Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Jun. 30, 2020 | Aug. 14, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | Stem Holdings, Inc. | |
Entity Central Index Key | 0001697834 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --09-30 | |
Entity Reporting Status Current | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 65,154,028 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2020 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2020 | Sep. 30, 2019 | |
Current assets | |||
Cash and cash equivalents | $ 1,913 | $ 3,339 | [1] |
Accounts receivable, net of allowance for doubtful accounts | 694 | 427 | [1] |
Note receivable | 600 | [1] | |
Inventory | 1,353 | 611 | [1] |
Prepaid expenses and other current assets | 457 | 491 | [1] |
Total current assets | 5,017 | 4,868 | [1] |
Property and equipment, net | 16,620 | 14,706 | [1] |
Investment in equity method investees | 287 | 1,771 | [1] |
Investments in affiliates | 1,951 | 1,827 | [1] |
Deposits and other assets | 130 | 47 | [1] |
Note receivable, long term | 355 | [1] | |
Intangible assets, net | 10,360 | 6,316 | [1] |
Goodwill | 11,613 | 1,070 | [1] |
Due from related party | 55 | 492 | [1] |
Total assets | 46,388 | 31,097 | [1] |
Current liabilities | |||
Accounts payable and accrued expenses | 2,225 | 1,082 | [1] |
Convertible notes, net | 5,996 | 1,888 | [1] |
Short term notes and advances | 2,951 | 3,384 | [1] |
Acquisition notes payable | 679 | 708 | [1] |
Contingent acquisition liability | 1,084 | ||
Due to related party | 666 | [1] | |
Derivative liability | 586 | 158 | [1] |
Warrant liability | 448 | 283 | [1] |
Total current liabilities | 14,635 | 7,503 | [1] |
Long-term debt, mortgages | 3,085 | [1] | |
Total liabilities | 17,720 | 7,503 | [1] |
Commitments and contingencies (Note 16) | [1] | ||
Shareholders' equity | |||
Common stock, $0.001 par value; 300,000,000 shares authorized; 66,616,526 and 52,254,941 shares issued, issuable and outstanding as of June 30, 2020 and September 30, 2019, respectively | 67 | 52 | [1] |
Additional paid-in capital | 75,369 | 61,202 | [1] |
Accumulated deficit | (48,952) | (40,384) | [1] |
Total Stem Holdings stockholder's equity | 26,484 | 20,870 | [1] |
Noncontrolling interest | 2,184 | 2,724 | [1] |
Total shareholders' equity | 28,668 | 23,594 | [1] |
Total liabilities and shareholders' equity | 46,388 | 31,097 | [1] |
Series A Preferred Stock [Member] | |||
Shareholders' equity | |||
Preferred stock, Value | [1] | ||
Series B Preferred Stock [Member] | |||
Shareholders' equity | |||
Preferred stock, Value | [1] | ||
[1] | Derived from audited information |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2020 | Sep. 30, 2019 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 66,616,526 | 52,254,941 |
Common stock, shares outstanding | 66,616,526 | 52,254,941 |
Series A Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, shares outstanding | ||
Series B Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, shares outstanding |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Income Statement [Abstract] | ||||
Gross Revenue | $ 6,696 | $ 621 | $ 10,315 | $ 1,314 |
Discounts and returns | 1,498 | 1,498 | ||
Net Revenue | 5,198 | 621 | 8,817 | 1,314 |
COGS | 3,420 | 258 | 6,062 | 258 |
Gross Profit | 1,778 | 363 | 2,755 | 1,056 |
Operating expenses: | ||||
Consulting fees | 124 | 115 | 2,031 | 297 |
Professional fees | 257 | 418 | 1,780 | 1,269 |
General and administration | 2,176 | 2,948 | 6,234 | 7,513 |
Total operating expenses | 2,557 | 3,481 | 10,045 | 9,079 |
Loss from operations | (779) | (3,118) | (7,290) | (8,023) |
Other income (expenses), net | ||||
Interest expense | (753) | (306) | (2,024) | (1,105) |
Inducement cost | (824) | |||
Change in fair value of derivative liability | (570) | (428) | ||
Change in fair value of warrant liability | 969 | 754 | ||
Foreign currency exchange gain | 187 | 208 | ||
Gain on forgiveness of debt | 40 | 40 | ||
Total other income (expense) | (167) | (266) | (1,490) | (1,889) |
Loss from equity method investees | (1) | (309) | (253) | (467) |
Net loss | (947) | (3,693) | (9,033) | (10,379) |
Net loss attributable to non-controlling interest | (121) | (466) | ||
Net loss attributable to Stem Holdings | $ (826) | $ (3,693) | $ (8,567) | $ (10,379) |
Net loss per share, basic and diluted | $ (0.01) | $ (0.10) | $ (0.15) | $ (0.48) |
Weighted-average shares outstanding, basic and diluted | 66,410,900 | 36,221,702 | 58,762,599 | 21,667,002 |
Condensed Consolidated Statem_2
Condensed Consolidated Statement of Changes in Stockholders' Equity (Unaudited) - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Total Stem Holdings Shareholders' Equity [Member] | Non-Controlling Interest [Member] | Total | |
Balance at Sep. 30, 2018 | $ 10 | $ 19,810 | $ (11,533) | $ 8,287 | $ 8,287 | ||
Balance, shares at Sep. 30, 2018 | 10,177,496 | ||||||
Common stock issued in connection with conversion of notes payable | $ 1 | 2,574 | 2,575 | 2,575 | |||
Common stock issued in connection with conversion of notes payable, shares | 1,430,556 | ||||||
Exercise of stock options | |||||||
Exercise of stock options, shares | (15,662) | ||||||
Yerba Buena acquisition | $ 2 | 4,440 | 4,442 | 4,442 | |||
Yerba Buena acquisition, shares | 1,931,506 | ||||||
Asset Purchase Agreement- 399 & 451 Wallis St and Applegate | 978 | 979 | 979 | ||||
Asset Purchase Agreement- 399 & 451 Wallis St and Applegate, shares | 457,191 | ||||||
Investment in YMY | 450 | 450 | 450 | ||||
Investment in YMY, shares | 187,500 | ||||||
Canaccord fee | 35 | 35 | 35 | ||||
Canaccord Fee, shares | 16,666 | ||||||
Inducement cost to convert convertible notes | 824 | 824 | 824 | ||||
Debt discount for warrants | 84 | 84 | 84 | ||||
Issuance of Canaccord warrants | 483 | 483 | 483 | ||||
Stock based compensation | $ 1 | 1,746 | 1,747 | 1,747 | |||
Stock based compensation, shares | 669,233 | ||||||
Net loss | (4,167) | (4,167) | (4,167) | ||||
Balance at Dec. 31, 2018 | $ 15 | 31,424 | (15,700) | 15,739 | 15,739 | ||
Balance, shares at Dec. 31, 2018 | 14,854,486 | ||||||
Balance at Sep. 30, 2018 | $ 10 | 19,810 | (11,533) | 8,287 | 8,287 | ||
Balance, shares at Sep. 30, 2018 | 10,177,496 | ||||||
Net loss | (10,379) | ||||||
Balance at Jun. 30, 2019 | $ 42 | 56,132 | (22,186) | 33,987 | 33,987 | ||
Balance, shares at Jun. 30, 2019 | 41,645,504 | ||||||
Balance at Sep. 30, 2018 | $ 10 | 19,810 | (11,533) | 8,287 | 8,287 | ||
Balance, shares at Sep. 30, 2018 | 10,177,496 | ||||||
Balance at Sep. 30, 2019 | $ 52 | 61,202 | (40,384) | 20,870 | 2,724 | 23,594 | [1] |
Balance, shares at Sep. 30, 2019 | 52,254,941 | ||||||
Balance at Dec. 31, 2018 | $ 15 | 31,424 | (15,700) | 15,739 | 15,739 | ||
Balance, shares at Dec. 31, 2018 | 14,854,486 | ||||||
Debt discount for warrants | 1,027 | 1,027 | 1,027 | ||||
Stock based compensation | $ 1 | 1,289 | 1,289 | 1,289 | |||
Stock based compensation, shares | 493,329 | ||||||
Common stock issued for investment (South African Ventures) | $ 8 | 14,017 | 14,025 | 14,025 | |||
Common stock issued for investment (South African Ventures), shares | 8,250,000 | ||||||
Net loss | (2,793) | (2,793) | (2,793) | ||||
Balance at Mar. 31, 2019 | $ 24 | 47,757 | (18,493) | 29,287 | 29,287 | ||
Balance, shares at Mar. 31, 2019 | 23,597,815 | ||||||
Yerba Buena acquisition | $ 1 | (580) | (579) | (579) | |||
Yerba Buena acquisition, shares | 560,760 | ||||||
Stock based compensation | $ 1 | 1,711 | 1,712 | 1,712 | |||
Stock based compensation, shares | 886,929 | ||||||
Common Stock issued for Investment (West Coast Ventures) | $ 3 | 4,433 | 4,436 | 4,436 | |||
Common Stock issued for Investment (West Coast Ventures), shares | 2,500,000 | ||||||
Common Stock issued for Related Party Acquisition (CVO) | $ 3 | 3 | 3 | ||||
Common Stock issued for Related Party Acquisition (CVO), shares | 3,173,793 | ||||||
Common Stock issued for Related Party Acquisition (OPCO) | $ 9 | 9 | 9 | ||||
Common Stock issued for Related Party Acquisition (OPCO), shares | 9,326,207 | ||||||
Common Stock to be issued for officers employment agreement | $ 1 | 2,811 | 2,812 | 2,812 | |||
Common Stock to be issued for officers employment agreement, shares | 1,600,000 | ||||||
Net loss | (3,693) | (3,693) | (3,693) | ||||
Balance at Jun. 30, 2019 | $ 42 | 56,132 | (22,186) | 33,987 | 33,987 | ||
Balance, shares at Jun. 30, 2019 | 41,645,504 | ||||||
Balance at Sep. 30, 2019 | $ 52 | 61,202 | (40,384) | 20,870 | 2,724 | 23,594 | [1] |
Balance, shares at Sep. 30, 2019 | 52,254,941 | ||||||
Stock based compensation | $ 1 | 497 | 498 | 498 | |||
Stock based compensation, shares | 100,000 | ||||||
Issuance of common stock in connection with consulting agreement | 4 | 4 | 4 | ||||
Issuance of common stock in connection with consulting agreement, shares | 5,000 | ||||||
Issuance of common stock in connection with asset acquisitions | 394 | 394 | 394 | ||||
Issuance of common stock in connection with asset acquisitions, shares | 394,270 | ||||||
Net loss | (3,077) | (3,077) | (235) | (3,312) | |||
Balance at Dec. 31, 2019 | $ 53 | 62,097 | (43,461) | 18,689 | 2,489 | 21,178 | |
Balance, shares at Dec. 31, 2019 | 52,754,211 | ||||||
Balance at Sep. 30, 2019 | $ 52 | 61,202 | (40,384) | 20,870 | 2,724 | $ 23,594 | [1] |
Balance, shares at Sep. 30, 2019 | 52,254,941 | ||||||
Stock based compensation, shares | 18,750 | ||||||
Net loss | $ (9,033) | ||||||
Balance at Jun. 30, 2020 | $ 66 | 75,369 | (48,952) | 26,484 | 2,184 | 28,668 | |
Balance, shares at Jun. 30, 2020 | 66,616,526 | ||||||
Balance at Dec. 31, 2019 | $ 53 | 62,097 | (43,461) | 18,689 | 2,489 | 21,178 | |
Balance, shares at Dec. 31, 2019 | 52,754,211 | ||||||
Stock based compensation | 47 | 47 | 47 | ||||
Stock based compensation, shares | 303,756 | ||||||
Issuance of common stock in connection with consulting agreement | $ 1 | 1,548 | 1,549 | 1,549 | |||
Issuance of common stock in connection with consulting agreement, shares | 970,416 | ||||||
Issuance of common stock in connection with asset acquisitions | $ 13 | 10,009 | 10,022 | 10,022 | |||
Issuance of common stock in connection with asset acquisitions, shares | 12,681,008 | ||||||
Cancellation of common stock in connection with consulting agreement | $ (1) | (699) | (700) | (700) | |||
Cancellation of common stock in connection with consulting agreement, shares | (700,000) | ||||||
Issuance of common stock related to interest on convertible notes | 121 | 121 | 121 | ||||
Issuance of common stock related to interest on convertible notes, Shares | 202,350 | ||||||
Derivatives | 431 | 431 | 431 | ||||
Net loss | (4,665) | (4,665) | (110) | (4,775) | |||
Balance at Mar. 31, 2020 | $ 66 | 73,554 | (48,126) | 25,494 | 2,379 | 27,873 | |
Balance, shares at Mar. 31, 2020 | 66,211,741 | ||||||
Balance at Dec. 31, 2019 | $ 53 | 62,097 | (43,461) | 18,689 | 2,489 | $ 21,178 | |
Balance, shares at Dec. 31, 2019 | 52,754,211 | ||||||
Common stock issued in connection with conversion of notes payable, shares | 12,500,000 | ||||||
Balance at Jun. 30, 2020 | $ 66 | 75,369 | (48,952) | 26,484 | 2,184 | $ 28,668 | |
Balance, shares at Jun. 30, 2020 | 66,616,526 | ||||||
Balance at Mar. 31, 2020 | $ 66 | 73,554 | (48,126) | 25,494 | 2,379 | 27,873 | |
Balance, shares at Mar. 31, 2020 | 66,211,741 | ||||||
Stock based compensation | 6 | 6 | 6 | ||||
Stock based compensation, shares | 18,750 | ||||||
Issuance of common stock in connection with share exchange agreement | 196 | 197 | (74) | 124 | |||
Issuance of common stock in connection with share exchange agreement, shares | 386,035 | ||||||
Consolidated Ventures of Oregon equity | 1,613 | 1,613 | 1,613 | ||||
Other | (1) | ||||||
Net loss | (826) | (826) | (121) | (947) | |||
Balance at Jun. 30, 2020 | $ 66 | $ 75,369 | $ (48,952) | $ 26,484 | $ 2,184 | $ 28,668 | |
Balance, shares at Jun. 30, 2020 | 66,616,526 | ||||||
[1] | Derived from audited information |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Cash flows from operating activities | ||
Net loss | $ (9,033) | $ (10,379) |
Equity method investee losses | 253 | 467 |
Net loss before equity method investment | (8,780) | (9,912) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock-based compensation expense | 1,913 | 4,675 |
Depreciation and amortization | 1,632 | 699 |
Non-cash interest | 953 | 781 |
Convertible notes inducement expense | 824 | |
Change in fair value of derivative liability | 428 | |
Foreign currency translation adjustment | (208) | |
Other | (317) | |
Changes in operating assets and liabilities: | ||
Accounts receivable, net of allowance for doubtful accounts | 267 | (568) |
Prepaid expenses and other current assets | 539 | (73) |
Inventory | (163) | |
Other assets | (83) | |
Accounts payable and accrued expenses | 488 | 159 |
Deferred revenue | (702) | |
Net cash used in operating activities | (4,053) | (4,117) |
Cash flows from investing activities | ||
Purchase of property and equipment | (433) | (905) |
Advances to related entities | (955) | 9,550 |
Return of cash for equity method investees | 229 | (350) |
Cash acquired in acquisition, net of cash transferred | 349 | (218) |
Project costs | (1,479) | |
Related party advances and repayments received | 60 | 330 |
Related party advances made | (830) | |
Investment in affiliates | (27) | |
Net cash used in investing activities | (750) | 6,071 |
Cash flows from financing activities | ||
Proceeds from advance from NVDRE | 300 | |
Proceeds from notes payable and advances | 4,596 | 150 |
Proceeds from the convertible notes, net of fees paid | 3,058 | |
Other | 81 | |
Cash paid from loan fees | (103) | |
Repayments of notes payable | (1,300) | (344) |
Net cash (used in) provided by financing activities | 3,377 | 3,061 |
Net (decrease) increase in cash and cash equivalents | (1,426) | 5,015 |
Cash and cash equivalents at the beginning of the period | 3,339 | 761 |
Cash and cash equivalents at the end of the period | 1,913 | 5,776 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 421 | |
Supplemental disclosure of noncash activities: | ||
Financed insurance | 327 | 266 |
Stock issued for services capitalized | 4,507 | |
Conversion of debt to equity | 121 | 2,575 |
Transfer of deposit to fixed assets | 126 | |
Deposit YMY stock | 450 | |
Deposit Yerba Oregon stock | 4,215 | |
Deposit CVO and OPCO stock | 12,500 | |
Stock acquisition of South African Ventures | 14,025 | |
Stock acquisition of Western Coast Ventures | 4,435 | |
Debt discount from warrants and beneficial conversion features | 1,912 | |
Projects costs paid in equity | 978 | |
Acquisition of Seven LV | 14,025 | |
Building acquired from related party with equity, net of lien acquired | 394 | |
Consolidation of CVO | 1,613 | |
Acquisition of NVDRE interest | $ 386 |
Incorporation and Operations an
Incorporation and Operations and Going Concern | 9 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Incorporation and Operations and Going Concern | 1. Incorporation and Operations and Going Concern Stem Holdings, Inc. (“Stem” or the “Company”) is a Nevada corporation incorporated on June 7, 2016. The Company is a multi-state, vertically integrated, cannabis company that purchases, improves, leases, operates and invests in properties for use in the production, distribution and sales of cannabis and cannabis-infused products licensed under the laws of the states of Oregon, Nevada, California and Oklahoma. As of June 30, 2020, Stem had ownership interests in 26 state issued cannabis licenses including nine (6) licenses for cannabis cultivation, three (3) licenses for cannabis production, five (5) licenses for cannabis processing, one (1) license for cannabis wholesale distribution, one (1) license for hemp production and ten (10) cannabis dispensary licenses. Stem’s partner consumer brands are award-winning and nationally known, and include cultivators, TJ’s Gardens, Travis X James, and Yerba Buena; retail brands, Stem and TJ’s; infused product manufacturers, Cannavore and Supernatural Honey; and a CBD company, Dose-ology. As of June 30, 2020, the Company has acquired nine commercial properties and leased a seventh property, located in Oregon and Nevada, and has entered into leases to related entities for these properties (see Note 15). As of June 30, 2020, the buildout of these properties to support cannabis related operations was either complete or near completion. The Company has incorporated nine wholly-owned subsidiaries –Stem Holdings Oregon, Inc., Stem Holdings IP, Inc., Opco, LLC, Stem Agri, LLC., Stem Group Oklahoma, Inc. and Stem Holdings Florida, Inc. Stem, through its subsidiaries, is currently in the process of finalizing the investment in and acquisition of entities that engage directly in the production and sale of cannabis, thereby transitioning from a real estate company, with a focus on cannabis industry tenants, to a vertically integrated, multi-state cannabis operating company. The Company’s stock is publicly traded and is listed on the Canadian Securities Exchange under the symbol “STEM” and the OTCQX under the symbol “STMH”. Going Concern As of June 30, 2020, the Company had approximate balances of cash and cash equivalents of $1.9 million, negative working capital of $8.5 million, total stockholders’ equity of $26.4 million and an accumulated deficit of $49 million. These unaudited condensed consolidated financial statements have been prepared on a going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. While the recreational use of cannabis is legal under the laws of certain States, where the Company has and is working towards further finalizing the acquisition of entities or investment in entities that directly produce or sell cannabis, the use and possession of cannabis is illegal under United States Federal law for any purpose, by way of Title II of the Comprehensive Drug Abuse Prevention and Control Act of 1970, otherwise known as the Controlled Substances Act of 1970 (the “ACT”). Cannabis is currently included under Schedule 1 of the Act, making it illegal to cultivate, sell or otherwise possess in the United States. On January 4, 2018, the office of the Attorney General published a memo regarding cannabis enforcement that rescinds directives promulgated under former President Obama that eased federal enforcement. In a January 8, 2018 memo, Jefferson B. Sessions, then Attorney General of the United States, indicated enforcement decisions will be left up to the U.S. Attorney’s in their respective states clearly indicating that the burden is with “federal prosecutors deciding which cases to prosecute by weighing all relevant considerations, including federal law enforcement priorities set by the Attorney General, the seriousness of the crime, the deterrent effect of federal prosecution, and the cumulative impact of particular crimes on the community.” Subsequently, in April 2018, President Trump promised to In December 2019, an outbreak of a novel strain of coronavirus (COVID-19) originated in Wuhan, China, and has since spread to a number of other countries, including the United States. On June 11, 2020, the World Health Organization characterized COVID-19 as a pandemic. In addition, as of the time of the filing of this Annual Report on Form 10-K, several states in the United States have declared states of emergency, and several countries around the world, including the United States, have taken steps to restrict travel. The existence of a worldwide pandemic, the fear associated with COVID-19, or any, pandemic, and the reactions of governments in response to COVID-19, or any, pandemic, to regulate the flow of labor and products and impede the travel of personnel, may impact our ability to conduct normal business operations, which could adversely affect our results of operations and liquidity. Disruptions to our supply chain and business operations disruptions to our retail operations and ou9r ability to collect rent from the properties which we own, personnel absences, or restrictions on the shipment of our or our suppliers’ or customers’ products, any of which could have adverse ripple effects throughout our business. If we need to close any of our facilities or a critical number of our employees become too ill to work, our production ability could be materially adversely affected in a rapid manner. Similarly, if our customers experience adverse consequences due to COVID-19, or any other, pandemic, demand for our products could also be materially adversely affected in a rapid manner. Global health concerns, such as COVID-19, could also result in social, economic, and labor instability in the markets in which we operate. Any of these uncertainties could have a material adverse effect on our business, financial condition or results of operations. These conditions raise substantial doubt as to the Company’s ability to continue as a going concern. Should the United States Federal Government choose to begin enforcement of the provisions under the Act, the Company through its wholly owned subsidiaries could be prosecuted under the Act and the Company may have to immediately cease operations and/or be liquidated upon their closing of the acquisition or investment in entities that engage directly in the production and or sale of cannabis. Management believes that the Company has access to capital resources through potential public or private issuances of debt or equity securities. However, if the Company is unable to raise additional capital, it may be required to curtail operations and take additional measures to reduce costs, including reducing its workforce, eliminating outside consultants and reducing legal fees to conserve its cash in amounts sufficient to sustain operations and meet its obligations. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying condensed consolidated financial statements do not include any adjustments that might become necessary should the Company be unable to continue as a going concern. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The unaudited condensed financial statements included herein are unaudited. Such financial statements, in the opinion of management, contain all adjustments necessary to present fairly the financial position and results of operations as of and for the periods indicated. All such adjustments are of a normal recurring nature. These interim results are not necessarily indicative of the results to be expected for the year ending September 30, 2020 or for any other period. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission, and because of this, for further information, readers should refer to the financial statements and footnotes included in its amended Form 10-K for the fiscal year ended September 30, 2019 filed on March 19, 2020. The Company believes that the disclosures are adequate to make the interim information presented not misleading. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The most significant estimates included in these condensed consolidated financial statements are those associated with the assumptions used to value equity instruments, derivative liabilities and valuation of its long live assets for impairment testing. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable given the circumstances that exist at the time the financial statements are prepared. Actual results may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected. Principals of Consolidation The Company’s policy is to consolidate all entities that it controls by ownership of a majority of the outstanding voting stock. In addition, the Company consolidates entities that meet the definition of a variable interest entity (“VIE”) for which it is the primary beneficiary. The primary beneficiary is the party who has the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and who has an obligation to absorb losses of the entity or a right to receive benefits from the entity that could potentially be significant to the entity. For consolidated entities that are less than wholly owned, the third party’s holding of equity interest is presented as noncontrolling interests in the Company’s condensed consolidated balance sheets and condensed consolidated statements of changes in stockholders’ equity. The portion of net loss attributable to the noncontrolling interests is presented as net loss attributable to noncontrolling interests in the Company’s condensed consolidated statements of operations. In August 2016, the Company and certain shareholders of the Company entered into a “Multi Party” Agreement, in which the Company became obligated to lease or acquire three separate real estate assets, and separately, if certain events occur, additional real estate assets held by entities related to those shareholders. The Agreement also gives the Company the right of first refusal in regard to certain properties owned by the persons and entities affiliated with the parties of the Agreement so long as certain targets are met. In the quarter ended June 30, 2019, the Company issued 12,500,000 shares of its common stock (shares are held in escrow) as it is currently attempting to acquire the set of entities that include Consolidated Ventures of Oregon, LLC (“CVO”) and Opco Holdings, LLC (“Opco”) which comprise the entities within the Multi Party Agreement. In addition, the Company is also currently negotiation with the owners of certain properties contained within the Multi Party Agreement. The Company and owners of CVO and Opco have finalized their agreements, and are waiting for regulatory approval to transfer certain licenses, which has not yet occurred as of the date of this filing, or the date of these consolidated financial statements, however, the Company does believe it will complete the acquisition in the current calendar year. Should the acquisition be completed, the Company will no longer be engaged primarily in property rental operations, but will take over the operations of its primary renters, which is the cultivation, production and sale of cannabis and related productions. Because CVO and Opco are related to the Company, should the acquisition occur, it will not be accounted for as a business combination at fair value under the codification sections of ASC 805. The assets and liabilities will transfer at their historical cost and the company will include the operations of CVO and Opco for all periods presented. The Company has therefore recorded the par value of the shares issued of $12,500 as of September 30, 2019. As of September 30, 2019, the Company has consolidated the entities with the Opco Holdings Group. As of June 30, 2020, the Company has consolidated the entities within the CVO group as it has determined that they are now material. The accompanying unaudited condensed consolidated financial statements include the accounts of Stem Holdings, Inc. and its wholly-owned subsidiaries, Stem Holdings Oregon, Inc., Stem Holdings IP, Inc., Opco, LLC, Stem Agri, LLC., Stem Group Oklahoma, Inc, Stem Holdings Florida, Inc. (what about foothills, SAV and WCV) In addition, the Company has consolidated YMY Ventures, LLC, NVDRE, Inc., Opco Holdings, Inc. and its subsidiaries and CVO and its subsidiaries under the variable interest requirements. All material intercompany accounts, transactions, and profits have been eliminated in consolidation. Loss per Share ASC 260, Earnings Per Share, requires dual presentation of basic and diluted earnings per share (“EPS”) with a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilution. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Basic net loss per share of common stock excludes dilution and is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share of common stock reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity unless inclusion of such shares would be anti-dilutive. Since the Company has only incurred losses, basic and diluted net loss per share is the same. Securities that could potentially dilute loss per share in the future that were not included in the computation of diluted loss per share at June 30, 2020 is as follows: Convertible notes 3,924,075 Options to purchase common stock 4,747,916 Unvested restricted stock awards 1,392,922 Warrants to purchase common stock 4,564,733 14,629,646 Revenue Recognition The Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (Topic 606), the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. Revenue for the Company’s product sales has not been adjusted for the effects of a financing component as the Company expects, at contract inception, that the period between when the Company’s transfers control of the product and when the Company receives payment will be one year or less. Product shipping and handling costs are included in cost of product sales. Effective October 1, 2019, the Company adopted the requirements of ASU 2014-09 (ASC 606) and related amendments, using the modified retrospective method. The adoption of ASC 606 did not have a significant impact on the Company’s revenue recognition policy as revenues related to wholesale and retail revenue are recorded upon transfer of merchandise to the customer, which was the effective policy under ASC 605 previously. The following policies reflect specific criteria for the various revenue streams of the Company: Revenue is recognized upon transfer of retail merchandise to the customer upon sale transaction. The Company’s sales environment is somewhat unique, in that once the product is sold to the customer (retail) or delivered (wholesale) there are essentially no returns allowed or warranty available to the customer under the various state laws. Revenue related to wholesale products is recognized upon receipt by the customer. Disaggregation of Revenue In the three and nine months ended June 30, 2019, the Company’s revenue was primarily rental of land, buildings and improvements in nature, and governed primarily under ASC 840. In the three and nine months ended June 30, 2020, all of the Company’s rental revenue is eliminated upon consolidation, and the revenue reported is primarily from the sale of cannabis and related products accounted for under ASC 606. The following table illustrates our revenue by type related to the three months ended June 30, 2020 and 2019: Three Months Ended June 30, 2020 2019 Revenue Wholesale $ 1,595 $ - Retail 5,072 - Rental 11 361 Other 18 260 Total revenue 6,696 621 Discounts and returns 1,498 - Net Revenue $ 5,198 $ 621 The following table illustrates our revenue by type related to the nine months ended June 30, 2020 and 2019: Nine Months Ended June 30, 2020 2019 Revenue Wholesale $ 2,903 $ - Retail 7,366 - Rental 26 1,053 Other 20 261 Total revenue 10,315 1,314 Discounts and returns 1,498 - Net Revenue $ 8,817 $ 1,314 Recent Accounting Guidance In June 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) ASU 2018-07, C ompensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers In February 2016, the FASB issued ASU No. 2016-02, Leases In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments |
Property, Plant & Equipment
Property, Plant & Equipment | 9 Months Ended |
Jun. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant & Equipment | 3. Property, Plant & Equipment Property and equipment consist of the following (in thousands): June 30, September 30, 2020 2019 Land $ 1,451 $ 1,451 Automobiles 61 61 Signage 19 19 Furniture and equipment 2,291 2,125 Leasehold improvements 3,306 3,197 Buildings and property improvements 12,628 9,719 Computer software 59 59 19,815 16,631 Accumulated depreciation (3,195 ) (1,925 ) Property and equipment, net $ 16,620 $ 14,706 Depreciation and amortization expense was approximately $0.5 million and $1.3 million for the three and nine months ended June 30, 2020. Depreciation and amortization expense was approximately $0.2 million and $0.7 million for the three and nine months ended June 30, 2019. |
Inventory
Inventory | 9 Months Ended |
Jun. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Inventory | 4. Inventory Inventory consists of the following (in thousands): June 30, September 30, 2020 2019 Raw materials $ 844 $ 169 Work-in-progress 129 42 Finished goods 380 400 Total Inventory $ 1,353 $ 611 The Company’s inventory is related to twelve subsidiaries of which seven are consolidated because of their VIE status, four are wholly owned by the Company and one subsidiary that is 50% owned by the Company. Raw materials and work-in-progress include the costs incurred for cultivation materials and live plants. Finished goods consists of cannabis products ready to be sold. There was no inventory reserve as of June 30, 2020 and September 30, 2019. |
Asset Acquisitions
Asset Acquisitions | 9 Months Ended |
Jun. 30, 2020 | |
Business Combinations [Abstract] | |
Asset Acquisitions | 5. Asset Acquisitions November 1, 2019, the Company received 100.0% interest in Empire Holdings, LLC (“EH”). EH leases its facilities to Kind Care, LLC. The Company purchased the property for $500,000 less the lien amount of $105,732 paid in kind and issued 394,270 shares of its common stock in satisfaction of the purchase price. For the period ended June 2020, the Company acquired Seven Leaf Ventures Corp. (“7LV”), a private Alberta corporation, and its subsidiaries, pursuant to the terms of a share purchase agreement dated March 6, 2020. 7LV owns Foothills Health and Wellness, a medical dispensary, in the greater Sacramento, California area. In connection with the acquisition, the Company issued 11,999,008 shares of common stock to former shareholders of 7LV (“7LV Shares”). The Company issued an aggregate 682,000 shares and replaced 10% unsecured convertible debentures in the aggregate principal amount of C4,571,170 ($3,410,000 USD) (the “Replacement Debentures”), convertible into shares at a conversion price of C$1.67 per share at any time prior to May 3, 2021, to former holders of unsecured convertible debentures of 7LV. As part of the Acquisition, the Company assumed the obligations of 7LV with respect to the common share purchase warrants of 7LV outstanding on the closing of the acquisition, subject to appropriate adjustments to reflect the exchange ratio. Accordingly, the Company has assumed 1,022,915 common share purchase warrants (the “Warrants”), exercisable into shares at an exercise price of C$2.08 per share at any time prior to May 3, 2021, 299,975 Warrants, exercisable into shares at an exercise price of C$4.17 per share at any time prior to December 30, 2020 and 999,923 Warrants, exercisable into shares at an exercise price of C$0.50 at any time prior to October 10, 2020. Following the completion of the acquisition, 7LV is now a wholly-owned subsidiary of the Company. Certain shareholders of 7LV, who collectively held approximately 74.5% of the 7LV Shares outstanding at the closing of the acquisition, have agreed to a contractual lock-up pursuant to which such shareholders will not transfer 25% of the Company’s shares received as part of the acquisition until approximately 90 days following the acquisition by 7LV of the Sacramento California Dispensary. With respect to the $3,410 of convertible debt acquired in the acquisition noted above, the Company agreed to issue to the Seven Leaf debenture holders a First Supplemental Indenture dated March 6, 2020. This instrument is entered into for the purpose of providing for the issue of additional debentures in an initial aggregate principal amount of $3,410 designated as 10 percent unsecured convertible debentures under the indenture and establishing the terms, provisions, and conditions of the 10 percent debentures. The table below represents unaudited pro forma revenue and operating loss as if the acquisition of 7LV had occurred in September 2019. Nine months ended June 30, 2020 Revenues $ 5,672 Operating loss $ (25,292 ) The following table presents a preliminary allocation of the purchase price to the net assets acquired, inclusive of intangible assets, with the excess fair value recorded to goodwill. The goodwill is not deductible for tax purposes. These estimates are provisional in nature and adjustments may be recorded in future periods as appraisals and other valuation reviews are finalized. Any necessary adjustments will be finalized within one year from the date of acquisition (in thousands). Consideration Paid (in thousands) Estimated fair value of common stock issued $ 10,022 Estimated fair value of warrants issued 653 Estimated fair value of debt issued 3,410 Contingent consideration 1,084 Total consideration paid $ 15,169 Assets acquired: (in thousands) Cash and cash equivalents $ 81 Accounts Receivable, net - Inventory 131 Prepaid expenses and other current assets 12 Goodwill 10,543 Intangible assets 4,474 Total assets acquired $ 15,241 Liabilities assumed: (in thousands) Accrued expenses and other current liabilities 72 Total liabilities assumed $ 72 Net assets acquired (in thousands) $ 15,169 As part of the Seven LV acquisition, on the anniversary date of the closing, the Company shall pay the seller additional consideration for the purchase price not greater than $1,220,000 based on achieving revenue of $5,000,000 or greater. As of June 30, 2020, the Company has recorded the contingent liability in the amount of $1,084. As of May 2020, the Company entered into a Share Exchange Agreement with the NVDRE shareholders to exchange their shareholdings that represent 12.5 percent of NVDRE in exchange for the issuance of the Company’s common stock. The exchange amounted to the issuance of 386,035 shares of the Company’s common stock valued and recorded to investment at $196,000. |
Notes Receivable
Notes Receivable | 9 Months Ended |
Jun. 30, 2020 | |
Noncontrolling Interest [Abstract] | |
Notes Receivable | 6. Notes Receivable On January 4, 2020, the Company issued a $355,000 promissory note to Community Growth Partners Holdings, Inc., (“CGS”). CGS is a cannabis license holder in Massachusetts. Subject to the terms and conditions of the note, CGS promises to pay the Company all of the outstanding balance together with interest upon the first to occur of (i) the closing of the initial capital equity contribution made by the Company in GCS or (ii) the date that is nine months after the opening of the Great Barrington Dispensary which is planned to open sometime this summer. On January 6, 2020, the Company issued a convertible promissory note to Community Growth Partners Holdings, Inc., (“CGS”) which will act as a line of credit. Subject to the terms and conditions of the note, CGS promises to pay the Company all of the outstanding principal together with interest on the unpaid principal balance upon the date that is twelve months after the effective date and shall be payable as follows: (a)The Company agrees to make several loans to CGS from time to time upon request of CGS in amounts not to exceed the principal sum of $2,000,000, (b) Payment of principal and interest shall be immediately available funds, (c) This note may be prepaid in whole or in part at any time without premium or penalty. Any partial prepayment shall be applied against the principal amount outstanding, (d) The unpaid principal amount outstanding under this note shall bear interest commencing upon the first advance at the rate of 10% per annum through the maturity date, calculated on the basis of a 365-day, until the entire indebtedness is fully paid, (e) Upon the closing of a $2,000,000 financing by the Company, all of the principal and interest shall automatically convert into equity shares of CGS at the price obtained by the qualified financing. Balance outstanding as of June 30, 2020 is approximately $600,000. On January 6, 2020, the Company issued a revolving credit promissory note to Community Growth Partners Holdings, Inc., (“CGS”) which will act as a second line of credit once the convertible prom note is fulfilled. Subject to the terms and conditions of the note, CGS promises to pay the Company, on the fourth anniversary of the effective date, the lesser of $2,500,000 or the aggregate unpaid principal balance amount of the loans made by the Company to CGS from time to time in accordance with the terms together with interest on the unpaid balance. |
Non-Controlling Interests
Non-Controlling Interests | 9 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Non-Controlling Interests | 7. Non-Controlling Interests Non-controlling interests in consolidated entities are as follows (in thousands): As of June 30, 2020 NCI Equity Share Net Loss Attributable to NCI NCI in Consolidated Entities Non-Controlling Ownership % NVD RE Corp. $ 916 $ (43 ) $ 873 50.0 % Western Coast Ventures, Inc. $ 1,287 (192 ) 1,095 49.0 % YMY Ventures, Inc. $ 447 (231 ) 216 50.0 % $ 2,650 $ (466 ) $ 2,184 |
Intangible Assets, Net
Intangible Assets, Net | 9 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets, net | 8. Intangible Assets, net Intangible assets as of June 30, 2020 (in thousands): Estimated Useful Life Cannabis Licenses Tradename Customer Relationship Non-compete Accumulated Amortization Net Carrying Amount Balance as September 30, 2019 $ 5,814 $ 147 $ 135 $ 220 $ - $ 6,316 YMY Ventures (1) 15 - - - - (38 ) (38 ) Western Coast Ventures, Inc. (1) 15 - - - - (122 ) (122 ) Yerba Buena 3-15 years - - - - (172 ) (172 ) Foot Hills 15 4,474 (98 ) 4,376 Other 5 - - - - - - Balance as June 30, 2020 $ 10,288 $ 147 $ 135 $ 220 $ (430 ) $ 10,360 (1) These represent provisional licenses that the Company acquired during the fiscal years ended September 30, 2019 and 2018. Once these licenses are approved by their respective regulatory bodies, the Company will amortize these cannabis licenses over a 15-year estimated useful life. Amortization expense for the three and nine months ended June 30, 2020 was $172 and $430, respectively. |
Related Party
Related Party | 9 Months Ended |
Jun. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related party | 9. Related party In the period ended June 30, 2020, the Company was advanced $490 by the parent company of 7LV. |
Accounts Payable and Accrued Ex
Accounts Payable and Accrued Expenses | 9 Months Ended |
Jun. 30, 2020 | |
Payables and Accruals [Abstract] | |
Accounts Payable and Accrued Expenses | 10. Accounts payable and accrued expenses Accounts payable and accrued expenses consist of the following (in thousands): June 30, 2020 September 30, 2019 Accounts payable $ 1,663 $ 707 Accrued credit cards 38 31 Accrued interest 133 106 Other 393 238 Total Accounts Payable and Accrued Expenses $ 2,226 $ 1,082 |
Notes Payable and Advances
Notes Payable and Advances | 9 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Notes Payable and Advances | 11. Notes Payable and Advances The following table summarizes the Company’s notes, mortgages, and advances as of June 30, 2020 and September 30, 2019 (in thousands): June 30, September 30, 2020 2019 Equipment financing $ 30 $ 33 Insurance financing 174 160 Mortgages payable 1,259 2,191 Promissory note 1,489 1,000 $ 2,952 $ 3,384 Acquisition notes payable 679 708 Total notes payable and advances $ 3,631 $ 4,092 Long-term mortgages 3,085 Equipment financing Effective May 29, 2018, the Company entered into a 24-month premium finance agreement in consideration for a MT85 wide track loader in the principal amount of $27,844. The note bears no annual interest rate and requires the Company to make 24 monthly payments of $1,160 over the term of the note. As of June 30, 2020, the obligation has been paid. No amount was recorded for the premium for the non- interest-bearing feature of the note as it was immaterial. Effective April 29, 2018, the Company entered into a 36-month premium finance agreement in consideration for a John Deere Gator Tractor in the principal amount of $15,710. The note bears no annual interest rate and requires the Company to make thirty-nine monthly payments of $442 over the term of the note. As of June 30, 2020, the obligation outstanding is $4,425. No amount was recorded for the premium for the non-interest-bearing feature of the note as it was immaterial. The note is secured by the equipment financed. November 2017, the Company entered into a promissory note in the amount of $21,749 from a vendor of the Company to finance the acquisition of a security electronics system in one of its properties. The promissory note bears an interest rate of 18% per annum and also contains a 10% servicing fee. The note matures 24 months after issuance and is secured by certain security electronics purchased with proceeds of the note. This vendor is currently in a restructuring and is likely to go out of business. As of June, 2019, the Company has been notified that the vendor holding the note is in bankruptcy and during the year ended September June, 2019, the Company withheld payment under the note. The obligation remains outstanding at $14,950 as of June 30, 2020. Upon acquisition of Yerba Buena on June 24, 2019, the Company assumed the liability of a 2017 tractor with a balance of approximately $18,000. The note bears no annual interest rate and requires the Company to make monthly payments of $482 over the term of the note. As of June 30, 2020, the obligation outstanding is $11,056. No amount was recorded for the premium for the non-interest-bearing feature of the note as it was immaterial. The note is secured by the equipment financed. Insurance financing Effective July 30, 2019, the Company entered into a 10-month premium finance agreement in partial consideration for an insurance policy in the principal amount of $63,101. The note bears an annual interest rate of 7.63% and requires the Company to make ten monthly payments of $4,582 over the term of the note. As of June 30, 2020, the obligation has been paid in full. Effective July 30, 2019, the Company entered into a 10-month premium finance agreement in partial consideration for an insurance policy in the principal amount of $78,900. The note bears an annual interest rate of 7.25% and requires the Company to make ten monthly payments of $5,756 over the term of the note. As of June 30, 2020, the obligation has been paid in full. Effective June 8, 2019, the Company entered into a 10-month premium finance agreement in partial consideration for an insurance policy in the principal amount of $5,975. The note bears an annual interest rate of 5.75% and requires the Company to make ten monthly payments of $513 over the term of the note. As of June 30, 2020, the obligation was paid in full. Effective May 24, 2019, the Company entered into a 9-month premium finance agreement in partial consideration for an insurance policy in the principal amount of $11,440. The note bears an annual interest rate of 8.7% and requires the Company to make 9 monthly payments of $1,322 over the term of the note. As of June 30, 2020, the obligation was paid in full. Effective December 5, 2019, the Company entered into a 12-month premium finance agreement in partial consideration for an insurance policy in the principal amount of $9,490. The note bears an annual interest rate of 8.7% and requires the Company to make 9 monthly payments of $685 over the term of the note. As of June 30, 2020, the obligation outstanding is $1,369. Effective February 7, 2020, the Company entered into a 12-month premium finance agreement in partial consideration for an insurance policy in the principal amount of $300,150. The note bears an annual interest rate of 7.46%. The Company paid $60,255 as a down payment on February 7, 2020, the note requires the Company to make 9 monthly payments of $22,718 over the remaining term of the note. As of June 30, 2020, the obligation outstanding is $159,024. Notes payable In July 2018, the Company entered into an agreement to acquire a 25% interest in East Coast Packers LLC (“ECP”) for the purchase price of $1.5 million, payable in the amount of $500,000 in cash at closing and a note for $1 million. All amounts are payable to ECP. At the time of closing, ECP was a dormant Florida LLC, but owned a citrus fruit dealer license active for the 2015-2016 growing season. This qualified ECP under newly enacted legislation in the state of Florida to apply for a license to produce and sell medical cannabis. Until such time as ECP is granted a medical cannabis license, the $500 paid into ECP may only be expended by ECP in acquiring a medical cannabis license. In the period ended June 30, 2020, the Company and ECP agreed to unwind the transaction. The Company returned its membership interest, the $1 million promissory note was cancelled and the remaining equity method investment of approximately. $236 was written off to loss from equity method investees on the statement of operations and ECP returned $232 of cash to the Company. For the quarter ended June 30, 2020, the Company received loan proceeds of $266,820 pursuant to the Paycheck Protection Program under the CARES Act. The Loan, which was in the form of a promissory note, dated May 01, 2020, between the Company and Transportation Alliance Bank as the lender, matures on May 01, 2022 and bears interest at a fixed rate of 1% per annum, payable monthly commencing in six months. Under the terms of the PPP, the principal may be forgiven if the Loan proceeds are used for qualifying expenses as described in the CARES Act, such as payroll costs, benefits mortgage interest, rent, and utilities. No assurance can be provided that the Company will obtain forgiveness of the Loan in whole or in part. In addition, details of the PPP continue to evolve regarding which companies are qualified to receive loans pursuant to the PPP and on what terms, and the Company may be required to repay some or all of the Loan due to these changes or different interpretations of the PPP requirements. The Promissory Note evidencing the PPP Loan contains customary representations, warranties, and covenants for this type of transaction, including customary events of default relating to, among other things, payment defaults and breaches of representations and warranties or other provisions of the Promissory Note. The occurrence of an event of default may result in, among other things, the Company becoming obligated to repay all amounts outstanding. We continue to evaluate and may still apply for additional programs under the CARES Act, there is no guarantee that we will meet any eligibility requirements to participate in such programs or, even if we are able to participate, that such programs will provide meaningful benefit to our business. For the quarter ended June 30, 2020, the Company’s related entity received loan proceeds of $245,400 pursuant to the Paycheck Protection Program under the CARES Act. The Loan, which was in the form of a promissory note, dated June 03, 2020, between the Company and Coastal States Bank as the lender, matures on June 03, 2022 and bears interest at a fixed rate of 1% per annum, payable monthly commencing in six months. Under the terms of the PPP, the principal may be forgiven if the Loan proceeds are used for qualifying expenses as described in the CARES Act, such as payroll costs, benefits mortgage interest, rent, and utilities. No assurance can be provided that the Company will obtain forgiveness of the Loan in whole or in part. In addition, details of the PPP continue to evolve regarding which companies are qualified to receive loans pursuant to the PPP and on what terms, and the Company may be required to repay some or all of the Loan due to these changes or different interpretations of the PPP requirements. The Promissory Note evidencing the PPP Loan is entered into subject to guidelines applicable to the program and contains customary representations, warranties, and covenants for this type of transaction, including customary events of default relating to, among other things, payment defaults and breaches of representations and warranties or other provisions of the Promissory Note. The occurrence of an event of default may result in, among other things, the Company becoming obligated to repay all amounts outstanding. We continue to evaluate and may still apply for additional programs under the CARES Act, there is no guarantee that we will meet any eligibility requirements to participate in such programs or, even if we are able to participate, that such programs will provide meaningful benefit to our business. For the quarter ended June 30, 2020, the Company’s subsidiary received loan proceeds of $62,500 pursuant to the Paycheck Protection Program under the CARES Act. The Loan, which was in the form of a promissory note, dated June 25, 2020, between the Company and First Home Bank as the lender, matures on June 25, 2022 and bears interest at a fixed rate of 1% per annum, payable monthly commencing in six months. Under the terms of the PPP, the principal may be forgiven if the Loan proceeds are used for qualifying expenses as described in the CARES Act, such as payroll costs, benefits mortgage interest, rent, and utilities. No assurance can be provided that the Company will obtain forgiveness of the Loan in whole or in part. In addition, details of the PPP continue to evolve regarding which companies are qualified to receive loans pursuant to the PPP and on what terms, and the Company may be required to repay some or all of the Loan due to these changes or different interpretations of the PPP requirements. The Promissory Note evidencing the PPP Loan is entered into subject to guidelines applicable to the program and contains customary representations, warranties, and covenants for this type of transaction, including customary events of default relating to, among other things, payment defaults and breaches of representations and warranties or other provisions of the Promissory Note. The occurrence of an event of default may result in, among other things, the Company becoming obligated to repay all amounts outstanding. We continue to evaluate and may still apply for additional programs under the CARES Act, there is no guarantee that we will meet any eligibility requirements to participate in such programs or, even if we are able to participate, that such programs will provide meaningful benefit to our business. Mortgages payable On January 16, 2018 the Company consummated a “Contract for Sale” for a Farm Property in Mulino OR (the “Mulino Property”). The purchase price was $1,700,000 which was reduced by a rental credit of approximately $135,000 which is equivalent to nine months’ rent at $15,000 a month and an additional credit of $9,500 for additional work done on the property. In connection with the purchase of the property, the Company made a cash payment as down payment plus payment of closing costs in the amount of $370,637 and issued a promissory note in the amount of $1,200,000 with a maturity of January 2020. The Company will pay monthly installments of principal and interest (at a rate of 2% per annum) in the amount of $13,500, commencing in July 2018 through the maturity date (January 2020), at which time the entire unpaid principal balance and any remaining accrued interest shall be due and payable in full. No amount was recorded for the premium for the below market rate feature of the note as it was immaterial. The note is secured by a deed of trust on the property. The Company performed an analysis and determined that the rate obtained was below market, however, no premium was recorded as the Company determined it was immaterial. At June 30, 2020, the balance due is $958,500. Currently the Company has received a verbal extension through the next quarter to procure additional financing on this property to pay off the indebtedness. On February 28, 2018, the Company executed a $550,000 mortgage payable on the Willamette property to acquire additional funds. The mortgage bears interest at 15% per annum. Monthly interest only payments began June 1, 2018 and continue each month thereafter until paid. The entire unpaid balance is due on June 1, 2020, the maturity date of the mortgage, and is secured by the underlying property. The Company paid costs of approximately $28,000 to close on the mortgage. The mortgage terms do not allow participation by the lender in either the appreciation in the fair value of the mortgaged real estate project or the results of operations of the mortgaged real estate project. The note has been cross guaranteed by the CEO and Director of the Company. The amount outstanding was $550,000 under this mortgage. In June 2020, the Company completed a refinance of this mortgage. In the refinance, the Company entered into a mortgage, secured by the property with an additional personal guaranty of the CEO of the Company, for $700,000 with an annual interest rate of 15%, paid points at closing totaling $42,000 and a maturity date of June 30, 2022 On April 4, 2018, the Company executed a $304,000 mortgage payable on the Powell property to acquire additional funds. At closing $75,000 of the proceeds was put into escrow. The mortgage bears interest at 15% per annum. Monthly interest only payments began May 1, 2018 and continue each month thereafter until paid. The entire unpaid balance is due on April 1, 2020, the maturity date of the mortgage, and is secured by the underlying property. The Company plaid costs of approximately $19,000 to close on the mortgage. The mortgage terms do not allow participations by the lender in either the appreciation in the fair value of the mortgaged real estate project or the results of operations of the mortgaged real estate project. The note has been cross guaranteed by the CEO and Director of the Company. The amount outstanding was $304,000. In January 2020, the Company completed a refinance of this mortgage. In the refinance, the Company entered into a mortgage, secured by the property with an additional personal guaranty of the CEO plus an assignment of the right and title in all of CEO’s common shares of the Company as collateral under the mortgage, for $400,000 with an annual interest rate of 15%, paid points at closing totaling $24,000 and a maturity date of January 30, 2022. In April 2018, the Company received a 37.5% interest in NVD RE Corp. (“NVD”) upon its issuance to NVD of a commitment to contribute $1.275 million to NVD which included the purchase price of $600,000 and an additional commitment to pay tenant improvement costs of $675,000. In the year ended September 30, 2019, NVD obtained $300,000 in proceeds from a mortgage on its property. The funds from this mortgage were advanced to the Company. The advance is undocumented, non-interest bearing and due on demand. At June 30, 2020, the balance due totals $300,000. For the period ended June 2020, the Company executed a $1,585,000 mortgage payable on property located in Oregon to acquire additional funds. The mortgage bears interest at 11.55% per annum. Monthly interest only payments began April 1, 2020 and continue each month thereafter until paid. The entire unpaid balance is due on April 1, 2023, the maturity date of the mortgage, and is secured by the underlying property. The Company paid costs of approximately $120,000 to close on the mortgage. The mortgage terms do not allow participation by the lender in either the appreciation in the fair value of the mortgaged real estate project or the results of operations of the mortgaged real estate project. The note has been cross guaranteed by the CEO and Director of the Company. For the period ended June 30, 2020, the Company executed a $400,000 mortgage payable on property located in Oregon to acquire additional funds. The mortgage bears interest at 11.55% per annum. Monthly interest only payments began May 1, 2020 and continue each month thereafter until paid. The entire unpaid balance is due on April 1, 2022, the maturity date of the mortgage, and is secured by the underlying property. The Company paid costs of approximately $38,000 to close on the mortgage. The mortgage terms do not allow participation by the lender in either the appreciation in the fair value of the mortgaged real estate project or the results of operations of the mortgaged real estate project. The note has been cross guaranteed by the CEO and Director of the Company. Acquisition Notes Payable In April 2019, the Company entered into a promissory note with a principal balance of $400,000 related to its acquisition of Yerba Buena, Oregon LLC. The note was issued on April 8, 2019 and is due on April 8, 2021. The note has a coupon interest rate of 8%. As of June 30, 2020, the Company has made payments of $28,093 leaving a balance of $371,907 in Short-term liabilities. In September 2018, the Company entered into an agreement to acquire 50% of the membership interest of YMY. In connection with this agreement, the Company recorded a note payable of approximately $300,000. As of June 30, 2020, the Company has not made any payments related to this note. Other Promissory Notes In January 2020, the Company issued a promissory note with a principal balance of $500,000 to accredited investors (the “Note Holders”). The notes mature in July 2020 and has an annual rate of interest of 12%. In connection with the issuance of the promissory notes, the Company issued the Note Holders 100,000 common stock purchase warrants with a five-year term from the issuance date, $0.85 per. In January 2020, the Company issued another promissory notes with a principal balance of $500,000 to accredited investors (the “Note Holders”). The notes mature in October 2020 and has an annual rate of interest of 12%. In connection with the issuance of the promissory notes, the Company issued the Note Holders 100,000 common stock purchase warrants with a five-year term from the issuance date, $0.85 per. |
Convertible Debt
Convertible Debt | 9 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Convertible Debt | 12. Convertible debt 8% Convertible notes Nine-month term During the year ended September 30, 2018, the Company issued convertible promissory notes with a principal balance of $975,000 to accredited investors (the “Note Holders”). The notes matured in June 2019 and had an annual rate of interest of 8%. Unless the notes are prepaid, the notes will automatically convert at the maturity date into shares of the Company’s common stock at a conversion price of $2.50 per share. In October 2018, the Company offered the convertible note holders the opportunity to receive a reduced conversion price from $2.50 per share to $1.80 per share as an inducement for the Note Holders to convert the notes. As of October 30, 2018, all of the convertible note holders agreed to convert at the reduced price offered by the Company. The Company issued 541,668 shares of common stock in conversion of the notes. The Company recognized an inducement cost associated with the conversion of the convertible promissory notes of approximately $0.368 million with a corresponding credit to additional paid-in capital. In connection with the issuance of the convertible promissory notes, the Company issued the Note Holders common stock purchase warrants with a three year term from the issuance date, providing the Note Holders the right to purchase 97,500 shares of the Company’s common stock at $2.50 per share, with standard anti-dilution protection. After allocating issuance proceeds to the warrant liability, the effective conversion price of the convertible promissory notes was below the quoted market price of the Company’s common stock. As such, the Company recognized beneficial conversion feature equal to the intrinsic value of the conversion feature on the issuance date, resulting in an additional discount to the initial carrying value of the convertible promissory notes of approximately $0.5 million with a corresponding credit to additional paid-in capital. As of June 30, 2020, the balance of the warrant liability for these debentures is 0. Twelve-month term In May and June 2018, the Company issued senior unsecured convertible notes with a principal balance of $1.5 million to accredited investors (the “Note Holders”). The notes matured in May 2019 and had an annual rate of interest at 8%. Accrued interest was payable quarterly in arrears on the fifth day of each calendar quarter. The notes ranked senior to all obligations not designated as a primary obligation by the Company. The Note Holders were entitled to convert all or any amount of the principal balance then outstanding into shares of the Company’s common stock at a conversion price of $2.50 per share. On November 1, 2018, the Company reduced the conversion price from $2.50 per share to $1.80 per share as an inducement for the Note Holders to convert the notes. Since the notes are optionally convertible by the Note Holders, were issued at par value and did not contain any detachable instruments, the effective conversion price is equal to the stated conversion price of $1.80 per share. The Company recognized an inducement cost associated with the conversion of the convertible promissory notes of approximately $0.9 million with a corresponding credit to additional paid-in capital. During October 2018, the Note Holders fully converted the notes into 833,333 shares of the Company’s common stock and the debt discount related to the notes was fully amortized. Canaccord On December 27, 2018, the Company entered into an Agency Agreement (the “Agency Agreement”) for a private offering of up to 10,000 convertible debenture special warrants of the Company (the “CD Special Warrants”) for aggregate gross proceeds of up to CDN$10,000,000 (the “Offering”). The net proceeds of the Offering were used for expansion initiatives and general corporate purposes. The Company’s functional currency is U.S. dollars. In December 2018 and January 2019, the Company issued 3,121 CD Special Warrants in the first closing of the Offering, at a price of CDN $1,000 per CD Special Warrant, and received aggregate gross proceeds of CDN $3.1 million or $2.3 million USD. In connection with this offering, the Company issued the agents in such offering 52,4June convertible debenture special warrants (the “Broker CD Special Warrants”) as partial satisfaction of a selling commission. On June 14, 2019, the Company issued 962 CD Special Warrants in the second and final closing of the Offering, at a price of CDN $1,000 per CD Special Warrant, and received aggregate gross proceeds of CDN $1.0 million or $0.7 million USD. In connection with this offering, the Company issued the agents in such offering 5,600 convertible debenture special warrants (the “Broker CD Special Warrants”) as partial satisfaction of a selling commission. The total aggregate proceeds of the Offering totaled $4.1 million CDN or $3.1 million USD. Each CD Special Warrant will be exchanged (with no further action on the part of the holder thereof and for no further consideration) for one convertible debenture unit of the Company (a “Convertible Debenture Unit”), on the earlier of: (i) the third business day after the date on which both (A) a receipt (the “Receipt”) for a (final) prospectus (the “Qualification Prospectus”) qualifying the distribution of the Convertible Debentures (as defined below) and Warrants (as defined below) issuable upon exercise of the CD Special Warrants has been issued by the applicable securities regulatory authorities in the Canadian jurisdictions in which purchasers of the CD Special Warrants are resident (the “Canadian Jurisdictions”), and (B) a registration statement (the “Registration Statement”) registering the resale of the common shares underlying the Convertible Debentures and Warrants has been declared effective by the U.S. Securities and Exchange Commission (the “Registration”); and (ii) the date that is nine months following the closing of the Offering. The Company has also provided certain registration rights to purchasers of the CD Special Warrants. The CD Special Warrants were exchanged for Convertible Debenture Units after nine months as U.S. and Canadian registrations were not effective at that time. Each Convertible Debenture Unit is comprised of CDN $1,000 principal amount 8.0% senior unsecured convertible debenture (each, a “Convertible Debenture”) of the Company and 167 common share purchase warrants of the Company (each, a “Warrant”). Each Warrant entitles the holder to purchase one common share of the Company (each, a “Warrant Share”) at an exercise price of CDN $3.90 per Warrant Share for a period of 24 months following the closing of the Offering (see Note 17). The Company has agreed to use its best efforts to obtain the Receipt and Registration within nine months following the closing of the Offering. In the event that the Receipt and Registration have not been obtained on or before 5:00 p.m. (PST) on the date that is 120 days following the closing of the Offering, each unexercised CD Special Warrant will thereafter entitle the holder thereof to receive, upon the exercise thereof and at no additional cost, 1.05 Convertible Debenture Units per CD Special Warrant (instead of 1.0 Convertible Debenture Unit per CD Special Warrant). Until the Receipt and Registration have been obtained, securities issued in connection with the Offering (including any underlying securities issued upon conversion or exercise thereof) will be subject to a 6-month hold period from the date of issue. Since the CD Special Warrants were exchanged for Convertible Debenture Units after 6 months as U.S. and Canadian registrations were not effective at that time, the holders received 1.05 Convertible Debenture Units per CD Special Warrant. The brokered portion of the Offering (CDN $2.5 million, $1.9 million USD) was completed by a syndicate of agents (collectively, the “Agents”). The Company paid the Agents a cash commission equal to 7.0% of the gross proceeds raised in the brokered portion of the Offering. As additional consideration, the Company issued the Agents such number of non-transferable broker convertible debenture special warrants (the “Broker CD Special Warrants”) as is equal to 7.0% of the number of CD Special Warrants sold under the brokered portion of the Offering. Each Broker CD Special Warrant shall be exchanged, on the same terms as the CD Special Warrants, into broker warrants of the Company (the “Broker Warrants”). Each Broker Warrant entitles the holder to acquire one Convertible Debenture Unit at an exercise price of CDN $1,000, until the date that is 24 months from the closing date of the Offering. The distribution of the Broker Warrants issuable upon the exchange of the Broker CD Special Warrants shall also be qualified under the Qualification Prospectus and the resale of the common shares underlying the Broker Warrants will be registered under the Registration Statement. The Company also paid the lead agent a commission noted above of CDN$157,290, corporate finance fee equal to CDN $50,000 in cash and as to $50,000 in common shares of the Company at a price per share of CDN $3.00 plus additional expenses of CDN$20,000. In addition, the Company paid the trustees legal fees of CDN$181,365. In total the Company approx. USD $0.32 million in fees and expenses associated with the offering. The issuance of the securities was made in reliance on the exemption provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), for the offer and sale of securities not involving a public offering, Regulation D promulgated under the Securities Act, Regulation S, in Canada to “accredited investors” within the meaning of National Instrument 45106 and other exempt purchasers in each province of Canada, except Quebec, and/or outside Canada and the United States on a basis which does not require the qualification or registration. The securities being offered have not been registered under the Securities Act and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons absent registration or an applicable exemption from the registration requirements. The Convertible Debenture features contain the following embedded derivatives: ● Conversion Option - The Convertible Debentures provide the holder the right to convert all or any portion of the outstanding principal into common shares of the Company at a conversion price of C$3.00 such that 333.33 common shares are issued for each C$1,000 of principal of Convertible Debentures converted. ● Contingent Put - Upon an Event of Default, the Convertible Debentures settle for cash at the outstanding principal and interest amount (at discretion of the Indenture Trustee or upon request of Holders of 25% or more of principal of the Convertible Debentures). ● Contingent Put - Upon a Change in Control, the Convertible Debentures settle for cash at the outstanding amount and principal and interest * 105% (where Holder accepts a Change of Control Offer). The conversion option, the contingent put feature upon an Event of Default, and the contingent put feature upon a Change in Control should be bifurcated and recognized collectively as a compound embedded derivative at fair value at inception and at each quarterly reporting period. A five percent penalty assessed for failure to timely file a registration statement to register the stock underlying the CD special warrants. The Company valued the warrants granted using the Black-Scholes pricing model and determined that the value at grant date was approximately $424,000 USD (this includes the warrants issued as part of the penalty for failure to timely file the required registration statement under the indenture agreement). The significant assumptions used in the valuation are as follows: Fair value of underlying common shares $ 1.78 to 2.10 Exercise price (converted to USD) $ 1.125 Dividend yield - Historical volatility 115 % Risk free interest rate 1.40 to 1.90 % The warrants are not indexed to the Company’s own stock under ASC 815, Derivatives and Hedging. As such, the warrants do not meet the scope exception in ASC 815-10-15-74(a) to derivative accounting and therefore were accounted for as a liability in accordance with the guidance in ASC 815. The warrant liability was recorded at the date of grant at fair value with subsequent changes in fair value recognized in earnings each reporting period. The table below shows the warrant liability and embedded derivative liability recorded in connection with the Canaccord convertible notes and the subsequent fair value measurement during the nine months ended June 30, 2020 in USD, ( in thousands Warrant Liability Derivative Liability Balance at September 30, 2019 $ 42 $ 158 Change in fair value (7 ) (21 ) Balance at December 31, 2019 35 137 Change in fair value (15 ) (121 ) Balance at March 31, 2020 20 16 Change in fair value 50 570 Balance at June 30, 2020 $ 70 $ 586 The table below shows the net amount of convertible notes as of June 30, 2020 in USD ( in thousands June 30, 2020 Principal value of 8%, convertible at $0.84 at June 30, 2020, due December 27, 2020 including penalty provision of $155,239 $ 2,901 Principal value of 10%, convertible at $1.22 at June 30, 2020, due May 30, 2021 (see note 5) 3,410 Debt discount (557 ) Cumulative foreign currency impact 242 Carrying value of convertible notes $ 5,996 In April, 2020 the Company received approval of the holders Warrant holders of the warrants and the holders debenture holders of the Convertible Debentures to reprice the convertible securities issued in connection with the Company’s special warrant financing, which closed on December 27, 2018 and June 14, 2019. The share purchase warrants of the Company issued in connection with the financing will be repriced to C$1.50 per Common Share and the convertible debentures of the Company issued in connection with the financing will be repriced to C$1.15 per common share. Additionally, the Debenture holders have approved the following amendments to the terms of the convertible debentures: (i) an extension to the maturity date of the convertible debentures to three years from the date of issuance; and (ii) an amendment to permit the Company to force the conversion of the principal amount of the then outstanding convertible debentures and any accrued and unpaid interest thereof at the new conversion price on not less than June days’ prior written notice if the closing trading price of the shares of common stock of the Company’s common shares exceeds C$1.90 for a period of 10 consecutive trading days on the CSE. The Warrant holders have also approved the inclusion of an early acceleration feature in accordance with the policies of the Canadian Securities Exchange, permitting the Company to accelerate the expiry date of the warrants should the closing trading price of the Common Shares exceed C$1.87 for a period of 10 consecutive trading days on the CSE. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 13. Fair Value Measurements In accordance with ASC 820 (Fair Value Measurements and Disclosures), the Company uses various inputs to measure the outstanding warrants and certain embedded conversion feature associated with convertible debt on a recurring basis to determine the fair value of the liability. ASC 820 also establishes a hierarchy categorizing inputs into three levels used to measure and disclose fair value. The hierarchy gives the highest priority to quoted prices available in active markets and the lowest priority to unobservable inputs. An explanation of each level in the hierarchy is described below: Level 1 – Unadjusted quoted prices in active markets for identical instruments that are accessible by the Company on the measurement date Level 2 – Quoted prices in markets that are not active or inputs which are either directly or indirectly observable Level 3 – Unobservable inputs for the instrument requiring the development of assumptions by the Company The following table classifies the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy as of June 30, 2020 (in thousands): Fair value measured at June 30, 2020 Quoted Significant prices in other Significant Fair value (Level 1) (Level 2) (Level 3) Warrant liability $ 448 $ - $ - $448 Embedded derivative liability 586 - - 586 Total fair value $ 1,034 $ - $ - $1,034 There were no transfers between Level 1, 2 or 3 during the nine months ended June 30, 2020. The following table presents changes in Level 3 liabilities measured at fair value for the nine months ended June 30, 2020. Both observable and unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long- dated volatilities) inputs (in thousands). Embedded Warrant Liability Derivative Liability Total Balance – September 30, 2019 $ 283 $ 158 $ 441 Warrants granted for stock-based compensation - - - Change in fair value (38 ) (21 ) (59 ) Balance - December 31, 2019 245 137 382 Warrants issued pursuant to acquisition (see Note 5) 823 823 Warrants granted for stock-based compensation 105 - 105 Change in fair value 254 (121 ) 133 Other (10 ) - (10 ) Balance - March 31, 2020 1,417 16 1,433 Change in fair value (969 ) 570 (399 ) Balance - June 30, 2020 $ 448 $ 586 $ 1,034 A summary of the weighted average (in aggregate) significant unobservable inputs (Level 3 inputs) used in measuring the Company’s warrant liabilities and embedded conversion feature that are categorized within Level 3 of the fair value hierarchy as of June 30, 2020 is as follows: Warrant Liability As of Strike price $ 0.45 Contractual term (years) 1 to 3 Volatility (annual) 115 % Risk-free rate .29 % Dividend yield (per share) 0 % Embedded Derivative Liability As of As of Strike price $ 1.36 $ 0.80 Contractual term (years) 1.5 1.2 Volatility (annual) 122 % 85 % Risk-free rate 1.36 % 1.68 % Dividend yield (per share) 0 % 11.12 % The Company used a lattice based trinomial model developed by Tsiveriotis, K. and Fernades in which the three lattices incorporate (1) the Company’s underlying common stock price; (2) the value of the debt components of the convertible notes; and (3) the value of the equity component of the convertible notes. The main drivers of sensitivity for the model are volatility and the credit spread. The model used will vary by approximately 1.5% for a 4% change in volatility and will vary by less than 1% for each 1% change in credit spread. |
Shareholders' Equity
Shareholders' Equity | 9 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Shareholders' Equity | 14. Shareholders’ Equity Preferred shares The Company had two series of preferred shares designated with no preferred shares issued and outstanding as of June 30, 2020 and September 30, 2019. Common shares As of May 2020, the Company entered into a Share Exchange Agreement with the NVDRE shareholders to exchange their shareholdings that represent 12.5 percent of NVDRE in exchange for the issuance of the Company’s common stock. The exchange amounted to the issuance of 386,030 shares of the Company’s common stock valued and recorded to investment at $196,000 (see note 5). During the nine months ended June 30, 2020, the Company issued 394,270 shares of its common stock in connection with a Membership Interest Purchase Agreement for real property located in Eugene, Oregon. The agreed upon purchase price was $500 less the lien of $106. The Company acquired the property from a related party and recorded the building at its carrying value of approximately $500. In connection with this transaction the Company issued 394,270 common shares at $1.00 per share. Pursuant to the acquisition of 7LV, the Company issued 11,999,008 shares of common stock to former shareholders of 7LV. The Company also issued an aggregate 682,000 shares and replacement 10% unsecured convertible debentures in the aggregate principal amount of C$4,571 ($3,410 USD) (the “Replacement Debentures”), convertible into shares at a conversion price of C$1.67 per share at any time prior to May 3, 2021, to former holders of unsecured convertible debentures of 7LV (see note 5). The Company issued 202,350 common shares for the fair value of $121 in partial payment of interest on convertible notes in connection with the Seven Leaf Ventures Corporation acquisition. Common stock issuances for compensation: During the three months ended December 30, 2019, the Company issued 5,000 shares of its common stock related to a consulting agreement for a fair value of approximately $4 or $0.89 per share. During the three months ended December 30, 2019, the Company issued 100,000 shares of its common stock related to an employment agreement for a fair value of approximately $498. During the period ended June 30, 2020, the Company issued 970,416 shares of its common stock related to various consulting agreements for a fair value of approximately $850 or $0.88 per share. During the same period, the Company cancelled 700,000 common shares related to consulting agreements. During the period ended June 30, 2020, the Company issued 303,756 shares of its common stock related to various employment agreements for a fair value of approximately $47. During the period ended June 30, 2020, the Company issued 18,750 shares of the Company’s common stock valued at $6 as stock-based compensation. |
Stock Based Compensation
Stock Based Compensation | 9 Months Ended |
Jun. 30, 2020 | |
Compensation Related Costs [Abstract] | |
Stock Based Compensation | 15. Stock Based Compensation Stock Options The fair value of the Company’s common stock was based upon the publicly quoted price on the date that the final approval of the awards was obtained. The Company does not expect to pay dividends in the foreseeable future so therefore the expected dividend yield is 0%. The expected term for stock options granted with service conditions represents the average period the stock options are expected to remain outstanding and is based on the expected term calculated using the approach prescribed by the Securities and Exchange Commission’s Staff Accounting Bulletin for “plain vanilla” options for options granted in 2019. The expected term for stock options granted with performance and/or market conditions represents the period estimated by management by which the performance conditions will be met. The Company obtained the risk-free interest rate from publicly available data published by the Federal Reserve. The Company uses a methodology in estimating its volatility percentage from a computation that was based on a comparison of average volatility rates of similar companies to a computation based on the standard deviation of the Company’s own underlying stock price’s daily logarithmic returns. The fair value of options granted during the nine months ended June 30, 2020 were estimated using the following weighted-average assumptions: Options: For the Nine Months Ended Exercise price $0.80 - $4.00 Expected term (years) .5 - 4.0 Expected stock price volatility 108.8% - 188.6 % Risk-free rate of interest 1.6 % Expected dividend rate 0 % A summary of option activity under the Company’s stock option plan for nine months ended June 30, 2020 is presented below: Number of Shares Weighted Average Exercise Price Total Intrinsic Value Weighted Average Remaining Contractual Life (in years) Outstanding as of September 30, 2019 3,210,416 $ 2.45 $ - 2.1 Granted 1,262,500 $ 1.19 $ - 2.3 Outstanding as of December 31, 2019 4,472,916 $ 2.09 $ - 2.0 Granted 275,000 Outstanding as of March 31, 2020 4,747,916 $ 2.03 $ - 1.66 Granted - - - - Outstanding as of June 30, 2020 4,747,916 2.03 - 1.41 Options vested and exercisable 4,435,416 $ 2.10 $ - 1.40 Estimated future stock-based compensation expense relating to unvested stock options was approximately $0.3 million as of June 30, 2020. Weighted average remaining contractual life of the options is 2.0 years. Stock-based Compensation Expense Stock-based compensation expense for the three and nine months ended June 30, 2020 and 2019 was comprised of the following (in thousands): Three months ended June 30, 2020 2019 Stock grants $ 6 $ 3,995 Stock options - 135 Warrants - - Total stock-based compensation $ 6 $ 4,130 Nine months ended June 30, 2020 2019 Stock grants $ 1,193 $ 5,991 Stock options 615 478 Warrants 105 697 Total stock-based compensation $ 1,913 $ 7,166 In the 4 th |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 16. Commitments and Contingencies As noted earlier in Note 1, the Company, engages in a business that constitutes an illegal act under the laws of the United States Federal Government. This raises several possible issues which may impact the Company’s overall operations, not the least of which are related to traditional banking and other key operational risks. Since cannabis remains illegal on the federal level, and most traditional banks are federally insured, those financial institutions will not service cannabis businesses. In states where medical or recreational marijuana is legal, dispensary owners, manufacturers, and anybody who “touches the plant,” continue to face a host of operational hurdles. While local, state-chartered banks and credit unions now accept cannabis commerce, there remains a reluctance by traditional banks to do business with them. Aside from a huge inconvenience and the need to find creative ways to manage financial flow, payroll logistics, and payment of taxes, this also poses tremendous risks to controls as a result of operating a lucrative business in cash. This lack of access to traditional banking may inhibit industry growth. In the period ended June 30, 2020, the Company’s accounts with a major money center bank were closed as the bank would not allow the Company to continue to use its banking network. Despite the uncertainties surrounding the Federal government’s position on legalized marijuana, the Company does not believe these risks will have a substantive impact on its planned operations in the near term. As of June 30, 2020, the Company has acquired interests in several entities. As part of those interests, the Company has commitments to fund the acquisition of licenses and permits to allow for the cultivation and sale of cannabis and related products in the United States and Eswatini. As of June 30, 2020, Company estimates that its investees will need up to approximately $2.5 million to complete the acquisition of licenses and permits, to fund the buildout or expansion of facilities to fully operate in their respective cannabis markets, which will encompass several years of development. Effective January 2019, the Company entered into a one-year Board Member agreement, and as part of that agreement for services agreed to issue 250,000 shares of the Company’s common stock and 250,000 options priced at $1.00. D.H. Flamingo, Inc. v. Department of Taxation, et. al. On February 27, 2020, a subsidiary of the Company (YMY Ventures, LLC) was served with a Summons and Second Amended Complaint in a matter pending in the District Court of Clark County Nevada (Case # A-19-787004-B) which is styled “D.H. Flamingo, Inc. v. Department of Taxation, et. al. Chord Advisors, LLC v. Stem Holdings, Inc., et. al. On June 5, 2020 Chord Advisors, LLC (“Chord”) filed a Complaint in the Circuit Court of the Fifteenth Judicial District in and for Palm Beach County, Florida (Case # 502020CA006097) alleging that Stem Holdings, Inc. owes Chord approximately $260,000 on account of fees for accounting services accrued pursuant to a Letter of Agreement dated October 2019. On July 6, 2020, the Company filed an Answer and Affirmative Defenses to the Complaint. This matter is in its early stages and, while the Company believes that it has meritorious defenses to the matters detailed in the Complaint, it is impossible to predict the outcome of the matter. Lili Enterprises, LLC adv. YMY Ventures and OPCO, LLC In July 2020, a dispute arose with the Company’s joint venture partner in connection with the Company’s operations in the State of Nevada. In this regard, the Company’s joint venture partner claims that it is owed certain amounts totaling approximately $307,500 pursuant to the joint venture Operating Agreement. On the other hand, the Company claims that the joint venture partner is in breach of its agreements with the Company and that the Company has heretofore advanced over $1 million in excess of its commitments under the Operating Agreement. The operative agreements require the disputes to be arbitrated. The parties have engaged an arbitrator and the matters are set for an arbitration hearing in February 2021. Ultimately, while the Company believes that a settlement will be reached, it is impossible to predict the outcome of the matter. For the period ended June 2020, the Company entered into a nine-month consulting agreement, and as part of that agreement for professional services, agreed to issue a total of 350,000 shares of the Company’s common stock and $100,000 cash compensation. Pursuant to the agreement, all 350,000 shares of common stock will be restricted securities. For the period ended 2020, the Company entered into a nine-month consulting agreement, and as part of that agreement for professional services, agreed to issue a total of 100,000 shares of the Company’s common stock and $10,000 cash compensation. Pursuant to the agreement, all 100,000 shares of common stock will be restricted securities |
Subsequent Events
Subsequent Events | 9 Months Ended |
Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | 17. Subsequent Events In July 2020, the Company’s wholly owned subsidiary in Oregon received loan proceeds of $220,564 pursuant to the Paycheck Protection Program under the CARES Act. The Loan, which was in the form of a promissory note, dated July 09, 2020, between the Company and Cross River Bank as the lender, matures on July 09, 2022 and bears interest at a fixed rate of 1% per annum, payable monthly commencing in six months. Under the terms of the PPP, the principal may be forgiven if the Loan proceeds are used for qualifying expenses as described in the CARES Act, such as payroll costs, benefits mortgage interest, rent, and utilities. No assurance can be provided that the Company will obtain forgiveness of the Loan in whole or in part. In addition, details of the PPP continue to evolve regarding which companies are qualified to receive loans pursuant to the PPP and on what terms, and the Company may be required to repay some or all of the Loan due to these changes or different interpretations of the PPP requirements. The Promissory Note evidencing the PPP Loan is entered into subject to guidelines applicable to the program and contains customary representations, warranties, and covenants for this type of transaction, including customary events of default relating to, among other things, payment defaults and breaches of representations and warranties or other provisions of the Promissory Note. The occurrence of an event of default may result in, among other things, the Company becoming obligated to repay all amounts outstanding. We continue to evaluate and may still apply for additional programs under the CARES Act, there is no guarantee that we will meet any eligibility requirements to participate in such programs or, even if we are able to participate, that such programs will provide meaningful benefit to our business. The Company filed a Registration Statement with respect to the prospective sale of up to 10,000,000 shares of Common Stock which was declared effective by the U.S. Securities Exchange Commission on July 2, 2020. As of the date of this report, none of the registered shares have been sold and, as a result, there are no proceeds of sales to report.” |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The unaudited condensed financial statements included herein are unaudited. Such financial statements, in the opinion of management, contain all adjustments necessary to present fairly the financial position and results of operations as of and for the periods indicated. All such adjustments are of a normal recurring nature. These interim results are not necessarily indicative of the results to be expected for the year ending September 30, 2020 or for any other period. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission, and because of this, for further information, readers should refer to the financial statements and footnotes included in its amended Form 10-K for the fiscal year ended September 30, 2019 filed on March 19, 2020. The Company believes that the disclosures are adequate to make the interim information presented not misleading. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The most significant estimates included in these condensed consolidated financial statements are those associated with the assumptions used to value equity instruments, derivative liabilities and valuation of its long live assets for impairment testing. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable given the circumstances that exist at the time the financial statements are prepared. Actual results may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected. |
Principals of Consolidation | Principals of Consolidation The Company’s policy is to consolidate all entities that it controls by ownership of a majority of the outstanding voting stock. In addition, the Company consolidates entities that meet the definition of a variable interest entity (“VIE”) for which it is the primary beneficiary. The primary beneficiary is the party who has the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and who has an obligation to absorb losses of the entity or a right to receive benefits from the entity that could potentially be significant to the entity. For consolidated entities that are less than wholly owned, the third party’s holding of equity interest is presented as noncontrolling interests in the Company’s condensed consolidated balance sheets and condensed consolidated statements of changes in stockholders’ equity. The portion of net loss attributable to the noncontrolling interests is presented as net loss attributable to noncontrolling interests in the Company’s condensed consolidated statements of operations. In August 2016, the Company and certain shareholders of the Company entered into a “Multi Party” Agreement, in which the Company became obligated to lease or acquire three separate real estate assets, and separately, if certain events occur, additional real estate assets held by entities related to those shareholders. The Agreement also gives the Company the right of first refusal in regard to certain properties owned by the persons and entities affiliated with the parties of the Agreement so long as certain targets are met. In the quarter ended June 30, 2019, the Company issued 12,500,000 shares of its common stock (shares are held in escrow) as it is currently attempting to acquire the set of entities that include Consolidated Ventures of Oregon, LLC (“CVO”) and Opco Holdings, LLC (“Opco”) which comprise the entities within the Multi Party Agreement. In addition, the Company is also currently negotiation with the owners of certain properties contained within the Multi Party Agreement. The Company and owners of CVO and Opco have finalized their agreements, and are waiting for regulatory approval to transfer certain licenses, which has not yet occurred as of the date of this filing, or the date of these consolidated financial statements, however, the Company does believe it will complete the acquisition in the current calendar year. Should the acquisition be completed, the Company will no longer be engaged primarily in property rental operations, but will take over the operations of its primary renters, which is the cultivation, production and sale of cannabis and related productions. Because CVO and Opco are related to the Company, should the acquisition occur, it will not be accounted for as a business combination at fair value under the codification sections of ASC 805. The assets and liabilities will transfer at their historical cost and the company will include the operations of CVO and Opco for all periods presented. The Company has therefore recorded the par value of the shares issued of $12,500 as of September 30, 2019. As of September 30, 2019, the Company has consolidated the entities with the Opco Holdings Group. As of June 30, 2020, the Company has consolidated the entities within the CVO group as it has determined that they are now material. The accompanying unaudited condensed consolidated financial statements include the accounts of Stem Holdings, Inc. and its wholly-owned subsidiaries, Stem Holdings Oregon, Inc., Stem Holdings IP, Inc., Opco, LLC, Stem Agri, LLC., Stem Group Oklahoma, Inc, Stem Holdings Florida, Inc. (what about foothills, SAV and WCV) In addition, the Company has consolidated YMY Ventures, LLC, NVDRE, Inc., Opco Holdings, Inc. and its subsidiaries and CVO and its subsidiaries under the variable interest requirements. All material intercompany accounts, transactions, and profits have been eliminated in consolidation. |
Loss Per Share | Loss per Share ASC 260, Earnings Per Share, requires dual presentation of basic and diluted earnings per share (“EPS”) with a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilution. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Basic net loss per share of common stock excludes dilution and is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share of common stock reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity unless inclusion of such shares would be anti-dilutive. Since the Company has only incurred losses, basic and diluted net loss per share is the same. Securities that could potentially dilute loss per share in the future that were not included in the computation of diluted loss per share at June 30, 2020 is as follows: Convertible notes 3,924,075 Options to purchase common stock 4,747,916 Unvested restricted stock awards 1,392,922 Warrants to purchase common stock 4,564,733 14,629,646 |
Revenue Recognition | Revenue Recognition The Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (Topic 606), the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. Revenue for the Company’s product sales has not been adjusted for the effects of a financing component as the Company expects, at contract inception, that the period between when the Company’s transfers control of the product and when the Company receives payment will be one year or less. Product shipping and handling costs are included in cost of product sales. Effective October 1, 2019, the Company adopted the requirements of ASU 2014-09 (ASC 606) and related amendments, using the modified retrospective method. The adoption of ASC 606 did not have a significant impact on the Company’s revenue recognition policy as revenues related to wholesale and retail revenue are recorded upon transfer of merchandise to the customer, which was the effective policy under ASC 605 previously. The following policies reflect specific criteria for the various revenue streams of the Company: Revenue is recognized upon transfer of retail merchandise to the customer upon sale transaction. The Company’s sales environment is somewhat unique, in that once the product is sold to the customer (retail) or delivered (wholesale) there are essentially no returns allowed or warranty available to the customer under the various state laws. Revenue related to wholesale products is recognized upon receipt by the customer. |
Disaggregation of Revenue | Disaggregation of Revenue In the three and nine months ended June 30, 2019, the Company’s revenue was primarily rental of land, buildings and improvements in nature, and governed primarily under ASC 840. In the three and nine months ended June 30, 2020, all of the Company’s rental revenue is eliminated upon consolidation, and the revenue reported is primarily from the sale of cannabis and related products accounted for under ASC 606. The following table illustrates our revenue by type related to the three months ended June 30, 2020 and 2019: Three Months Ended June 30, 2020 2019 Revenue Wholesale $ 1,595 $ - Retail 5,072 - Rental 11 361 Other 18 260 Total revenue 6,696 621 Discounts and returns 1,498 - Net Revenue $ 5,198 $ 621 The following table illustrates our revenue by type related to the nine months ended June 30, 2020 and 2019: Nine Months Ended June 30, 2020 2019 Revenue Wholesale $ 2,903 $ - Retail 7,366 - Rental 26 1,053 Other 20 261 Total revenue 10,315 1,314 Discounts and returns 1,498 - Net Revenue $ 8,817 $ 1,314 |
Recent Accounting Guidance | Recent Accounting Guidance In June 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) ASU 2018-07, C ompensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers In February 2016, the FASB issued ASU No. 2016-02, Leases In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Schedule of Computation of Diluted Loss | Securities that could potentially dilute loss per share in the future that were not included in the computation of diluted loss per share at June 30, 2020 is as follows: Convertible notes 3,924,075 Options to purchase common stock 4,747,916 Unvested restricted stock awards 1,392,922 Warrants to purchase common stock 4,564,733 14,629,646 |
Schedule of Disaggregation of Revenue | The following table illustrates our revenue by type related to the three months ended June 30, 2020 and 2019: Three Months Ended June 30, 2020 2019 Revenue Wholesale $ 1,595 $ - Retail 5,072 - Rental 11 361 Other 18 260 Total revenue 6,696 621 Discounts and returns 1,498 - Net Revenue $ 5,198 $ 621 The following table illustrates our revenue by type related to the nine months ended June 30, 2020 and 2019: Nine Months Ended June 30, 2020 2019 Revenue Wholesale $ 2,903 $ - Retail 7,366 - Rental 26 1,053 Other 20 261 Total revenue 10,315 1,314 Discounts and returns 1,498 - Net Revenue $ 8,817 $ 1,314 |
Property, Plant & Equipment (Ta
Property, Plant & Equipment (Tables) | 9 Months Ended |
Jun. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Plant and Equipment | Property and equipment consist of the following (in thousands): June 30, September 30, 2020 2019 Land $ 1,451 $ 1,451 Automobiles 61 61 Signage 19 19 Furniture and equipment 2,291 2,125 Leasehold improvements 3,306 3,197 Buildings and property improvements 12,628 9,719 Computer software 59 59 19,815 16,631 Accumulated depreciation (3,195 ) (1,925 ) Property and equipment, net $ 16,620 $ 14,706 |
Inventory (Tables)
Inventory (Tables) | 9 Months Ended |
Jun. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Inventory consists of the following (in thousands): June 30, September 30, 2020 2019 Raw materials $ 844 $ 169 Work-in-progress 129 42 Finished goods 380 400 Total Inventory $ 1,353 $ 611 |
Asset Acquisitions (Tables)
Asset Acquisitions (Tables) | 9 Months Ended |
Jun. 30, 2020 | |
Noncontrolling Interest [Abstract] | |
Schedule of Pro Forma Revenue and Operating Loss | The table below represents unaudited pro forma revenue and operating loss as if the acquisition of 7LV had occurred in September 2019. Nine months ended June 30, 2020 Revenues $ 5,672 Operating loss $ (25,292 ) |
Summary of Business Combination Asset Acquired and Liabilities Assumed | Consideration Paid (in thousands) Estimated fair value of common stock issued $ 10,022 Estimated fair value of warrants issued 653 Estimated fair value of debt issued 3,410 Contingent consideration 1,084 Total consideration paid $ 15,169 Assets acquired: (in thousands) Cash and cash equivalents $ 81 Accounts Receivable, net - Inventory 131 Prepaid expenses and other current assets 12 Goodwill 10,543 Intangible assets 4,474 Total assets acquired $ 15,241 Liabilities assumed: (in thousands) Accrued expenses and other current liabilities 72 Total liabilities assumed $ 72 Net assets acquired (in thousands) $ 15,169 |
Non-Controlling Interests (Tabl
Non-Controlling Interests (Tables) | 9 Months Ended |
Jun. 30, 2020 | |
Noncontrolling Interest [Abstract] | |
Schedule of Non-Controlling Interests in Consolidated Entities | Non-controlling interests in consolidated entities are as follows (in thousands): As of June 30, 2020 NCI Equity Share Net Loss Attributable to NCI NCI in Consolidated Entities Non-Controlling Ownership % NVD RE Corp. $ 916 $ (43 ) $ 873 50.0 % Western Coast Ventures, Inc. $ 1,287 (192 ) 1,095 49.0 % YMY Ventures, Inc. $ 447 (231 ) 216 50.0 % $ 2,650 $ (466 ) $ 2,184 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 9 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | Intangible assets as of June 30, 2020 (in thousands): Estimated Useful Life Cannabis Licenses Tradename Customer Relationship Non-compete Accumulated Amortization Net Carrying Amount Balance as September 30, 2019 $ 5,814 $ 147 $ 135 $ 220 $ - $ 6,316 YMY Ventures (1) 15 - - - - (38 ) (38 ) Western Coast Ventures, Inc. (1) 15 - - - - (122 ) (122 ) Yerba Buena 3-15 years - - - - (172 ) (172 ) Foot Hills 15 4,474 (98 ) 4,376 Other 5 - - - - - - Balance as June 30, 2020 $ 10,288 $ 147 $ 135 $ 220 $ (430 ) $ 10,360 (1) These represent provisional licenses that the Company acquired during the fiscal years ended September 30, 2019 and 2018. Once these licenses are approved by their respective regulatory bodies, the Company will amortize these cannabis licenses over a 15-year estimated useful life. Amortization expense for the three and nine months ended June 30, 2020 was $172 and $430, respectively. |
Accounts payable and Accrued _2
Accounts payable and Accrued Expenses (Tables) | 9 Months Ended |
Jun. 30, 2020 | |
Payables and Accruals [Abstract] | |
Schedule of Accounts Payable and Accrued Expenses | Accounts payable and accrued expenses consist of the following (in thousands): June 30, 2020 September 30, 2019 Accounts payable $ 1,663 $ 707 Accrued credit cards 38 31 Accrued interest 133 106 Other 393 238 Total Accounts Payable and Accrued Expenses $ 2,226 $ 1,082 |
Notes Payable and Advances (Tab
Notes Payable and Advances (Tables) | 9 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Short-term Notes and Advances | The following table summarizes the Company’s notes, mortgages, and advances as of June 30, 2020 and September 30, 2019 (in thousands): June 30, September 30, 2020 2019 Equipment financing $ 30 $ 33 Insurance financing 174 160 Mortgages payable 1,259 2,191 Promissory note 1,489 1,000 $ 2,952 $ 3,384 Acquisition notes payable 679 708 Total notes payable and advances $ 3,631 $ 4,092 Long-term mortgages 3,085 |
Convertible Debt (Tables)
Convertible Debt (Tables) | 9 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Assumptions Value Warrant Granted | The significant assumptions used in the valuation are as follows: Fair value of underlying common shares $ 1.78 to 2.10 Exercise price (converted to USD) $ 1.125 Dividend yield - Historical volatility 115 % Risk free interest rate 1.40 to 1.90 % |
Schedule of Embedded Derivative Liability | The table below shows the warrant liability and embedded derivative liability recorded in connection with the Canaccord convertible notes and the subsequent fair value measurement during the nine months ended June 30, 2020 in USD, ( in thousands Warrant Liability Derivative Liability Balance at September 30, 2019 $ 42 $ 158 Change in fair value (7 ) (21 ) Balance at December 31, 2019 35 137 Change in fair value (15 ) (121 ) Balance at March 31, 2020 20 16 Change in fair value 50 570 Balance at June 30, 2020 $ 70 $ 586 |
Schedule of Convertible Notes | The table below shows the net amount of convertible notes as of June 30, 2020 in USD ( in thousands June 30, 2020 Principal value of 8%, convertible at $0.84 at June 30, 2020, due December 27, 2020 including penalty provision of $155,239 $ 2,901 Principal value of 10%, convertible at $1.22 at June 30, 2020, due May 30, 2021 (see note 5) 3,410 Debt discount (557 ) Cumulative foreign currency impact 242 Carrying value of convertible notes $ 5,996 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of Liabilities Measured at Fair Value on a Recurring Basis | The following table classifies the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy as of June 30, 2020 (in thousands): Fair value measured at June 30, 2020 Quoted Significant prices in other Significant Fair value (Level 1) (Level 2) (Level 3) Warrant liability $ 448 $ - $ - $448 Embedded derivative liability 586 - - 586 Total fair value $ 1,034 $ - $ - $1,034 |
Schedule of Level 3 Liabilities Measured at Fair Value | Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long- dated volatilities) inputs (in thousands). Embedded Warrant Liability Derivative Liability Total Balance – September 30, 2019 $ 283 $ 158 $ 441 Warrants granted for stock-based compensation - - - Change in fair value (38 ) (21 ) (59 ) Balance - December 31, 2019 245 137 382 Warrants issued pursuant to acquisition (see Note 5) 823 823 Warrants granted for stock-based compensation 105 - 105 Change in fair value 254 (121 ) 133 Other (10 ) - (10 ) Balance - March 31, 2020 1,417 16 1,433 Change in fair value (969 ) 570 (399 ) Balance - June 30, 2020 $ 448 $ 586 $ 1,034 |
Summary of Weighted Average Significant Unobservable Inputs | A summary of the weighted average (in aggregate) significant unobservable inputs (Level 3 inputs) used in measuring the Company’s warrant liabilities and embedded conversion feature that are categorized within Level 3 of the fair value hierarchy as of June 30, 2020 is as follows: Warrant Liability As of Strike price $ 0.45 Contractual term (years) 1 to 3 Volatility (annual) 115 % Risk-free rate .29 % Dividend yield (per share) 0 % Embedded Derivative Liability As of As of Strike price $ 1.36 $ 0.80 Contractual term (years) 1.5 1.2 Volatility (annual) 122 % 85 % Risk-free rate 1.36 % 1.68 % Dividend yield (per share) 0 % 11.12 % |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 9 Months Ended |
Jun. 30, 2020 | |
Compensation Related Costs [Abstract] | |
Schedule of Fair Value of Options Granted | The fair value of options granted during the nine months ended June 30, 2020 were estimated using the following weighted-average assumptions: Options: For the Nine Months Ended Exercise price $0.80 - $4.00 Expected term (years) .5 - 4.0 Expected stock price volatility 108.8% - 188.6 % Risk-free rate of interest 1.6 % Expected dividend rate 0 % |
Summary of Stock Option Activity | A summary of option activity under the Company’s stock option plan for nine months ended June 30, 2020 is presented below: Number of Shares Weighted Average Exercise Price Total Intrinsic Value Weighted Average Remaining Contractual Life (in years) Outstanding as of September 30, 2019 3,210,416 $ 2.45 $ - 2.1 Granted 1,262,500 $ 1.19 $ - 2.3 Outstanding as of December 31, 2019 4,472,916 $ 2.09 $ - 2.0 Granted 275,000 Outstanding as of March 31, 2020 4,747,916 $ 2.03 $ - 1.66 Granted - - - - Outstanding as of June 30, 2020 4,747,916 2.03 - 1.41 Options vested and exercisable 4,435,416 $ 2.10 $ - 1.40 |
Schedule of Stock-based Compensation Expenses | Stock-based compensation expense for the three and nine months ended June 30, 2020 and 2019 was comprised of the following (in thousands): Three months ended June 30, 2020 2019 Stock grants $ 6 $ 3,995 Stock options - 135 Warrants - - Total stock-based compensation $ 6 $ 4,130 Nine months ended June 30, 2020 2019 Stock grants $ 1,193 $ 5,991 Stock options 615 478 Warrants 105 697 Total stock-based compensation $ 1,913 $ 7,166 |
Incorporation and Operations _2
Incorporation and Operations and Going Concern (Details Narrative) - USD ($) $ in Thousands | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | [1] | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||
Cash and cash equivalents | $ 1,913 | $ 3,339 | |||||||
Working capital | (8,500) | ||||||||
Stockholder's equity | 28,668 | $ 27,873 | $ 21,178 | 23,594 | $ 33,987 | $ 29,287 | $ 15,739 | $ 8,287 | |
Accumulated deficit | $ (48,952) | $ (40,384) | |||||||
[1] | Derived from audited information |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended |
Dec. 31, 2018 | Jun. 30, 2020 | Sep. 30, 2019 | |
Stock issued during the period | 12,500,000 | ||
Stock issued during the period, value | $ 2,575 | ||
Accounting Standards Update 2016-02 [Member] | |||
Operating lease liabilities | $ 1,300 | ||
Right of use of asset | $ 1,300 | ||
Multi-Party Agreement [Member] | |||
Stock issued during the period, value | $ 12,500 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Computation of Diluted Loss (Details) | 9 Months Ended |
Jun. 30, 2020shares | |
Antidilutive Securities excluded from computation of earnings per share, amount | 14,629,646 |
Convertible Notes [Member] | |
Antidilutive Securities excluded from computation of earnings per share, amount | 3,924,075 |
Options to Purchase Common Stock [Member] | |
Antidilutive Securities excluded from computation of earnings per share, amount | 4,747,916 |
Unvested Restricted Stock Awards [Member] | |
Antidilutive Securities excluded from computation of earnings per share, amount | 1,392,922 |
Warrants to Purchase Common Stock [Member] | |
Antidilutive Securities excluded from computation of earnings per share, amount | 4,564,733 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Schedule of Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Total Revenue | $ 6,696 | $ 621 | $ 10,315 | $ 1,314 |
Discounts and returns | 1,498 | 1,498 | ||
Net revenue | 5,198 | 621 | 8,817 | 1,314 |
Wholesale [Member] | ||||
Total Revenue | 1,595 | 2,903 | ||
Retail [Member] | ||||
Total Revenue | 5,072 | 7,366 | ||
Rental [Member] | ||||
Total Revenue | 11 | 361 | 26 | 1,053 |
Other [Member] | ||||
Total Revenue | $ 18 | $ 260 | $ 20 | $ 261 |
Property, Plant & Equipment (De
Property, Plant & Equipment (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2020 | Mar. 31, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation and amortization expense | $ 500 | $ 200 | $ 1,300 | $ 700 |
Property, Plant & Equipment - S
Property, Plant & Equipment - Schedule of Property, Plant and Equipment (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Sep. 30, 2019 | |
Property and equipment, gross | $ 19,815 | $ 16,631 | |
Accumulated depreciation | (3,195) | (1,925) | |
Property and equipment, net | 16,620 | 14,706 | [1] |
Land [Member] | |||
Property and equipment, gross | 1,451 | 1,451 | |
Automobiles [Member] | |||
Property and equipment, gross | 61 | 61 | |
Signage [Member] | |||
Property and equipment, gross | 19 | 19 | |
Furniture and Equipment [Member] | |||
Property and equipment, gross | 2,291 | 2,125 | |
Leasehold Improvements [Member] | |||
Property and equipment, gross | 3,306 | 3,197 | |
Buildings and Property Improvements [Member] | |||
Property and equipment, gross | 12,628 | 9,719 | |
Computer Software [Member] | |||
Property and equipment, gross | $ 59 | $ 59 | |
[1] | Derived from audited information |
Inventory (Details Narrative)
Inventory (Details Narrative) - USD ($) | Jun. 30, 2020 | Sep. 30, 2019 |
Inventory reserve | ||
Owned by One Subsidiaries [Member] | ||
Equity method investment, ownership percentage | 50.00% |
Inventory - Schedule of Invento
Inventory - Schedule of Inventory (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Sep. 30, 2019 | |
Inventory Disclosure [Abstract] | |||
Raw materials | $ 844 | $ 169 | |
Work-in-progress | 129 | 42 | |
Finished goods | 380 | 400 | |
Total Inventory | $ 1,353 | $ 611 | [1] |
[1] | Derived from audited information |
Asset Acquisitions (Details Nar
Asset Acquisitions (Details Narrative) | Nov. 01, 2019USD ($)shares | Jun. 30, 2020USD ($)$ / sharesshares | Jun. 30, 2020USD ($)$ / sharesshares | Jun. 30, 2019USD ($) | Jun. 30, 2020CAD ($)shares | May 31, 2020 | Apr. 30, 2020$ / shares |
Purchase of property | $ 433,000 | $ 905,000 | |||||
Debt instrument, interest rate | 8.00% | 8.00% | 8.00% | ||||
Debt instrument, conversion price | $ / shares | $ 0.84 | $ 0.84 | $ 1.90 | ||||
Warrants exercise price | $ / shares | $ 1.50 | ||||||
Share Exchange Agreement [Member] | |||||||
Debt instrument, interest rate | 12.50% | ||||||
Purchase price | $ 1,220,000 | ||||||
Achievement of revenue | 5,000,000 | ||||||
Contingent liability | $ 1,084 | $ 1,084 | |||||
Seven Leaf Ventures Corp [Member] | |||||||
Number of shares issued for purchase price | shares | 11,999,008 | ||||||
Issuance of common stock convertible debentures, shares | shares | 682,000 | ||||||
Debt instrument, interest rate | 10.00% | 10.00% | 10.00% | ||||
Business acquisition, planned restructuring activities, description | The Company assumed the obligations of 7LV with respect to the common share purchase warrants of 7LV outstanding on the closing of the acquisition, subject to appropriate adjustments to reflect the exchange ratio. Accordingly, the Company has assumed 1,022,915 common share purchase warrants (the "Warrants"), exercisable into shares at an exercise price of C$2.08 per share at any time prior to May 3, 2021, 299,975 Warrants, exercisable into shares at an exercise price of C$4.17 per share at any time prior to December 30, 2020 and 999,923 Warrants, exercisable into shares at an exercise price of C$0.50 at any time prior to October 10, 2020. Following the completion of the acquisition, 7LV is now a wholly-owned subsidiary of the Company. Certain shareholders of 7LV, who collectively held approximately 74.5% of the 7LV Shares outstanding at the closing of the acquisition, have agreed to a contractual lock-up pursuant to which such shareholders will not transfer 25% of the Company's shares received as part of the acquisition until approximately 90 days following the acquisition by 7LV of the Sacramento California Dispensary. | ||||||
Seven Leaf Ventures Corp [Member] | Unsecured Convertible Debentures [Member] | |||||||
Debt instrument, interest rate | 10.00% | 10.00% | 10.00% | ||||
Unsecured convertible debentures | $ 3,410 | $ 3,410 | |||||
Debt instrument, conversion price | $ / shares | $ 1.67 | $ 1.67 | |||||
Number of warrants to purchase shares | shares | 1,022,915 | 1,022,915 | 1,022,915 | ||||
Seven Leaf Ventures Corp [Member] | Unsecured Convertible Debentures [Member] | CAD [Member] | |||||||
Unsecured convertible debentures | $ 4,571 | ||||||
Warrants exercise price | $ / shares | $ 2.08 | $ 2.08 | |||||
Seven Leaf Ventures Corp [Member] | Unsecured Convertible Debentures [Member] | |||||||
Number of warrants to purchase shares | shares | 299,975 | 299,975 | 299,975 | ||||
Warrants exercise price | $ / shares | $ 4.17 | $ 4.17 | |||||
Seven Leaf Ventures Corp [Member] | Unsecured Convertible Debentures [Member] | |||||||
Number of warrants to purchase shares | shares | 999,923 | 999,923 | 999,923 | ||||
Warrants exercise price | $ / shares | $ 0.50 | $ 0.50 | |||||
Seven Leaf Ventures Corp [Member] | Seven Leaf Debenture Holders [Member] | |||||||
Debt instrument face amount | $ 3,410 | $ 3,410 | |||||
Empire Holdings LLC [Member] | |||||||
Equity method investment, ownership percentage | 100.00% | ||||||
Purchase of property | $ 500,000 | ||||||
Paid in kind lien amount | $ 105,732 | ||||||
Number of shares issued for purchase price | shares | 394,270 |
Asset Acquisitions - Schedule o
Asset Acquisitions - Schedule of Pro Forma Revenue and Operating Loss (Details) | 9 Months Ended |
Jun. 30, 2020USD ($) | |
Equity Method Investments and Joint Ventures [Abstract] | |
Revenues | $ 5,672 |
Operating loss | $ (25,292) |
Asset Acquisitions - Summary of
Asset Acquisitions - Summary of Business Combination Asset Acquired and Liabilities Assumed (Details) - USD ($) | 9 Months Ended | ||
Jun. 30, 2020 | Sep. 30, 2019 | [1] | |
Goodwill | $ 11,613,000 | $ 1,070,000 | |
Seven Leaf Ventures Corp [Member] | |||
Estimated fair value of common stock issued | 10,022 | ||
Estimated fair value of warrants issued | 653 | ||
Estimated fair value of debt issued | 3,410 | ||
Contingent consideration | 1,084 | ||
Total consideration paid | 15,169 | ||
Cash and cash equivalents | 81 | ||
Accounts Receivable, net | |||
Inventory | 131 | ||
Prepaid expenses and other current assets | 12 | ||
Goodwill | 10,543 | ||
Intangible assets | 4,474 | ||
Total assets acquired | 15,241 | ||
Accrued expenses and other current liabilities | 72 | ||
Total liabilities assumed | 72 | ||
Net assets acquired (in thousands) | $ 15,169 | ||
[1] | Derived from audited information |
Notes Receivable (Details Narra
Notes Receivable (Details Narrative) - USD ($) | Jun. 30, 2020 | Jan. 06, 2020 | Jan. 04, 2020 |
Debt instrument, interest rate | 8.00% | ||
Community Growth Partners Holdings, Inc., [Member] | |||
Promissory note issued, value | $ 355,000 | ||
Loans receivable | $ 600,000 | $ 2,000,000 | |
Debt instrument, interest rate | 10.00% | ||
Community Growth Partners Holdings, Inc., [Member] | revolving credit promissory note [Member] | |||
Loans receivable | $ 2,500,000 |
Non-Controlling Interests - Sch
Non-Controlling Interests - Schedule of Non-Controlling Interests in Consolidated Entities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Sep. 30, 2019 | [1] | |
NCI Equity Share | 2,650 | |||||
Net Loss Attributable to NCI | $ (121) | $ (466) | ||||
NCI in Consolidated Entities | 2,184 | $ 2,184 | $ 2,724 | |||
NVD RE Corp. [Member] | ||||||
NCI Equity Share | 916 | |||||
Net Loss Attributable to NCI | $ (43) | |||||
NCI in Consolidated Entities | $ 873 | $ 873 | ||||
Non-Controlling Ownership, percentage | 50.00% | 50.00% | ||||
Western Coast Ventures, Inc. [Member] | ||||||
NCI Equity Share | 1,287 | |||||
Net Loss Attributable to NCI | $ (192) | |||||
NCI in Consolidated Entities | $ 1,095 | $ 1,095 | ||||
Non-Controlling Ownership, percentage | 49.00% | 49.00% | ||||
YMY Ventures, Inc. [Member] | ||||||
NCI Equity Share | 447 | |||||
Net Loss Attributable to NCI | $ (231) | |||||
NCI in Consolidated Entities | $ 216 | $ 216 | ||||
Non-Controlling Ownership, percentage | 50.00% | 50.00% | ||||
[1] | Derived from audited information |
Intangible Assets, Net - Schedu
Intangible Assets, Net - Schedule of Intangible Assets (Details) $ in Thousands | 9 Months Ended | |
Jun. 30, 2020USD ($) | ||
Balance, beginning | $ 6,316 | |
Accumulated Amortization | 430 | |
Balance, ending | 10,360 | |
YMY Ventures LLC [Member] | ||
Accumulated Amortization | (38) | [1] |
Balance, ending | $ (38) | [1] |
Estimated Useful Life | 15 years | [1] |
Western Coast Ventures, Inc. (WCV) [Member] | ||
Accumulated Amortization | $ (122) | [1] |
Balance, ending | $ (122) | [1] |
Estimated Useful Life | 15 years | [1] |
Yerba Buena, LLC [Member] | ||
Accumulated Amortization | $ (172) | |
Balance, ending | $ (172) | |
Yerba Buena, LLC [Member] | Minimum [Member] | ||
Estimated Useful Life | 3 years | |
Yerba Buena, LLC [Member] | Maximum [Member] | ||
Estimated Useful Life | 15 years | |
Foot Hills [Member] | ||
Accumulated Amortization | $ (98) | |
Balance, ending | $ 4,376 | |
Estimated Useful Life | 15 years | |
Other [Member] | ||
Accumulated Amortization | ||
Balance, ending | ||
Estimated Useful Life | 5 years | |
Cannabis Licenses [Member] | ||
Balance, beginning | $ 5,814 | |
Balance, ending | 10,288 | |
Cannabis Licenses [Member] | YMY Ventures LLC [Member] | ||
Balance, beginning | [1] | |
Balance, ending | [1] | |
Cannabis Licenses [Member] | Western Coast Ventures, Inc. (WCV) [Member] | ||
Balance, beginning | [1] | |
Balance, ending | [1] | |
Estimated Useful Life | ||
Cannabis Licenses [Member] | Yerba Buena, LLC [Member] | ||
Balance, beginning | ||
Balance, ending | ||
Cannabis Licenses [Member] | Foot Hills [Member] | ||
Balance, beginning | 4,474 | |
Balance, ending | ||
Cannabis Licenses [Member] | Other [Member] | ||
Balance, beginning | ||
Balance, ending | ||
Trade Name [Member] | ||
Balance, beginning | 147 | |
Balance, ending | 147 | |
Trade Name [Member] | YMY Ventures LLC [Member] | ||
Balance, beginning | [1] | |
Balance, ending | [1] | |
Trade Name [Member] | Western Coast Ventures, Inc. (WCV) [Member] | ||
Balance, beginning | [1] | |
Balance, ending | [1] | |
Estimated Useful Life | ||
Trade Name [Member] | Yerba Buena, LLC [Member] | ||
Balance, beginning | ||
Balance, ending | ||
Trade Name [Member] | Foot Hills [Member] | ||
Balance, beginning | ||
Balance, ending | ||
Trade Name [Member] | Other [Member] | ||
Balance, beginning | ||
Balance, ending | ||
Customer Relationship [Member] | ||
Balance, beginning | 135 | |
Balance, ending | 135 | |
Customer Relationship [Member] | YMY Ventures LLC [Member] | ||
Balance, beginning | [1] | |
Balance, ending | [1] | |
Customer Relationship [Member] | Western Coast Ventures, Inc. (WCV) [Member] | ||
Balance, beginning | [1] | |
Balance, ending | [1] | |
Estimated Useful Life | ||
Customer Relationship [Member] | Yerba Buena, LLC [Member] | ||
Balance, beginning | ||
Balance, ending | ||
Customer Relationship [Member] | Foot Hills [Member] | ||
Balance, beginning | ||
Balance, ending | ||
Customer Relationship [Member] | Other [Member] | ||
Balance, beginning | ||
Balance, ending | ||
Non-Compete [Member] | ||
Balance, beginning | 220 | |
Balance, ending | 220 | |
Non-Compete [Member] | YMY Ventures LLC [Member] | ||
Balance, beginning | [1] | |
Balance, ending | [1] | |
Non-Compete [Member] | Western Coast Ventures, Inc. (WCV) [Member] | ||
Balance, beginning | [1] | |
Balance, ending | [1] | |
Estimated Useful Life | ||
Non-Compete [Member] | Yerba Buena, LLC [Member] | ||
Balance, beginning | ||
Balance, ending | ||
Non-Compete [Member] | Foot Hills [Member] | ||
Balance, beginning | ||
Balance, ending | ||
Non-Compete [Member] | Other [Member] | ||
Balance, beginning | ||
Balance, ending | ||
[1] | These represent provisional licenses that the Company acquired during the fiscal years ended September 30, 2019 and 2018. Once these licenses are approved by their respective regulatory bodies, the Company will amortize these cannabis licenses over a 15-year estimated useful life. Amortization expense for the three and nine months ended June 30, 2020 was $172 and $430, respectively. |
Intangible Assets, Net - Sche_2
Intangible Assets, Net - Schedule of Intangible Assets (Details) (Parenthetical) - Cannabis Licenses [Member] - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Jun. 30, 2020 | Jun. 30, 2020 | |
Amortization estimated useful life, description | Once these licenses are approved by their respective regulatory bodies, the Company will amortize these cannabis licenses over a 15-year estimated useful life. | |
Amortization estimated useful life | 15 years | |
Amortization expense | $ 172 | $ 430 |
Related Party (Details Narrativ
Related Party (Details Narrative) $ in Thousands | Jun. 30, 2020USD ($) |
Seven Leaf Ventures Corp. [Member] | |
Due from related parties | $ 490 |
Accounts Payable and Accrued _3
Accounts Payable and Accrued Expenses - Schedule of Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Sep. 30, 2019 | |
Payables and Accruals [Abstract] | |||
Accounts payable | $ 1,663 | $ 707 | |
Accrued credit cards | 38 | 31 | |
Accrued interest | 133 | 106 | |
Other | 393 | 238 | |
Total Accounts Payable and Accrued Expenses | $ 2,225 | $ 1,082 | [1] |
[1] | Derived from audited information |
Notes Payable and Advances (Det
Notes Payable and Advances (Details Narrative) - USD ($) | Mar. 17, 2020 | Feb. 07, 2020 | Dec. 05, 2019 | Jul. 30, 2019 | Jun. 24, 2019 | Jun. 08, 2019 | May 24, 2019 | Jul. 31, 2018 | May 29, 2018 | Apr. 30, 2018 | Apr. 29, 2018 | Apr. 04, 2018 | Feb. 28, 2018 | Jan. 16, 2018 | Nov. 30, 2017 | Jan. 31, 2020 | Apr. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Apr. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | |
Debt instrument, interest rate | 8.00% | ||||||||||||||||||||||
Debt maturity date | Dec. 27, 2020 | ||||||||||||||||||||||
Acquisition of purchase price | $ 433,000 | $ 905,000 | |||||||||||||||||||||
Mortgage payable | 1,259,000 | $ 2,191,000 | |||||||||||||||||||||
Due to related party | 666,000 | [1] | |||||||||||||||||||||
Short-term liabilities | 2,951,000 | 3,384,000 | [1] | ||||||||||||||||||||
Warrants exercise price | $ 1.50 | ||||||||||||||||||||||
Acquisition of Yerba Buena [Member] | |||||||||||||||||||||||
Debt instrument face amount | $ 400,000 | ||||||||||||||||||||||
Debt monthly payments | $ 28,093 | ||||||||||||||||||||||
Debt instrument, interest rate | 8.00% | ||||||||||||||||||||||
Debt maturity period description | The note was issued on April 8, 2019 and is due on April 8, 2021. | ||||||||||||||||||||||
Debt maturity date | Apr. 8, 2021 | ||||||||||||||||||||||
Short-term liabilities | $ 371,907 | ||||||||||||||||||||||
Willamette Property [Member] | |||||||||||||||||||||||
Mortgage payable | $ 550,000 | 550,000 | |||||||||||||||||||||
Mortgage payable, interest rate | 15.00% | ||||||||||||||||||||||
Mortgage payable final due date | Jun. 1, 2020 | ||||||||||||||||||||||
Value of mortgage paid | $ 28,000 | ||||||||||||||||||||||
Description of collateral | The note has been cross guaranteed by the CEO and Director of the Company. | ||||||||||||||||||||||
Property With Additional Personal Guaranty of CEO [Member] | |||||||||||||||||||||||
Mortgage payable | $ 700,000 | $ 400,000 | |||||||||||||||||||||
Mortgage payable, interest rate | 15.00% | 15.00% | |||||||||||||||||||||
Mortgage payable final due date | Jun. 30, 2022 | Jan. 30, 2022 | |||||||||||||||||||||
Value of mortgage paid | $ 42,000 | $ 24,000 | |||||||||||||||||||||
Powell Property [Member] | |||||||||||||||||||||||
Mortgage payable | $ 304,000 | $ 304,000 | |||||||||||||||||||||
Mortgage payable, interest rate | 15.00% | ||||||||||||||||||||||
Mortgage payable final due date | Apr. 1, 2020 | ||||||||||||||||||||||
Value of mortgage paid | $ 19,000 | ||||||||||||||||||||||
Description of collateral | The note has been cross guaranteed by the CEO and Director of the Company. | ||||||||||||||||||||||
Shares issued escrow amount | $ 75,000 | ||||||||||||||||||||||
East Coast Packers LLC [Member] | |||||||||||||||||||||||
Debt instrument face amount | $ 1,000,000 | ||||||||||||||||||||||
Equity method investment | 236 | ||||||||||||||||||||||
Cash | 232 | ||||||||||||||||||||||
NVD RE Corp. [Member] | |||||||||||||||||||||||
Notes payable | 300,000 | ||||||||||||||||||||||
Debt instrument, interest rate | 37.50% | ||||||||||||||||||||||
Mortgage payable | 300,000 | ||||||||||||||||||||||
Due to related party | $ 1,275,000 | ||||||||||||||||||||||
Purchase price | 600,000 | ||||||||||||||||||||||
Payment of tenant improvement | $ 675,000 | ||||||||||||||||||||||
YMY Ventures LLC [Member] | |||||||||||||||||||||||
Notes payable | $ 300,000 | ||||||||||||||||||||||
YMY Ventures LLC [Member] | Acquisition Notes Payable [Member] | |||||||||||||||||||||||
Acquire membership interest rate | 50.00% | ||||||||||||||||||||||
2017 Tractor [Member] | |||||||||||||||||||||||
Debt instrument face amount | $ 18,000 | ||||||||||||||||||||||
Debt monthly payments | $ 482 | ||||||||||||||||||||||
Notes payable | 11,056 | ||||||||||||||||||||||
Notes Payable [Member] | |||||||||||||||||||||||
Notes payable | $ 0 | ||||||||||||||||||||||
Debt instrument, interest rate | 0.00% | ||||||||||||||||||||||
Notes Payable One [Member] | |||||||||||||||||||||||
Notes payable | $ 4,425 | ||||||||||||||||||||||
Debt instrument, interest rate | 0.00% | ||||||||||||||||||||||
Promissory Note [Member] | |||||||||||||||||||||||
Debt instrument face amount | $ 21,749 | ||||||||||||||||||||||
Notes payable | $ 14,950 | ||||||||||||||||||||||
Debt instrument, interest rate | 18.00% | ||||||||||||||||||||||
Debt servicing fee percentage | 10.00% | ||||||||||||||||||||||
Debt maturity period description | Matures 24 months after issuance | ||||||||||||||||||||||
Promissory Note [Member] | East Coast Packers LLC [Member] | |||||||||||||||||||||||
Debt instrument face amount | $ 1,500,000 | ||||||||||||||||||||||
Ownership interest | 25.00% | ||||||||||||||||||||||
Payments to acquire business interest | $ 500,000 | ||||||||||||||||||||||
Note issued for interest acquisition | 1,000,000 | ||||||||||||||||||||||
Payments to license | $ 500 | ||||||||||||||||||||||
Mortgage Payable [Member] | |||||||||||||||||||||||
Mortgage payable | $ 1,585,000 | ||||||||||||||||||||||
Mortgage payable, interest rate | 11.55% | ||||||||||||||||||||||
Value of mortgage paid | $ 120,000 | ||||||||||||||||||||||
Mortgage Payable [Member] | |||||||||||||||||||||||
Mortgage payable | $ 400,000 | ||||||||||||||||||||||
Mortgage payable, interest rate | 11.55% | ||||||||||||||||||||||
Value of mortgage paid | $ 38,000 | ||||||||||||||||||||||
Two Promissory Notes [Member] | Mature in July 2020 [Member] | |||||||||||||||||||||||
Debt instrument face amount | $ 500,000 | ||||||||||||||||||||||
Debt instrument, interest rate | 12.00% | ||||||||||||||||||||||
Debt maturity period description | The notes mature in October 2020 and has an annual rate of interest of 12%. | ||||||||||||||||||||||
Number of warrants issued to purchase common stock | 100,000 | ||||||||||||||||||||||
Warrants term | 5 years | ||||||||||||||||||||||
Warrants exercise price | $ 0.85 | ||||||||||||||||||||||
Two Promissory Notes [Member] | Mature in October 2020 [Member] | |||||||||||||||||||||||
Debt instrument face amount | $ 500,000 | ||||||||||||||||||||||
Debt instrument, interest rate | 12.00% | ||||||||||||||||||||||
Debt maturity period description | The notes mature in October 2020 and has an annual rate of interest of 12%. | ||||||||||||||||||||||
Number of warrants issued to purchase common stock | 100,000 | ||||||||||||||||||||||
Warrants term | 5 years | ||||||||||||||||||||||
Warrants exercise price | $ 0.85 | ||||||||||||||||||||||
24-Month Premium Finance Agreement [Member] | Notes Payable [Member] | |||||||||||||||||||||||
Debt instrument face amount | $ 27,844 | ||||||||||||||||||||||
Debt monthly payments | $ 1,160 | ||||||||||||||||||||||
36-Month Premium Finance Agreement [Member] | Notes Payable [Member] | |||||||||||||||||||||||
Debt instrument face amount | $ 15,710 | ||||||||||||||||||||||
Debt monthly payments | $ 442 | ||||||||||||||||||||||
10-Month Premium Finance Agreement [Member] | Notes Payable [Member] | |||||||||||||||||||||||
Debt instrument face amount | $ 63,101 | ||||||||||||||||||||||
Debt monthly payments | $ 4,582 | ||||||||||||||||||||||
Notes payable | 0 | ||||||||||||||||||||||
Debt instrument, interest rate | 7.63% | ||||||||||||||||||||||
10-Month Premium Finance Agreement [Member] | Notes Payable One [Member] | |||||||||||||||||||||||
Debt instrument face amount | $ 78,900 | ||||||||||||||||||||||
Debt monthly payments | $ 5,756 | ||||||||||||||||||||||
Notes payable | 0 | ||||||||||||||||||||||
Debt instrument, interest rate | 7.25% | ||||||||||||||||||||||
10-Month Premium Finance Agreement [Member] | Notes Payable Two [Member] | |||||||||||||||||||||||
Debt instrument face amount | $ 5,975 | ||||||||||||||||||||||
Debt monthly payments | $ 513 | ||||||||||||||||||||||
Notes payable | 0 | ||||||||||||||||||||||
Debt instrument, interest rate | 5.75% | ||||||||||||||||||||||
9-Month Premium Finance Agreement [Member] | Notes Payable [Member] | |||||||||||||||||||||||
Debt instrument face amount | $ 11,440 | ||||||||||||||||||||||
Debt monthly payments | $ 1,322 | ||||||||||||||||||||||
Notes payable | 0 | ||||||||||||||||||||||
Debt instrument, interest rate | 8.70% | ||||||||||||||||||||||
9-Month Premium Finance Agreement [Member] | Notes Payable One [Member] | |||||||||||||||||||||||
Debt monthly payments | $ 60,255 | $ 685 | |||||||||||||||||||||
9-Month Premium Finance Agreement [Member] | Notes Payable One [Member] | Nine Monthly Payments [Member] | |||||||||||||||||||||||
Debt monthly payments | 22,718 | ||||||||||||||||||||||
12-Month Premium Finance Agreement [Member] | Notes Payable One [Member] | |||||||||||||||||||||||
Debt instrument face amount | $ 300,150 | $ 9,490 | |||||||||||||||||||||
Notes payable | 1,369 | ||||||||||||||||||||||
Debt instrument, interest rate | 7.46% | 8.70% | |||||||||||||||||||||
12-Month Premium Finance Agreement [Member] | Notes Payable Two [Member] | |||||||||||||||||||||||
Notes payable | $ 159,024 | ||||||||||||||||||||||
Paycheck Protection Program [Member] | |||||||||||||||||||||||
Debt instrument, interest rate | 1.00% | ||||||||||||||||||||||
Proceeds from loans | $ 266,820 | ||||||||||||||||||||||
Debt maturity date | May 1, 2022 | ||||||||||||||||||||||
Paycheck Protection Program [Member] | |||||||||||||||||||||||
Debt instrument, interest rate | 1.00% | ||||||||||||||||||||||
Proceeds from loans | $ 245,400 | ||||||||||||||||||||||
Debt maturity date | Jun. 3, 2022 | ||||||||||||||||||||||
Paycheck Protection Program [Member] | |||||||||||||||||||||||
Debt instrument, interest rate | 1.00% | ||||||||||||||||||||||
Proceeds from loans | $ 62,500 | ||||||||||||||||||||||
Debt maturity date | Jun. 25, 2022 | ||||||||||||||||||||||
Contract for Sale [Member] | |||||||||||||||||||||||
Notes payable | $ 958,500 | ||||||||||||||||||||||
Debt maturity date | Jan. 31, 2020 | ||||||||||||||||||||||
Promissory note amount | $ 1,200,000 | ||||||||||||||||||||||
Contract for Sale [Member] | Mulino Property [Member] | |||||||||||||||||||||||
Purchase price of premises | 1,700,000 | ||||||||||||||||||||||
Rental credit | 135,000 | ||||||||||||||||||||||
Monthly payments | 15,000 | ||||||||||||||||||||||
Amount granted for improvement of property | 9,500 | ||||||||||||||||||||||
Acquisition of purchase price | 370,637 | ||||||||||||||||||||||
Contract for Sale [Member] | July 2018 [Member] | |||||||||||||||||||||||
Debt monthly payments | $ 13,500 | ||||||||||||||||||||||
Monthly installments interest rate | 2.00% | ||||||||||||||||||||||
[1] | Derived from audited information |
Notes Payable and Advances - Sc
Notes Payable and Advances - Schedule of Short-term Notes and Advances (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |||
Equipment financing | $ 30 | $ 33 | |
Insurance financing | 174 | 160 | |
Mortgages and liens payable | 1,259 | 2,191 | |
Promissory note | 1,489 | 1,000 | |
Short-term notes and advances | 2,951 | 3,384 | [1] |
Acquisition notes payable | 679 | 708 | [1] |
Total notes payable and advances | 3,631 | $ 4,092 | |
Long-term mortgages | $ 3,085 | ||
[1] | Derived from audited information |
Convertible Debt (Details Narra
Convertible Debt (Details Narrative) | Jun. 14, 2019USD ($)$ / sharesshares | Jan. 31, 2019USD ($)$ / sharesshares | Dec. 27, 2018USD ($) | Jun. 30, 2019USD ($) | Jan. 31, 2019CAD ($)shares | Dec. 31, 2018CAD ($)shares | Oct. 31, 2018USD ($)$ / sharesshares | Dec. 31, 2018USD ($) | Jun. 30, 2020USD ($)$ / sharesshares | Jun. 30, 2020CAD ($)shares | Sep. 30, 2018USD ($)$ / sharesshares | Apr. 30, 2020$ / shares | Mar. 31, 2019$ / sharesshares | Nov. 02, 2018$ / shares | Jun. 30, 2018USD ($)$ / shares | May 31, 2018USD ($)$ / shares |
Debt maturity date | Dec. 27, 2020 | Dec. 27, 2020 | ||||||||||||||
Debt instrument, interest rate | 8.00% | |||||||||||||||
Conversion price | $ / shares | $ 0.84 | $ 1.90 | ||||||||||||||
Inducement cost to convert convertible notes | $ 824,000 | |||||||||||||||
Warrant exercise price | $ / shares | 1.50 | |||||||||||||||
Share price per share | $ / shares | 1.15 | |||||||||||||||
Common Stock [Member] | ||||||||||||||||
Inducement cost to convert convertible notes | ||||||||||||||||
Canaccord Genuity Inc., [Member] | ||||||||||||||||
Debt instrument principal and interest percentage | 105.00% | 105.00% | ||||||||||||||
Canaccord Genuity Inc., [Member] | Common Stock [Member] | ||||||||||||||||
Finance fee | $ 50,000 | |||||||||||||||
Private Offering [Member] | Canaccord Genuity Inc., [Member] | CD Special Warrant [Member] | ||||||||||||||||
Number of warrants to purchase shares | shares | 962 | 3,121 | 3,121 | |||||||||||||
Issuance of common stock convertible debentures | $ 700,000 | $ 2,300,000 | $ 10,000 | $ 2,300,000 | ||||||||||||
Private Offering [Member] | Canaccord Genuity Inc., [Member] | Broker CD Special Warrant [Member] | ||||||||||||||||
Issuance of common stock convertible debentures, shares | shares | 5,600 | 52 | 52 | |||||||||||||
Senior Unsecured Convertible Notes [Member] | ||||||||||||||||
Debt instrument, interest rate | 8.00% | 8.00% | ||||||||||||||
Conversion price | $ / shares | $ 2.50 | $ 2.50 | ||||||||||||||
Convertible notes, principal amount | $ 1,500,000 | $ 1,500,000 | ||||||||||||||
Inducement cost associated with the conversion of the convertible promissory notes | $ 900,000 | $ 900,000 | ||||||||||||||
Debt converted into shares | shares | 833,333 | |||||||||||||||
Minimum [Member] | Senior Unsecured Convertible Notes [Member] | ||||||||||||||||
Conversion price | $ / shares | $ 1.80 | |||||||||||||||
Agents [Member] | Canaccord Genuity Inc., [Member] | ||||||||||||||||
Cash commission percentage | 7.00% | 7.00% | ||||||||||||||
Agents [Member] | Canaccord Genuity Inc., [Member] | Broker CD Special Warrant [Member] | ||||||||||||||||
Cash commission percentage | 7.00% | 7.00% | ||||||||||||||
Indenture Trustee [Member] | Canaccord Genuity Inc., [Member] | ||||||||||||||||
Debt instrument principal and interest percentage | 25.00% | 25.00% | ||||||||||||||
CAD [Member] | ||||||||||||||||
Share price per share | $ / shares | $ 1.87 | |||||||||||||||
CAD [Member] | Canaccord Genuity Inc., [Member] | ||||||||||||||||
Conversion price | $ / shares | $ 3 | |||||||||||||||
Issuance of common stock convertible debentures | $ 1,000 | |||||||||||||||
Share price per share | $ / shares | $ 3 | |||||||||||||||
Debt converted into shares | shares | 333.33 | 333.33 | ||||||||||||||
Fair value of options grant | $ 424,000 | |||||||||||||||
CAD [Member] | Canaccord Genuity Inc., [Member] | Common Stock [Member] | ||||||||||||||||
Finance fee | $ 50,000 | |||||||||||||||
CAD [Member] | Canaccord Genuity Inc., [Member] | Broker Warrant [Member] | ||||||||||||||||
Warrant exercise price | $ / shares | $ 1,000 | |||||||||||||||
Commission fee | $ 157,290 | |||||||||||||||
Commission and finance fee plus additional expenses | $ 20,000 | |||||||||||||||
Legal fee | 181,365 | |||||||||||||||
Offering fee and expenses | 320,000 | |||||||||||||||
CAD [Member] | Private Offering [Member] | Canaccord Genuity Inc., [Member] | CD Special Warrant [Member] | ||||||||||||||||
Warrant exercise price | $ / shares | $ 1,000 | $ 1,000 | $ 1,000 | |||||||||||||
Proceeds from private offerings | $ 10,000,000 | |||||||||||||||
Issuance of common stock convertible debentures | $ 1,000,000 | $ 3,100,000 | $ 3,100,000 | |||||||||||||
8% Convertible Notes [Member] | Canaccord Genuity Inc., [Member] | ||||||||||||||||
Proceeds from private offerings | 3,100,000 | |||||||||||||||
8% Convertible Notes [Member] | Six-Month Term [Member] | ||||||||||||||||
Convertible promissory notes | $ 500,000 | |||||||||||||||
Remaining balance of warrant liability for debentures | 0 | |||||||||||||||
8% Convertible Notes [Member] | Six-Month Term [Member] | Accredited Investor [Member] | ||||||||||||||||
Convertible promissory notes | $ 975,000 | |||||||||||||||
Debt maturity date | Mar. 31, 2019 | |||||||||||||||
Debt instrument, interest rate | 8.00% | |||||||||||||||
Conversion price | $ / shares | $ 2.50 | |||||||||||||||
Issuance of common stock convertible debentures, shares | shares | 541,668 | |||||||||||||||
Inducement cost to convert convertible notes | $ 368,000 | |||||||||||||||
Warrant term | 3 years | |||||||||||||||
Number of warrants to purchase shares | shares | 97,500 | |||||||||||||||
Warrant exercise price | $ / shares | $ 2.50 | |||||||||||||||
8% Convertible Notes [Member] | Six-Month Term [Member] | Accredited Investor [Member] | Maximum [Member] | ||||||||||||||||
Conversion price | $ / shares | $ 2.50 | |||||||||||||||
8% Convertible Notes [Member] | Six-Month Term [Member] | Accredited Investor [Member] | Minimum [Member] | ||||||||||||||||
Conversion price | $ / shares | $ 1.80 | |||||||||||||||
8% Convertible Notes [Member] | CAD [Member] | Canaccord Genuity Inc., [Member] | ||||||||||||||||
Proceeds from private offerings | $ 4,100,000 | |||||||||||||||
8.0% Senior Unsecured Convertible Debenture [Member] | Canaccord Genuity Inc., [Member] | ||||||||||||||||
Debt instrument, interest rate | 8.00% | |||||||||||||||
Number of warrants to purchase shares | shares | 167 | |||||||||||||||
Debt instrument description | Upon the exercise thereof and at no additional cost, 1.05 Convertible Debenture Units per CD Special Warrant (instead of 1.0 Convertible Debenture Unit per CD Special Warrant). Until the Receipt and Registration have been obtained, securities issued in connection with the Offering (including any underlying securities issued upon conversion or exercise thereof) will be subject to a 6-month hold period from the date of issue. Since the CD Special Warrants were exchanged for Convertible Debenture Units after 6 months as U.S. and Canadian registrations were not effective at that time, the holders received 1.05 Convertible Debenture Units per CD Special Warrant. | Upon the exercise thereof and at no additional cost, 1.05 Convertible Debenture Units per CD Special Warrant (instead of 1.0 Convertible Debenture Unit per CD Special Warrant). Until the Receipt and Registration have been obtained, securities issued in connection with the Offering (including any underlying securities issued upon conversion or exercise thereof) will be subject to a 6-month hold period from the date of issue. Since the CD Special Warrants were exchanged for Convertible Debenture Units after 6 months as U.S. and Canadian registrations were not effective at that time, the holders received 1.05 Convertible Debenture Units per CD Special Warrant. | ||||||||||||||
Payment of brokered portion of offering | $ 1,900,000 | |||||||||||||||
8.0% Senior Unsecured Convertible Debenture [Member] | CAD [Member] | Canaccord Genuity Inc., [Member] | ||||||||||||||||
Warrant exercise price | $ / shares | $ 3.90 | |||||||||||||||
Convertible debenture | $ 1,000 | |||||||||||||||
Payment of brokered portion of offering | $ 2,500,000 |
Convertible Debt - Schedule of
Convertible Debt - Schedule of Assumptions Value Warrant Granted (Details) - Warrants Granted [Member] - Convertible Debt [Member] | Jun. 30, 2020Integer$ / shares |
Exercise Price [Member] | |
Fair value of underlying common shares | $ / shares | $ 1.125 |
Dividend Yield [Member] | |
Fair value assumptions measurement input percentages | |
Historical Volatility [Member] | |
Fair value assumptions measurement input percentages | 115 |
Minimum [Member] | |
Fair value of underlying common shares | $ / shares | $ 1.78 |
Minimum [Member] | Risk Free Interest Rate [Member] | |
Fair value assumptions measurement input percentages | 1.40 |
Maximum [Member] | |
Fair value of underlying common shares | $ / shares | $ 2.10 |
Maximum [Member] | Risk Free Interest Rate [Member] | |
Fair value assumptions measurement input percentages | 1.90 |
Convertible Debt - Schedule o_2
Convertible Debt - Schedule of Embedded Derivative Liability (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Change in fair value | $ (570) | $ (428) | ||||
Warrant Liability [Member] | ||||||
Beginning balance | 20 | $ 35 | $ 42 | 42 | ||
Change in fair value | 50 | (15) | (7) | |||
Ending balance | 70 | 20 | 35 | 70 | ||
Derivative Liability [Member] | ||||||
Beginning balance | 16 | 137 | 158 | 158 | ||
Change in fair value | 570 | (121) | (21) | |||
Ending balance | $ 586 | $ 16 | $ 137 | $ 586 |
Convertible Debt - Schedule o_3
Convertible Debt - Schedule of Convertible Notes (Details) - Convertible Notes [Member] $ in Thousands | Jun. 30, 2020USD ($) |
Principal value of 8%, convertible at $0.84 at June 30, 2020, due December 27, 2020 including penalty provision of $155,239 | $ 2,901 |
Principal value of 10%, convertible at $1.22 at June 30, 2020, due May 30, 2021 (see note 5) | 3,410 |
Debt discount | (557) |
Cumulative foreign currency impact | 242 |
Carrying value of convertible notes | $ 5,996 |
Convertible Debt - Schedule o_4
Convertible Debt - Schedule of Convertible Notes (Details) (Parenthetical) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | |
Jun. 30, 2020 | Apr. 30, 2020 | |
Debt instrument, interest rate | 8.00% | |
Conversion price | $ 0.84 | $ 1.90 |
Debt instrument maturity date | Dec. 27, 2020 | |
Penalty provision | $ 155,239 | |
Convertible Notes [Member] | ||
Debt instrument, interest rate | 10.00% | |
Conversion price | $ 1.22 | |
Debt instrument maturity date | May 30, 2021 |
Fair Value Measurements (Detail
Fair Value Measurements (Details Narrative) | 9 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Pricing model description | The Company used a lattice based trinomial model developed by Tsiveriotis, K. and Fernades in which the three lattices incorporate (1) the Company's underlying common stock price; (2) the value of the debt components of the convertible notes; and (3) the value of the equity component of the convertible notes. The main drivers of sensitivity for the model are volatility and the credit spread. The model used will vary by approximately 1.5% for a 4% change in volatility and will vary by less than 1% for each 1% change in credit spread. |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Liabilities Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Sep. 30, 2019 | [1] |
Warrant liability | $ 448 | $ 283 | |
Embedded derivative liability | 586 | ||
Total fair value | 1,034 | ||
Level 1 [Member] | |||
Warrant liability | |||
Embedded derivative liability | |||
Total fair value | |||
Level 2 [Member] | |||
Warrant liability | |||
Embedded derivative liability | |||
Total fair value | |||
Level 3 [Member] | |||
Warrant liability | 448 | ||
Embedded derivative liability | 586 | ||
Total fair value | $ 1,034 | ||
[1] | Derived from audited information |
Fair Value Measurements - Sch_2
Fair Value Measurements - Schedule of Level 3 Liabilities Measured at Fair Value (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | |
Beginning balance | $ 1,433 | $ 382 | $ 441 |
Warrants granted for stock-based compensation | 105 | ||
Warrants issued pursuant to acquisition (see Note 5) | 823 | ||
Change in fair value | (399) | 133 | (59) |
Other | (10) | ||
Ending balance | 1,034 | 1,433 | 382 |
Warrant Liability [Member] | |||
Beginning balance | 1,417 | 245 | 283 |
Warrants granted for stock-based compensation | 105 | ||
Warrants issued pursuant to acquisition (see Note 5) | 823 | ||
Change in fair value | (969) | 254 | (38) |
Other | (10) | ||
Ending balance | 448 | 1,417 | 245 |
Embedded Derivative Liability [Member] | |||
Beginning balance | 16 | 137 | 158 |
Warrants granted for stock-based compensation | |||
Warrants issued pursuant to acquisition (see Note 5) | |||
Change in fair value | 570 | (121) | (21) |
Other | |||
Ending balance | $ 586 | $ 16 | $ 137 |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Weighted Average Significant Unobservable Inputs (Details) | 9 Months Ended | 12 Months Ended | |
Jun. 30, 2020Integer$ / shares | Sep. 30, 2019Integer$ / shares | Apr. 30, 2020$ / shares | |
Warrant Liability Strike price | $ / shares | $ 1.50 | ||
Warrant Liability [Member] | |||
Warrant Liability Strike price | $ / shares | $ 0.45 | ||
Warrant Liability [Member] | Volatility (Annual) [Member] | |||
Warrant Liability Measurement input | 115 | ||
Warrant Liability [Member] | Risk Free Interest Rate [Member] | |||
Warrant Liability Measurement input | 29 | ||
Warrant Liability [Member] | Dividend Yield [Member] | |||
Warrant Liability Measurement input | 0 | ||
Warrant Liability [Member] | Minimum [Member] | |||
Warrant Liability Contractual term (years) | 1 year | ||
Warrant Liability [Member] | Maximum [Member] | |||
Warrant Liability Contractual term (years) | 3 years | ||
Embedded Derivative Liability [Member] | |||
Embedded Derivative Liability Strike price | $ / shares | $ 1.36 | $ 0.80 | |
Embedded Derivative Liability Contractual term (years) | 1 year 6 months | 1 year 2 months 12 days | |
Embedded Derivative Liability [Member] | Volatility (Annual) [Member] | |||
Embedded Derivative Liability Measurement input | 122 | 85 | |
Embedded Derivative Liability [Member] | Risk Free Interest Rate [Member] | |||
Embedded Derivative Liability Measurement input | 1.36 | 1.68 | |
Embedded Derivative Liability [Member] | Dividend Yield [Member] | |||
Embedded Derivative Liability Measurement input | 0 | 11.12 |
Shareholders' Equity (Details N
Shareholders' Equity (Details Narrative) | May 31, 2020USD ($)shares | Jun. 30, 2020USD ($)$ / sharesshares | Jun. 30, 2020USD ($)$ / sharesshares | Jun. 30, 2020USD ($)$ / sharesshares | Jun. 30, 2020CAD ($)shares | Apr. 30, 2020$ / shares | Sep. 30, 2019shares |
Two series of preferred stock designated, shares issued | shares | |||||||
Debt instrument, interest rate | 8.00% | 8.00% | 8.00% | 8.00% | |||
Issuance of common stock in connection with share exchange agreement | $ | $ 124,000 | ||||||
Number of common stock issued | shares | 12,500,000 | ||||||
Shares issued price per share | $ / shares | $ 1.15 | ||||||
Debt conversion price | $ / shares | $ 0.84 | $ 0.84 | $ 0.84 | 1.90 | |||
Common stock issued for stock compensation | shares | 18,750 | ||||||
Common stock issued for stock compensation, value | $ | $ 6 | ||||||
CAD [Member] | |||||||
Shares issued price per share | $ / shares | $ 1.87 | ||||||
Seven Leaf Ventures Corp [Member] | |||||||
Debt instrument, interest rate | 10.00% | 10.00% | 10.00% | 10.00% | |||
Number of common stock issued | shares | 1,199,900 | ||||||
Purchase price | $ | $ 15,169 | ||||||
Seven Leaf Ventures Corp [Member] | Unsecured Convertible Debentures [Member] | |||||||
Debt instrument, interest rate | 10.00% | 10.00% | 10.00% | 10.00% | |||
Number of common stock issued | shares | 682,000 | ||||||
Unsecured debenture aggregate principal amount | $ | $ 3,410 | $ 3,410 | $ 3,410 | ||||
Debt conversion price | $ / shares | $ 1.67 | $ 1.67 | $ 1.67 | ||||
Number of shares issued for convertible notes | shares | 202,350 | ||||||
Value of shares issued for convertible notes | $ | $ 121 | ||||||
Seven Leaf Ventures Corp [Member] | Unsecured Convertible Debentures [Member] | CAD [Member] | |||||||
Unsecured debenture aggregate principal amount | $ | $ 4,571 | ||||||
Share Exchange Agreement [Member] | |||||||
Debt instrument, interest rate | 12.50% | ||||||
Issuance of common stock in connection with share exchange agreement | $ | $ 386,035 | ||||||
Issuance of common stock in connection with share exchange agreement, shares | shares | 196 | ||||||
Membership Interest Purchase Agreement [Member] | |||||||
Number of common stock issued | shares | 394,270 | ||||||
Purchase price | $ | $ 500 | ||||||
Lien in real estate property | $ | $ 106 | $ 106 | 106 | ||||
Building, carrying value | $ | $ 500 | $ 500 | $ 500 | ||||
Shares issued price per share | $ / shares | $ 1 | $ 1 | $ 1 | ||||
Membership Interest Purchase Agreement [Member] | Eugene, Oregon [Member] | |||||||
Number of common stock issued | shares | 394,270 | ||||||
Consulting Agreement [Member] | |||||||
Shares issued price per share | $ / shares | 0.89 | 0.89 | $ 0.89 | ||||
Common stock issued for stock compensation | shares | 5,000 | ||||||
Common stock issued for stock compensation, value | $ | $ 4 | ||||||
Employment Agreement [Member] | |||||||
Common stock issued for stock compensation | shares | 100,000 | ||||||
Common stock issued for stock compensation, value | $ | $ 498 | ||||||
Consulting Agreements [Member] | |||||||
Shares issued price per share | $ / shares | $ 0.88 | $ 0.88 | $ 0.88 | ||||
Common stock issued for stock compensation | shares | 970,416 | ||||||
Common stock issued for stock compensation, value | $ | $ 850 | ||||||
Number of shares cancelled | shares | 700,000 | ||||||
Employment Agreements [Member] | |||||||
Common stock issued for stock compensation | shares | 303,756 | ||||||
Common stock issued for stock compensation, value | $ | $ 47 |
Stock Based Compensation (Detai
Stock Based Compensation (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Weighted average remaining contractual life | 1 year 7 months 28 days | 2 years | 2 years 1 month 6 days | ||
Change increases the loss per share | $ (0.01) | ||||
Minimum [Member] | |||||
Change increases the loss per share | (0.46) | ||||
Maximum [Member] | |||||
Change increases the loss per share | $ (0.47) | ||||
Stock Options [Member] | |||||
Expected dividend yield | 0.00% | ||||
Stock-based compensation expense | $ 300 | ||||
Weighted average remaining contractual life | 2 years | ||||
Unvested stock-based compensation expense | $ 273 |
Stock Based Compensation - Sche
Stock Based Compensation - Schedule of Fair Value of Options Granted (Details) - Options [Member] | 9 Months Ended |
Jun. 30, 2020$ / shares | |
Risk-free rate of interest | 1.60% |
Expected dividend rate | 0.00% |
Minimum [Member] | |
Exercise price | $ 0.80 |
Expected term (years) | 6 months |
Expected stock price volatility | 108.80% |
Maximum [Member] | |
Exercise price | $ 4 |
Expected term (years) | 4 years |
Expected stock price volatility | 188.60% |
Stock Based Compensation - Summ
Stock Based Compensation - Summary of Stock Option Activity (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Jun. 30, 2020 | |
Compensation Related Costs [Abstract] | ||||
Number of Options, Outstanding Beginning Balance | 4,747,916 | 4,472,916 | 3,210,416 | 3,210,416 |
Number of Options, Granted | 275,000 | 1,262,500 | ||
Number of Options, Outstanding Ending Balance | 4,747,916 | 4,747,916 | 4,472,916 | 4,747,916 |
Number of Options, Vested and Exercisable | 4,435,416 | 4,435,416 | ||
Weighted Average Exercise Price, Outstanding Beginning Balance | $ 2.03 | $ 2.09 | $ 2.45 | $ 2.45 |
Weighted Average Exercise Price, Granted | 1.19 | |||
Weighted Average Exercise Price, Outstanding Ending Balance | 2.03 | $ 2.03 | $ 2.09 | 2.03 |
Weighted Average Exercise Price, Vested and Exercisable | $ 2.10 | $ 2.10 | ||
Aggregate Intrinsic Value, Beginning Balance | ||||
Aggregate Intrinsic Value, Ending Balance | ||||
Aggregate Intrinsic Value, Vested and Exercisable | ||||
Weighted Average Remaining Contractual Term, Beginning Balance | 1 year 7 months 28 days | 2 years | 2 years 1 month 6 days | |
Weighted Average Remaining Contractual Term, Granted | 2 years 3 months 19 days | |||
Weighted Average Remaining Contractual Term, Ending Balance | 1 year 4 months 28 days | 1 year 7 months 28 days | 2 years | |
Weighted Average Remaining Contractual Term, Vested and Exercisable | 1 year 4 months 24 days |
Stock Based Compensation - Sc_2
Stock Based Compensation - Schedule of Stock-based Compensation Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Total stock-based compensation | $ 6 | $ 4,130 | $ 1,913 | $ 4,675 |
Stock Grants [Member] | ||||
Total stock-based compensation | 6 | 3,995 | 1,193 | 5,991 |
Stock Options [Member] | ||||
Total stock-based compensation | 135 | 615 | 478 | |
Warrants (Liability) [Member] | ||||
Total stock-based compensation | $ 105 | $ 697 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) | Jun. 05, 2020 | Jul. 31, 2020 | Jun. 30, 2020 | Jan. 31, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 |
Acquisition of licenses and permits | $ 2,500,000 | |||||||
Number of shares agreed to issue | 250,000 | |||||||
Number of options agreed to issue | 250,000 | |||||||
Professional Fees | $ 257,000 | $ 418,000 | 1,780,000 | $ 1,269,000 | ||||
Joint venture amount | $ 307,500 | |||||||
Excess of its commitments | $ 1,000,000 | |||||||
Six Month Consulting Agreement [Member] | ||||||||
Number of shares issued for services | $ 350,000 | |||||||
Cash compensation | $ 100,000 | 100,000 | 100,000 | |||||
Number of restricted securities | 350,000 | |||||||
Six Month Consulting Agreement [Member] | ||||||||
Number of shares issued for services | $ 100,000 | |||||||
Cash compensation | $ 10,000 | $ 10,000 | $ 10,000 | |||||
Number of restricted securities | 100,000 | |||||||
Chord Advisors LLC [Member] | ||||||||
Professional Fees | $ 260,000 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Jul. 02, 2020 | Jul. 31, 2020 | Jun. 30, 2020 |
Debt instrument, maturity date | Dec. 27, 2020 | ||
Debt instrument, interest rate | 8.00% | ||
Paycheck Protection Program [Member] | |||
Proceeds from loan | $ 266,820 | ||
Debt instrument, maturity date | May 1, 2022 | ||
Debt instrument, interest rate | 1.00% | ||
Subsequent Event [Member] | Maximum [Member] | |||
Sale of stock, share | 10,000,000 | ||
Subsequent Event [Member] | Paycheck Protection Program [Member] | |||
Proceeds from loan | $ 220,564 | ||
Debt instrument, maturity date | Jul. 9, 2022 | ||
Debt instrument, interest rate | 1.00% |