Cover
Cover | 6 Months Ended |
Jun. 30, 2022 shares | |
Cover [Abstract] | |
Entity Registrant Name | Jacksam Corporation |
Entity Central Index Key | 0000860543 |
Document Type | 10-Q |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Entity Small Business | true |
Entity Shell Company | false |
Entity Emerging Growth Company | true |
Entity Current Reporting Status | Yes |
Document Period End Date | Jun. 30, 2022 |
Entity Filer Category | Non-accelerated Filer |
Document Fiscal Period Focus | Q2 |
Document Fiscal Year Focus | 2022 |
Entity Ex Transition Period | false |
Entity Common Stock Shares Outstanding | 80,771,577 |
Document Quarterly Report | true |
Document Transition Report | false |
Entity File Number | 033-33263 |
Entity Incorporation State Country Code | NV |
Entity Tax Identification Number | 46-3566284 |
Entity Interactive Data Current | Yes |
Entity Address Address Line 1 | 3100 Airway Avenue Suite 138 |
Entity Address City Or Town | Costa Mesa |
Entity Address State Or Province | CA |
Entity Address Postal Zip Code | 92626 |
City Area Code | 800 |
Local Phone Number | 605-3580 |
Security 12b Title | Common Stock, par value $0.001 per share |
Trading Symbol | JKSM |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jun. 30, 2022 | Dec. 31, 2021 |
Current Assets: | ||
Cash | $ 373,657 | $ 344,811 |
Accounts receivable, net | 1,262,690 | 591,169 |
Inventory, net | 225,451 | 196,712 |
Prepaid expenses | 67,243 | 8,600 |
Total Current Assets | 1,929,041 | 1,141,292 |
Property and equipment, net | 756 | 1,472 |
Right of-use asset - operating lease | 93,329 | 0 |
Total Assets | 2,023,126 | 1,142,764 |
Current Liabilities: | ||
Accounts payable and accrued expenses | 1,140,869 | 641,690 |
Accrued dividends | 39,671 | |
Deferred revenue | 104,303 | 171,771 |
Convertible notes payable, current portion (net of discount $0 and $$43,269, respectively) | 444,444 | 701,175 |
Notes payable, current portion | 144,389 | 87,774 |
Right of use liability - operating lease, current portion | 31,593 | 0 |
Derivative liability | 101,831 | 325,808 |
Accrued liabilities - other | 2,220,175 | 2,264,390 |
Subscription payable | 499,999 | 499,999 |
Total Current Liabilities | 4,727,274 | 4,692,607 |
Notes payable, net of current portion (net of discount $107,814 and $121,310 respectively) | 573,155 | 705,038 |
Right of use liability - operating lease | 63,792 | 0 |
Total Liabilities | 5,364,221 | 5,397,645 |
Mezzanine equity | ||
Series A Preferred stock - 2,800,000 authorized, $0.001 par value, 2,800,000 and 0 shares issued and outstanding as of June 30, 2022 and December 31, 2021 | 265,670 | 259,422 |
Stockholders' Deficit: | ||
Preferred stock, value | 0 | 0 |
Common stock - 200,000,000 authorized, $0.001 par value, 80,771,577 and 74,490,147 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively | 80,771 | 74,490 |
Additional paid-in capital | 7,448,690 | 6,210,414 |
Shares payable, consisting of 2,222,223 shares of common shares as of June 30, 2022 and December 31, 2021 | 0 | 331,600 |
Accumulated deficit | (11,136,326) | (11,130,807) |
Total Stockholders' Deficit | (3,606,765) | (4,514,303) |
Total Liabilities and Stockholders' Deficit | 2,023,126 | 1,142,764 |
Series B Preferred Stock [Member] | ||
Stockholders' Deficit: | ||
Preferred stock, value | $ 100 | $ 0 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Jun. 30, 2022 | Dec. 31, 2021 |
Preferred stock, shares authorized | 30,000,000 | 30,000,000 |
Preferred stock, par value per share | $ 0.001 | $ 0.001 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, par value per share | $ 0.001 | $ 0.001 |
Common stock, shares issued | 80,771,577 | 74,490,147 |
Common stock, shares outstanding | 80,771,577 | 74,490,147 |
Shares payable | 2,222,223 | 2,222,223 |
Notes Payable [Member] | ||
Notes payable, current portion (net of discount) | $ 107,814 | $ 121,310 |
Convertible Notes Payable [Member] | ||
Notes payable, current portion (net of discount) | $ 0 | $ 43,269 |
Series B Preferred Stock [Member] | ||
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, par value per share | $ 0.001 | $ 0.001 |
Preferred stock, shares issued | 1,000,000 | 0 |
Preferred stock, shares outstanding | 1,000,000 | 0 |
Preferred stock, stated value per share | $ 1 | $ 1 |
Series A Preferred Stock [Member] | ||
Preferred stock, shares authorized | 2,800,000 | 2,800,000 |
Preferred stock, par value per share | $ 0.001 | $ 0.001 |
Preferred stock, shares issued | 2,800,000 | 0 |
Preferred stock, shares outstanding | 2,800,000 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Condensed Consolidated Statements of Operations (Unaudited) | ||||
Sales | $ 1,467,309 | $ 1,660,257 | $ 3,244,384 | $ 3,431,223 |
Cost of Sales | 1,042,379 | 1,156,441 | 2,400,817 | 2,413,414 |
Gross Profit | 424,930 | 503,816 | 843,567 | 1,017,809 |
Operating Expenses | ||||
Salaries and wages | 273,836 | 336,368 | 541,480 | 665,451 |
Other selling, general and administrative expenses | 225,867 | 537,730 | 375,480 | 718,890 |
Total Operating Expenses | 499,703 | 874,098 | 916,960 | 1,384,341 |
Loss from Operations | (74,773) | (370,282) | (73,393) | (366,532) |
Other Income (Expense) | ||||
Derivative gain | 77,899 | 542,993 | 364,997 | 1,075,360 |
Interest expense | (38,029) | (165,234) | (297,123) | (513,885) |
Loss on conversion of notes payable | 0 | 0 | 0 | (58,642) |
Gain on settlement of notes payable | 0 | 297,670 | 0 | 160,164 |
Total Other Income (Expense) | 39,870 | 675,429 | 67,874 | 662,997 |
Net Income (Loss) | (34,903) | 305,147 | (5,519) | 296,465 |
Preferred stock dividends | (23,087) | (1,208) | (45,920) | (1,208) |
Net Income (Loss) Available to Common Shareholders | $ (57,990) | $ 303,939 | $ (51,439) | $ 295,257 |
Net Income (Loss) Per Share | ||||
Basic | $ 0 | $ 0 | $ 0 | $ 0 |
Diluted | $ 0 | $ 0 | $ 0 | $ 0 |
Weighted Average Shares Outstanding | ||||
Basic | 80,132,342 | 72,034,097 | 77,605,012 | 70,692,600 |
Diluted | 80,132,342 | 80,740,245 | 77,605,012 | 77,787,944 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Deficit (Unaudited)) - USD ($) | Total | Series B Preferred Stock | Common Stock $0.001 Par Value | Shares Payable | Series A Preferred Stock | Paid-In Capital | Accumulated Deficit |
Balance, shares at Dec. 31, 2020 | 66,366,419 | ||||||
Balance, amount at Dec. 31, 2020 | $ (5,705,452) | $ 0 | $ 66,366 | $ 645,192 | $ 0 | $ 4,708,323 | $ (11,125,333) |
Common stock issued for debt conversion, shares | 3,086,420 | ||||||
Common stock issued for debt conversion, amount | 614,198 | 0 | $ 3,087 | 0 | 0 | 611,111 | 0 |
Common stock issued for deferred finance cost, shares | 200,000 | ||||||
Common stock issued for deferred finance cost, amount | 72,000 | 0 | $ 200 | 0 | 0 | 71,800 | 0 |
Sale of common stock units, shares | 2,479,994 | ||||||
Sale of common stock units, amount | 187,800 | 0 | $ 2,480 | (136,875) | 0 | 322,195 | 0 |
Common stock and warrants issued for settlement of notes payable, shares | 414,930 | ||||||
Common stock and warrants issued for settlement of notes payable, amount | 141,118 | 0 | $ 415 | 0 | 0 | 140,703 | 0 |
Net loss | (8,682) | 0 | 0 | 0 | 0 | 0 | (8,682) |
Balance, amount at Mar. 31, 2021 | (4,699,018) | 0 | $ 72,548 | 508,317 | 0 | 5,854,132 | (11,134,015) |
Balance, shares at Mar. 31, 2021 | 72,547,763 | ||||||
Balance, shares at Dec. 31, 2020 | 66,366,419 | ||||||
Balance, amount at Dec. 31, 2020 | (5,705,452) | 0 | $ 66,366 | 645,192 | 0 | 4,708,323 | (11,125,333) |
Net loss | 296,465 | ||||||
Balance, amount at Jun. 30, 2021 | (4,315,910) | 0 | $ 73,561 | 331,600 | $ 253,208 | 6,107,797 | (10,828,868) |
Balance, shares at Jun. 30, 2021 | 73,560,683 | 2,800,000 | |||||
Balance, shares at Mar. 31, 2021 | 72,547,763 | ||||||
Balance, amount at Mar. 31, 2021 | (4,699,018) | 0 | $ 72,548 | 508,317 | $ 0 | 5,854,132 | (11,134,015) |
Sale of common stock units, shares | 1,388,889 | ||||||
Sale of common stock units, amount | 0 | 0 | $ 1,389 | (176,717) | 0 | 175,328 | 0 |
Net loss | 305,147 | 0 | $ 0 | 0 | 0 | 0 | 305,147 |
Common stock issued for services, shares | 57,895 | ||||||
Common stock issued for services, amount | 6,211 | 0 | $ 58 | 0 | 0 | 6,153 | 0 |
Exercise of warrants, shares | 426,136 | ||||||
Exercise of warrants, amount | 0 | 0 | $ 426 | 0 | 0 | (426) | 0 |
Extinguishment of derivative liability due to conversion | 72,958 | 0 | $ 0 | 0 | 0 | 72,958 | 0 |
Shares returned under share-lending agreement, shares | (860,000) | ||||||
Shares returned under share-lending agreement, amount | 0 | 0 | $ (860) | 0 | $ 0 | 860 | 0 |
Issuance of Series A preferred stock, shares | 2,800,000 | ||||||
Issuance of Series A preferred stock, amount | 0 | 0 | 0 | 0 | $ 252,000 | 0 | 0 |
Dividends on Series A preferred stock | (1,208) | 0 | 0 | 0 | 1,208 | (1,208) | 0 |
Balance, amount at Jun. 30, 2021 | (4,315,910) | 0 | $ 73,561 | 331,600 | $ 253,208 | 6,107,797 | (10,828,868) |
Balance, shares at Jun. 30, 2021 | 73,560,683 | 2,800,000 | |||||
Balance, shares at Dec. 31, 2021 | 74,490,147 | 2,800,000 | |||||
Balance, amount at Dec. 31, 2021 | (4,514,303) | 0 | $ 74,490 | 331,600 | $ 259,422 | 6,210,414 | (11,130,807) |
Net loss | 29,384 | 29,384 | |||||
Dividends on Series A preferred stock | (22,833) | $ 0 | 0 | 0 | 3,107 | (22,833) | 0 |
Issuance of Series B Preferred Stock, net of fees, shares | 1,000,000 | ||||||
Issuance of Series B Preferred Stock, net of fees, amount | 890,000 | $ 100 | $ 0 | 0 | 0 | 889,900 | 0 |
Common Stock and Warrants issued in connection with preferred stock, shares | 2,000,000 | ||||||
Common Stock and Warrants issued in connection with preferred stock, amount | 0 | $ 2,000 | 0 | (2,000) | 0 | ||
Balance, amount at Mar. 31, 2022 | (3,617,752) | $ 100 | $ 76,490 | 331,600 | $ 262,529 | 7,075,481 | (11,101,423) |
Balance, shares at Mar. 31, 2022 | 1,000,000 | 76,490,147 | 2,800,000 | ||||
Balance, shares at Dec. 31, 2021 | 74,490,147 | 2,800,000 | |||||
Balance, amount at Dec. 31, 2021 | (4,514,303) | $ 0 | $ 74,490 | 331,600 | $ 259,422 | 6,210,414 | (11,130,807) |
Net loss | (5,519) | ||||||
Balance, amount at Jun. 30, 2022 | (3,606,765) | $ 100 | $ 80,771 | 0 | $ 265,670 | 7,448,690 | (11,136,326) |
Balance, shares at Jun. 30, 2022 | 1,000,000 | 80,771,577 | 2,800,000 | ||||
Balance, shares at Mar. 31, 2022 | 1,000,000 | 76,490,147 | 2,800,000 | ||||
Balance, amount at Mar. 31, 2022 | (3,617,752) | $ 100 | $ 76,490 | 331,600 | $ 262,529 | 7,075,481 | (11,101,423) |
Net loss | (34,903) | (34,903) | |||||
Common stock issued for services, shares | 1,389,175 | ||||||
Common stock issued for services, amount | 68,977 | $ 1,389 | 0 | 0 | 67,588 | 0 | |
Dividends on Series A preferred stock | (23,087) | 0 | $ 0 | 0 | 3,141 | (23,087) | 0 |
Common Stock and Warrants issued in connection with preferred stock, shares | 670,034 | ||||||
Common Stock and Warrants issued in connection with preferred stock, amount | 0 | $ 670 | 0 | (670) | 0 | ||
Common stock issued for share payable, shares | 2,222,221 | ||||||
Common stock issued for share payable, amount | 0 | 0 | $ 2,222 | (331,600) | 0 | 329,378 | 0 |
Balance, amount at Jun. 30, 2022 | $ (3,606,765) | $ 100 | $ 80,771 | $ 0 | $ 265,670 | $ 7,448,690 | $ (11,136,326) |
Balance, shares at Jun. 30, 2022 | 1,000,000 | 80,771,577 | 2,800,000 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Cash Flows from Operating Activities | ||
Net income (loss) | $ (5,519) | $ 296,465 |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||
Depreciation expense | 716 | 1,008 |
Stock-based compensation | 68,977 | 6,211 |
Gain on settlement of notes payable | 0 | (160,164) |
Loss on conversion of notes payable | 0 | 58,642 |
Amortization of debt discount | 56,765 | 433,097 |
Amortization of right-of-use assets | 12,493 | 0 |
Interest expense from derivative issuance | 141,020 | 0 |
Derivative (gain) | (364,977) | (1,075,360) |
Inventory impairment | 18,000 | 0 |
Net change in: | ||
Accounts receivable | (671,521) | 39,905 |
Inventory | (47,539) | 4,922 |
Prepaid expenses | (58,643) | 136,859 |
Right-of-use liabilities | (10,437) | 0 |
Accounts payable and accrued expenses | 454,962 | (99,191) |
Deferred revenue | (67,468) | (177,260) |
Net cash used in operating activities | (472,391) | (534,866) |
Cash Flows from Financing Activities | ||
Proceeds from convertible notes payable | 0 | 570,000 |
Payments on convertible notes payable | (300,000) | (530,503) |
Proceeds from notes payable | 163,988 | 296,524 |
Payments on notes payable | (252,751) | (34,377) |
Proceeds from sale of common stock units | 0 | 250,000 |
Proceeds from issuance of Series A preferred stock | 890,000 | 252,000 |
Net cash provided by financing activities | 501,237 | 803,644 |
Net Change in Cash | 28,846 | 268,778 |
Cash, Beginning of Period | 344,811 | 489,560 |
Cash, End of Period | 373,657 | 758,338 |
Cash Paid For: | ||
Income Taxes | 0 | 0 |
Interest | 10,212 | 49,802 |
Non-cash transactions: | ||
Right of use asset and liability recognized, operating leases | 105,822 | 0 |
Common stock issued to settle convertible notes payable | 0 | 614,198 |
Derivative liability recognized at issuance of warrants and conversion option | 0 | 493,670 |
Extinguishment of derivative to warrant exercise | 0 | 72,958 |
Common stock issued for deferred finance costs | $ 2,670 | $ 72,000 |
Common stock issued to settle share payable | 331,600 |
Organization and Nature of Oper
Organization and Nature of Operations | 6 Months Ended |
Jun. 30, 2022 | |
Organization and Nature of Operations | |
Note 1 Organization and Nature of Operations | Note 1: Organization and Nature of Operations Jacksam Corporation dba Convectium is a technology company focused on developing and commercializing products of vaporizer cartridge filling & capping, pre-roll filling, and other automation systems. The Company’s product line primarily consisted of the 710 Shark cartridge filling machine, the 710 Captain cartridge capping machine, the “PreRoll-ER” pre-roll & cone filling machine, customizable and C-Cell cartridges, and accessories. The Company’s customers are primarily businesses operating in jurisdictions that have some form of cannabis legalization. These businesses include medical and recreational dispensaries, large and small-scale processors and growers, multi-state operators, and distributors. The Company utilizes its direct sales force, website, strategic partners’ sales force, independent sales representatives, and a wide range of referral network to sell its products. The Company was originally organized under the laws of the State of Nevada on September 21, 1989 under the name of Fulton Ventures, Inc. Effective November 16, 2009, management at that time changed the name of Fulton Ventures, Inc. to China Grand Resorts, Inc. After the September 30, 2014 10-Q filing, the management of China Grand Resorts, Inc. abandoned the Company and its subsidiaries were taken back by Chinese national companies in China who owned them. The remaining parent company, China Grand Resorts, Inc., became a dormant company until 2016 when a new shareholder Bryan Glass became the majority shareholder and owner of the Company. On September 14, 2018 (the “Merger”), the Company’s wholly owned subsidiary, Jacksam Acquisition Corp., a corporation formed in the State of Nevada on September 11, 2018, or the Acquisition Sub, merged with and into Jacksam, a corporation incorporated in the State of Delaware in August 2013. On November 5, 2018, current management merged Jacksam into the parent Company, China Grand Resorts, Inc. In connection with the transaction, current management amended our articles of incorporation to change the Company’s name from China Grand Resorts, Inc. to Jacksam Corporation dba Convectium. Since the Merger, the Company has been operated under the control of current management and continued to operate the business of Jacksam Corporation, described herein, as our sole business. |
Significant Accounting Policies
Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2022 | |
Significant Accounting Policies | |
Note 2 Significant Accounting Policies | Note 2: Significant Accounting Policies Basis of Preparation The accompanying financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) under the accrual basis of accounting. These financial statements are presented in U.S. dollars and are prepared on a historical cost basis, except for certain financial instruments which are carried at fair value. The accompanying unaudited interim consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and should be read in conjunction with the audited consolidated financial statements and notes thereto for the years ended December 31, 2021 in the Form 10-K filed on March 31, 2022. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the consolidated financial statements which would substantially duplicate the disclosures contained in the Form 10-K have been omitted. Principles of Consolidation The accompanying consolidated financial statements include the accounts of Jacksam Corporation and its wholly owned subsidiary. All intercompany transactions and balances are eliminated in consolidation. Use of Estimates The preparation of financial statements is in conformity with U.S. GAAP and requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Such estimates and assumptions impact both assets and liabilities, including but not limited to net realizable value of accounts receivable and inventory, estimated useful lives and potential impairment of property and equipment, estimate of fair value of share based payments and derivative liabilities, estimates of fair value of warrants issued and recorded as debt discount and estimates of the probability and potential magnitude of contingent liabilities. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to one or more future nonconforming events. Accordingly, actual results could differ significantly from estimates. Risks and Uncertainties The Company’s operations are subject to risk and uncertainties including financial, operational, regulatory and other risks including the potential risk of business failure. The Company has experienced, and in the future, expects to continue to experience, variability in its sales and earnings. The factors expected to contribute to this variability include, among others, (i) the uncertainty associated with the commercialization and ultimate success of the product, (ii) competition inherent at large national retail chains where product is expected to be sold, (iii) general economic conditions, and (iv) the related volatility of prices pertaining to the cost of sales. Cash and Cash Equivalents Cash and cash equivalents are carried at cost and consist of cash on hand and demand deposits placed with banks or other financial institutions, and all highly liquid investments with an original maturity of three months or less. Federal Deposit Insurance Corporation (“FDIC”) deposit insurance covers $250,000 per depositor, per FDIC-insured bank, per ownership category. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are recorded at the invoiced amount and do not bear interest. The Company extends unsecured credit to its customers in the ordinary course of business but mitigates the associated risks by performing credit checks and actively pursuing past due accounts. The Company recognizes an allowance for losses on accounts receivable in an amount equal to the estimated probable losses net of recoveries. The allowance is based on an analysis of historical bad debt experience, current receivables aging, and expected future bad debts, as well as an assessment of specific identifiable customer accounts considered at risk or uncollectible. As of June 30, 2022 and December 31, 2021, the Company had recorded an allowance for doubtful accounts of $74,000. Inventory Inventories are stated at the lower of cost, determined on the average cost basis or net realizable value. Cost principally consists of the purchase price (adjusted for lower of cost or market), customs, duties, and freight. The Company periodically reviews historical sales activity to determine potentially obsolete items and evaluates the impact of any anticipated changes in future demand. The June 30, 2022 and December 31, 2021 inventory consisted entirely of finished goods. The Company will maintain an allowance based on specific inventory items that have shown no activity over a 60-month period. The Company tracks inventory as it is disposed, scrapped or sold at below cost to determine whether additional items on hand should be reduced in value through an allowance method. As of June 30, 2022 and December 31, 2021, the Company has determined that an inventory allowance of $18,800 is required and was recognized during the six months ended June 30, 2022. Property and Equipment Property and equipment are measured at cost, less accumulated depreciation, and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Depreciation of property and equipment is provided utilizing the straight-line method over the estimated useful lives, ranging from 5 to 7 years of the respective assets. Expenditures for maintenance and repairs are charged to expense as incurred. Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the statements of operations. Fair Value of Financial Instruments The Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level. The following are the hierarchical levels of inputs to measure fair value: · Level 1 · Level 2 · Level 3 The carrying amounts of the Company’s financial assets and liabilities, such as cash, prepaid expenses, other current assets, accounts payable & accrued expenses, certain notes payable and an approximate of their fair values because of the short maturity of these instruments. Binomial Calculation Model The Company uses a binomial calculator model to determine fair market value of derivative liabilities, warrants and options issued. Revenue Recognition The Company derives revenues from the sale of machines and non-machine products (customizable and C-Cell cartridges and accessories). The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 606. Revenues are recognized when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration the Company expects to be entitled to in exchange for transferring those goods or services. Revenue is recognized based on the following five step model: - Identification of the contract with a customer - Identification of the performance obligations in the contract - Determination of the transaction price - Allocation of the transaction price to the performance obligations in the contract - Recognition of revenue when, or as, the Company satisfies a performance obligation Performance Obligations Sales of machines and non-machine products are recognized when all the following criteria are satisfied: (i) a contract with an end user exists which has commercial substance; (ii) it is probable the Company will collect the amount charged to the end user; and (iii) the Company has completed its performance obligation whereby the end user has obtained control of the product. A contract with commercial substance exists once the Company receives and accepts a purchase order or once it enters into a contract with an end user. If collectability is not probable, the sale is deferred and not recognized until collection is probable or payment is received. Control of products typically transfers when title and risk of ownership of the product has transferred to the customer. The customer has a 10-day period to inspect the equipment and may return the product if it does not meet the agreed-upon specifications. For contracts with multiple performance obligations, the Company allocates the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling prices of the promised goods or services underlying each performance obligation. The Company uses an observable price to determine the stand-alone selling price for separate performance obligations or a cost plus margin approach when one is not available. Historically, the Company’s contracts have not had multiple performance obligations. The large majority of the Company’s performance obligations are recognized at a point in time related to the sale of machines and non-machine products. Sales, value add, and other taxes collected concurrent with revenue-producing activities are excluded from revenue. Incidental items that are immaterial in the context of the contract are recognized as expense. Payment terms between invoicing and when payment is due is less than one year. As of December 31, 2021, none of the Company’s contracts contained a significant financing component. The Company elected the practical expedient to not adjust the amount of revenue to be recognized under a contract with an end user for the effects of time value of money when the timing difference between receipt of payment and recognition of revenue is less than one year. The majority of the Company’s contracts offer an assurance-type warranty of the products at no additional cost for a period of 3 years. Assurance-type warranties provide a customer with assurance that the related product will function as the parties intended because it complies with agreed-upon specifications. Such warranties do not represent a separate performance obligation. At the time a sale is recognized, the Company estimated future warranty costs, which were trivial. Transaction Price Allocated to the Remaining Performance Obligations At a given point in time, the Company may have collected payment for future sales of product to begin production. These transactions are deferred until the product transfers to the customer and the performance obligation is considered complete. As of June 30, 2022, $104,303 in revenue is expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period. The Company expects to recognize all of our unsatisfied (or partially unsatisfied) performance obligations as revenue in the next twelve months. Contract Costs Costs incurred to obtain a customer contract are not material to the Company. The Company elected to apply the practical expedient to not capitalize contract costs to obtain contracts with a duration of one year or less, which are expensed and included within cost of goods and services. Critical Accounting Estimates Estimates are used to determine the amount of variable consideration in contracts, the standalone selling price among separate performance obligations and the measure of progress for contracts where revenue is recognized over time. The Company reviews and updates these estimates regularly. Disaggregation of Revenue All machine sales and most non-machine sales are completed in North America. Three Months Ended June 30, 2022 Three Months Ended June 30, 2021 Six Months Ended June 30, 2022 Six Months Ended June 30, 2021 Machine sales $ 1,157,961 $ 1,526,947 $ 2,191,084 $ 3,185,615 Non-machine sales 309,348 133,310 1,053,300 245,608 Total sales $ 1,467,309 $ 1,660,257 $ 3,244,384 $ 3,431,223 Net Loss Per Common Share Basic net loss per common share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Potential common stock equivalents are determined using the treasury stock method. For diluted net loss per share purposes, the Company excludes stock options and other stock-based awards, including shares issued as a result of option exercises that are subject to repurchase by the Company, whose effect would be anti-dilutive from the calculation. The following table presents the effect of potential dilutive issuances for the three and six months ended June 30, 2022 and 2021: Three Months Ended Six Months Ended June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021 Net income (loss) attributable to common stockholders $ (57,990 ) $ 303,939 $ (51,439 ) $ 295,257 Preferred stock dividends - 1,208 - 1,208 Derivative gain - (542,993 ) - (1,075,360 ) Interest expense associated with convertible debt - 155,241 - 447,791 Net income (loss) for dilutive calculation $ (57,990 ) $ (86,605 ) (51,439 ) (331,104 ) Weighted average shares outstanding 80,132,342 72,034,097 77,605,012 70,692,600 Dilutive effect of preferred stock - 1,400,000 - 1,400,000 Dilutive effect of convertible debt - 2,469,136 - 2,469,136 Dilutive effect of common stock warrants - - - Weighted average shares outstanding for diluted net income (loss) per share 80,132,342 80,740,245 77,605,012 77,787,944 During the three and six months ended June 30, 2022, the impact of 15,189,056 warrants to purchase common stock, 2,469,136 shares issuable under convertible debt and 18,066,667 shares issuable under convertible preferred stock were excluded from the calculation above as their impact would be anti-dilutive. The calculation for each period presented also excludes 2,777,778 shares not yet issued related to conversions of debt that occurred in 2020, and for the three and six months ended June 30, 2021, excludes 2,222,223 related to stock unit sales in 2021 that were not yet issued. During the three and six months ended June 30, 2021, the impact of 10,968,056 warrants to purchase common stock were excluded from the calculation as their impact would be anti-dilutive. During the six months ended June 30, 2021, 2,493,827 shares issuable under convertible debt were excluded from the calculation above as their impact would be anti-dilutive. Going Concern The Company’s financial statements are prepared using U.S. GAAP to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has negative working capital, recurring losses, and does not have a source of revenues sufficient to cover its operating costs. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon its ability to successfully execute the business plan and attain profitable operations. The accompanying financial statements do not include any adjustments that may be necessary if the Company is unable to continue as a going concern. In the coming year, the Company’s foreseeable cash requirements will relate to continual development of the operations of its business, maintaining its good standing and making the requisite filings with the SEC, and the payment of expenses associated with operations and business developments. The Company may experience a cash shortfall and be required to raise additional capital. Historically, it has mostly relied upon convertible notes payable and cash flows from operations to finance its operations and growth. Management may raise additional capital by retaining net earnings or through future private offerings of the Company’s stock or through loans from private investors, although there can be no assurance that it will be able to obtain such financing. The Company’s failure to do so could have a material and adverse effect upon it and its shareholders. Recently Issued Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the effect of recently issued standards that are not yet effective and will not have a material effect on its consolidated financial position or results of operations upon adoption. In August 2020, the FASB issued ASU 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815 – 40)” |
Property and Equipment
Property and Equipment | 6 Months Ended |
Jun. 30, 2022 | |
Property and Equipment | |
Note 3 Property and Equipment | Note 3: Property and Equipment Property and equipment consist of the following: June 30, 2022 December 31, 2021 Furniture and fixtures $ 10,425 $ 10,425 Equipment 7,578 7,579 Trade show display 2,640 2,640 Total 20,643 20,644 Less: Accumulated depreciation (19,887 ) (19,172 ) Property and equipment, net $ 756 $ 1,472 Depreciation expense amounted to $716 and $1,008 for the six months ended June 30, 2022 and 2021, respectively. |
Accounts Payable and Accrued Ex
Accounts Payable and Accrued Expenses | 6 Months Ended |
Jun. 30, 2022 | |
Accounts Payable and Accrued Expenses | |
Note 4 Accounts Payable and Accrued Expenses | Note 4: Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consist of the following: June 30, 2022 December 31, 2021 Accounts payable $ 860,478 $ 382,925 Accrued interest 93,615 4,338 Sales tax payable 144,553 144,541 Accrued officer consulting cost - 13,750 Other 42,223 42,221 Total Accounts payable and Accrued expenses $ 1,140,869 $ 587,775 |
Notes Payable
Notes Payable | 6 Months Ended |
Jun. 30, 2022 | |
Notes Payable | |
Note 5 Notes Payable | Note 5: Notes Payable A summary of Notes Payable are as follows: June 30, 2022 December 31, 2021 Note payable April 2020 - 35,245 SBA loan May 2020 146,348 148,093 Note payable September 2021 679,010 730,783 Total notes payable 825,358 914,121 Less: discount and deferred finance costs (107,814 ) (121,309 ) Less: current portion (144,389 ) (87,774 ) Long-term portion of notes payable $ 573,155 705,038 On December 31, 2019, the Company entered into an inventory financing arrangement with a single lender, whereby $150,000 was paid by the lender directly to a vendor to secure inventory for the sales to customers in January 2020. The Company will repay $164,835 of principal and interest by February 29, 2020. The interest and fees of $14,835 were recorded as debt discount and were amortized through the maturity date. The Company also paid a deferred finance cost of $5,000 which was amortized through the maturity date. The Company entered into a second agreement on February 6, 2020 with the same lander for an additional $43,000 of funding. The Company will repay $47,253 at maturity on April 6, 2020. On April 22, 2020, these two notes payable were refinanced with the lender into a single agreement whereby the Company will make an initial repayment of $74,231 and 24 monthly payments of $7,467, for total payments of $253,439. This amendment was accounted for as a modification of the debt. As of June 30, 2022 the company has repaid the balance of the note in full. On June 2, 2020, the Company received $150,000 under the Small Business Administration’s Economic Injury Disaster Loan. The loan bears interest at a fixed rate of 3.75%, and matures on May 26, 2050, payable monthly with payments of $731 beginning twelve months after issuance. The loan gives the Small Business Administration a security interest in all assets of the Company. On September 29, 2021, the Company entered into a Revenue Loan and Security Agreement with an investor for up to a total amount of $1,000,000. Upon drawing from the facility and continuing thereafter until maturity or earlier prepayment in full, the Company shall pay monthly to the lender an amount equal to the product of (i) all revenue of the Company for the immediately preceding month multiplied by (ii) an applicable revenue percentage. On September 29, 2021, the Company borrowed $750,000 under the agreement and received initial cash proceeds of $727,500. The Company also paid an additional $5,000 in fees to the investor to secure the loan for total deferred financing fees of $27,500. On November 12, 2021, the Company issued a total of 843,750 shares of common stock to a lender in connection with the note payable issued. These shares had a fair value of $100,744 and were recorded as deferred finance costs. As of June 30, 2022 and December 31, 2021, the Company owed a principal amount of $679,010 and $730,783 under this loan, with remaining unamortized discount of $107,814 and $121,310, respectively. In March 2022, the Company received cash proceeds of $82,081 under an unsecured short term financing agreement. The Company repaid $5,694 per week until paid in full. This note was paid in full as of June 30, 2022. The Company entered into a second unsecured short term finance arrangement and received cash proceeds of $81,907. This agreement was repaid in full as of June 30, 2022. The Company amortized $13,495 and $0 of debt discount and deferred finance costs to interest expense related to notes payable during the six months ended June 30, 2022 and 2021, respectively. |
Convertible Notes Payable and D
Convertible Notes Payable and Derivative Liabilities | 6 Months Ended |
Jun. 30, 2022 | |
Convertible Notes Payable and Derivative Liabilities | |
Note 6 Convertible Notes Payable and Derivative Liabilities | Note 6: Convertible Notes Payable and Derivative Liabilities Convertible Notes Payable The following table summarizes outstanding convertible notes as of June 30, 2022 and December 31, 2021: June 30, 2022 December 31, 2021 June 2019 Notes, due December 21, 2022 $ 444,444 $ 444,444 June 2020 Note 1, maturing June 4, 2021 - - June 2020 Note 2, maturing June 24, 2021 - - June 2020 Note 3, maturing June 24, 2021 - - November 2020 Note, maturing November 23, 2021 - - February 2021 Note, maturing February 15, 2022 - 300,000 Total 444,444 744,444 Less: Debt discount and deferred finance costs on short-term convertible notes - (43,269 ) Less: Current convertible notes payable, net of discount (444,444 ) (701,175 ) Total long-term convertible notes payable, net $ - $ - In June and July 2019, the Company issued convertible notes to 10 investors with an original principal amount of $2,388,889, receiving $1,583,333 in net cash proceeds (the “June 2019 Notes”). The June 2019 Notes matured on March 25, 2020 and are convertible into the Company’s common stock at a per share price of $0.35 at any time subsequent to the issuance date. The June 2019 Notes contain a down round feature, whereby any sale of common stock or common stock equivalent at a price per share lower than the conversion price of the June 2019 Notes will result in the conversion price being lowered to the new price. The warrants contain the same down round feature as the notes. As a result of a dilutive issuance during the year ended December 31, 2020, the exercise price of the remaining notes payable and the warrants is currently $0.18 per share. During the year ended December 31, 2020, $1,500,000 of the principal on the June 2019 Notes was converted into the right to receive 7,883,599 shares of common stock, of which 5,105,821 were issued by December 31, 2021 and 2,777,778 were part of the subscriptions payable liability balance of $499,999 as of June 30, 2022. See Note 7. Following two previous extensions and on July 9, 2021, the holder of $444,444 of the notes agreed to extend the repayment period to December 31, 2021. There were no other changes to terms of the convertible notes payable, and the amendments were accounted for as a debt modification. On February 15, 2021, the Company entered into a convertible note agreement with an institutional investor for a principal amount of $675,000 (the “February 2021 Note”) bearing interest at 10% with an original issue discount of $67,500 and a maturity date of February 15, 2022. The Company paid $37,500 of deferred finance costs and issued 200,000 shares of common stock to the lender of the February 2021 Note as deferred finance costs, valued at $72,000 based on the closing price of the stock at the date of borrowing. This lender also received 767,045 common stock warrants with an exercise price of $0.44 and a term of 3 years valued at $179,699. If the note is in default, the holder has the right to convert the outstanding principal and accrued interest balance into shares of common stock at the closing bid price of the Company’s common stock immediately prior to conversion. As a result of the variable conversion price on the Company’s outstanding notes payable and reset provisions, the conversion option and the warrants were accounted for as a derivative liability. The original balance of this note was $675,000. The Company used proceeds from this note payable to pay in full the June 2020 Notes and the November 2020 Note. The Company repaid the remaining 300,000 of principal on this note during the six months ended June 30, 2022. The Company amortized $43,270 and $433,097 of debt discount and deferred finance costs to interest expense related to convertible notes payable during the six months ended June 30, 2022 and 2021, respectively. Accrued interest on notes payable and convertible notes payable was $93,615 and $4,338 as of June 30, 2022 and December 31, 2021, respectively. Derivative Liabilities The fair values of the conversion option of outstanding convertible notes payable and common stock warrants with reset provisions were estimated using a binomial model with the following assumptions: As of June 30, 2022 Conversion Option Warrants Volatility 74.86 % 67.92-97.57 % Dividend Yield 0 % 0 % Risk-free rate 2.51 % 2.92-3.01 % Expected term 0.5 year 0.5-5 years Stock price $ 0.0325 $ 0.0325 Exercise price $ 0.18 $ 0.18-0.30 Derivative liability fair value $ - $ 101,832 All fair value measurements related to the derivative liabilities are considered significant unobservable inputs (Level 3) under the fair value hierarchy of ASC 820. The table below presents the change in the fair value of the derivative liability during the six months ended June 30, 2022: Fair value as of December 31, 2021 $ 325,808 Fair value on the date of issuance of new derivatives 141,020 Extinguishment due to repayment of debt (7,655 ) Gain on change in fair value of derivatives (357,342 ) Fair value as of June 30, 2022 $ 101,831 The total impact of derivative liabilities recognized in the Company’s consolidated statements of operations includes extinguishments due to repayments and the change in fair value of derivatives, with the Company recognizing a total gain of $364,977 and $1,075,360 during the six months ended June 30, 2022 and 2021, respectively. |
Equity
Equity | 6 Months Ended |
Jun. 30, 2022 | |
Equity | |
Note 7 Equity | Note 7: Equity Common Stock On December 31, 2021, the Board of Directors of the Company and shareholders holding a majority of the voting power of the Company both approved an amendment to the Company’s Article of Incorporation to increase the total number of authorized shares that the Company shall have authority to issue from 100,000,000 shares to 230,000,000 shares, consisting of two classes to be designated respectively, “Common Stock” and “Preferred Stock”, with all such shares having a par value of $0.001 per share, of which 200,000,000 shall be designated as Common stock and 30,000,000 designated as Preferred stock. During the years ended December 31, 2021 and 2020, the Company sold common stock units at $0.18 per unit. Each $0.18 unit consists of a share of common stock and a warrant to purchase half a share of common stock at an exercise price of $0.27, for a period of three years from issuance. As of June 30, 2022 and December 31, 2021 there were zero and 2,222,223 shares remaining to be issued related to common stock units, respectively. As of June 30, 2022 and December 31, 2021, there are 2,777,778 shares remaining to be issued related to 2020 debt conversions of $499,999, which is included in Subscription payable on the consolidated balance sheets, with 2,160,494 of those shares remaining to be issued to Mark Adams, CEO, and David Hall, EVP of Sales. See Note 6. Series A Redeemable Preferred Stock The Company created the 2,800,000 shares of Series A Preferred Stock out of the 10,000,000 shares of preferred stock authorized by the Company’s articles of incorporation by filing a certificate of designation as authorized by the Company’s board of directors (the “Certificate of Designation”). The Series A Preferred Stock bears a cumulative dividend of 5.0% per annum on the original purchase price and is redeemable by the Company or upon a class vote by the holders of the Series A Preferred Stock at the original purchase price, plus any unpaid dividends then owing, payable in 4 equal quarterly payments. The Series A Preferred Stock converts into the Company’s common stock at a ratio of 2:1, subject to revision on the basis of standard weighted average anti-dilution protective provisions, at the option of the holders of the Series A Preferred Stock or automatically upon the occurrence of a merger, sale of the Company’s assets, or upon another Deemed Liquidation Event as defined in the Certificate of Designation. In the absence of an anti-dilution adjustment, the 2,800,000 shares of Series A Preferred Stock will convert into 1,400,000 shares of the Company’s common stock. The Series A Preferred Stock votes with the Company’s common stock, as a single class, at a rate of 20 votes for each share of Series A Preferred Stock. The Series A Preferred Stock carries a liquidation preference and is participating. The Series A Preferred Stock carries standard protective provisions that preclude the Company from amending its articles of incorporation, bylaws or the terms of the Certificate of Designation adversely to the holders of the Series A Preferred Stock without their prior approval. Due to the redemption feature, the Company accounts for the Series A Preferred Stock as temporary equity in accordance with ASC 480. The Series A Preferred Stock is accounted for at redemption value. On May 26, 2021, the Company, entered into a subscription agreement (the “Preferred Stock Agreement”) with Mark Adams, Chief Executive Officer, President, and a member of Board of Directors of the Company. Mark Adams paid $126,000 to purchase 1,400,000 shares of the Series A Preferred Stock, at a price per share of $0.09. Scott Wessler, Chairman of Board of Directors of the Company, paid $126,000 to purchase 1,400,000 shares of the Series A Preferred Stock, at a price per share of $0.09. The Company accrued $6,248 in dividends on the Series A Preferred Stock for the six months ended June 30, 2022. The redemption value of the Series A Preferred Stock as of June 30, 2022 and December 31, 2021 was $265,670 and $259,422, reflected as temporary equity on the Company’s consolidated balance sheet. Series B Convertible Preferred Stock In February 2022, the Company designated 1,000,000 shares of Series B Convertible Preferred Stock (“Series B”). The Series B has a par value of $0.0001 per share, a stated value of $1 per share and carries a dividend of 8%. The Series B are convertible into shares of common stock at a price of $0.06 per share, and contains an exercise price reset provision in the event of dilutive issuances of common stock or any common stock equivalent by the Company with a price below the exercise price. The Series B holders do not have voting rights on matters other than those related to amending the certificate of incorporation of the Series B, altering voting or other powers of the Series B, or redemption or acquisition of outstanding Series B. For a period of one year following closing of the Series B funding, the Company may not authorize or create any class of stock that is senior to the Series B with respect to dividends, redemption or distribution of assets upon Liquidation. In the event of liquidation of the Company, the Series B holders shall be paid 125% of the Stated value plus 125% of any unpaid dividends. During the six months ended June 30, 2022, the Company sold a total of 1,000,000 shares of Series B to two investors for net cash proceeds of $885,000 after closing costs of $115,000 and issued warrants to purchase 4,000,000 shares of common stock at $0.20 per share for a period of five years. The Company also issued 2,670,034 shares of common stock with a fair value of $139,800 to the investors, which were recorded as a cost of capital. The Company granted to the investors the piggy-back registration rights. Stock Warrants A summary of stock warrant information is as follows: Aggregate Number Aggregate Exercise Price Weighted Average Exercise Price Outstanding at December 31, 2021 11,189,056 $ 2,646,044 $ 0.24 Granted 4,000,000 800,000 0.20 Exercised - - - Forfeited and cancelled - - - Outstanding at June 30, 2022 15,189,056 $ 3,446,044 $ 0.23 The weighted average remaining contractual life is approximately 2.42 years for stock warrants outstanding with no intrinsic value of as of June 30, 2022. All of the above warrants were fully vested. |
Related Party
Related Party | 6 Months Ended |
Jun. 30, 2022 | |
Related Party | |
Note 8 Related Party | Note 8: Related Party Mark Adams, CEO, and David Hall, EVP of Sales invested in the June 2019 Notes. Mark Adams and David Hall contributed $250,000 and $100,000 respectively, and converted their debt during the year ended December 31, 2020 into shares of common stock of 1,388,885 and 555,555, respectively, that have not yet to be issued. Mark Adams and David Hall will also receive an additional 154,321 and 61,728 shares of common stock once the shares are issued. Those shares were in subscriptions payable and presented on the balance sheet. See Notes 6 and 7. Mark Adams and Scott Wessler each contributed $126,000 to purchase the Series A Preferred Stock as discussed in Note 7. |
Commitments
Commitments | 6 Months Ended |
Jun. 30, 2022 | |
Commitments | |
Note 9 Commitments | Note 9: Commitments Leases The Company entered into a lease agreement for office space on February 2, 2022, for a term beginning February 15, 2022 through February 28, 2025. The lease requires payments of $3,267 per month through the lease term, increasing by 4% each year, with an option to renew. The Company recognized an initial right of use asset and lease liability of $105,822, based on the present value of the minimum lease payments. For purposes of calculating operating lease liabilities, lease terms may be deemed to include options to extend the lease when it is reasonably certain that the Company will exercise those options. Some leasing arrangements require variable payments that are dependent on usage, output, or may vary for other reasons, such as insurance and tax payments. The variable lease payments are not presented as part of the initial right-of-use (“ROU”) asset or lease liability. The Company’s lease agreements do not contain any material restrictive covenants. The components of lease cost for operating leases for the six months ended June 30, 2022 and 2021 were as follows: Six months ended June 30, 2022 June 30, 2021 Operating lease cost $ 16,757 $ - Short-term lease cost 34,274 54,398 Variable lease cost - - Sublease income - - Total lease cost $ 51,031 $ 54,398 The following table summarizes the lease-related assets and liabilities recorded in the consolidated balance sheets at June 30, 2022 and December 31, 2021: Lease Position June 30, 2022 December 31, 2021 Operating Leases Operating lease right-of-use assets $ 93,329 $ - Right of use liability operating lease current portion $ 31,593 $ - Right of use liability operating lease long term 63,792 - Total operating lease liabilities $ 95,385 $ - The Company utilizes the incremental borrowing rate in determining the present value of lease payments unless the implicit rate is readily determinable. The Company estimated its incremental borrowing rate to be 10%. The lease has a remaining term of 2.67 years. The following table provides the maturities of lease liabilities at June 30, 2022: Operating Leases 2022 (Six months remaining) $ 19,602 2023 40,511 2024 42,123 2025 7,065 2026 and thereafter - Total future undiscounted lease payments 109,301 Less: Interest (13,916 ) Present value of lease liabilities $ 95,385 Lawsuit The Company has a pending lawsuit with one of its previous suppliers regarding defected cartridges. The Company is still evaluating the case and determining the impact of the case on the Company and as of the date of this report the amount or range of possible losses is not reasonably estimable. |
Accrued Liabilities Other
Accrued Liabilities Other | 6 Months Ended |
Jun. 30, 2022 | |
Accrued Liabilities Other | |
Note 10 Accrued Liabilities - Other | Note 10: Accrued Liabilities – Other Prior to the Merger, China Grand Resorts, Inc. recorded various liabilities that were incurred by former related parties. The current management team is not aware of any written agreements in place governing the terms of the loans nor have they been in contact with the debt holders however recognizes that China Grand Resorts, Inc. previously reported these amounts as liabilities of the Company. In accordance with ASC 405-20-40, the liabilities may only be removed from the Company’s financial statements if they are paid, formally settled or judicially released. Management believes the relevant statute of limitations has passed and that no enforceable legal claim exists in relation to these liabilities of $1,696,374 but does not believe that is sufficient to remove the liability from the financial statements. Management does not intend to remove these liabilities of $1,696,374 from the Company’s financial statements until such time that the liability is formally settled or judicially released in accordance with ASC 405-20-40. Due to the lack of written agreements and other factors noted above, management concluded to no longer accrue interest on these loans. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2022 | |
Subsequent Events | |
Note 11 Subsequent Events | Note 11: Subsequent Events The Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q and determined that there have been no events that have occurred that would require adjustments to our disclosures in the financial statements. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2022 | |
Significant Accounting Policies | |
Basis of Preparation | The accompanying financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) under the accrual basis of accounting. These financial statements are presented in U.S. dollars and are prepared on a historical cost basis, except for certain financial instruments which are carried at fair value. The accompanying unaudited interim consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and should be read in conjunction with the audited consolidated financial statements and notes thereto for the years ended December 31, 2021 in the Form 10-K filed on March 31, 2022. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the consolidated financial statements which would substantially duplicate the disclosures contained in the Form 10-K have been omitted. |
Principles of Consolidation | The accompanying consolidated financial statements include the accounts of Jacksam Corporation and its wholly owned subsidiary. All intercompany transactions and balances are eliminated in consolidation. |
Use of Estimates | The preparation of financial statements is in conformity with U.S. GAAP and requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Such estimates and assumptions impact both assets and liabilities, including but not limited to net realizable value of accounts receivable and inventory, estimated useful lives and potential impairment of property and equipment, estimate of fair value of share based payments and derivative liabilities, estimates of fair value of warrants issued and recorded as debt discount and estimates of the probability and potential magnitude of contingent liabilities. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to one or more future nonconforming events. Accordingly, actual results could differ significantly from estimates. |
Risks and Uncertainties | The Company’s operations are subject to risk and uncertainties including financial, operational, regulatory and other risks including the potential risk of business failure. The Company has experienced, and in the future, expects to continue to experience, variability in its sales and earnings. The factors expected to contribute to this variability include, among others, (i) the uncertainty associated with the commercialization and ultimate success of the product, (ii) competition inherent at large national retail chains where product is expected to be sold, (iii) general economic conditions, and (iv) the related volatility of prices pertaining to the cost of sales. |
Cash and Cash Equivalents | Cash and cash equivalents are carried at cost and consist of cash on hand and demand deposits placed with banks or other financial institutions, and all highly liquid investments with an original maturity of three months or less. Federal Deposit Insurance Corporation (“FDIC”) deposit insurance covers $250,000 per depositor, per FDIC-insured bank, per ownership category. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts receivable are recorded at the invoiced amount and do not bear interest. The Company extends unsecured credit to its customers in the ordinary course of business but mitigates the associated risks by performing credit checks and actively pursuing past due accounts. The Company recognizes an allowance for losses on accounts receivable in an amount equal to the estimated probable losses net of recoveries. The allowance is based on an analysis of historical bad debt experience, current receivables aging, and expected future bad debts, as well as an assessment of specific identifiable customer accounts considered at risk or uncollectible. As of June 30, 2022 and December 31, 2021, the Company had recorded an allowance for doubtful accounts of $74,000. |
Inventory | Inventories are stated at the lower of cost, determined on the average cost basis or net realizable value. Cost principally consists of the purchase price (adjusted for lower of cost or market), customs, duties, and freight. The Company periodically reviews historical sales activity to determine potentially obsolete items and evaluates the impact of any anticipated changes in future demand. The June 30, 2022 and December 31, 2021 inventory consisted entirely of finished goods. The Company will maintain an allowance based on specific inventory items that have shown no activity over a 60-month period. The Company tracks inventory as it is disposed, scrapped or sold at below cost to determine whether additional items on hand should be reduced in value through an allowance method. As of June 30, 2022 and December 31, 2021, the Company has determined that an inventory allowance of $18,800 is required and was recognized during the six months ended June 30, 2022. |
Property and Equipment | Property and equipment are measured at cost, less accumulated depreciation, and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Depreciation of property and equipment is provided utilizing the straight-line method over the estimated useful lives, ranging from 5 to 7 years of the respective assets. Expenditures for maintenance and repairs are charged to expense as incurred. Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the statements of operations. |
Fair Value of Financial Instruments | The Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level. The following are the hierarchical levels of inputs to measure fair value: · Level 1 · Level 2 · Level 3 The carrying amounts of the Company’s financial assets and liabilities, such as cash, prepaid expenses, other current assets, accounts payable & accrued expenses, certain notes payable and an approximate of their fair values because of the short maturity of these instruments. |
Binomial Calculation Model | The Company uses a binomial calculator model to determine fair market value of derivative liabilities, warrants and options issued. |
Revenue Recognition | The Company derives revenues from the sale of machines and non-machine products (customizable and C-Cell cartridges and accessories). The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 606. Revenues are recognized when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration the Company expects to be entitled to in exchange for transferring those goods or services. Revenue is recognized based on the following five step model: - Identification of the contract with a customer - Identification of the performance obligations in the contract - Determination of the transaction price - Allocation of the transaction price to the performance obligations in the contract - Recognition of revenue when, or as, the Company satisfies a performance obligation Performance Obligations Sales of machines and non-machine products are recognized when all the following criteria are satisfied: (i) a contract with an end user exists which has commercial substance; (ii) it is probable the Company will collect the amount charged to the end user; and (iii) the Company has completed its performance obligation whereby the end user has obtained control of the product. A contract with commercial substance exists once the Company receives and accepts a purchase order or once it enters into a contract with an end user. If collectability is not probable, the sale is deferred and not recognized until collection is probable or payment is received. Control of products typically transfers when title and risk of ownership of the product has transferred to the customer. The customer has a 10-day period to inspect the equipment and may return the product if it does not meet the agreed-upon specifications. For contracts with multiple performance obligations, the Company allocates the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling prices of the promised goods or services underlying each performance obligation. The Company uses an observable price to determine the stand-alone selling price for separate performance obligations or a cost plus margin approach when one is not available. Historically, the Company’s contracts have not had multiple performance obligations. The large majority of the Company’s performance obligations are recognized at a point in time related to the sale of machines and non-machine products. Sales, value add, and other taxes collected concurrent with revenue-producing activities are excluded from revenue. Incidental items that are immaterial in the context of the contract are recognized as expense. Payment terms between invoicing and when payment is due is less than one year. As of December 31, 2021, none of the Company’s contracts contained a significant financing component. The Company elected the practical expedient to not adjust the amount of revenue to be recognized under a contract with an end user for the effects of time value of money when the timing difference between receipt of payment and recognition of revenue is less than one year. The majority of the Company’s contracts offer an assurance-type warranty of the products at no additional cost for a period of 3 years. Assurance-type warranties provide a customer with assurance that the related product will function as the parties intended because it complies with agreed-upon specifications. Such warranties do not represent a separate performance obligation. At the time a sale is recognized, the Company estimated future warranty costs, which were trivial. Transaction Price Allocated to the Remaining Performance Obligations At a given point in time, the Company may have collected payment for future sales of product to begin production. These transactions are deferred until the product transfers to the customer and the performance obligation is considered complete. As of June 30, 2022, $104,303 in revenue is expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period. The Company expects to recognize all of our unsatisfied (or partially unsatisfied) performance obligations as revenue in the next twelve months. Contract Costs Costs incurred to obtain a customer contract are not material to the Company. The Company elected to apply the practical expedient to not capitalize contract costs to obtain contracts with a duration of one year or less, which are expensed and included within cost of goods and services. Critical Accounting Estimates Estimates are used to determine the amount of variable consideration in contracts, the standalone selling price among separate performance obligations and the measure of progress for contracts where revenue is recognized over time. The Company reviews and updates these estimates regularly. Disaggregation of Revenue All machine sales and most non-machine sales are completed in North America. Three Months Ended June 30, 2022 Three Months Ended June 30, 2021 Six Months Ended June 30, 2022 Six Months Ended June 30, 2021 Machine sales $ 1,157,961 $ 1,526,947 $ 2,191,084 $ 3,185,615 Non-machine sales 309,348 133,310 1,053,300 245,608 Total sales $ 1,467,309 $ 1,660,257 $ 3,244,384 $ 3,431,223 |
Net Loss Per Common Share | Basic net loss per common share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Potential common stock equivalents are determined using the treasury stock method. For diluted net loss per share purposes, the Company excludes stock options and other stock-based awards, including shares issued as a result of option exercises that are subject to repurchase by the Company, whose effect would be anti-dilutive from the calculation. The following table presents the effect of potential dilutive issuances for the three and six months ended June 30, 2022 and 2021: Three Months Ended Six Months Ended June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021 Net income (loss) attributable to common stockholders $ (57,990 ) $ 303,939 $ (51,439 ) $ 295,257 Preferred stock dividends - 1,208 - 1,208 Derivative gain - (542,993 ) - (1,075,360 ) Interest expense associated with convertible debt - 155,241 - 447,791 Net income (loss) for dilutive calculation $ (57,990 ) $ (86,605 ) (51,439 ) (331,104 ) Weighted average shares outstanding 80,132,342 72,034,097 77,605,012 70,692,600 Dilutive effect of preferred stock - 1,400,000 - 1,400,000 Dilutive effect of convertible debt - 2,469,136 - 2,469,136 Dilutive effect of common stock warrants - - - Weighted average shares outstanding for diluted net income (loss) per share 80,132,342 80,740,245 77,605,012 77,787,944 During the three and six months ended June 30, 2022, the impact of 15,189,056 warrants to purchase common stock, 2,469,136 shares issuable under convertible debt and 18,066,667 shares issuable under convertible preferred stock were excluded from the calculation above as their impact would be anti-dilutive. The calculation for each period presented also excludes 2,777,778 shares not yet issued related to conversions of debt that occurred in 2020, and for the three and six months ended June 30, 2021, excludes 2,222,223 related to stock unit sales in 2021 that were not yet issued. During the three and six months ended June 30, 2021, the impact of 10,968,056 warrants to purchase common stock were excluded from the calculation as their impact would be anti-dilutive. During the six months ended June 30, 2021, 2,493,827 shares issuable under convertible debt were excluded from the calculation above as their impact would be anti-dilutive. |
Going Concern | The Company’s financial statements are prepared using U.S. GAAP to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has negative working capital, recurring losses, and does not have a source of revenues sufficient to cover its operating costs. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon its ability to successfully execute the business plan and attain profitable operations. The accompanying financial statements do not include any adjustments that may be necessary if the Company is unable to continue as a going concern. In the coming year, the Company’s foreseeable cash requirements will relate to continual development of the operations of its business, maintaining its good standing and making the requisite filings with the SEC, and the payment of expenses associated with operations and business developments. The Company may experience a cash shortfall and be required to raise additional capital. Historically, it has mostly relied upon convertible notes payable and cash flows from operations to finance its operations and growth. Management may raise additional capital by retaining net earnings or through future private offerings of the Company’s stock or through loans from private investors, although there can be no assurance that it will be able to obtain such financing. The Company’s failure to do so could have a material and adverse effect upon it and its shareholders. |
Recently Issued Accounting Pronouncements | From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the effect of recently issued standards that are not yet effective and will not have a material effect on its consolidated financial position or results of operations upon adoption. In August 2020, the FASB issued ASU 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815 – 40)” |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Significant Accounting Policies | |
Schedule of disaggregation of revenue | Three Months Ended June 30, 2022 Three Months Ended June 30, 2021 Six Months Ended June 30, 2022 Six Months Ended June 30, 2021 Machine sales $ 1,157,961 $ 1,526,947 $ 2,191,084 $ 3,185,615 Non-machine sales 309,348 133,310 1,053,300 245,608 Total sales $ 1,467,309 $ 1,660,257 $ 3,244,384 $ 3,431,223 |
Summary of effect of potential dilutive issuances | Three Months Ended Six Months Ended June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021 Net income (loss) attributable to common stockholders $ (57,990 ) $ 303,939 $ (51,439 ) $ 295,257 Preferred stock dividends - 1,208 - 1,208 Derivative gain - (542,993 ) - (1,075,360 ) Interest expense associated with convertible debt - 155,241 - 447,791 Net income (loss) for dilutive calculation $ (57,990 ) $ (86,605 ) (51,439 ) (331,104 ) Weighted average shares outstanding 80,132,342 72,034,097 77,605,012 70,692,600 Dilutive effect of preferred stock - 1,400,000 - 1,400,000 Dilutive effect of convertible debt - 2,469,136 - 2,469,136 Dilutive effect of common stock warrants - - - Weighted average shares outstanding for diluted net income (loss) per share 80,132,342 80,740,245 77,605,012 77,787,944 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Property and Equipment | |
Schedule of property and equipment | June 30, 2022 December 31, 2021 Furniture and fixtures $ 10,425 $ 10,425 Equipment 7,578 7,579 Trade show display 2,640 2,640 Total 20,643 20,644 Less: Accumulated depreciation (19,887 ) (19,172 ) Property and equipment, net $ 756 $ 1,472 |
Accounts payable and accrued _2
Accounts payable and accrued expenses (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Accounts payable and accrued expenses (Tables) | |
Schedule of accounts payable and accrued expenses | June 30, 2022 December 31, 2021 Accounts payable $ 860,478 $ 382,925 Accrued interest 93,615 4,338 Sales tax payable 144,553 144,541 Accrued officer consulting cost - 13,750 Other 42,223 42,221 Total Accounts payable and Accrued expenses $ 1,140,869 $ 587,775 |
Notes Payable (Tables)
Notes Payable (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Notes Payable (Tables) | |
Summary of notes payable | June 30, 2022 December 31, 2021 Note payable April 2020 - 35,245 SBA loan May 2020 146,348 148,093 Note payable September 2021 679,010 730,783 Total notes payable 825,358 914,121 Less: discount and deferred finance costs (107,814 ) (121,309 ) Less: current portion (144,389 ) (87,774 ) Long-term portion of notes payable $ 573,155 705,038 |
Convertible Notes Payable and_2
Convertible Notes Payable and Derivative Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Convertible Notes Payable and Derivative Liabilities | |
Schedule of outstanding convertible notes | June 30, 2022 December 31, 2021 June 2019 Notes, due December 21, 2022 $ 444,444 $ 444,444 June 2020 Note 1, maturing June 4, 2021 - - June 2020 Note 2, maturing June 24, 2021 - - June 2020 Note 3, maturing June 24, 2021 - - November 2020 Note, maturing November 23, 2021 - - February 2021 Note, maturing February 15, 2022 - 300,000 Total 444,444 744,444 Less: Debt discount and deferred finance costs on short-term convertible notes - (43,269 ) Less: Current convertible notes payable, net of discount (444,444 ) (701,175 ) Total long-term convertible notes payable, net $ - $ - |
Schedule of fair values of conversion option and warrants | As of June 30, 2022 Conversion Option Warrants Volatility 74.86 % 67.92-97.57 % Dividend Yield 0 % 0 % Risk-free rate 2.51 % 2.92-3.01 % Expected term 0.5 year 0.5-5 years Stock price $ 0.0325 $ 0.0325 Exercise price $ 0.18 $ 0.18-0.30 Derivative liability fair value $ - $ 101,832 |
Schedule of fair value of derivative liability | Fair value as of December 31, 2021 $ 325,808 Fair value on the date of issuance of new derivatives 141,020 Extinguishment due to repayment of debt (7,655 ) Gain on change in fair value of derivatives (357,342 ) Fair value as of June 30, 2022 $ 101,831 |
Equity (Tables)
Equity (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Equity | |
Summary of stock warrant | Aggregate Number Aggregate Exercise Price Weighted Average Exercise Price Outstanding at December 31, 2021 11,189,056 $ 2,646,044 $ 0.24 Granted 4,000,000 800,000 0.20 Exercised - - - Forfeited and cancelled - - - Outstanding at June 30, 2022 15,189,056 $ 3,446,044 $ 0.23 |
Commitments (Tables)
Commitments (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Commitments (Tables) | |
Schedule of operating lease cost | Six months ended June 30, 2022 June 30, 2021 Operating lease cost $ 16,757 $ - Short-term lease cost 34,274 54,398 Variable lease cost - - Sublease income - - Total lease cost $ 51,031 $ 54,398 |
Summary of lease related assets and liabilities | Lease Position June 30, 2022 December 31, 2021 Operating Leases Operating lease right-of-use assets $ 93,329 $ - Right of use liability operating lease current portion $ 31,593 $ - Right of use liability operating lease long term 63,792 - Total operating lease liabilities $ 95,385 $ - |
Schedule of maturities of lease liabilities | Operating Leases 2022 (Six months remaining) $ 19,602 2023 40,511 2024 42,123 2025 7,065 2026 and thereafter - Total future undiscounted lease payments 109,301 Less: Interest (13,916 ) Present value of lease liabilities $ 95,385 |
Significant Accounting Polici_4
Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Significant Accounting Policies (Details) | ||||
Machine sales | $ 1,157,961 | $ 1,526,947 | $ 2,191,084 | $ 3,185,615 |
Non-machine sales | 309,348 | 133,310 | 1,053,300 | 245,608 |
Total sales | $ 1,467,309 | $ 1,660,257 | $ 3,244,384 | $ 3,431,223 |
Significant Accounting Polici_5
Significant Accounting Policies (Details 1) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Significant Accounting Policies (Details) | ||||
Net income (loss) attributable to common stockholders | $ (57,990) | $ 303,939 | $ (51,439) | $ 295,257 |
Preferred stock dividends | 0 | 1,208 | 0 | 1,208 |
Derivative gain | 0 | (542,993) | 0 | (1,075,360) |
Interest expense associated with convertible debt | 0 | 155,241 | 0 | 447,791 |
Net income (loss) for dilutive calculation | (57,990) | (86,605) | (51,439) | (331,104) |
Weighted average shares outstanding | 80,132,342 | 72,034,097 | 77,605,012 | 70,692,600 |
Dilutive effect of preferred stock | 0 | 1,400,000 | 0 | 1,400,000 |
Dilutive effect of convertible debt | 0 | 2,469,136 | 0 | 2,469,136 |
Dilutive effect of common stock warrants | 0 | 0 | 0 | |
Weighted average shares outstanding for diluted net income (loss) per share | $ 80,132,342 | $ 80,740,245 | $ 77,605,012 | $ 77,787,944 |
Significant Accounting Polici_6
Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Allowance for Doubtful Accounts | $ 74,000 | $ 74,000 | |||
Inventory allowance | $ 18,800 | 18,800 | |||
Common stock purchase | 15,189,056 | 10,968,056 | 15,189,056 | 10,968,056 | |
Shares issuable under convertible debt excluded from calculation | 2,469,136 | 2,469,136 | |||
Convertible preferred stock | 18,066,667 | 18,066,667 | |||
Shares not yet issued related to conversions of debt excluding stock units | 2,222,223 | 2,222,223 | |||
FDIC insurance amount | $ 250,000 | ||||
Revenue | $ 104,303 | $ 104,303 | $ 171,771 | ||
Shares issuable | 2,777,778 | 2,493,827 | |||
Maturiity date | Dec. 15, 2023 | ||||
Minimum [Member] | |||||
Property and equipment , estimated useful lives | 5 years | ||||
Maximum [Member] | |||||
Property and equipment , estimated useful lives | 7 years |
Property and Equipmentt (Detail
Property and Equipmentt (Details) - USD ($) | Jun. 30, 2022 | Dec. 31, 2021 |
Total | $ 20,643 | $ 20,644 |
Less: Accumulated Depreciation | (19,887) | (19,172) |
Property and Equipment net | 756 | 1,472 |
Furniture and Fixtures [Member] | ||
Total | 10,425 | 10,425 |
Equipments [Member] | ||
Total | 7,578 | 7,579 |
Trade Show Displays [Member] | ||
Total | $ 2,640 | $ 2,640 |
Property and Equipmentt (Deta_2
Property and Equipmentt (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Property and Equipmentt (Details) | ||
Depreciation expense | $ 716 | $ 1,008 |
Accounts Payable and Accrued _3
Accounts Payable and Accrued Expenses (Details) - USD ($) | Jun. 30, 2022 | Dec. 31, 2021 |
Total Accounts payable and Accrued expenses | $ 1,140,869 | $ 587,775 |
Total Accounts payable and Accrued expenses | 1,140,869 | 641,690 |
Accounts payable [Member] | ||
Total Accounts payable and Accrued expenses | 860,478 | 382,925 |
Accrued interest [Member] | ||
Total Accounts payable and Accrued expenses | 93,615 | 4,338 |
Sales tax payable [Member] | ||
Total Accounts payable and Accrued expenses | 144,553 | 144,541 |
Accrued officer consulting cost [Member] | ||
Total Accounts payable and Accrued expenses | 0 | 13,750 |
Other [Member] | ||
Total Accounts payable and Accrued expenses | $ 42,223 | $ 42,221 |
Notes Payable (Details)
Notes Payable (Details) - USD ($) | Jun. 30, 2022 | Dec. 31, 2021 |
Total notes payable | $ 825,358 | $ 914,121 |
Less: discount and deferred finance costs | (107,814) | (121,309) |
Less: current portion | (144,389) | (87,774) |
Long term portion of notes payable | 573,155 | 705,038 |
Note Payable April 2020 [Member] | ||
Total notes payable | 0 | 35,245 |
SBA loan May 2020 [Member] | ||
Total notes payable | 146,348 | 148,093 |
Note Payable September 2021 [Member] | ||
Total notes payable | $ 679,010 | $ 730,783 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | 1 Months Ended | 6 Months Ended | 12 Months Ended | ||||||
Jun. 02, 2020 | Feb. 06, 2020 | Mar. 31, 2022 | Sep. 29, 2021 | Apr. 22, 2020 | Dec. 31, 2019 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Amortization of debt discount | $ 14,835 | $ 13,495 | $ 0 | ||||||
Investor fees | $ 5,000 | ||||||||
Financing fees | $ 27,500 | ||||||||
Common stock to a lender | 843,750 | ||||||||
Deferred finance costs | $ 100,744 | ||||||||
Repayment of notes | 252,751 | $ 34,377 | |||||||
Payroll Protection Program [Member] | |||||||||
Repayment of notes | $ 5,694 | ||||||||
Interest rate | 3.75% | ||||||||
Debt discount and deferred finance costs to interest expense related to notes payable | 6,710 | ||||||||
Proceeds from loan | $ 150,000 | $ 1,000,000 | |||||||
Cash proceeds from an unsecured short term financing agreement | $ 82,081 | 81,907 | |||||||
Loan forgiveness | 679,010 | $ 730,783 | |||||||
Unamortized discount | $ 107,814 | $ 121,310 | |||||||
Maturity date | Apr. 22, 2022 | ||||||||
Debt description | payable monthly with payments of $731 beginning twelve months after issuance. | all revenue of the Company for the immediately preceding month multiplied by (ii) an applicable revenue percentage. On September 29, 2021, the Company borrowed $750,000 under the agreement and received initial cash proceeds of $727,500 | |||||||
Inventory Financing Agreement [Member] | Lender [Member] | |||||||||
Maturity date | Apr. 22, 2020 | ||||||||
Frequency of payment | 24 monthly | ||||||||
Periodic payment, monthly | $ 7,467 | ||||||||
Total outstanding payment | 253,439 | ||||||||
Deferred finance cost | $ 5,000 | ||||||||
Repayment of debt | $ 74,231 | ||||||||
Inventory financing arrangement, Description | The Company will repay $47,253 at maturity on April 6, 2020 | The Company will repay $164,835 of principal and interest by February 29, 2020. The interest and fees of $14,835 were recorded as debt discount and were amortized through the maturity date. The Company also paid a deferred finance cost of $5,000 which was amortized through the maturity date | |||||||
Proceeds from lender | $ 43,000 | $ 150,000 |
Convertible Notes Payable and_3
Convertible Notes Payable and Derivative Liabilities (Details) - USD ($) | Jun. 30, 2022 | Dec. 31, 2021 |
Total | $ 444,444 | $ 744,444 |
Less: Debt discount and deferred finance costs on short-term convertible notes | 0 | (43,269) |
Less: Current convertible notes payable, net of discount | (444,444) | (701,175) |
Total long-term convertible notes payable, net | 0 | 0 |
June 2020 Note 3, maturing June 24, 2021 [Member] | ||
Total | 0 | 0 |
November 2020 Note, maturing November 23, 2021 [Member] | ||
Total | 0 | 0 |
June 2020 Note 2, maturing June 24, 2021 [Member] | ||
Total | 0 | 0 |
June 2019 Notes, Due December 21, 2022 [Member] | ||
Total | 444,444 | 444,444 |
February 2021 Note, Maturing February 15, 2022 [Member] | ||
Total | $ 0 | $ 300,000 |
Convertible Notes Payable and_4
Convertible Notes Payable and Derivative Liabilities (Details 1) | 6 Months Ended |
Jun. 30, 2022 USD ($) $ / shares | |
Exercise price | $ 0 |
Warrants [Member] | |
Dividend Yield | 0% |
Stock price | $ 0.0325 |
Derivative Liability fair value | $ | $ 101,832 |
Conversion Option [Member] | |
Exercise price | $ 0.18 |
Volatility | 74.86% |
Dividend Yield | 0% |
Risk-free rate | 2.51% |
Expected term | 6 months |
Stock price | $ 0.0325 |
Derivative Liability fair value | $ | $ 0 |
Minimum [Member] | Warrants [Member] | |
Exercise price | $ 0.18 |
Volatility | 67.92% |
Risk-free rate | 2.92% |
Expected term | 6 months |
Maximum [Member] | Warrants [Member] | |
Exercise price | $ 0.30 |
Volatility | 97.57% |
Risk-free rate | 3.01% |
Expected term | 5 years |
Convertible Notes Payable and_5
Convertible Notes Payable and Derivative Liabilities (Details 2) - Fair Value [Member] | 6 Months Ended |
Jun. 30, 2022 USD ($) | |
Fair value, Beginning balance | $ 325,808 |
Fair value on the date of issuance of new derivatives | 141,020 |
Extinguishment due to repayment of debt | (7,655) |
Gain on change in fair value of derivatives | (357,342) |
Fair value, Ending balance | $ 101,831 |
Convertible Notes Payable and_6
Convertible Notes Payable and Derivative Liabilities (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jul. 09, 2021 | Feb. 28, 2021 | Feb. 15, 2021 | Jun. 30, 2022 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | |
Accrued interest | $ 93,615 | $ 93,615 | $ 4,338 | |||||
Convertible notes payable | $ 444,444 | $ 364,977 | $ 1,075,360 | |||||
Shares issued for subscriptions payable | 2,800,000 | |||||||
Subscriptions payable liability balance | $ 499,999 | $ 499,999 | ||||||
Shares issued upon conversion of debt | 18,066,667 | 18,066,667 | ||||||
Amortization of debt discount | $ 56,765 | 433,097 | ||||||
Common stock, shares par value | $ 0.001 | $ 0.001 | $ 0.001 | |||||
Proceeds from convertible notes payable | $ 163,988 | 296,524 | ||||||
Convertible notes (June 2019 Notes) [Member] | ||||||||
Common stock shares issued for conversion of debt | 7,883,599 | |||||||
Shares issued for subscriptions payable | 2,777,778 | |||||||
Subscriptions payable liability balance | $ 499,999 | $ 499,999 | ||||||
Shares issued upon conversion of debt | 5,105,821 | |||||||
Common stock shares issued for conversion of debt, Amount | $ 1,500,000 | |||||||
Amortization of debt discount | $ 43,270 | $ 433,097 | ||||||
Convertible notes [Member] | Investors [Member] | ||||||||
Amortization of debt discount | $ 67,500 | |||||||
Principal amount | $ 675,000 | 675,000 | ||||||
Bearing interest | 10% | |||||||
Maturity date | Feb. 15, 2022 | |||||||
Note balance | $ 300,000 | 300,000 | ||||||
Deferred finance cost and issued, shares | 200,000 | |||||||
Deferred finance cost and issued, amount | $ 72,000 | |||||||
Deferred finance | $ 37,500 | |||||||
Common stock warrants | 767,045 | |||||||
Warrant exercise price | $ 0.44 | |||||||
Warrant term | 3 years | |||||||
Note defaults | $ 179,699 | |||||||
Convertible notes (June and July 2019 Notes) [Member] | ||||||||
Principal amount | $ 2,388,889 | |||||||
Maturity date | Mar. 25, 2020 | |||||||
Common stock, shares par value | $ 0.35 | $ 0.35 | ||||||
Proceeds from convertible notes payable | $ 1,583,333 | |||||||
Exercise price | $ 0.18 |
Equity (Details)
Equity (Details) | 6 Months Ended |
Jun. 30, 2022 USD ($) $ / shares shares | |
Aggregate Number | |
Aggregate number, Beginning | shares | 11,189,056 |
Granted | shares | 4,000,000 |
Aggregate number, Ending | shares | 15,189,056 |
Aggregate Exercise Price | |
Aggregate exercise price, Beginning | $ | $ 2,646,044 |
Granted | $ | 800,000 |
Exercised | $ | 0 |
Forfeited and cancelled | $ | 0 |
Aggregate exercise price, Ending | $ | $ 3,446,044 |
Weighted average exercise price, Beginning | $ / shares | $ 0.24 |
Granted | $ / shares | 0.20 |
Exercised | $ / shares | 0 |
Forfeited and cancelled | $ / shares | 0 |
Weighted average exercise price, Ending | $ / shares | $ 0.23 |
Equity (Details Narrative)
Equity (Details Narrative) - USD ($) | 1 Months Ended | 2 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |
May 26, 2021 | Feb. 28, 2022 | Mar. 31, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Common stock designated | 200,000,000 | |||||
Preferred stock designated | 30,000,000 | |||||
Common stock, shares par value | $ 0.001 | $ 0.001 | ||||
Par value, preferred stock | $ 0.001 | $ 0.001 | ||||
Shares remaining to be issued | 2,222,223 | 2,222,223 | ||||
Shares issued for subscriptions payable | 2,800,000 | |||||
Fair value of common stock | $ 139,800 | |||||
Sale of common stock, shares | 2,000,000 | |||||
Subscriptions payable liability balance | $ 499,999 | |||||
Weighted average remaining contractual life | 2 years 5 months 1 day | |||||
Share price | $ 0.18 | |||||
Price per unit | $ 0.18 | |||||
Redemption value of series a preferred stock | $ 265,670 | $ 259,422 | ||||
Common stock shares issued | 2,670,034 | |||||
Warrants to purchase shares of common stock | 4,000,000 | |||||
Warrants to purchase shares of common stock, price per share | $ 0.20 | |||||
Stock exercise price | $ 0.27 | |||||
Proceeds from issuance of Series A preferred stock | $ 0 | $ 890,000 | $ 252,000 | |||
Preferred stock values | $ 0 | $ 0 | ||||
Preferred stock, shares issued | 0 | 0 | ||||
Series B | ||||||
Par value, preferred stock | $ 0.0001 | |||||
Designated preferred shares | $ 1,000,000 | |||||
Preferred stock,shares stated value | $ 1 | |||||
Conversion price | $ 0.06 | |||||
DIvidend percent | 8% | |||||
Sold of warrant share | 100,000,000 | |||||
Net cash proceeds from invester | $ 885,000 | |||||
Closing Costs | $ 115,000 | |||||
Purchase from series B of common | 4,000,000 | |||||
Common stock as purchase price | $ 0.20 | |||||
Minimum [Member] | ||||||
Increased the authorized common shares | 230,000,000 | 100,000,000 | ||||
Mr Mark Adamsand Mr David Hall [Member] | ||||||
Shares remaining to be issued | 2,777,778 | 2,777,778 | ||||
DIvidend percent | 5% | |||||
Convertible debt converted and stock | 2,160,494 | |||||
Scott Wessler [Member] | Series A Redeemable Preferred Stock [Member] | Subscription Agreement [Member] | ||||||
Preferred stock values | $ 126,000 | |||||
Preferred stock, shares issued | 1,400,000 | |||||
Price per share | $ 0.09 | |||||
Preferred stock, Description | The Company created the 2,800,000 shares of Series A Preferred Stock out of the 10,000,000 shares of preferred stock authorized by the Company’s articles of incorporation by filing a certificate of designation as authorized by the Company’s board of directors (the “Certificate of Designation”). | |||||
Mr Adams [Member] | Series A Redeemable Preferred Stock [Member] | Subscription Agreement [Member] | ||||||
Preferred stock values | $ 126,000 | |||||
Preferred stock, shares issued | 1,400,000 | |||||
Price per share | $ 0.09 |
Related Party (Details Narrativ
Related Party (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2022 | Dec. 31, 2021 | |
Preferred stock values | $ 0 | $ 0 |
Mr. Hall [Member] | ||
Contribution amount | $ 100,000 | |
Conversion of debt into common stock | 555,555 | |
Receipt of shares after issuance of common stock | 61,728 | |
Preferred stock values | $ 126,000 | |
Mr. Adams [Member] | ||
Contribution amount | $ 250,000 | |
Conversion of debt into common stock | 1,388,885 | |
Receipt of shares after issuance of common stock | 154,321 | |
Preferred stock values | $ 126,000 |
Commitments (Details)
Commitments (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Commitments (Details) | ||
Operating lease cost | $ 16,757 | $ 0 |
Short-term lease cost | 34,274 | 54,398 |
Variable lease cost | 0 | 0 |
Sublease income | 0 | 0 |
Total lease cost | $ 51,031 | $ 54,398 |
Commitments (Details 1)
Commitments (Details 1) - USD ($) | Jun. 30, 2022 | Dec. 31, 2021 |
Commitments (Details) | ||
Operating lease right-of-use assets | $ 93,329 | $ 0 |
Right of use liability operating lease current portion | 31,593 | 0 |
Right of use liability operating lease long term | 63,792 | 0 |
Total operating lease liabilities | $ 95,385 | $ 0 |
Commitments (Details 2)
Commitments (Details 2) | Jun. 30, 2022 USD ($) |
Commitments (Details) | |
2022 (Six months remaining) | $ 19,602 |
2023 | 40,511 |
2024 | 42,123 |
2025 | 7,065 |
2026 and thereafter | 0 |
Total future undiscounted lease payments | 109,301 |
Less: Interest | (13,916) |
Present value of lease liabilities | $ 95,385 |
Commitments (Details Narrative)
Commitments (Details Narrative) | 6 Months Ended |
Jun. 30, 2022 USD ($) | |
Commitments (Details) | |
Lease payments per month | $ 3,267 |
Lease payments increased percentage | 4% |
Right of use asset and lease liability | $ 105,822 |
Incremental borrowing rate, percentage | 10% |
Lease remaining term | 2 years 8 months 1 day |
Description for the extention of the lease term | beginning February 15, 2022 through February 28, 2025 |
Accrued Liabilities Other (Deta
Accrued Liabilities Other (Details Narrative) | 6 Months Ended |
Jun. 30, 2022 USD ($) | |
Significant Accounting Policies | |
Accrued Liabilities, Other | $ 1,696,374 |
Description of management intention of not removing accrued liabilities | Management does not intend to remove these liabilities of $1,696,374 from the Company’s financial statements until such time that the liability is formally settled or judicially released in accordance with ASC 405-20-40. Due to the lack of written agreements and other factors noted above, management concluded to no longer accrue interest on these loans. |