensaries and one cultivation facility. The aggregate purchase price was $118,000,000. The Company accounted for the transaction utilizing purchase price accounting stating that the book value approximates the fair market value of the assets acquired. The purchase price accounting resulted in the Company valuing the investment as $ 27,054,025 As of June 30, 2021, the Company had $41,505,944 of goodwill which consisted of $ 6,301,080 3,003,226 3,000,000 2,147,613 27,054,025 |
Debt
Debt | 6 Months Ended |
Jun. 30, 2021 | |
Debt Disclosure [Abstract] | |
Debt | 10. Debt Term Loan 10,000,000 15 500,000 February 26, 2025 Under the terms of the loan, the Company must comply with certain restrictions. These include customary events of default and specified representations as well as various financial ratio requirements including, (i) a consolidated fixed charge coverage ratio of at least 1.3 at the end of each fiscal quarter beginning in the first quarter of 2022, and (ii) a minimum of $3,000,000 in a deposit account in which the lender has a security interest. As of June 30, 2021, the Company was in compliance with the requirements described above. Seller Notes 44,250,000 12 st 13,901,759 3,474,519 26,873,722 |
Leases
Leases | 6 Months Ended |
Jun. 30, 2021 | |
Leases [Abstract] | |
Leases | 11. Leases Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. Leases with a term greater than one year are recognized on the balance sheet at the time of lease commencement or modification of an ROU operating lease asset and a lease liability, initially measured at the present value of the lease payments. Lease costs are recognized in the income statement over the lease term on a straight-line basis. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. The Company's leases consist of real estate leases for office spaces. The Company elected to combine the lease and related non-lease components for its operating leases. The Company’s operating leases include options to extend or terminate the lease, which are not included in the determination of the ROU asset or lease liability unless reasonably certain to be exercised. The Company's operating leases have remaining lease terms of less than two years. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. As the Company's leases do not provide an implicit rate, we used an incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. The discount rate used in the computations ranged between 6 12 Balance Sheet Classification of Operating Lease Assets and Liabilities Balance Sheet Classification Table Balance Sheet Line June 30, 2021 Asset Operating lease right of use assets Noncurrent assets $ 3,934,370 Liabilities Lease liabilities Noncurrent liabilities $ 4,078,375 Lease Costs The table below summarizes the components of lease costs for the six months ended June 30, 2021. Operating Lease Costs Six Months Ended Operating lease costs $ 650,692 Maturities of Lease Liabilities Maturities of lease liabilities as of June 30, 2021 are as follows: Maturities of Lease Liabilities 2021 fiscal year $ 4,809,658 Less: Interest 182,344 Present value of lease liabilities $ 4,627,314 The following table presents the Company’s future minimum lease obligation under ASC 840 as of June 30, 2021: Future minimum lease obligations 2021 fiscal year $ 740,076 2022 fiscal year 1,479,393 2023 fiscal year 1,354,595 2024 fiscal year 723,590 2025 fiscal year 333,356 Total $ 4,631,010 |
Stockholders_ Equity
Stockholders’ Equity | 6 Months Ended |
Jun. 30, 2021 | |
Equity [Abstract] | |
Stockholders’ Equity | 12. Stockholders’ Equity The Company is authorized to issue two classes of stock, designated preferred stock and common stock. Preferred Stock The number of shares of preferred stock authorized is 10,000,000 0.001 The Company had 87,266 19,716 Common Stock The Company is authorized to issue 250,000,000 0.001 42,925,303 42,408,259 42,601,773 42,169,041 Common Stock Issued in Private Placements During the year ended December 31, 2020, the Company issued 187,500 187,500 375,000 Common Stock Issued as Compensation to Employees, Officers, and Directors On April 3, 2020, the Company cancelled 500,000 During the six months ended December 31, 2020, the Company issued 406,895 497,301 During the period ended June 30, 2021, the Company issued 323,530 557,998 Common and Preferred Stock Issued as Payment for Acquisitions On April 20, 2020, the Company issued 2,554,750 4,167,253 On December 17, 2020, the Company issued 2,862 2,861,994 6,404 6,403,987 On February 3, 2021, the Company issued 2,319 2,318,998 17,921 17,920,982 Warrants The Company accounts for common stock purchase warrants in accordance with ASC 480, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock, Distinguishing Liabilities from Equity During the period ended June 30, 2021, the Company issued warrants to purchase an aggregate of 3,793,530 1.20 2.50 5 0.46 0.75 192.71 195.00 The following table reflects the change in common stock purchase warrants for the six months ended June 30, 2021. Schedule of warrant activity Number of shares Balance as of January 1, 2021 11,725,220 Warrants exercised – Warrants forfeited – Warrants issued 5,293,530 Balance as of June 30, 2021 17,018,750 Option Repricing On December 15, 2020, the Board repriced certain outstanding stock options issued to the Company’s current employees. The repriced stock options had original exercise prices ranging from $1.52 per share to $3.83 per share. All of these stock options to current employees were repriced to have an exercise price of $1.26 per share, which was the closing price of the Company’s common stock on December 15, 2020. Each of the options has a new 10-year term from the repricing date. |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2021 | |
Segment Reporting [Abstract] | |
Segment Information | 13. Segment Information The Company has three identifiable segments as of June 30, 2021; (i) retail, (ii) wholesale and (iii) and other. The retail segment represents our dispensaries which sell merchandise directly to customers via retail locations and e-commerce portals. The wholesale segment represents our manufacturing and wholesale business which sell merchandise to customers via e-commerce portals, a retail location, and manufacturing facility. The other segment derives its revenue from licensing and consulting agreements with cannabis related entities, in addition to fees from seminars and expense reimbursements included in other revenue on the Company’s financial statements. The following information represents segment activity for the three-month periods ended June 30, 2021 and June 30, 2020: Schedule of Segment Reporting Information For the Three Months Ended For the Three Months Ended 30-June-2021 30-June-2020 Retail Wholesale Other Total Retail Wholesale Other Total Revenues $ 21,525,816 $ 9,186,180 $ 16,844 $ 30,728,841 $ 732,459 $ 4,106,195 $ 586,675 $ 5,424,329 Cost of goods and services $ (9,562,361 ) $ (6,208,416 ) $ (55,564 ) $ (15,826,341 ) $ (477,085 ) $ (2,356,159 ) $ (273,442 ) $ (3,106,686 ) Gross profit $ 11,963,455 $ 2,977,764 $ (38,720 ) $ 14,902,500 $ 255,374 $ 2,382,741 $ 734,127 $ 2,317,643 Intangible assets amortization $ 2,755,794 $ (191 ) $ 134 $ 2,755,736 $ – $ 3,027 $ 268 $ 1,647 Depreciation $ 136,500 $ 5,385 $ 118,957 $ 260,843 $ 76,448 $ 4,593 $ 9,933 $ 86,510 Income (loss) from operations $ 6,643,360 $ 2,519,461 $ (4,792,780 ) $ 4,370,040 $ (76,789 ) $ 1,448,547 $ (9,346,774 ) $ (6,595,707 ) Segment assets $ 133,063,287 $ 24,484,790 $ 25,811,195 $ 183,359,272 $ 1,730,156 $ 20,783,819 $ 12,498,980 $ 36,012,965 The following information represents segment activity for the six-month periods ended June 30, 2021 and June 30, 2020: For the Six Months Ended For the Six Months Ended 30-June-2021 30-June-2020 Retail Wholesale Other Total Retail Wholesale Other Total Revenues $ 33,342,016 $ 16,632,445 $ 94,494 $ 50,068,955 $ 732,459 $ 6,635,126 $ 1,259,878 $ 8,627,463 COGS $ (17,063,118 ) $ (10,692,109 ) $ (158,224 ) $ (27,913,451 ) $ (477,085 ) $ (4,252,385 ) $ (525,751 ) $ (5,255,221 ) Gross profit $ 16,278,898 $ 5,940,336 $ (63,730 ) $ 22,155,504 $ 255,374 $ 2,382,741 $ 734,127 $ 3,372,242 Intangible assets amortization $ 4,350,095 $ 1,305 $ 266 $ 4,351,667 $ – $ 3,027 $ 268 $ 3,295 Depreciation $ 220,798 $ 9,026 $ 225,656 $ 455,480 $ 76,448 $ 4,593 $ 9,933 $ 90,974 Income (loss) from operations $ 8,042,011 $ 5,333,475 $ (12,654,954 ) $ 720,532 $ (76,789 ) $ 1,448,547 $ (9,346,774 ) $ (7,975,017 ) Segment assets $ 133,063,287 $ 24,484,790 $ 25,811,195 $ 183,359,272 $ 1,730,156 $ 20,783,819 $ 12,498,980 $ 36,012,965 |
Tax Provision
Tax Provision | 6 Months Ended |
Jun. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
Tax Provision | 14. Tax Provision The following table summarizes the Company’s income tax expense and effective tax rates for the three and six months ended June 30, 2021 and June 30, 2020: Components of income tax expense Three Months Ended June 30, 2021 2020 Income (Loss) before Income Taxes 4,598,515 (6,595,707 ) Income Tax Expense 228,474 – Effective Tax Rate 4.97% 0% Six Months Ended June 30, 2021 2020 Income (Loss) before Income Taxes 1,405,620 (7,975,017 ) Income Tax Expense 685,088 – Effective Tax Rate 48.74% 0% The Company has computed its provision for income taxes under the discrete method which treats the year-to-date period as if it were the annual period and determines the income tax expense or benefit on that basis. The discrete method is applied when application of the estimated annual effective tax rate is impractical because it is not possible to reliably estimate the annual effective tax rate. We believe that, at this time, the use of this discrete method is more appropriate than the annual effective tax rate method as the estimated annual effective tax rate method is not reliable due to the high degree of uncertainty in estimating annual pre-tax income due to the early growth stage of the business. Due to its cannabis operations, the Company is subject to the limitations of Internal Revenue Code (“IRC”) Section 280E under which the Company is only allowed to deduct expenses directly related to sales of product. This results in permanent differences between ordinary and necessary business expenses deemed non-allowable under IRC Section 280E. The effective tax rate for the three months and six months ended June 30, 2021 varies from the three months and six months ended June 30, 2020 primarily due to IRC Section 280E. The Company acquired plant-touching cannabis operations during 2020 and 2021 and these plant-touching operations are subject to the limitations of IRC Section 280E. In April 2020, the Company acquired its first plant-touching business, Mesa Organics. Prior to this acquisition, the Company was not subject to IRC Section 280E. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company's valuation allowance represents the amount of tax benefits that are likely to not be realized. Management assesses the need for a valuation allowance each period and continues to have a full valuation allowance on its deferred tax assets as of June 30, 2021. The Federal statute of limitation remains open for the 2017 tax year to present. The state statute of limitation remains open for the 2016 tax year to present. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | 15. Subsequent Events In accordance with FASB ASC 855-10, Subsequent Events On July 21, 2021, the Company, completed its previously announced asset purchase from SCG Services, LLC (the “APA Seller”), pursuant to the terms of an asset purchase agreement, dated May 27, 2021, among the Company, SCG Holding, LLC, a wholly-owned subsidiary of the Company (the “Purchaser”), the APA Seller, and John Sakun and Vladimir Sakun (together, the “APA Members”). At the closing, the Purchaser purchased all of the assets of the APA Seller that are used in or held for use in or are related to the operation of the APA Seller’s business of growing, distributing and marketing recreational cannabis products, on the terms and subject to the conditions set forth in the asset purchase agreement, and assumed obligations under contracts acquired as part of the purchase. The aggregate purchase price for the assets of the APA Seller was $6.725 million, approximately $1.2 million of which was paid in cash and the remainder of which was paid in shares of the Company’s common stock based on the volume weighted average price per share of the Company’s common stock for the prior 30 consecutive trading days, as determined in reasonable good faith by the Purchaser on the date that was three business days prior to the closing, or 1,992,593 shares. The Company held back 10% of each of the cash portion, approximately $0.1 million, and the stock portion, 221,400 shares, of the purchase price as collateral for potential claims for indemnification from the APA Seller and the APA Members under the asset purchase agreement. Any portion of the held-back cash portion and stock portion not used to satisfy indemnification claims will be released to the APA Members on the first anniversary of the closing. Also, at the closing, the Purchaser acquired certain real estate from BWR L.L.C.(the “Real Estate Seller”), pursuant to the terms of an agreement of purchase and sale, dated May 27, 2021, between the Purchaser and the Real Estate Seller. At closing, the Purchaser purchased and acquired from the Real Estate Seller certain real property consisting of approximately 36 acres located in Huerfano County, Colorado, together with, among other things, all structures and improvements thereon, all fixtures therein or thereto and all privileges, easements and appurtenances pertaining thereto, including all of the Real Estate Seller’s right, title and interest in and to any adjacent or adjoining streets, alleys, or rights-of-ways and any strips or gores. The aggregate purchase price for the property of the Real Estate Seller was $4.499 million, which was paid in cash. On July 28, 2021, Mesa Organics Ltd, a wholly-owned subsidiary of the Company, in its capacity as the administrative borrower, entered into a First Amendment to Loan Agreement with SHWZ Altmore, LLC, as lender, and GGG Partners LLC, as collateral agent, effective as of June 25, 2021. The amendment amended two definitions in the Loan Agreement, dated February 26, 2021, among Mesa Organics Ltd., Mesa Organics II Ltd., Mesa Organics III Ltd., Mesa Organics IV Ltd., SCG Holding, LLC and PBS Holdco LLC, SHWZ Altmore LLC and GGG Partners LLC, to extend the time period during which the borrowers are eligible to request the final $5,000,000 advance under the Loan Agreement by 60 days, or until August 25, 2021. On July 28, 2021, SHWZ Altmore LLC made the final advance of $5,000,000 to the borrowers under the Loan Agreement. As previously reported, the final advance was conditioned on, among other things, the Company’s completing its asset purchase from SCG Services, LLC, which occurred on July 21, 2021. |
Critical Accounting Policies _2
Critical Accounting Policies and Estimates (Policies) | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Management’s Representation of Interim Financial Statements | Management’s Representation of Interim Financial Statements |
Basis of Presentation | Basis of Presentation |
Use of Estimates | 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 | 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 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, notes receivable, accounts payable 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, 2021 and December 31, 2020, using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3): Schedule of fair value measurement June 30, 2021 December 31, 2020 Level 1 – Marketable Securities Available-for-Sale – Recurring 498,039 276,782 |
Marketable Securities at Fair Value on a Recurring Basis | 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., a publicly-traded company whose securities are actively quoted on the Toronto Stock Exchange. |
Fair Value of Financial Instruments | 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 | Accounts Receivable The Company extends unsecured credit to its customers in the ordinary course of business. These accounts receivable relates to the Company’s wholesale and other revenue segments. Accounts receivable are recorded when a milestone is reached at a point in time resulting in funds being due for delivered goods or services, and where payment is reasonably assured. Wholesale revenues are generally collected within 14 to 30 days after invoice is sent. 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, 2021, and December 31, 2020: Schedule of Accounts Receivable June 30, 2021 December 31, 2020 Accounts receivable – trade $ 3,377,879 $ 1,315,188 Accounts receivable – related party – 80,494 Accounts receivable – litigation, non-current 3,063,968 3,063,968 Allowance for doubtful accounts (172,938 ) (44,808 ) Total accounts receivable $ 6,268,909 $ 4,414,842 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. |
Notes Receivable | 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.. 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 60 months and bears interest at a rate of 2%. On April 30, 2019, the terms of the loan were amended to reduce the term from 60 months to 36 months. As of June 30, 2021 and December 31, 2020, the outstanding balance, including accrued interest, on the notes receivable with AMC totaled $ 246,765 246,765 On March 12, 2021, the Company sold equipment to Colorado Cannabis. The terms of sale included a zero interest note receivable, payable $11,944 on the first of each month for 24 months. As of June 30, 2021, the outstanding balance, including penalties for late payments, on the notes receivable with Colorado Cannabis totaled $ 215,890 |
Other Assets (Current and Non-Current) | Other Assets (Current and Non-Current) Other assets as of June 30, 2021 and December 31, 2020 were $ 2,284,610 666,079 1,865,138 419,472 345,777 268,423 51,879 |
Goodwill and Intangible Assets | 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 15 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 as of December 31, 2020, 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 as of June 30, 2021 that would indicate impairment. |
Long-Lived Assets | 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, 2020 on its subsidiaries with material amounts on their respective balance sheets and determined that no impairment exists. |
Accounts Payable | Accounts Payable Accounts payable as of June 30, 2021 and December 31, 2020 were $ 2,375,540 3,557,461 |
Accrued Expenses and Other Liabilities | Accrued Expenses and Other Liabilities Accrued expenses and other liabilities as of June 30, 2021 and December 31, 2020 were $ 10,279,124 2,705,445 17,169 741,299 5,719,742 3,800,914 26,826 1,154,887 1,523,732 |
Revenue Recognition and Related Allowances | Revenue Recognition and Related Allowances 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 is 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: retail; wholesale; and other. Retail and wholesale 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. Other revenue consists of other income and expenses, including related to, licensing and consulting services, facility design services, facility management services, the Company’s Three A Light™ publication, and corporate operations. Revenue 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 or 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 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 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 Advertising and marketing costs are expensed as incurred and totaled $ 196,908 308,593 336,529 465,796 |
Stock Based Compensation | Stock Based Compensation The Company accounts for share-based payments pursuant to ASC 718, Stock 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 through direct stock grants is expensed as occurred. Since the Company’s common stock is publicly traded, the value is determined based on the number of shares of common stock issued and the trading value of the common stock on the date of the transaction. On June 20, 2018, the Financial Accounting Standards Board (“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 $ 1,153,018 2,636,824 4,361,822 |
Income Taxes | 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 are regularly assessed to determine the likelihood they will be recovered from future taxable income. A valuation allowance is established when we believe it is more likely than not the future realization of all or some of a deferred tax asset will not be achieved. In evaluating our ability to recover deferred tax assets within the jurisdiction which they arise, we consider all available positive and negative evidence. Factors reviewed include the cumulative pre-tax book income for the past three years, scheduled reversals of deferred tax liabilities, our history of earnings and reliability of our forecasts, projections of pre-tax book income over the foreseeable future, and the impact of any feasible and prudent tax planning strategies. The Company assesses all material positions taken in any income tax return, including all significant uncertain positions, in all tax years that are still subject to assessment or challenge by relevant taxing authorities. Assessing an uncertain tax position begins with the initial determination of the position’s sustainability, and the tax benefit to be recognized is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. We recognize the impact of a tax position in our financial statements only if that position is more likely than not of being sustained upon examination by taxing authorities, based on the technical merits of the position. Tax authorities regularly examine our returns in the jurisdictions in which we do business and we regularly assess the tax risk of our return filing positions. Due to the complexity of some of the uncertainties, the ultimate resolution may result in payments that are materially different from our current estimate of the tax liability. These differences, as well as any interest and penalties, will be reflected in the provision for income taxes in the period in which they are determined. As the Company operates in the cannabis industry, it is subject to the limits of the Internal Revenue Code (IRC) Section 280E under which the Company is only allowed to deduct expenses directly related to sales of product. This results in permanent differences between ordinary and necessary business expenses deemed non-allowable under IRC Section 280E. |
Right of Use Assets and Lease Liabilities | 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 ROU assets and operating lease liabilities, current and non-current, on the Company's consolidated balance sheets. |
Critical Accounting Policies _3
Critical Accounting Policies and Estimates (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Schedule of fair value measurement | Schedule of fair value measurement June 30, 2021 December 31, 2020 Level 1 – Marketable Securities Available-for-Sale – Recurring 498,039 276,782 |
Schedule of Accounts Receivable | Schedule of Accounts Receivable June 30, 2021 December 31, 2020 Accounts receivable – trade $ 3,377,879 $ 1,315,188 Accounts receivable – related party – 80,494 Accounts receivable – litigation, non-current 3,063,968 3,063,968 Allowance for doubtful accounts (172,938 ) (44,808 ) Total accounts receivable $ 6,268,909 $ 4,414,842 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment table | Property and equipment table June 30, December 31, Furniture and fixtures $ 294,204 $ 228,451 Leasehold improvements 656,314 90,314 Machinery and tools 1,502,417 1,456,752 Office equipment 238,837 104,059 Software 1,308,387 1,308,387 Work in process 767,736 269,414 $ 4,767,895 $ 3,457,377 Less: Accumulated depreciation (1,291,349 ) (872,579 ) Total property and equipment, net of depreciation $ 3,476,546 $ 2,584,798 |
Schedule of property and equipment useful lives | Schedule of property and equipment useful lives Furniture and fixtures 3 Leasehold improvements Lesser of the lease term or estimated useful life Machinery and tools 3 Office equipment 3 Software 3 5 |
Intangible Asset (Tables)
Intangible Asset (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible assets | Intangible assets June 30, December 31, License agreements $ 88,775,280 $ 1,667,000 Tradenames 4,270,000 350,000 Customer relationships 5,150,000 1,055,000 Non-compete 1,130,000 120,000 Product license and registration 57,300 57,300 Trade secret – intellectual property 32,500 32,500 99,415,080 3,282,500 Less: accumulated amortization (4,553,827 ) (200,456 ) Total intangible assets, net of amortization $ 94,861,253 $ 3,082,044 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Leases [Abstract] | |
Balance Sheet Classification Table | Balance Sheet Classification Table Balance Sheet Line June 30, 2021 Asset Operating lease right of use assets Noncurrent assets $ 3,934,370 Liabilities Lease liabilities Noncurrent liabilities $ 4,078,375 |
Operating Lease Costs | Operating Lease Costs Six Months Ended Operating lease costs $ 650,692 |
Maturities of Lease Liabilities | Maturities of Lease Liabilities 2021 fiscal year $ 4,809,658 Less: Interest 182,344 Present value of lease liabilities $ 4,627,314 |
Future minimum lease obligations | Future minimum lease obligations 2021 fiscal year $ 740,076 2022 fiscal year 1,479,393 2023 fiscal year 1,354,595 2024 fiscal year 723,590 2025 fiscal year 333,356 Total $ 4,631,010 |
Stockholders_ Equity (Tables)
Stockholders’ Equity (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Equity [Abstract] | |
Schedule of warrant activity | Schedule of warrant activity Number of shares Balance as of January 1, 2021 11,725,220 Warrants exercised – Warrants forfeited – Warrants issued 5,293,530 Balance as of June 30, 2021 17,018,750 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information | Schedule of Segment Reporting Information For the Three Months Ended For the Three Months Ended 30-June-2021 30-June-2020 Retail Wholesale Other Total Retail Wholesale Other Total Revenues $ 21,525,816 $ 9,186,180 $ 16,844 $ 30,728,841 $ 732,459 $ 4,106,195 $ 586,675 $ 5,424,329 Cost of goods and services $ (9,562,361 ) $ (6,208,416 ) $ (55,564 ) $ (15,826,341 ) $ (477,085 ) $ (2,356,159 ) $ (273,442 ) $ (3,106,686 ) Gross profit $ 11,963,455 $ 2,977,764 $ (38,720 ) $ 14,902,500 $ 255,374 $ 2,382,741 $ 734,127 $ 2,317,643 Intangible assets amortization $ 2,755,794 $ (191 ) $ 134 $ 2,755,736 $ – $ 3,027 $ 268 $ 1,647 Depreciation $ 136,500 $ 5,385 $ 118,957 $ 260,843 $ 76,448 $ 4,593 $ 9,933 $ 86,510 Income (loss) from operations $ 6,643,360 $ 2,519,461 $ (4,792,780 ) $ 4,370,040 $ (76,789 ) $ 1,448,547 $ (9,346,774 ) $ (6,595,707 ) Segment assets $ 133,063,287 $ 24,484,790 $ 25,811,195 $ 183,359,272 $ 1,730,156 $ 20,783,819 $ 12,498,980 $ 36,012,965 The following information represents segment activity for the six-month periods ended June 30, 2021 and June 30, 2020: For the Six Months Ended For the Six Months Ended 30-June-2021 30-June-2020 Retail Wholesale Other Total Retail Wholesale Other Total Revenues $ 33,342,016 $ 16,632,445 $ 94,494 $ 50,068,955 $ 732,459 $ 6,635,126 $ 1,259,878 $ 8,627,463 COGS $ (17,063,118 ) $ (10,692,109 ) $ (158,224 ) $ (27,913,451 ) $ (477,085 ) $ (4,252,385 ) $ (525,751 ) $ (5,255,221 ) Gross profit $ 16,278,898 $ 5,940,336 $ (63,730 ) $ 22,155,504 $ 255,374 $ 2,382,741 $ 734,127 $ 3,372,242 Intangible assets amortization $ 4,350,095 $ 1,305 $ 266 $ 4,351,667 $ – $ 3,027 $ 268 $ 3,295 Depreciation $ 220,798 $ 9,026 $ 225,656 $ 455,480 $ 76,448 $ 4,593 $ 9,933 $ 90,974 Income (loss) from operations $ 8,042,011 $ 5,333,475 $ (12,654,954 ) $ 720,532 $ (76,789 ) $ 1,448,547 $ (9,346,774 ) $ (7,975,017 ) Segment assets $ 133,063,287 $ 24,484,790 $ 25,811,195 $ 183,359,272 $ 1,730,156 $ 20,783,819 $ 12,498,980 $ 36,012,965 |
Tax Provision (Tables)
Tax Provision (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
Components of income tax expense | Components of income tax expense Three Months Ended June 30, 2021 2020 Income (Loss) before Income Taxes 4,598,515 (6,595,707 ) Income Tax Expense 228,474 – Effective Tax Rate 4.97% 0% Six Months Ended June 30, 2021 2020 Income (Loss) before Income Taxes 1,405,620 (7,975,017 ) Income Tax Expense 685,088 – Effective Tax Rate 48.74% 0% |
Organization and Nature of Op_2
Organization and Nature of Operations (Details Narrative) - USD ($) | 2 Months Ended | 4 Months Ended | 6 Months Ended | ||
Feb. 26, 2021 | Mar. 31, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 16, 2020 | |
Class of Stock [Line Items] | |||||
Proceeds from issuance of stock | $ 50,282,798 | $ 0 | |||
Dye Capital [Member] | |||||
Class of Stock [Line Items] | |||||
Debt Instrument, Face Amount | $ 5,000,000 | ||||
Debt Conversion, Converted Instrument, Amount | $ 5,000,000 | ||||
Debt converted, shares issued | 5,060 | ||||
Series A Cumulative Convertible Preferred Stock [Member] | Dye Cann II and CRW [Member] | |||||
Class of Stock [Line Items] | |||||
Proceeds from issuance of stock | $ 57,700,000 | ||||
Stock issued new, shares | 57,700 | ||||
Share Price | $ 1,000 | ||||
Preferred Stock, Dividend Rate, Percentage | 8.00% |
Liquidity and Capital Resourc_2
Liquidity and Capital Resources (Details Narrative) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 | Jun. 30, 2020 |
Liquidity And Capital Resources | |||
Cash and cash equivalents | $ 21,130,769 | $ 1,231,235 | $ 5,418,317 |
Critical Accounting Policies _4
Critical Accounting Policies and Estimates (Details - Level 3) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member] | Marketable Securities [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Fair value assets | $ 498,039 | $ 276,782 |
Critical Accounting Policies _5
Critical Accounting Policies and Estimates (Details - Receivables) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total accounts receivable | $ 6,268,909 | $ 4,414,842 |
Allowance for doubtful accounts | (172,938) | (44,808) |
Trade Accounts Receivable [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total accounts receivable | 3,377,879 | 1,315,188 |
Accounts receivable - related party [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total accounts receivable | 0 | 80,494 |
Accounts receivable - litigation [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total accounts receivable | $ 3,063,968 | $ 3,063,968 |
Critical Accounting Policies _6
Critical Accounting Policies and Estimates (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
AccountingPoliciesLineItems [Line Items] | |||||
Other assets | $ 2,284,610 | $ 2,284,610 | $ 666,079 | ||
Accounts payable | 2,375,540 | 2,375,540 | 3,557,461 | ||
Accrued expenses and other liabilities | 10,279,124 | 10,279,124 | 2,705,445 | ||
Advertising and marketing expense | 196,908 | $ 336,529 | 308,593 | $ 465,796 | |
Stock based compensation expense | 1,153,018 | $ 3,109,091 | $ 2,636,824 | $ 4,361,822 | |
Minimum [Member] | |||||
AccountingPoliciesLineItems [Line Items] | |||||
Intangible assets useful lives | 10 years | ||||
Maximum [Member] | |||||
AccountingPoliciesLineItems [Line Items] | |||||
Intangible assets useful lives | 15 years | ||||
Prepaid Expenses [Member] | |||||
AccountingPoliciesLineItems [Line Items] | |||||
Other assets | 1,865,138 | $ 1,865,138 | 345,777 | ||
Security Deposits [Member] | |||||
AccountingPoliciesLineItems [Line Items] | |||||
Other assets | 419,472 | 419,472 | 51,879 | ||
Tax Receivable [Member] | |||||
AccountingPoliciesLineItems [Line Items] | |||||
Other assets | 268,423 | ||||
Customer Deposits [Member] | |||||
AccountingPoliciesLineItems [Line Items] | |||||
Accrued expenses and other liabilities | 17,169 | 17,169 | 26,826 | ||
Accrued Payroll [Member] | |||||
AccountingPoliciesLineItems [Line Items] | |||||
Accrued expenses and other liabilities | 741,299 | 741,299 | 1,154,887 | ||
Operating Expenses [Member] | |||||
AccountingPoliciesLineItems [Line Items] | |||||
Accrued expenses and other liabilities | 5,719,742 | 5,719,742 | 1,523,732 | ||
Dividends On Preferred Stock [Member] | |||||
AccountingPoliciesLineItems [Line Items] | |||||
Accrued expenses and other liabilities | 3,800,914 | 3,800,914 | |||
Colorado Cannabis [Member] | |||||
AccountingPoliciesLineItems [Line Items] | |||||
Notes receivable | 215,890 | 215,890 | |||
Abba Medix Corp [Member] | |||||
AccountingPoliciesLineItems [Line Items] | |||||
Notes receivable | $ 246,765 | $ 246,765 | $ 246,765 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, gross | $ 4,767,895 | $ 3,457,377 |
Less: Accumulated Depreciation | (1,291,349) | (872,579) |
Property and equipment, net | 3,476,546 | 2,584,798 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, gross | 294,204 | 228,451 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, gross | 656,314 | 90,314 |
Machinery and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, gross | 1,502,417 | 1,456,752 |
Office Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, gross | 238,837 | 104,059 |
Software and Software Development Costs [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, gross | 1,308,387 | 1,308,387 |
Work In Progress [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, gross | $ 767,736 | $ 269,414 |
Property and Equipment (Detai_2
Property and Equipment (Details - Expected life) | 6 Months Ended |
Jun. 30, 2021 | |
Furniture and Fixtures [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3 years |
Leasehold Improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | Lesser of the lease term or estimated useful life |
Machinery and Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3 years |
Office Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3 years |
Software and Software Development Costs [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3 years |
Software and Software Development Costs [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 5 years |
Property and Equipment (Detai_3
Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 260,843 | $ 86,510 | $ 455,480 | $ 90,974 |
Intangible Asset (Details)
Intangible Asset (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 99,415,080 | $ 3,282,500 |
Less: accumulated amortization | (4,553,827) | (200,456) |
Intangible assets, net | 94,861,253 | 3,082,044 |
Licensing Agreements [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | 88,775,280 | 1,667,000 |
Trade Names [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | 4,270,000 | 350,000 |
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | 5,150,000 | 1,055,000 |
Noncompete Agreements [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | 1,130,000 | 120,000 |
Product License and Registration [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | 57,300 | 57,300 |
Trade Secret [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 32,500 | $ 32,500 |
Intangible Asset (Details Narra
Intangible Asset (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2021 | Jun. 30, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 2,755,736 | $ 4,351,667 |
Derivative Liability (Details N
Derivative Liability (Details Narrative) - USD ($) | Jan. 08, 2019 | Feb. 25, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Apr. 23, 2019 | Jun. 11, 2019 | Jun. 30, 2021 | Jun. 30, 2020 |
Derivative [Line Items] | ||||||||
Gain on forfeiture of contingent consideration | $ 0 | $ 0 | $ 0 | $ 1,462,636 | ||||
Fair value of derivative liabilities | 436,554 | 436,554 | ||||||
Unrealized gain (loss) on derivative liabilities | $ 1,864,741 | $ (348,535) | $ 610,927 | $ 843,428 | ||||
Officer And Director [Member] | Restricted Stock [Member] | ||||||||
Derivative [Line Items] | ||||||||
Restricted stock granted, shares | 500,000 | 1,000,000 | ||||||
Officer And Director [Member] | Restricted Stock [Member] | Director Resignation [Member] | ||||||||
Derivative [Line Items] | ||||||||
Gain on forfeiture of contingent consideration | $ 1,462,636 | |||||||
An Officer [Member] | Restricted Stock [Member] | ||||||||
Derivative [Line Items] | ||||||||
Restricted stock granted, shares | 1,000,000 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 1 Months Ended | 2 Months Ended | 3 Months Ended | 4 Months Ended | 5 Months Ended | 6 Months Ended | 7 Months Ended | 8 Months Ended | 12 Months Ended | 22 Months Ended | 25 Months Ended | ||||||||
Feb. 03, 2021 | Mar. 02, 2021 | Mar. 02, 2021 | Feb. 26, 2021 | Mar. 30, 2021 | Apr. 19, 2021 | Jun. 05, 2019 | Jun. 30, 2021 | Jun. 30, 2020 | Jul. 31, 2020 | Sep. 04, 2020 | Dec. 31, 2020 | Dec. 22, 2020 | Dec. 18, 2020 | Dec. 16, 2020 | Dec. 31, 2019 | Mar. 31, 2021 | Jun. 30, 2021 | Aug. 01, 2020 | |
Related Party Transaction [Line Items] | |||||||||||||||||||
Cash paid at closing | $ 66,082,072 | $ 2,609,500 | |||||||||||||||||
Star Buds [Member] | |||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||
Consideration transferred | $ 118,000,000 | ||||||||||||||||||
Cash paid at closing | 44,250,000 | ||||||||||||||||||
Deferred cash | $ 44,250,000 | ||||||||||||||||||
Dye Capital [Member] | |||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||
Convertible note | $ 5,000,000 | ||||||||||||||||||
Debt converted, amount converted | $ 5,000,000 | ||||||||||||||||||
Debt converted, interest converted | $ 60,250 | ||||||||||||||||||
Seller Notes [Member] | Star Buds [Member] | |||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||
Note payable balance | 44,250,000 | $ 44,250,000 | |||||||||||||||||
Interest paid | $ 1,752,662 | ||||||||||||||||||
Warrants [Member] | Star Buds [Member] | |||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||
Stock issued | 5,531,250 | 3,793,530 | |||||||||||||||||
Warrants [Member] | Dye Capital [Member] | |||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||
Debt converted, shares issued | 5,060 | ||||||||||||||||||
Cash paid on conversion of debt | $ 230 | ||||||||||||||||||
Series A Preferred Stock [Member] | Star Buds [Member] | |||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||
Stock issued | 29,500 | ||||||||||||||||||
Dye Cann II SPA [Member] | |||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||
Stock issued new, shares | 21,350 | ||||||||||||||||||
Proceeds from sale of equity | $ 21,350,000 | ||||||||||||||||||
Dye Cann II SPA [Member] | Series A Preferred Stock [Member] | |||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||
Stock issued new, shares | 3,100 | 3,800 | 4,000 | 1,300 | 1,450 | 7,700 | |||||||||||||
CRW SPA [Member] | Series A Preferred Stock [Member] | |||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||
Stock issued new, shares | 25,350 | ||||||||||||||||||
Proceeds from sale of equity | $ 25,350,000 | ||||||||||||||||||
Med Man Denver [Member] | |||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||
Revenue from related parties | $ 997,262 | ||||||||||||||||||
Accounts receivable from related parties | 72,109 | ||||||||||||||||||
Med Pharm Holdings [Member] | |||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||
Revenue from related parties | 73,557 | ||||||||||||||||||
Accounts receivable from related parties | 5,885 | ||||||||||||||||||
Notes receivable issued | $ 767,695 | ||||||||||||||||||
Note receivable balance | 0 | 0 | $ 767,695 | ||||||||||||||||
Accrued interest receivable | $ 47,161 | ||||||||||||||||||
Note receivable balance | $ 181,911 | $ 100,000 | |||||||||||||||||
Med Pharm Holdings [Member] | Andrew Williams [Member] | |||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||
Shares returned for payment of note receivable | 175,000 | ||||||||||||||||||
Baseball 18 [Member] | |||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||
Revenue from related parties | 14,605 | ||||||||||||||||||
Accounts payable from related party | 31,250 | ||||||||||||||||||
Farm Boy [Member] | |||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||
Revenue from related parties | 16,125 | ||||||||||||||||||
Accounts payable from related party | 93,944 | ||||||||||||||||||
Emerald Fields [Member] | |||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||
Revenue from related parties | 16,605 | ||||||||||||||||||
Los Suenos [Member] | |||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||
Revenue from related parties | 52,244 | ||||||||||||||||||
Dye Cann I [Member] | Securities Purchase Agreement [Member] | |||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||
Proceeds from sale of equity | $ 3,000,000 | $ 18,575,000 | |||||||||||||||||
Dye Cann I [Member] | Securities Purchase Agreement [Member] | Common Stock [Member] | |||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||
Stock issued new, shares | 1,500,000 | 9,287,500 | |||||||||||||||||
Dye Cann I [Member] | Securities Purchase Agreement [Member] | Warrants [Member] | |||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||
Warrants issued | 1,500,000 | 9,287,500 | |||||||||||||||||
Tella Digital [Member] | |||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||
Costs and expenses to related party | 193,120 | $ 66,264 | |||||||||||||||||
Brian Ruden [Member] | Star Buds [Member] | |||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||
Cash paid at closing | $ 13,727,490 | ||||||||||||||||||
Deferred cash | $ 13,727,490 | ||||||||||||||||||
Brian Ruden [Member] | Seller Notes [Member] | Star Buds [Member] | |||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||
Interest paid | $ 544,889 | ||||||||||||||||||
Brian Ruden [Member] | Warrants [Member] | Star Buds [Member] | |||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||
Stock issued | 1,715,936 | ||||||||||||||||||
Brian Ruden [Member] | Series A Preferred Stock [Member] | Star Buds [Member] | |||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||
Stock issued | 9,152 |
Inventory (Details Narrative)
Inventory (Details Narrative) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
Inventory Disclosure [Abstract] | ||
Finished goods inventory | $ 5,948,853 | $ 2,090,887 |
Inventory work in process | 858,628 | 27,342 |
Raw materials inventory | 2,375,461 | 500,917 |
Inventory obsolescence | $ 0 | $ 0 |
Goodwill (Details Narrative)
Goodwill (Details Narrative) - USD ($) | 2 Months Ended | 4 Months Ended | 5 Months Ended | 6 Months Ended | 7 Months Ended | 9 Months Ended | ||
Mar. 02, 2021 | Apr. 20, 2020 | Jun. 03, 2017 | Jun. 30, 2021 | Jun. 30, 2020 | Jul. 21, 2017 | Sep. 17, 2018 | Dec. 31, 2020 | |
Acquired Indefinite-lived Intangible Assets [Line Items] | ||||||||
Goodwill | $ 41,505,944 | $ 53,046,729 | ||||||
Cash paid for acquisition | 66,082,072 | $ 2,609,500 | ||||||
Success And Pono [Member] | ||||||||
Acquired Indefinite-lived Intangible Assets [Line Items] | ||||||||
Stock issued for acquisition, shares | 7,000,000 | |||||||
Goodwill | $ 6,301,080 | 6,301,080 | ||||||
Denver Consulting [Member] | ||||||||
Acquired Indefinite-lived Intangible Assets [Line Items] | ||||||||
Stock issued for acquisition, shares | 2,258,065 | |||||||
Goodwill | 3,003,226 | $ 3,003,226 | ||||||
Big Tomato [Member] | ||||||||
Acquired Indefinite-lived Intangible Assets [Line Items] | ||||||||
Stock issued for acquisition, shares | 1,933,329 | |||||||
Goodwill | 3,000,000 | $ 3,000,000 | ||||||
Mesa Organics [Member] | ||||||||
Acquired Indefinite-lived Intangible Assets [Line Items] | ||||||||
Stock issued for acquisition, shares | 2,554,750 | |||||||
Goodwill | $ 2,147,613 | 2,147,613 | ||||||
Cash paid for acquisition | $ 2,609,500 | |||||||
Star Buds [Member] | ||||||||
Acquired Indefinite-lived Intangible Assets [Line Items] | ||||||||
Goodwill | $ 27,054,025 | $ 27,054,025 | ||||||
Cash paid for acquisition | $ 44,250,000 |
Debt (Details Narrative)
Debt (Details Narrative) - USD ($) | 1 Months Ended | 2 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |
Feb. 03, 2026 | Mar. 02, 2026 | Feb. 26, 2021 | Mar. 31, 2021 | Jun. 30, 2021 | Dec. 17, 2025 | |
Star Buds Assets [Member] | Seller Notes [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt Instrument, Interest Rate During Period | 12.00% | |||||
Periodic principal payment | $ 44,250,000 | |||||
Star Buds [Member] | Seller Notes [Member] | Subsequent Event [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Periodic principal payment | $ 3,474,519 | $ 26,873,722 | $ 13,901,759 | |||
Loan Agreement [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Proceeds from Issuance of Debt | $ 10,000,000 | |||||
Debt Instrument, Interest Rate During Period | 15.00% | |||||
Periodic principal payment | $ 500,000 | |||||
Debt Instrument, Maturity Date | Feb. 26, 2025 |
Leases (Details - Balance Sheet
Leases (Details - Balance Sheet Classification) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Leases [Abstract] | ||
Operating lease asset - non-current | $ 3,934,370 | $ 2,579,036 |
Operating lease liability - non-current | $ 4,078,375 | $ 2,645,597 |
Leases (Details - Operating lea
Leases (Details - Operating lease cost) | 6 Months Ended |
Jun. 30, 2021USD ($) | |
Leases [Abstract] | |
Operating lease costs | $ 650,692 |
Leases (Details - Lease maturit
Leases (Details - Lease maturities) | Jun. 30, 2021USD ($) |
Leases [Abstract] | |
2021 fiscal year | $ 4,809,658 |
Less: Interest | (182,344) |
Present value of lease liabilities | $ 4,627,314 |
Leases (Details - Minimum lease
Leases (Details - Minimum lease obligation) | Jun. 30, 2021USD ($) |
Leases [Abstract] | |
2021 fiscal year | $ 740,076 |
2022 fiscal year | 1,479,393 |
2023 fiscal year | 1,354,595 |
2024 fiscal year | 723,590 |
2025 fiscal year | 333,356 |
Total | $ 4,631,010 |
Leases (Details Narrative)
Leases (Details Narrative) | Jun. 30, 2021 |
Minimum [Member] | |
Lessee, Lease, Description [Line Items] | |
Weighted average lease discount rate | 6.00% |
Maximum [Member] | |
Lessee, Lease, Description [Line Items] | |
Weighted average lease discount rate | 12.00% |
Stockholders' Equity (Details W
Stockholders' Equity (Details Warrant Activity) - Warrant [Member] | 6 Months Ended |
Jun. 30, 2021shares | |
Class of Warrant or Right [Line Items] | |
Warrants outstanding, beginning balance | 11,725,220 |
Warrants exercised | 0 |
Warrants forfeited | 0 |
Warrants issued | 5,293,530 |
Warrants outstanding, ending balance | 17,018,750 |
Stockholders_ Equity (Details N
Stockholders’ Equity (Details Narrative) - USD ($) | Apr. 03, 2020 | Feb. 03, 2021 | Mar. 03, 2021 | Mar. 02, 2021 | Jun. 30, 2021 | Apr. 20, 2020 | Jun. 30, 2021 | Dec. 31, 2020 | Dec. 18, 2020 | Dec. 17, 2020 |
Class of Stock [Line Items] | ||||||||||
Preferred stock authorized | 10,000,000 | 10,000,000 | 10,000,000 | |||||||
Preferred stock par value | $ 0.001 | $ 0.001 | $ 0.001 | |||||||
Preferred stock issued | 87,266 | 87,266 | 19,716 | |||||||
Preferred stock outstanding | 87,266 | 87,266 | 19,716 | |||||||
Common stock authorized | 250,000,000 | 250,000,000 | 250,000,000 | |||||||
Common stock par value | $ 0.001 | $ 0.001 | $ 0.001 | |||||||
Common stock issued | 42,925,303 | 42,925,303 | 42,601,773 | |||||||
Common stock outstanding | 42,408,259 | 42,408,259 | 42,169,041 | |||||||
Shares cancelled | 500,000 | |||||||||
Stock issued for compensation, value | $ 236,056 | $ 680,861 | ||||||||
Shares issued for acquisition, value | $ 20,240,000 | |||||||||
Warrant [Member] | Various Accredited Investor [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Contractual term | 5 years | |||||||||
Warrant [Member] | Various Accredited Investor [Member] | Minimum [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Stock price | $ 1.20 | $ 1.20 | ||||||||
Risk-free interest rate | 0.46% | |||||||||
Expected volatility rate | 192.71% | |||||||||
Warrant [Member] | Various Accredited Investor [Member] | Maximum [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Stock price | $ 2.50 | $ 2.50 | ||||||||
Risk-free interest rate | 0.75% | |||||||||
Expected volatility rate | 195.00% | |||||||||
Star Buds [Member] | Preferred Stock [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Stock issued for acquisition, shares | 2,319 | 17,921 | 6,404 | 2,862 | ||||||
Shares issued for acquisition, value | $ 2,318,998 | $ 17,920,982 | $ 6,403,987 | $ 2,861,994 | ||||||
Star Buds [Member] | Warrants [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Stock issued for acquisition, shares | 5,531,250 | 3,793,530 | ||||||||
Employees Officers Directors [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Stock issued for compensation, shares | 323,530 | 406,895 | ||||||||
Stock issued for compensation, value | $ 557,998 | $ 497,301 | ||||||||
Mesa Organics Ltd [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Stock issued for acquisition, shares | 2,554,750 | |||||||||
Shares issued for acquisition, value | $ 4,167,253 | |||||||||
Private Placements [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Stock issued new, shares | 187,500 | |||||||||
Warrants issued | 187,500 | |||||||||
Proceeds from sale of equity | $ 375,000 |
Segment Information (Details- S
Segment Information (Details- Segment Information) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Segment Reporting Information [Line Items] | ||||
Revenues | $ 30,728,841 | $ 5,424,329 | $ 50,068,955 | $ 8,627,463 |
Cost of goods and services | (15,826,341) | (3,106,686) | (27,913,451) | (5,255,221) |
Gross profit | 14,902,500 | 2,317,643 | 22,155,504 | 3,372,242 |
Intangible assets amortization | 2,755,736 | 1,647 | 4,351,667 | 3,295 |
Depreciation | 260,843 | 86,510 | 455,480 | 90,974 |
Net income (loss) | 4,370,040 | (6,595,707) | 720,532 | (7,975,017) |
Segment assets | 183,359,272 | 36,012,965 | 183,359,272 | 36,012,965 |
Products [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 21,525,816 | 732,459 | 33,342,016 | 732,459 |
Cost of goods and services | (9,562,361) | (477,085) | (17,063,118) | (477,085) |
Gross profit | 11,963,455 | 255,374 | 16,278,898 | 255,374 |
Intangible assets amortization | 2,755,794 | 0 | 4,350,095 | 0 |
Depreciation | 136,500 | 76,448 | 220,798 | 76,448 |
Net income (loss) | 6,643,360 | (76,789) | 8,042,011 | (76,789) |
Segment assets | 133,063,287 | 1,730,156 | 133,063,287 | 1,730,156 |
Licensing and Consulting [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 9,186,180 | 4,106,195 | 16,632,445 | 6,635,126 |
Cost of goods and services | (6,208,416) | (2,356,159) | (10,692,109) | (4,252,385) |
Gross profit | 2,977,764 | 2,382,741 | 5,940,336 | 2,382,741 |
Intangible assets amortization | (191) | 3,027 | 1,305 | 3,027 |
Depreciation | 5,385 | 4,593 | 9,026 | 4,593 |
Net income (loss) | 2,519,461 | 1,448,547 | 5,333,475 | 1,448,547 |
Segment assets | 24,484,790 | 20,783,819 | 24,484,790 | 20,783,819 |
Infrastructure [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 16,844 | 586,675 | 94,494 | 1,259,878 |
Cost of goods and services | (55,564) | (273,442) | (158,224) | (525,751) |
Gross profit | (38,720) | 734,127 | (63,730) | 734,127 |
Intangible assets amortization | 134 | 268 | 266 | 268 |
Depreciation | 118,957 | 9,933 | 225,656 | 9,933 |
Net income (loss) | (4,792,780) | (9,346,774) | (12,654,954) | (9,346,774) |
Segment assets | $ 25,811,195 | $ 12,498,980 | $ 25,811,195 | $ 12,498,980 |
Tax Provision (Details - Compon
Tax Provision (Details - Components of Income Tax) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | ||||
Income (Loss) before Income Taxes | $ 4,598,515 | $ (6,595,707) | $ 1,405,620 | $ (7,975,017) |
Income Tax Expense | $ 228,474 | $ 0 | $ 685,088 | $ 0 |
Effective Tax Rate | 4.97% | 0.00% | 48.74% | 0.00% |