We are a smaller reporting
Company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
See the accompanying notes to these audited condensed consolidated financial statements
See the accompanying notes to these audited condensed consolidated financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
NOTE 1 — SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant
accounting policies applied in the presentation of the accompanying financial statements follows:
Basis and business
presentation
Marijuana Company of
America, Inc. (The “Company”) was incorporated under the laws of the State of Utah in October 1985 under the name Mormon
Mint, Inc. The corporation was originally a startup company organized to manufacture and market commemorative medallions related
to the Church of Jesus Christ of Latter Day Saints. On January 5, 1999, Bekam Investments, Ltd. acquired one hundred percent of
the common shares of the Company and spun the Company off changing its name Converge Global, Inc. From August 13, 1999 until November
20, 2002, the Company focused on the development and implementation of Internet web content and e-commerce applications. In October
2009, in a 30 for 1 exchange, the Company merged with Sparrowtech, Inc. for the purpose of exploration and development of commercially
viable mining properties. From 2009 to 2014, we operated primarily in the mining exploration business.
In 2015, the Company
changed its business model to a marketing and distribution company for medical marijuana. In conjunction with the change, the Company
changed its name to Marijuana Company of America, Inc. At the time of the transition in 2015, there were no remaining assets, liabilities
or operating activities of the mining business.
On September 21, 2015,
the Company formed H Smart, Inc, a Delaware corporation as a wholly owned subsidiary for the purpose of operating the hempSMART
brand. H Smart, Inc. is also registered with the California Secretary of State as a foreign corporation.
On February 1, 2016,
the Company formed MCOA CA, Inc., a California corporation as a wholly owned subsidiary to facilitate mergers, acquisitions and
the offering of investments or loans to the Company.
On May 3, 2017, the Company
formed Hempsmart Limited, a United Kingdom corporation as a wholly owned subsidiary for the purpose of future expansion into the
European market.
On May 23, 2018, the
Company formed H Smart, LLC in Washington State. On January 21, 2019, the Company converted this entity into a Washington State
corporation named H Smart, Inc.
The consolidated financial
statements include the accounts of the Company and its wholly owned subsidiaries: H Smart, Inc., H Smart, LLC, Hempsmart Limited
and MCOA CA, Inc. All significant intercompany balances and transactions have been eliminated in consolidation.
Revenue Recognition
For annual reporting
periods after December 15, 2017, the Financial Accounting Standards Board (“FASB”) made effective ASU 2014-09 “Revenue
from Contracts with Customers,” to supersede previous revenue recognition guidance under current U.S. GAAP. Revenue is now
recognized in accordance with FASB ASC Topic 606, Revenue Recognition. The objective of the guidance is to establish the principles
that an entity shall apply to report useful information to users of financial statements about the nature, amount, timing, and
uncertainty of revenue and cash flows arising from a contract with a customer. The core principal is to recognize revenue to depict
the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects
to be entitled in exchange for those goods or services. Two options were made available for implementation of the standard: the
full retrospective approach or modified retrospective approach. The guidance became effective for annual reporting periods beginning
after December 15, 2017, including interim periods within that reporting period, with early adoption permitted. We adopted FASB
ASC Topic 606 for our reporting period as of the year ended December 31, 2017, which made our implementation of FASB ASC Topic
606 effective in the first quarter of 2018. We decided to implement the modified retrospective transition method to implement FASB
ASC Topic 606, with no restatement of the comparative periods presented. Using this transition method, we applied the new standards
to all new contracts initiated on/after the effective date. We also decided to apply this method to any incomplete contracts we
determine are subject to FASB ASC Topic 606 prospectively. For the year ended December 31, 2020, there were no incomplete contracts.
As is more fully discussed below, we are of the opinion that none of our contracts for services or products contain significant
financing components that require revenue adjustment under FASB ASC Topic 606.
Identification of
Our Contracts with Our Customers.
Contracts included in
our application of FASB ASC Topic 606, consist completely of sales contracts between us and our customers that create enforceable
rights and obligations. For the year ended December 31, 2019, our sales contracts included the following parties: us, our sales
associates and our customers. Our sales contracts were offered by us and our sales associates to our customers directly through
our web site. Our sales contracts, and those formalized by our sales associates, are represented by an electronic order form, which
contains the contractual elements of offer for sale, acceptance and the provision of consideration consisting of the buyer’s
payment, which is concurrent with our delivery of hempSMART™ product. Since our hempSMART™ product sales contracts
are consummated upon receipt of the customer’s acceptance of our offer; our concurrent receipt of our customers payment;
and, our delivery of the agreed to hempSMART™ product, all parties are equally committed to fulfilling their respective obligations
under the sales contracts. Further, the sales contracts specifically identify (1) parties; (2) quantity of hempSMART™ product
ordered; (3) price; and, (4) subject, and so each respective party’s rights are identifiable and the payment terms are defined.
Since the sales contracts are consummated concurrent with offer, acceptance, payment and delivery of the hempSMART™ product
ordered, we recognize revenue and cash flows as the principal from the respective sales contract transactions as they complete.
Further, because our sales contracts are offered, accepted and consummated concurrently, our ability to collect revenue is immediate.
We receive no payments for agreements that do not qualify as a contract. If customers agree to multiple sales contracts when they
are entered into at or near the same time, our policy is to combine those contracts if: (1) the sales contracts are negotiated
as a single package; (2) the payment amount of one sales contract is dependent upon another sales contract; (3) our performance
obligations of delivering multiple hempSMART™ products can be determined to be part of a single transaction. Since the nature
of the entry into and consummation of our sales contracts occur concurrently, there are no changes or modifications to the terms
of the sales contracts that would modify the enforceable rights and performance obligations of the parties and that would materially
alter the timing of our receipt of revenue from our sales contracts.
Identifying the Performance
Obligations in Our Sales Contracts.
In analyzing our sales
contracts, our policy is to identify the distinct performance obligations in a sales contract arrangement. In determining our performance
obligations under our sales contracts, we consider that the terms and conditions of sales are explicitly outlined in our sales
contracts and are so distinct and identifiable within the context of each sales contract, and so are not integrated with other
goods, or constitute a modification or customization of other goods in our contracts, or are highly dependent or highly integrated
with other goods in our sales contracts. Thus, our performance obligations are singularly related to our promise to provide the
hempSMART™ products upon receipt of payment. We offer an assurance warranty on our hempSMART™ products that allows
a customer to return any hempSMART™ products within thirty days if not satisfied for any reason. Assurance warranties are
not identifiable performance obligations, since they are electable at the whim of the customer for any reason. However, we do account
for returns of purchase prices if made.
Determination of the
Price in Our Sales Contracts.
The
transaction prices in our sales contract is the amount of consideration we expect to be entitled to for transferring promised hempSMART™
products. The consideration amount is fixed and not variable. The transaction price is allocated to the identified performance
obligations in the contract. These allocated amounts are recognized as revenue when or as the performance obligations are fulfilled,
which is concurrently upon receipt of payment. There are no future options for a contract when considering and determining the
transaction price. We exclude amounts third parties will eventually collect, such as sales tax, when determining the transaction
price. Since the timing between receiving consideration and transferring goods or services is immediate, our sales contract do
not have a significant financing component, i.e., recognizing revenue at the amount that reflects the cash payment that the customer
would have made at the time the goods or services were transferred to them (cash selling price), rather than significantly before
or after the goods or services are provided.
Allocation of the
Transaction Price of Our Sales Contracts.
Our sales contracts are
not considered multi-element arrangements which require the fulfillment of multiple performance obligations. Rather, our sales
contracts include one performance obligation in each contract. As such, from the outset, we allocate the total consideration to
each performance obligation based on the fixed and determinable standalone selling price, which we believe is an accurate representation
of what the price is in each transaction.
Recognition of Revenue
when the Performance Obligation is Satisfied.
A performance obligation
is satisfied when or as control of the good or service is transferred to the customer. The standard defines control as “the
ability to direct the use of, and obtain substantially all of the remaining benefits from, the asset.” (ASC 606-10-20). For
performance obligations that are fulfilled at a point in time, revenue is recognized at the fulfillment of the performance obligation.
As noted above, our single performance obligation sales contracts are singularly related to our promise to provide the hempSMART™
products to the customer upon receipt of payment, which occurs concurrently and when, upon completion, allows us under our revenue
recognition policy to realize revenue.
Regarding our offered
financial accounting, bookkeeping and/or real property management consulting services, to date no contracts have been entered into,
and thus no reportable revenues have resulted for the fiscal years ended 2020 and 2019.
Product Sales
Revenue from product
sales, including delivery fees, FOB shipping point, is recognized when (1) an order is placed by the customer; (2) the price is
fixed and determinable when the order is placed; (3) the customer is required to and concurrently pays for the product upon order;
and, (4) the product is shipped. The evaluation of our recognition of revenue after the adoption of FASB ASC 606 did not include
any judgments or changes to judgments that affected our reporting of revenues, since our product sales, both pre and post adoption
of FASB ASC 606, were evaluated using the same standards as noted above, reflecting revenue recognition upon order, payment and
shipment, which all occurs concurrently when the order is placed and paid for by the customer, and the product is shipped. Further,
given the facts that (1) our customers exercise discretion in determining the timing of when they place their product order; and,
(2) the price negotiated in our product sales is fixed and determinable at the time the customer places the order, and there is
no delay in shipment, we are of the opinion that our product sales do not indicate or involve any significant customer financing
that would materially change the amount of revenue recognized under the sales transaction, or would otherwise contain a significant
financing component for us or the customer under FASB ASC Topic 606.
Consulting Services
We also offer professional
services for financial accounting, bookkeeping or real property management consulting services based on consulting agreements.
As of the date of this filing, we have not entered into any contracts for any financial accounting, bookkeeping and/or real property
management consulting services that have generated reportable revenues as of the years ended 2020 and 2019. We intend and expect
these arrangements to be entered into on an hourly fixed fee basis.
For hourly based fixed fee service contracts,
we intend to utilize and rely upon the proportional performance method, which recognizes revenue as services are performed. Under
this method, in order to determine the amount of revenue to be recognized, we will calculate the amount of completed work in comparison
to the total services to be provided under the arrangement or deliverable. We only recognize revenues as we incur and charge billable
hours. Because our hourly fees for services are fixed and determinable and are only earned and recognized as revenue upon actual
performance, we are of the opinion that such arrangements are not an indicator of a vendor or customer based significant financing,
that would materially change the amount of revenue we recognize under the contract or would otherwise contain a significant financing
component under FASB ASC Topic 606.
The Company determined
that upon adoption of ASC 606 there were no quantitative adjustments converting from ASC 605 to ASC 606 respecting the timing of
our revenue recognition because product sales revenue is recognized upon customer order, payment and shipment, which occurs concurrently,
and our consulting services offered are fixed and determinable and are only earned and recognized as revenue upon actual performance.
Use of Estimates
The preparation of financial statements in
conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Significant estimates include the fair value of the Company’s stock, stock-based compensation,
fair values relating to derivative liabilities, debt discounts and the valuation allowance related to deferred tax assets. Actual
results may differ from these estimates.
Cash
The Company considers cash to consist of cash
on hand and temporary investments having an original maturity of 90 days or less that are readily convertible into cash.
Concentrations of credit risk
The Company’s financial instruments that
are exposed to a concentration of credit risk are cash and accounts receivable. Occasionally, the Company’s cash and cash
equivalents in interest-bearing accounts may exceed FDIC insurance limits. The financial stability of these institutions is periodically
reviewed by senior management.
Accounts Receivable
Trade receivables are carried at their estimated
collectible amounts. Trade credit is generally extended on a short-term basis; thus, trade receivables do not bear interest. Trade
accounts receivable are periodically evaluated for collectability based on past credit history with customers and their current
financial condition.
Allowance for Doubtful Accounts
Any charges to the allowance for doubtful accounts
on accounts receivable are charged to operations in amounts sufficient to maintain the allowance for uncollectible accounts at
a level management believes is adequate to cover any probable losses. Management determines the adequacy of the allowance based
on historical write-off percentages and the current status of accounts receivable. Accounts receivable are charged off against
the allowance when collectability is determined to be permanently impaired. As of December 31, 2020, and 2019, allowance for doubtful
accounts was $0 and $0, respectively.
Inventories
Inventories are stated at the lower of cost
or market with cost being determined on a first-in, first-out (FIFO) basis. The Company writes down its inventory for estimated
obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based
upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected
by management, additional inventory write-downs may be required. During the periods presented, there were no inventory write-downs.
Cost of sales
Cost of sales is comprised of cost of product
sold, packaging, and shipping costs.
Stock Based Compensation
The Company measures the cost of services received
in exchange for an award of equity instruments including stock, stock options and restricted stock awards based on the fair value
of the award. For employees and directors, the fair value of the award is measured on the grant date and recognized over the period
during which services are required to be provided in exchange for the award, usually the vesting period. For non-employees, share-based
compensation awards are recorded at either the fair value of the services rendered or the fair value of the share-based payments,
whichever is more readily determinable. Stock and restricted stock and option awards are based on the closing price of the stock
underlying the awards on the grant date. Stock-based compensation expense is recorded by the Company in the same expense classifications
in the statements of operations, as if such amounts were paid in cash. As of December 31, 2020, and 2019, the number of outstanding
stock options to purchase shares of common stock was 0 and 0 shares, respectively. 0 and 0 shares were vested as of December 31,
2020 and 2019, respectively.
Net Loss per Common Share, basic and diluted
The Company computes earnings (loss) per share
under Accounting Standards Codification subtopic 260-10, Earnings Per Share (“ASC 260-10”). Net loss per common share
is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the year. Diluted
earnings per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially
dilutive securities into common stock using the “treasury stock” and/or “if converted” methods as applicable.
The computation of basic and diluted income
(loss) per share as of December 31, 2020 and 2019 excludes potentially dilutive securities when their inclusion would be anti-dilutive,
or if their exercise prices were greater than the average market price of the common stock during the period.
Potentially dilutive securities excluded from
the computation of basic and diluted net loss per share are as follows:
|
|
2020
|
|
2019
|
Convertible notes payable
|
|
|
1,282,203,301
|
|
|
|
137,219,847
|
|
Options to purchase common stock(1)
|
|
|
0
|
(1)
|
|
|
0
|
(1)
|
Warrants to purchase common stock
|
|
|
293,054,702
|
|
|
|
110,846,817
|
|
Total
|
|
|
1,575,258,003
|
|
|
|
248,066,664
|
|
(1) On February 27, 2019, Donald Steinberg and Charles
Larsen cancelled previously issued options to purchase an aggregate of 1,000,000,000 shares at an average exercise price of $0.0005
per share, representing 100% of all previously issued options.
Property and Equipment
Property and
equipment are stated at cost. When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed
from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings. For financial
statement purposes, property and equipment are recorded at cost and depreciated using the straight-line method over their estimated
useful lives of 3 to 5 years.
Investments
The Company follows Accounting Standards Codification
subtopic 321-10, Investments-Equity Securities (“ASC 321-10) which requires the accounting for equity security to be measured
at fair value with changes in unrealized gains and losses are included in current period operations. Where an equity security is
without a readily determinable fair value, the Company may elect to estimate its fair value at cost minus impairment plus or minus
changes resulting from observable price changes (See Note 4).
Derivative Financial Instruments
The Company classifies as equity any
contracts that (i) require physical settlement or net-share settlement or (ii) provide the Company with a choice of net-cash settlement
or settlement in its own shares (physical settlement or net-share settlement) providing that such contracts are indexed to the
Company’s own stock. The Company classifies as assets or liabilities any contracts that (i) require net-cash settlement (including
a requirement to net cash settle the contract if an event occurs and if that event is outside the Company’s control) or (ii)
gives the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). The
Company assesses classification of its common stock purchase warrants and other free standing derivatives at each reporting date
to determine whether a change in classification between equity and liabilities is required.
The Company’s free-standing derivatives
consisted of conversion options embedded within its issued convertible debt and warrants with anti-dilutive (reset) provisions.
The Company evaluated these derivatives to assess their proper classification in the balance sheet using the applicable classification
criteria enumerated under GAAP. The Company determined that certain conversion and exercise options do not contain fixed
settlement provisions. The convertible notes contain a conversion feature and warrants have a reset provision such that the
Company could not ensure it would have adequate authorized shares to meet all possible conversion demands.
As such, the Company was required to record
the conversion feature and the reset provision which does not have fixed settlement provisions as liabilities and mark to market
all such derivatives to fair value at the end of each reporting period.
The Company has adopted a sequencing policy
that reclassifies contracts (from equity to assets or liabilities) with the most recent inception date first. Thus, any available
shares are allocated first to contracts with the most recent inception dates.
Fair Value of Financial Instruments
Fair value estimates discussed herein are based
upon certain market assumptions and pertinent information available to management as of December 31, 2020 and 2019. The respective
carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include
cash and accounts payable. Fair values were assumed to approximate carrying values for cash, accounts payables and short-term notes
because they are short term in nature.
Advertising
The Company follows the policy of charging
the costs of advertising to expense as incurred. The Company charged to operations $129,504 and $540,474 for the year ended December
31, 2020 and 2019, respectively, as advertising costs.
Income Taxes
Deferred income
tax assets and liabilities are determined based on the estimated future tax effects of net operating loss and credit carry forwards
and temporary differences between the tax basis of assets and liabilities and their respective financial reporting amounts measured
at the current enacted tax rates. The Company records an estimated valuation allowance on its deferred income tax assets if it
is not more likely than not that these deferred income tax assets will be realized.
The Company recognizes a tax benefit from an
uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities,
based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a
position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.
As of December 31, 2020, and 2019, the Company has not recorded any unrecognized tax benefits.
Segment Information
Accounting Standards Codification subtopic
Segment Reporting 280-10 (“ASC 280-10”) establishes standards for reporting information regarding operating segments
in annual financial statements and requires selected information for those segments to be presented in interim financial reports
issued to stockholders. ASC 280-10 also establishes standards for related disclosures about products and services and geographic
areas. Operating segments are identified as components of an enterprise about which separate discrete financial information is
available for evaluation by the chief operating decision maker, or decision-making group, in making decisions how to allocate resources
and assess performance. The information disclosed herein materially represents all of the financial information related to the
Company’s only material principal operating segment.
Recent Accounting Pronouncements
There are various updates recently issued,
most of which represented technical corrections to the accounting literature or application to specific industries and are not
expected to a have a material impact on the Company’s financial position, results of operations or cash flows.
Adoption of Accounting Standards
In May 2014, the Financial Accounting Standards
Board (the “FASB”) issued ASU 2014-09 “Revenue from Contracts with Customers” to supersede previous revenue
recognition guidance under current U.S. GAAP. The guidance presents a single five-step model for comprehensive revenue recognition
that requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that
reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Two options are
available for implementation of the standard which is either the retrospective approach or cumulative effect adjustment approach.
The guidance becomes effective for annual reporting periods beginning after December 15, 2017, including interim periods within
that reporting period, with early adoption permitted.
The Company has determined that the adoption
of ASU-2014-09 will not have a material impact on its financial statements.
COVID-19 Impacts on Accounting Policies
and Estimates
COVID-19 Impacts on Accounting Policies and Estimates In light of
the currently unknown ultimate duration and severity of COVID-19, we face a greater degree of uncertainty than normal in making
the judgments and estimates needed to apply our significant accounting policies. As COVID-19 continues to develop, we may make
changes to these estimates and judgments over time, which could result in meaningful impacts to our financial statements in future
periods.
As previously reported on Form 8-K filed on
March 30, 2020, the Company was unable to file its Annual Report on Form 10-K for the fiscal year ended December 31, 2019 by the
original deadline of March 30, 2020, due to circumstances related to COVID-19 pandemic, specifically: (i) the Southern California
area, including the location of the Company’s corporate headquarters, was at one of the epicenters of the coronavirus outbreaks
in the United States and the Governor of California had ordered all residents to stay at home excepting only essential travel;
and (ii) historically, the Company has relied on vendors in China to manufacture certain of its principal products. The outbreak
of COVID-19 caused different levels of delay in operations of the Company, vendors, customers and professional service providers.
As a result, the Company’s books and records were not easily accessible from our Chinese manufacturer of our products, resulting
in a delay in the preparation, audit and completion of the Company’s financial statements for the Annual Report.
Subsequent Events
The Company evaluates
events that have occurred after the balance sheet date but before the financial statements are issued. Based upon the evaluation,
the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure
in the financial statements, except as disclosed.
NOTE 2 – GOING CONCERN AND MANAGEMENT’S
LIQUIDITY PLANS
The accompanying financial statements have
been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the
normal course of business. As shown in the accompanying financial statements during year ended December 31, 2020, the Company incurred
net losses of $12,145,382 and used cash in operations of $1,723,950. These factors among others may indicate that the Company will
be unable to continue as a going concern for a reasonable period of time.
The Company’s primary source of operating
funds in 2020 and 2019 has been from funds generated from proceeds from the sale of common stock and the issuance of convertible
and other debt. The Company has experienced net losses from operations since its inception, but expects these conditions to improve
in 2020 and beyond as it develops its business model. The Company has stockholders’ deficiencies at December 31, 2020 and
requires additional financing to fund future operations.
The Company’s existence is dependent
upon management’s ability to develop profitable operations and to obtain additional funding sources. There can be no assurance
that the Company’s financing efforts will result in profitable operations or the resolution of the Company’s liquidity
problems. The accompanying statements do not include any adjustments that might result should the Company be unable to continue
as a going concern.
NOTE 3 – PROPERTY AND EQUIPMENT
Property and equipment as of December 31, 2020 and 2019 is summarized
as follows:
|
|
2020
|
|
2019
|
Computer equipment
|
|
$
|
20,143
|
|
|
$
|
16,358
|
|
Furniture and fixtures
|
|
|
5,140
|
|
|
|
5,140
|
|
Subtotal
|
|
|
25,283
|
|
|
|
21,498
|
|
Less accumulated depreciation
|
|
|
(18,741
|
)
|
|
|
(13,986
|
)
|
Property and equipment, net
|
|
$
|
6,542
|
|
|
$
|
7,512
|
|
Property and equipment are stated at cost and
depreciated using the straight-line method over their estimated useful lives of 3 years. When retired or otherwise disposed, the
related carrying value and accumulated depreciation are removed from the respective accounts and the net difference less any amount
realized from disposition, is reflected in earnings.
Depreciation expense was $5,933 and $7,299
for the year ended December 31, 2020 and 2019.
NOTE 4 – INVESTMENTS
MoneyTrac
On March 13,
2017, in exchange for $250,000, we purchased a 15% interest in MoneyTrac Technology, Inc. (“MoneyTrac”), a developer
of an integrated and streamlined electronic payment processing system containing E-Wallet and mobile applications, that allows
for the management and processing of prepaid cards, debit cards, and credit card payments. On June 12th, 2018 Global Payout, Inc.
(“Global”) entered into a Reverse Triangular Merger with MoneyTrac, MoneyTrac Technology, Inc., a California Corporation
and MTrac Tech Corporation, a Nevada corporation and wholly-owned subsidiary of Global Payout, Inc., whereby MoneyTrac merged into
MTrac Tech Corporation, the surviving corporation of the merger, and thereafter the separate existence of MoneyTrac ceased, and
all rights, privileges, powers and property, were assumed by Merger Sub. Pursuant to the terms of the Merger, Global issued 1,100,000,000
(one billion, one hundred million) shares of its common stock to MoneyTrac as consideration for the purchase of MoneyTrac, whereby
each one (1) share of MoneyTrac stock, issued and outstanding immediately prior to the effective date of the Merger, was canceled
and converted into ten (10) shares of Global common stock. We acquired 150,000,000 Global common shares for our original $250,000
representing approximately 15% ownership. Global’s name changed in April, 2020 to Global Trac Solutions, Inc. Global’s
trading on the OTC Markets under the symbol “PYSC.” We realized $51,748 from sales of our Global securities during
fiscal year ended December 31, 2019.
Conveniant Hemp Mart, LLC
Conveniant Hemp Mart, LLC (“Conveniant”)
is a Wyoming limited liability company whose business plan includes the development, manufacture and sale of consumer products
containing CBD that are intended for marketing and sales at convenience stores, gas stations and markets. On July 19, 2017, we
agreed to lend $50,000 to Conveniant based on a promissory note. The note provided that in lieu of receiving repayment, we could
elect to exercise a right to convert the loaned amount into a payment towards the purchase of a 25% interest in Conveniant, subject
to our payment of an additional $50,000 equaling a total purchase price of $100,000. The Company exercised this option on November
20, 2017 and paid Conveniant on November 21, 2017. Conveniant developed a line of consumer products containing industrial hemp
derived CBD with no traceable THC content. On May 1, 2019, the Company and Conveniant agreed to cancel the Company’s 25%
interest in Conveniant. Conveniant issued to the Company a credit memo equal to the Company’s $100,000 investment. The Company
determined that as of December 31, 2018, the total investment was impaired.
Global Hemp Group Joint Ventures
We currently have one ongoing joint venture
with Global Hemp Group, Inc., a Canadian corporation – the Scio, Oregon Joint Venture. As of September 30, 2019, we withdrew
and fully impaired the Joint Venture with Global Hemp Group referred to as the “New Brunswick”
joint venture, because the research project failed to finalize the research
studies and render any tangible revenue to us. The decision to impair this joint venture did not have a material impact on our
reported operations, revenues or gross profits for the fiscal year ended December 31, 2019 or December 31, 2020. A brief description
of each follows.
New Brunswick Canada
On May 8, 2018, we entered into a joint venture with Global Hemp
Group, Inc., develop a project to commercialize the cultivation of industrial hemp on a 109 acre parcel of real property owned
by the Company and Global Hemp Group in Scio, Oregon, and operating under the Oregon corporation Covered Bridges, Ltd. The joint
venture agreement commits the Company to a cash contribution of $600,000 payable on the following funding schedule: $200,000 upon
execution of the joint venture agreement; $238,780 by July 31, 2018; $126,445 by October 31, 2018; and, $34,775 by January 31,
2019. The Company has complied with its payments. The 2018 crop of hemp grown on the joint venture’s real property consisted
of 33 acres of high yielding CBD hemp grown in an orchard style cultivation on the property. The 2018 harvest consisted of approximately
37,000 high yielding CBD hemp plants producing 24 tons of biomass that produced 48,000 pounds of dried biomass. However, there
were delays with Global Hemp Group’s management and maintenance of the business and the biomass that caused degradation to
the harvested crop affecting marketability. We determined the investment fully impaired as of September 30, 2019. Additional issues
and disputes arose between the Company and Global Hemp Group. These disputes led to the parties entering into a settlement agreement
on September 28, 2020, whereby Global Hemp Group agreed to pay the Company $200,000 and issue common stock to the Company equal
in value to $185,000 as of September 28, 2020, subject to a non-dilutive protection provision. Additionally, Global Hemp Group
agreed to pay the Company $10,000 to cover the Company’s legal fees relating to the Agreement. In exchange for the settlement
consideration, the Company agreed to relinquish its ownership interest in the joint venture.
The Company’s costs incurred by the Company’s
interest was $0 and $10,775 for the years ended December 31, 2019 and 2018 and was recorded as other income/expense in the Company’s
Statement of Operations in the appropriate periods. As of December 31, 2019, the balance of the New Brunswick JV investment reported
on the balance sheet for the year ended December 31, 2019 was $0 as a result of the investment being deemed fully impaired and
the Company withdrawing from the joint venture as of September 30, 2019.
Global Hemp Group JV – Scio Oregon
On May 8, 2018, the Company,
Global Hemp Group, Inc., a Canadian corporation, and TTO Enterprises, Ltd., an Oregon corporation entered into a Joint Venture
Agreement. The purpose of the joint venture is to develop a project to commercialize the cultivation of industrial hemp on a 109
acre parcel of real property owned by the Company and Global Hemp Group in Scio, Oregon, and operating under the Oregon corporation
Covered Bridges, Ltd. The joint venture agreement committed the Company to provide cash contributions of $600,000 payable on the
following funding schedule: $200,000 upon execution of the joint venture agreement; $238,780 by July 31, 2018; $126,445 by October
31, 2018; and, $34,775 by January 31, 2019. The Company complied with its payments.
The 2018 crop of hemp grown on the joint venture’s real property
consisted of 33 acres of high yielding CBD hemp grown in an orchard style cultivation on the property. The 2018 harvest consisted
of approximately 37,000 high yielding CBD hemp plants producing 24 tons of biomass that produced 48,000 pounds of dried biomass.
The joint venture partners prepared processing samples ranging in size from 100 lbs. to 2,000 lbs. for sample offers to extraction
companies. However, there were delays with Global Hemp Group’s management and maintenance of the business and the biomass
that caused degradation to the harvested crop affecting marketability. Additional issues and disputes arose between the Company
and Global Hemp Group. These disputes led to the parties entering into a settlement agreement on September 28, 2020, whereby Global
Hemp Group agreed to pay the Company $200,000 and issue common stock to the Company equal in value to $185,000 as of September
28, 2020, subject to a non-dilutive protection provision. Additionally, Global Hemp Group agreed to pay the Company $10,000 to
cover the Company’s legal fees relating to the Agreement. In exchange for the settlement consideration, the Company agreed
to relinquish its ownership interest in the joint venture.
As of December 31, 2019, the combined
balance of the Covered Bridge (SCIO) investment and related 41389 Farm investment was $0 as the investment was written off as a
loss for the period ended December 31, 2019. The debt obligation related to this JV of $262,414 was also written off to $0 as of
the year ended December 31, 2019.
Bougainville Ventures, Inc. Joint Venture
On March 16,
2017, we entered into a joint venture agreement with Bougainville Ventures, Inc., a Canadian corporation. The purpose of the joint
venture was for the Company and Bougainville to (i) jointly engage in the development and promotion of products in the legalized
cannabis industry in Washington State; (ii) utilize Bougainville’s high quality cannabis grow operations in the State of
Washington, where it claimed to have an ownership interest in real property for use within the legalized cannabis industry; (iii)
leverage Bougainville’s agreement with a I502 Tier 3 license holder to grow cannabis on the site; provide technical and management
services and resources including, but not limited to: sales and marketing, agricultural procedures, operations, security and monitoring,
processing and delivery, branding, capital resources and financial management; and, (iv) optimize collaborative business opportunities.
The Company and Bougainville agreed to operate through a Washington State Limited Liability Company, and BV-MCOA Management, LLC
was organized in the State of Washington on May 16, 2017.
As our contribution to the joint venture, the
Company committed to raise not less than $1,000,000 to fund joint venture operations, based upon a funding schedule. The Company
also committed to providing branding and systems for the representation of cannabis related products and derivatives comprised
of management, marketing and various proprietary methodologies directly tailored to the cannabis industry.
The Company and Bougainville’s
agreement provided that funding provided by the Company would contribute towards the joint venture’s ultimate purchase of
the land consisting of a one-acre parcel located in Okanogan County, Washington, for joint venture operations.
As disclosed on Form
8-K on December 11, 2017, the Company did not comply with the funding schedule for the joint venture. On November 6, 2017, the
Company and Bougainville amended the joint venture agreement to reduce the amount of the Company’s commitment from $1,000,000
to $800,000, and also required the Company to issue Bougainville 15 million shares of the Company’s restricted common stock.
The Company completed its payments pursuant to the amended agreement on November 7, 2017, and on November 9, 2017, issued to Bougainville
15 million shares of restricted common stock. The amended agreement provided that Bougainville would deed the real property to
the joint venture within thirty days of its receipt of payment.
Thereafter, the Company
determined that Bougainville had no ownership interest in the property in Washington State, but rather was a party to a purchase
agreement for real property that was in breach of contract for non-payment. Bougainville also did not possess an agreement with
a Tier 3 I502 license holder to grow Marijuana on the property. Nonetheless, as a result of funding arranged for by the Company,
Bougainville and an unrelated third party, Green Ventures Capital Corp., purchased the land, but did not deed the real property
to the joint venture. Bougainville failed to pay delinquent property taxes to Okanogan County and to date, the property has not
been deeded to the joint venture.
To clarify the respective
contributions and roles of the parties, the Company offered to enter into good faith negotiations to revise and restate the joint
venture agreement with Bougainville. The Company diligently attempted to communicate with Bougainville to accomplish a revised
and restated joint venture agreement, and efforts towards satisfying the conditions to complete the subdivision of the land by
the Okanogan County Assessor. However, Bougainville failed to cooperate or communicate with the Company in good faith, and failed
to pay the delinquent taxes on the real property that would allow for sub-division and the deeding of the real property to the
joint venture.
On
August 10, 2018, the Company advised its independent auditor that Bougainville did not cooperate or communicate with the Company
regarding its requests for information concerning the audit of Bougainville’s receipt and expenditures of $800,000 contributed
by the Company in the joint venture agreement. Bougainville had a material obligation to do so under the joint venture agreement.
The Company believes that some of the funds it paid to Bougainville were misappropriated and that there was self-dealing with respect
to those funds. Additionally, the Company believes that Bougainville misrepresented material facts in the joint venture agreement,
as amended, including, but not limited to, Bougainville’s representations that: (i) it had an ownership interest in real
property that was to be deeded to the joint venture; (ii) it had an agreement with a Tier 3 # I502 cannabis license holder to grow
cannabis on the real property; and, (iii) that clear title to the real property associated with the Tier 3 # I502 license would
be deeded to the joint venture thirty days after the Company made its final funding contribution. As a result, on September 20,
2018, the Company filed suit against Bougainville Ventures, Inc., BV-MCOA Management, LLC, Andy Jagpal, Richard Cindric, et al.
in Okanogan County Washington Superior Court, case number 18-2- 0045324. The Company’s complaint seeks legal and equitable
relief for breach of contract, fraud, breach of fiduciary duty, conversion, recession of the joint venture agreement, an accounting,
quiet title to real property in the name of the Company, for the appointment of a receiver, the return to treasury of 15 million
shares issued to Bougainville, and, for treble damages pursuant to the Consumer Protection Act in Washington State. The registrant
has filed a lis pendens on the real property. The case is currently in litigation.
In connection with the
agreement, the Company recorded a cash investment of $1,188,500 to the Joint Venture during 2017. This was comprised of 49.5% ownership
of BV-MCOA Management LLC, and was accounted for using the equity method of accounting. The Company recorded an annual impairment
in 2017 of $792,500, reflecting the Company’s percentage of ownership of the net book value of the investment. During 2018,
the Company recorded equity losses of $37,673 and $11,043 for the first and second quarters respectively, and recorded an annual
impairment of $285,986 for the year ended December 31, 2018, at which time the Company determined the investment to be fully impaired
due to Bougainville’s breach of contract and resulting litigation, as discussed above.
GateC Joint Venture
On March 17, 2017, the Company and GateC Research,
Inc. (“GateC”) entered into a Joint Venture Agreement (“Agreement”) whereby the Company committed to raise
up to one and one-half million dollars ($1,500,000) over a six-month period, with a minimum commitment of five hundred thousand
dollars ($500,000) within a three (3) month period; and, information establishing brands and systems for the representation of
cannabis related products and derivatives comprised of management, marketing and various proprietary methodologies, including but
not limited to its affiliate marketing program, directly tailored to the cannabis industry.
GateC agreed to contribute its management and
control services and systems related to cannabis grow operations in Adelanto County, California, and its permit to grow marijuana
in an approved zone in Adelanto, California. GateC did not own a physical site for its operation in Adelanto County, California,
and GateC’s permit to grow cannabis did not contain a conditional use permit.
On or about November 28, 2017, GateC and the
Registrant orally agreed to suspend the Company’s funding commitment, pending the finalization of California State regulations
governing the growth, cultivation and distribution of cannabis, which were expected to be completed in 2018.
On March 19, 2018, the Company and GateC rescinded
the Agreement and concurrently released each other from any all any and all losses, claims, debts, liabilities, demands, obligations,
promises, acts, omissions, agreements, costs and expenses, damages, injuries, suits, actions and causes of action, of whatever
kind or nature, whether known or unknown, suspected or unsuspected, contingent or fixed, that they may have against each other
and their Affiliates, arising out of the Agreement.
The Registrant incurred no termination penalties
as the result of its entry into the Recession and Mutual Release Agreement.
In 2017, the Company recorded a debt obligation
of $1,500,000 to the Joint Venture and a corresponding impairment charge of $1,500,000 during for year ended December 31, 2017.
Upon termination of the material definitive agreement on March 19, 2018, the Company realized a gain on settlement of debt obligation
of $1,500,000 for the year ended December 31, 2018.
Natural Plant Extract
of California
Natural Plant Extract
of California & Subsidiaries Joint Venture; On April 15, 2019, the Company entered into a joint venture agreement with Natural
Plant Extracts of California, Inc. and subsidiaries. The purpose of the joint venture was to utilize Natural Plant Extracts’
California and City cannabis licenses to jointly operate a business named “Viva Buds” to operate a licensed cannabis
distribution service in California. In exchange for acquiring 20% of Natural Plant Extracts’ common stock, the Company agree
to pay two million dollars and issue Natural Plant Extract one million dollars’ worth of the Company’s restricted
common stock. As of February 3, 2020, the Company was in arrears in its payment obligations under the joint venture agreement,
and the parties entered into a settlement and release of all claims terminating the joint venture. The parties agreed to reduce
the Company’s equity ownership in Natural Plant Extracts from 20% to 5%. The Company also agreed to pay Natural Plant Extracts
$85,000 and the balance of $56,085.15 paid in a convertible promissory note issued with terms allowing Natural Plant Extracts
to convert the note into common stock at a 50% discount to the closing price of MCOA’s common stock as of the maturity date.
As of the date of this filing, the Company satisfied its payment obligations under the settlement agreement.
Cannabis Global Share
Exchange
Share Exchange with Cannabis
Global, Inc. On September 30, 2020, the Company entered into a securities exchange agreement with Cannabis Global, Inc., a Nevada
corporation. By virtue of the agreement, the Company issued 650,000,000 shares of its unregistered common stock to Cannabis Global
in exchange for 7,222,222 shares of Cannabis Global unregistered common stock. The Company and Cannabis Global also entered into
a lock up leak out agreement which prevents either party from sales of the exchanged shares for a period of 12 months. Thereafter
the parties may sell not more than the quantity of shares equaling an aggregate maximum sale value of $20,000 per week, or $80,000
per month until all Shares and Exchange Shares are sold.
Joint Ventures in Brazil and Uruguay –
Development Stage
On October 1, 2020, we entered into two Joint
Venture Agreements with Marco Guerrero, a director of the Company, dated September 30, 2020, to form joint venture operations in
Brazil and in Uruguay to produce, manufacture, market and sell the Company’s hempSMART™ products in Latin America,
and will also work to develop and sell hempSMART™ products globally. The Joint Venture Agreements contain equal terms for
the formation of joint venture entities in Uruguay and Brazil. The Brazilian joint venture will be headquartered in São
Paulo, Brazil, and will be named HempSmart Produtos Naturais Ltda. (“HempSmart Brazil”). The Uruguayan joint venture
will be headquartered in Montevideo, Uruguay and will be named Hempsmart Uruguay S.A.S. (“HempSmart Uruguay”). Both
are in the development stage. Under the Joint Venture Agreements, the Company will acquire a 70% equity interest in both HempSmart
Brazil and HempSmart Uruguay. A minority 30% equity interest in both HempSmart Brazil and HempSmart Uruguay will be held by newly
formed entities controlled by Mr. Guerrero, our director and a successful Brazilian entrepreneur. The Company will provide capital
in the amount of $50,000 to both HempSmart Brazil and HempSmart Uruguay under the Joint Venture Agreements, for a total capital
obligation of $100,000. As of December 31, 2020, this amount has not been disbursed. It is expected that the proceeds of the initial
capital contribution will be used for contracting with third-party manufacturing facilities in Brazil and Uruguay, and related
infrastructure and employment of key personnel. The boards of directors of HempSmart Brazil and HempSmart Uruguay will consist
of three directors, elected by the joint venture partners. As part of the Joint Venture Agreements, the Company will license, on
a royalty-free basis, certain of its intellectual property regarding the Company’s existing products to HempSmart Brazil
and HempSmart Uruguay to enable the joint ventures to manufacture and sell the Company’s products in Brazil, Uruguay, and
for export to other Latin American countries, the United States, and globally in accordance with the terms of the Joint Venture
Agreements. The Joint Venture Agreements provide the partners with a right of first offer. Under this right, each partner may trigger
an “interest sale” right of first offer process at any time pursuant to which the other partners may either acquire
the triggering partner’s interest in the joint ventures, or permit the triggering partner to sell its interest to a third
party. In addition, the Company, as majority partner, may trigger a compulsory buy-sell procedure in the event a joint venture
is frustrated in its intent or purpose, pursuant to which the Company could pursue a sale of all or substantially all of the joint
venture. Subject to certain exceptions, the joint venture partners may not transfer their interests in HempSmart Brazil and HempSmart
Uruguay. The Joint Venture Agreements contain customary terms, conditions, representations, warranties and covenants of the parties
for like transactions.
|
|
INVESTMENTS
|
|
SHORT-TERM
INVESTMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
Global
Hemp
|
|
Cannabis
Global
|
|
|
|
|
|
Bougainville
Ventues,
|
|
Gate
C Research
|
|
Natural
Plant
|
|
|
|
TOTAL
Short-Term
|
|
Global
Hemp
|
|
|
|
|
INVESTMENTS
|
|
Group
|
|
Inc.
|
|
Benihemp
|
|
MoneyTrac
|
|
Inc.
|
|
Inc.
|
|
Extract
|
|
Vivabuds
|
|
Investments
|
|
Group
|
|
MoneyTrac
|
Beginning
balance @12-31-16
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
$
|
0
|
|
|
|
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments made during
2017
|
|
|
3,049,275
|
|
|
|
10,775
|
|
|
|
|
|
|
|
100,000
|
|
|
|
250,000
|
|
|
|
1,188,500
|
|
|
|
1,500,000
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter 03-31-17 equity
method Loss
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter 06-30-17 equity
method Loss
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter 09-30-17 equity
method Loss
|
|
|
(375,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(375,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter 12-31-17 equity
method accounting
|
|
|
313,702
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
313,702
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment
of Investment in 2017
|
|
|
(2,292,500
|
)
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(792,500
|
)
|
|
|
(1,500,000
|
)
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
Balances
as of 12/31/17
|
|
|
695,477
|
|
|
|
10,775
|
|
|
|
0
|
|
|
|
100,000
|
|
|
|
250,000
|
|
|
|
334,702
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments made during
2018
|
|
|
986,654
|
|
|
|
986,654
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter 03-31-18 equity
method Loss
|
|
|
(37,673
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(37,673
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter 06-30-18 equity
method Loss
|
|
|
(11,043
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11,043
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter 09-30-18 equity
method Loss
|
|
|
(10,422
|
)
|
|
|
|
|
|
|
|
|
|
|
(10,422
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter 12-31-18 equity
method Loss
|
|
|
(31,721
|
)
|
|
|
(31,721
|
)
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Moneytrac investment reclassified
to Short-Term investments
|
|
|
(250,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(250,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
250,000
|
|
|
|
|
|
|
|
250,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains on trading
securities - 2018
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
560,000
|
|
|
|
|
|
|
|
560,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment
of investment in 2018
|
|
|
(933,195
|
)
|
|
|
(557,631
|
)
|
|
|
|
|
|
|
(89,578
|
)
|
|
|
|
|
|
|
(285,986
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
Balance
@12-31-18
|
|
$
|
408,077
|
|
|
$
|
408,077
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
810,000
|
|
|
$
|
0
|
|
|
$
|
810,000
|
|
|
|
INVESTMENTS
|
|
SHORT-TERM
INVESTMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
Global
Hemp
|
|
Cannabis
Global
|
|
|
|
|
|
Bougainville
Ventues,
|
|
Gate
C Research
|
|
Natural
Plant
|
|
|
|
TOTAL
Short-Term
|
|
Global
Hemp
|
|
|
|
|
INVESTMENTS
|
|
Group
|
|
Inc.
|
|
Benihemp
|
|
MoneyTrac
|
|
Inc.
|
|
Inc.
|
|
Extract
|
|
Vivabuds
|
|
Investments
|
|
Group
|
|
MoneyTrac
|
Investments made during
quarter ended 03-31-19
|
|
|
129,040
|
|
|
|
129,040
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter 03-31-19 equity
method Loss
|
|
|
(59,541
|
)
|
|
|
(59,541
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
gains on trading securities - quarter ended 03-31-19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(135,000
|
)
|
|
|
|
|
|
$
|
(135,000
|
)
|
Balance
@03-31-19
|
|
$
|
477,576
|
|
|
$
|
477,576
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
675,000
|
|
|
$
|
0
|
|
|
$
|
675,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments made during
quarter ended 06-30-19
|
|
$
|
3,157,234
|
|
|
$
|
83,646
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,000,000
|
|
|
$
|
73,588
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter 06-30-19 equity
method Income (Loss)
|
|
($
|
171,284
|
)
|
|
($
|
141,870
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(6,291
|
)
|
|
$
|
(23,123
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
gains on trading securities - quarter ended 06-30-19
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(150,000
|
)
|
|
|
|
|
|
$
|
(150,000
|
)
|
Balance
@06-30-19
|
|
$
|
3,463,526
|
|
|
$
|
419,352
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
2,993,709
|
|
|
$
|
50,465
|
|
|
$
|
525,000
|
|
|
$
|
0
|
|
|
$
|
525,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments made during
quarter ended 09-30-19
|
|
$
|
186,263
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
186,263
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter 09-30-19 equity
method Income (Loss)
|
|
$
|
122,863
|
|
|
$
|
262,789
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(94,987
|
)
|
|
$
|
(44,939
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of trading securities
during quarter ended 09-30-19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(41,667
|
)
|
|
|
|
|
|
$
|
(41,667
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
gains on trading securities - quarter ended 09-30-19
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(362,625
|
)
|
|
|
|
|
|
$
|
(362,625
|
)
|
Balance
@09-30-19
|
|
$
|
3,772,652
|
|
|
$
|
682,141
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
2,898,722
|
|
|
$
|
191,789
|
|
|
$
|
120,708
|
|
|
$
|
0
|
|
|
$
|
120,708
|
|
|
|
INVESTMENTS
|
|
SHORT-TERM
INVESTMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
Global
Hemp
|
|
Cannabis
Global
|
|
|
|
|
|
Bougainville
Ventues,
|
|
Gate
C Research
|
|
Natural
Plant
|
|
|
|
TOTAL
Short-Term
|
|
Global
Hemp
|
|
|
|
|
INVESTMENTS
|
|
Group
|
|
Inc.
|
|
Benihemp
|
|
MoneyTrac
|
|
Inc.
|
|
Inc.
|
|
Extract
|
|
Vivabuds
|
|
Investments
|
|
Group
|
|
MoneyTrac
|
Investments made during
quarter ended 12-31-19
|
|
$
|
392,226
|
|
|
$
|
262,414
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
129,812
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter 12-31-19 equity
method Income (Loss)
|
|
$
|
(178,164
|
)
|
|
$
|
(75,220
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(23,865
|
)
|
|
$
|
(79,079
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reversal of Equity method
Loss for 2019
|
|
$
|
272,285
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
125,143
|
|
|
$
|
147,142
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of investment
in 2019
|
|
$
|
(3,175,420
|
)
|
|
$
|
(869,335
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(2,306,085
|
)
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on disposition of
investment
|
|
$
|
(389,664
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(389,664
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of trading securities
during quarter ended 12-31-19
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(17,760
|
)
|
|
|
|
|
|
$
|
(17,760
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
gains on trading securities - quarter ended 12-31-19
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(75,545
|
)
|
|
|
|
|
|
$
|
(75,545
|
)
|
Balance
@12-31-19
|
|
$
|
693,915
|
|
|
$
|
(0
|
)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
693,915
|
|
|
$
|
0
|
|
|
$
|
27,403
|
|
|
$
|
0
|
|
|
$
|
27,403
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Loss for Quarter
ended 03-31-20
|
|
|
126,845
|
|
|
|
126,845
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recognize Joint venture
liabilities per JV agreement @03-31-20
|
|
|
394,848
|
|
|
|
394,848
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of Equity Loss
for Quarter ended 03-31-20
|
|
|
(521,692
|
)
|
|
|
(521,692
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
gains on trading securities - quarter ended 03-31-19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(13,945
|
)
|
|
|
|
|
|
$
|
(13,945
|
)
|
Balance
@03-31-20
|
|
$
|
693,915
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
693,915
|
|
|
$
|
0
|
|
|
$
|
13,458
|
|
|
$
|
0
|
|
|
$
|
13,458
|
|
|
|
INVESTMENTS
|
|
SHORT-TERM
INVESTMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
Global
Hemp
|
|
Cannabis
Global
|
|
|
|
|
|
Bougainville
Ventues,
|
|
Gate
C Research
|
|
Natural
Plant
|
|
|
|
TOTAL
Short-Term
|
|
Global
Hemp
|
|
|
|
|
INVESTMENTS
|
|
Group
|
|
Inc.
|
|
Benihemp
|
|
MoneyTrac
|
|
Inc.
|
|
Inc.
|
|
Extract
|
|
Vivabuds
|
|
Investments
|
|
Group
|
|
MoneyTrac
|
Equity Loss for Quarter
ended 06-30-20
|
|
|
(7,048
|
)
|
|
|
(7,048
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of Equity Loss
for Quarter ended 06-30-20
|
|
|
7,048
|
|
|
|
7,048
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales of of trading
securities - quarter ended 06-30-20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(13,458
|
)
|
|
|
|
|
|
$
|
(13,458
|
)
|
Balance
@06-30-20
|
|
$
|
693,915
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
693,915
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Hemp Group trading
securities issued
|
|
|
650,000
|
|
|
|
|
|
|
$
|
650,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
185,000
|
|
|
$
|
185,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in Cannabis
Global
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
@09-30-20
|
|
$
|
1,343,915
|
|
|
$
|
0
|
|
|
$
|
650,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
693,915
|
|
|
$
|
0
|
|
|
$
|
185,000
|
|
|
$
|
185,000
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain on Global
Hemp Group securities - 4th Quarter 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
54,064
|
|
|
$
|
54,064
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
gains on Cannabis Global Inc securities - 4th Quarter 2020
|
|
|
208,086
|
|
|
|
|
|
|
$
|
208,086
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
@12-31-20
|
|
$
|
1,552,001
|
|
|
$
|
0
|
|
|
$
|
858,086
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
693,915
|
|
|
$
|
0
|
|
|
$
|
239,064
|
|
|
$
|
239,064
|
|
|
$
|
0
|
|
The following table indicates the amount of
debt the Company recorded quarter to quarter as a result of its joint venture investments:
Loan Payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
|
|
Global
Hemp
|
|
|
|
|
|
|
|
|
|
|
|
Bougainville Ventues,
|
|
|
|
Gate C Research
|
|
|
|
Natural
Plant
|
|
|
|
Robert L Hymers
|
|
|
|
|
|
|
|
General Operating
|
|
|
|
|
JV Debt
|
|
|
|
Group
|
|
|
|
Benihemp
|
|
|
|
MoneyTrac
|
|
|
|
Inc.
|
|
|
|
Inc.
|
|
|
|
Extract
|
|
|
|
III
|
|
|
|
Vivabuds
|
|
|
|
Expense
|
|
Beginning balance @12-31-16
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter 03-31-17 loan borrowings
|
|
|
1,500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter 06-30-17 loan activity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter 09-30-17 loan borrowings
|
|
|
725,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
725,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter 12-31-17 loan repayments
|
|
|
(330,445
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(330,445
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General operational expense
|
|
|
172,856
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
172,856
|
|
Balances as of 12/31/17 (a)
|
|
|
2,067,411
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
394,555
|
|
|
|
1,500,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
172,856
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter 03-31-18 loan borrowings (payments)
|
|
|
376,472
|
|
|
|
447,430
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(70,958
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter 06-30-18 cancellation of JV debt obligation
|
|
|
(1,500,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,500,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter 06-30-18 loan repayments
|
|
|
(101,898
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(101,898
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter 09-30-18 loan activity
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter 12-31-18 loan borrowings
|
|
|
580,425
|
|
|
|
580,425
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance @12-31-18 (b)
|
|
|
1,422,410
|
|
|
|
1,027,855
|
|
|
|
0
|
|
|
|
0
|
|
|
|
394,555
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Loan Payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
|
|
Global
Hemp
|
|
|
|
|
|
|
|
|
|
|
|
Bougainville Ventues,
|
|
|
|
Gate C Research
|
|
|
|
Natural
Plant
|
|
|
|
Robert L Hymers
|
|
|
|
|
|
|
|
General Operating
|
|
|
|
|
JV Debt
|
|
|
|
Group
|
|
|
|
Benihemp
|
|
|
|
MoneyTrac
|
|
|
|
Inc.
|
|
|
|
Inc.
|
|
|
|
Extract
|
|
|
|
III
|
|
|
|
Vivabuds
|
|
|
|
Expense
|
|
Quarter 03-31-19 loan borrowings
|
|
|
649,575
|
|
|
|
649,575
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter 03-31-19 debt conversion to equity
|
|
|
(407,192
|
)
|
|
|
(407,192
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance @03-31-19 ©
|
|
|
1,664,793
|
|
|
|
1,270,238
|
|
|
|
0
|
|
|
|
0
|
|
|
|
394,555
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter 03-31-19 loan borrowings
|
|
|
3,836,220
|
|
|
$
|
161,220
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,000,000
|
|
|
|
|
|
|
$
|
0
|
|
|
$
|
1,675,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter 03-31-19 debt conversion to equity
|
|
|
(1,572,971
|
)
|
|
$
|
(161,220
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(349,650
|
)
|
|
|
|
|
|
|
|
|
|
$
|
(1,062,101
|
)
|
Balance @06-30-19 (d)
|
|
|
3,928,042
|
|
|
|
1,270,238
|
|
|
|
0
|
|
|
|
0
|
|
|
|
394,555
|
|
|
|
0
|
|
|
|
1,650,350
|
|
|
|
0
|
|
|
|
0
|
|
|
|
612,899
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter 09-30-19 loan borrowings
|
|
|
582,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
582,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter 09-30-19 debt conversion to equity
|
|
|
(187,615
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(187,615
|
)
|
Balance @09-30-19 (e)
|
|
|
4,322,427
|
|
|
|
1,270,238
|
|
|
|
0
|
|
|
|
0
|
|
|
|
394,555
|
|
|
|
0
|
|
|
|
1,650,350
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,007,284
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter 12-31-19 loan borrowings
|
|
|
2,989,378
|
|
|
$
|
262,414
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
596,784
|
|
|
$
|
4,221
|
|
|
|
|
|
|
$
|
2,125,959
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of investment in 2019
|
|
|
(4,083,349
|
)
|
|
$
|
(1,532,652
|
)
|
|
|
|
|
|
|
|
|
|
$
|
(394,555
|
)
|
|
|
|
|
|
$
|
(2,156,142
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on settlement of debt in 2019
|
|
|
50,093
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
50,093
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment to reclassify amount to accrued liabilities
|
|
|
(85,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(85,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance @12-31-19 (f)
|
|
$
|
3,193,548
|
|
|
$
|
(0
|
)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
56,085
|
|
|
$
|
4,221
|
|
|
$
|
0
|
|
|
$
|
3,133,243
|
|
Loan Payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
|
|
Global
Hemp
|
|
|
|
|
|
|
|
|
|
|
|
Bougainville Ventues,
|
|
|
|
Gate C Research
|
|
|
|
Natural
Plant
|
|
|
|
Robert L Hymers
|
|
|
|
|
|
|
|
General Operating
|
|
|
|
|
JV Debt
|
|
|
|
Group
|
|
|
|
Benihemp
|
|
|
|
MoneyTrac
|
|
|
|
Inc.
|
|
|
|
Inc.
|
|
|
|
Extract
|
|
|
|
III
|
|
|
|
Vivabuds
|
|
|
|
Expense
|
|
Quarter 03-31-20 loan borrowings
|
|
$
|
441,638
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
441,638
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter 03-31-20 debt conversion to equity
|
|
$
|
(619,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(619,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recognize Joint venture liabilities per JV agreement @03-31-20
|
|
$
|
394,848
|
|
|
$
|
394,848
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter 03-31-20 Debt Discount adjustments
|
|
$
|
24,138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
24,138
|
|
|
|
|
|
|
|
|
|
Balance @03-31-20 (g)
|
|
$
|
3,435,172
|
|
|
$
|
394,848
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
56,085
|
|
|
$
|
28,359
|
|
|
$
|
0
|
|
|
$
|
2,955,881
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter 06-30-20 loan borrowings, net
|
|
$
|
65,091
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
65,091
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter 06-30-20 debt conversion to equity
|
|
($
|
727,118
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(727,118
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter 06-30-20 reclass of liability
|
|
$
|
83,647
|
|
|
$
|
83,647
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter 06-30-20 Debt Discount adjustments
|
|
$
|
405,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(27,715
|
)
|
|
|
|
|
|
$
|
433,461
|
|
Balance @06-30-20 (h)
|
|
$
|
3,262,538
|
|
|
$
|
478,495
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
56,085
|
|
|
$
|
65,735
|
|
|
$
|
0
|
|
|
$
|
2,662,224
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter 09-30-20 debt conversion to equity
|
|
$
|
(606,472
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(56,085
|
)
|
|
$
|
(65,735
|
)
|
|
|
|
|
|
$
|
(484,652
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt Settlement during Q3 2020
|
|
$
|
(474,495
|
)
|
|
$
|
(474,495
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance @09-30-20 (i)
|
|
$
|
2,181,571
|
|
|
$
|
4,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
($
|
0
|
)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
2,177,572
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter 12-31-20 loan borrowings, net
|
|
$
|
309,675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
309,675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter 12-31-20 Debt Discount adjustments
|
|
$
|
(71,271
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(71,271
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter 12-31-20 debt conversion to equity
|
|
$
|
(993,081
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(993,081
|
)
|
Balance @12-31-20 (j)
|
|
$
|
1,426,894
|
|
|
$
|
4,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
($
|
0
|
)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,422,895
|
|
NOTE 5 – CONVERTIBLE NOTES PAYABLE
During the year ended December 31, 2020 and
2019, the Company issued an aggregate of 2,241,141,195 and 9,251,217 shares of its common stock in settlement of the issued convertible
notes payable and accrued interest.
For the years ended December 31, 2020 and 2019,
the Company recorded amortization of debt discounts of $1,658,395 and $2,906,843, respectively, as a charge to interest expense.
Convertible notes payable are comprised of
the following:
|
|
2020
|
|
2019
|
Convertible note payable – Power Up Lending Group
|
|
$
|
35,000
|
|
|
$
|
294
|
|
Convertible note payable – Crown Bridge Partners
|
|
$
|
172,500
|
|
|
$
|
110,000
|
|
Convertible note payable – Odyssey Funding LLC
|
|
$
|
—
|
|
|
$
|
250,000
|
|
Convertible note payable – Paladin Advisors LLC
|
|
$
|
—
|
|
|
$
|
75,000
|
|
Convertible note payable- GS Capital Partners LLC
|
|
$
|
143,500
|
|
|
$
|
173,000
|
|
Convertible note payable – Natural Plant Extract
|
|
$
|
—
|
|
|
$
|
56,085
|
|
Convertible note payable – Robert L. Hymers III
|
|
$
|
70,000
|
|
|
$
|
96,553
|
|
Convertible note payable – Geneva Roth
|
|
$
|
33,500
|
|
|
$
|
—
|
|
Convertible note payable – Dutchess Capital Partners
|
|
$
|
10,000
|
|
|
$
|
—
|
|
Convertible note payable – Redstart HLDGS
|
|
$
|
109,000
|
|
|
$
|
—
|
|
Convertible note payable – GW Holdings
|
|
$
|
98,175
|
|
|
$
|
—
|
|
Convertible notes payable-St George-due Dec 31,2020 and 2019
|
|
$
|
1,160,726
|
|
|
$
|
2,947,890
|
|
Total
|
|
$
|
1,832,401
|
|
|
$
|
3,708,822
|
|
Less debt discounts
|
|
$
|
(405,507
|
)
|
|
$
|
(808,980
|
)
|
Net
|
|
$
|
1,426,894
|
|
|
$
|
2,899,842
|
|
Less current portion
|
|
$
|
(1,426,894
|
)
|
|
$
|
(2,899,842
|
)
|
Long term portion
|
|
$
|
—
|
|
|
$
|
—
|
|
Convertible
notes payable-Power Up Lending
From July 1 through
September 12, 2019, the Company issued four convertible promissory notes in the aggregate principal amount of $294,000 to Power
Up Lending (“Power Up”). The promissory notes bear interest at 10% per annum, are due one year from the respective
issuance date and include an original issuance discount (“OID”) in aggregate of $12,000. Interest shall accrue from
the issuance date, but interest shall not become payable until the notes becomes payable. The notes are convertible at any time
at a conversion rate equal to 61% of the Market Price (defined as the lowest trading price during the 15-trading-day period prior
to the conversion date). Upon the issuance of these convertible notes, the Company determined that the features associated with
the embedded conversion option embedded in the debentures, should be accounted for at fair value, as a derivative liability, as
the Company cannot determine if a sufficient number of shares would be available to settle all potential future conversion transactions.
As of the funding date of each note, the Company determined the fair value of the embedded
derivative associated with the convertibility of each note. The fair value of the embedded derivative has been added to the debt
discount (total debt discount is limited to the face value of the debt) with any excess of the derivative liability recognized
as interest expense. The aggregate debt discount of $33,542 is being amortized to interest expense over the respective terms of
the notes.
The Company shall
have the right to prepay the notes for an amount ranging from 125% - 140% multiplied by the outstanding balance (all principal
and accrued interest) depending on the Prepayment Period (ranging from 1 to 180 days following the issuance date). The Company
is prohibited from effecting a conversion of any note to the extent that, as a result of such conversion, the investor, together
with its affiliates, would beneficially own more than 4.99% of the number of shares of the Company’s common stock outstanding
immediately after giving effect to the issuance of shares of common stock upon conversion of the note.
As of
December 31, 2020, the Company owed an aggregate of $35,000 of principal and $1,167 of accrued interest on these convertible promissory
notes.
Convertible
notes payable-Crown Bridge Partners
From October 1 through December 31, 2019, the
Company issued convertible promissory notes in the aggregate principal amount of $225,000 to Crown Bridge Partners LLC (“Crown
Bridge”). The promissory notes bear interest at 10% per annum, are due one year from the respective issuance date and include
an original issuance discount (“OID”) in aggregate of $22,500. Interest shall accrue from the issuance date, but interest
shall not become payable until the notes becomes payable. The notes are convertible at any time at a conversion rate equal to 60%
of the Market Price (defined as the lowest trading price during the 15-trading-day period prior to the conversion date). Upon the
issuance of these convertible notes, the Company determined that the features associated with the embedded conversion option embedded
in the debentures, should be accounted for at fair value, as a derivative liability, as the Company cannot determine if a sufficient
number of shares would be available to settle all potential future conversion transactions. As
of the funding date of each note, the Company determined the fair value of the embedded derivative associated with the convertibility
of each note. The fair value of the embedded derivative has been added to the debt discount (total debt discount is limited to
the face value of the debt) with any excess of the derivative liability recognized as interest expense. The aggregate debt discount
of $78,056 is being amortized to interest expense over the respective terms of the notes.
The Company shall
have the right to prepay the notes for an amount ranging from 125% - 140% multiplied by the outstanding balance (all principal
and accrued interest) depending on the Prepayment Period (ranging from 1 to 180 days following the issuance date). The Company
is prohibited from effecting a conversion of any note to the extent that, as a result of such conversion, the investor, together
with its affiliates, would beneficially own more than 4.99% of the number of shares of the Company’s common stock outstanding
immediately after giving effect to the issuance of shares of common stock upon conversion of the note.
As of
December 31, 2020, the Company owed an aggregate of $172,500 of principal and $6,500 of accrued interest on these convertible promissory
notes.
Convertible
notes payable-Odyssey Funding LLC
On October 30,
2019, the Company issued convertible promissory notes in the aggregate principal amount of $250,000 to Odyssey Funding LLC (“Odyssey”).
The promissory notes bear interest at 12% per annum, are due one year from the respective issuance date and include an original
issuance discount (“OID”) in aggregate of $0. Interest shall accrue from the issuance date, but interest shall not
become payable until the notes becomes payable. The notes are convertible at any time at a conversion rate equal to 55% the average
of the two lowest trading prices of the Common Stock as reported on the National Quotations Bureau OTC market exchange which the
Company's shares are traded or any exchange upon which the Common Stock may be traded in the future ("Exchange"), for
the twenty prior trading days including the day upon which a Notice of Conversion is received by the Company or its transfer agent
(provided such Notice of Conversion is delivered by fax or other electronic method of communication to the Company or its transfer
agent after 4 P.M. Eastern Standard or Daylight Savings Time if the Holder wishes to include the same day closing price). If the
shares have not been delivered within 3 business days, the Notice of Conversion may be rescinded. Such conversion shall be effectuated
by the Company delivering the shares of Common Stock to the Holder within 3 business days of receipt by the Company of the Notice
of Conversion. Accrued but unpaid interest shall be subject to conversion. No fractional shares or scrip representing fractions
of shares will be issued on conversion, but the number of shares issuable shall be rounded to the nearest whole share. The Company
agrees to honor all conversions submitted pending this increase. In the event the Company experiences a DTC "Chill" on
its shares, the conversion price shall be decreased to 45% instead of 55% while that "Chill" is in effect. In no event
shall the Holder be allowed to effect a conversion if such conversion, along with all other shares of Company Common Stock beneficially
owned by the Holder and its affiliates would exceed 4.99% of the outstanding shares of the Common Stock of the Company (which may
be increased up to 9.9% upon 60 days' prior written notice by the Investor).
As of
the funding date of each note, the Company determined the fair value of the embedded derivative associated with the convertibility
of each note. The fair value of the embedded derivative has been added to the debt discount (total debt discount is limited
to the face value of the debt) with any excess of the derivative liability recognized as interest expense. The aggregate debt discount
of $0 is being amortized to interest expense over the respective terms of the notes. As of December 31, 2020, the Company owed
an aggregate of $0 of principal and $0 of accrued interest on these convertible promissory notes.
Convertible
notes payable-Paladin Advisors LLC
On October 23, 2019, the Company issued convertible
promissory notes in the aggregate principal amount of $75,000 to Paladin Advisors, LLC (“Paladin”). The promissory
notes bear interest at 8% per anum, and is due six months from the respective issuance date of the note along with accrued and
unpaid interest. Principal and interest to be payable as provided below on that date which is six months from the date of issuance
(the “Maturity Date”). All payments due hereunder (to the extent not converted into common stock, $0.001 par value
per share (the “Common Stock”) in accordance with the terms of this agreement and shall be made in lawful money of
the United States of America. All payments shall be made at such address as the Holder shall hereafter give to the Company by written
notice made in accordance with the provisions of this Note. Whenever any amount expressed to be due by the terms of this Note is
due on any day which is not a business day, the same shall instead be due on the next succeeding day which is a business day and,
in the case of any interest payment date which is not the date on which this Note is paid in full, the extension of the due date
thereof shall not be taken into account for purposes of determining the amount of interest due on such date. As used in this Note,
the term “business day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the
city of New York, New York are authorized or required by law or executive order to remain closed.
For so long as there remains any amount due
hereunder, the Holder shall have the option to convert all or any portion of the unpaid principal amount of this Note, plus accrued
interest (together with the unpaid principal amount, the “Converted Amount”), into shares of the Company’s common
stock. The conversion price (the “Conversion Price”) shall be equal to a forty-five percent (45%) discount to the lowest
closing bid of the previous ten (10) day trading period, ending on the business day before a Notice of Conversion is delivered
to the Company. The number of shares of Common Stock into which the Converted Amount shall be convertible (the “Conversion
Shares”) shall be determined by dividing (i) the Converted Amount by (ii) the Conversion Price. For the purposes of this
Section 4(a), a conversion shall be deemed to occur on the date that the Company receives an executed copy of the Conversion Notice.
The aggregate debt discount of $0 is being
amortized to interest expense over the respective terms of the notes. As of December 31, 2020, the Company owed an aggregate of
$0 of principal and $0 of accrued interest on these convertible promissory notes.
Convertible
notes payable-GS Capital Partners LLC
On December 19, 2019, the Company issued convertible
promissory notes in the aggregate principal amount of $173,000 to GS Capital Partners LLC (“GS Capital”). The promissory
notes bear interest at 10% per annum and is due one year from the respective issuance date and include an original issuance discount
(“OID”) in aggregate of $15,000.
The interest
will be paid to the Holder in whose name this Note is registered on the records of the Company regarding registration and transfers
of this Note. The principal of, and interest on, this Note are payable at 30 Broad Street, Suite 1201, New York, NY 10004, initially,
and if changed, last appearing on the records of the Company as designated in writing by the Holder hereof from time to time. The
Company will pay each interest payment and the outstanding principal due upon this Note before or on the Maturity Date, less any
amounts required by law to be deducted or withheld, to the Holder of this Note by check or wire transfer addressed to such Holder
at the last address appearing on the records of the Company. The forwarding of such check or wire transfer shall constitute a payment
of outstanding principal hereunder and shall satisfy and discharge the liability for principal on this Note to the extent of the
sum represented by such check or wire transfer.
The Holder of this Note is entitled, at its
option, at any time after cash payment, to convert all or any amount of the principal face amount of this Note then outstanding
into shares of the Company's common stock (the "Common Stock") at a price ("Conversion Price") for each share
of Common Stock equal to 62% of the lowest trading price of the Common Stock as reported on the National Quotations Bureau OTC
Marketplace exchange which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the
future ("Exchange"), for the twenty prior trading days including the day upon which a Notice of Conversion is received
by the Company or its transfer agent (provided such Notice of Conversion is delivered by fax or other electronic method of communication
to the Company or its transfer agent after 4 P.M. Eastern Standard or Daylight Savings Time if the Holder wishes to include the
same day closing price). If the shares have not been delivered within 3 business days, the Notice of Conversion may be rescinded.
Such conversion shall be effectuated by the Company delivering the shares of Common Stock to the Holder within 3 business days
of receipt by the Company of the Notice of Conversion. Accrued but unpaid interest shall be subject to conversion. No fractional
shares or scrip representing fractions of shares will be issued on conversion, but the number of shares issuable shall be rounded
to the nearest whole share. To the extent the Conversion Price of the Company’s Common Stock closes below the par value per
share, the Company will take all steps necessary to solicit the consent of the stockholders to reduce the par value to the lowest
value possible under law. The Company agrees to honor all conversions submitted pending this increase. In the event the Company
experiences a DTC “Chill” on its shares, the Conversion Price shall be decreased to 52% instead of 62% while that “Chill”
is in effect. In no event shall the Holder be allowed to effect a conversion if such conversion, along with all other shares of
Company Common Stock beneficially owned by the Holder and its affiliates would exceed 4.99% of the outstanding shares of the Common
Stock of the Company (which may be increased up to 9.9% upon 60 days’ prior written notice by the Investor).
As of
the funding date of each note, the Company determined the fair value of the embedded derivative associated with the convertibility
of each note. The fair value of the embedded derivative has been added to the debt discount (total debt discount is limited to
the face value of the debt) with any excess of the derivative liability recognized as interest expense. The aggregate debt discount
of $92,396 is being amortized to interest expense over the respective terms of the notes. As of December 31, 2020, the Company
owed an aggregate of $143,500 of principal and $2,789 of accrued interest on these convertible promissory notes.
Convertible notes payable-St George Investments
Effective November 1, 2017, the Company issued
a secured convertible promissory note in aggregate of $601,420 to St George Investments LLC (“St George”). The promissory
note bears interest at 10% compounded daily, was due upon maturity on September 10, 2018 and includes an original issue discount
(“OID”) of $59,220. The promissory note was funded on November 11, 2017 for $542,200, net of OID and transaction costs.
As of September 30, 2019, the Company owed $417,890 of principal and $38,378 of accrued interest on this convertible promissory
note. As of September 30, 2019, this note was in default, but the lender has not enforced the default interest rate. Effective
December 20, 2017, the Company issued a secured convertible promissory note in aggregate of $1,655,000 to St George Investments
LLC (“St George”). The promissory note bears interest at 10% compounded daily, was due upon maturity on October 27,
2018 and includes an original issue discount (“OID”) of $155,000. In addition, the Company agreed to pay $5,000 for
legal, accounting and other transaction costs of the lender. The promissory note was funded in nine tranches of $300,000; $200,000;
$200,000; $400,000; $75,000; $150,000; $85,000; $120,000 and $70,000, resulting in aggregate net proceeds of $1,500,000. The Company
received aggregate net proceeds of $1,200,000 and $300,000 during the years ended December 31, 2018 and 2017, respectively. As
an investment incentive, the Company issued 1,100,000 five-year warrants, exercisable at $2.40 per share, with certain reset provisions.
The promissory notes are convertible, at any
time at the lender’s option, at $2.40 per share. However, in the event the Company’s market capitalization (as defined)
falls below $30,000,000, the conversion rate is 60% of the 3 lowest closing trade prices due the 20 trading days immediately preceding
date of conversion, subject to additional adjustments, as defined. In addition, the promissory note includes certain anti-dilution
provisions should the Company subsequently issue any common stock or equivalents at an effective price less than the lender conversion
price. The Company has a right to prepayment of the note, subject to a 20% prepayment premium and is secured by a trust deed of
certain assets of the Company.
On November 5,
2018, $250,000 of principal and accrued interest was assigned to John Fife as an individual with all the terms and conditions of
the original note issued to St George. On March 21, 2019, $150,959 of principal and $4,963 of accrued interest along with $160,454
of derivative liabilities valued as of the respective conversion date were converted into 394,460 shares of common stock.
Effective August 28, 2018, the Company issued
a secured convertible promissory note in aggregate of $1,128,518 (includes overfunding of $23,518) to St George Investments LLC
(“St George”). The promissory note bears interest at 10% compounded daily, was due upon maturity on June 30, 2019 and
includes an original issue discount (“OID”) of $100,000. In addition, the Company agreed to pay $5,000 for legal, accounting
and other transaction costs of the lender. During the year ended December 31, 2018, the Company received aggregate net proceeds
of $825,000. During the nine months ended September 30, 2019, an additional $218,518 was funded under this note resulting in net
proceeds of $198,518.
As an investment incentive, the Company issued
750,000 five-year warrants, exercisable at $2.40 per share, with certain reset provisions. The aggregate fair value of the issued
warrants was $1,588,493. The face value of the debt was then allocated, on a relative fair value basis, between the debt and the
warrants. The portion allocated to warrants has been added to the debt discount with a resulting increase in additional paid-in
capital. As of the funding date of each tranche of this note, the Company determined the fair value of the embedded derivative
associated with the convertibility of this note. The fair value of the embedded derivative has been added to the debt discount
(total debt discount is limited to the face value of the debt) with any excess of the derivative liability recognized as interest
expense. As of the aggregate debt discount of $1,114,698 is being amortized to interest expense over the respective term of each
tranche.
The promissory notes are convertible, at any
time at the lender’s option, at $2.40 per share. However, in the event the Company’s market capitalization (as defined)
falls below $30,000,000, the conversion rate is 60% of the 3 lowest closing trade prices due the 20 trading days immediately preceding
date of conversion, subject to additional adjustments, as defined. In addition, the promissory note includes certain anti-dilution
provisions should the Company subsequently issue any common stock or equivalents at an effective price less than the lender conversion
price. The Company has a right to prepayment of the note, subject to a 15% prepayment premium and is secured by a trust deed of
certain assets of the Company.
Effective January
29, 2019, the Company issued a secured convertible promissory note in aggregate of $2,205,000 to St George Investments LLC (“St
George”). The promissory note bears interest at 10% compounded daily, is due upon maturity on December 5, 2019 and includes
an original issue discount (“OID”) of $200,000. In addition, the Company agreed to pay $5,000 for legal, accounting
and other transaction costs of the lender. During the nine months ended September 30, 2019, the promissory note was funded in eight
tranches totaling $1,406,482 resulting in aggregate net proceeds of $1,276,482 under this note. As an investment incentive, the
Company issued 1,500,000 5-year warrants, exercisable at $2.40 per share, with certain reset provisions. The aggregate fair value
of the issued warrants was $999,838. The face value of the debt was then allocated, on a relative fair value basis, between the
debt and the warrants. The portion allocated to warrants has been added to the debt discount with a resulting increase in additional
paid-in capital. As of the funding date of each tranche of this note, the Company determined the fair value of the embedded derivative
associated with the convertibility of this note. The fair value of the embedded derivative has been added to the debt discount
(total debt discount is limited to the face value of the debt) with any excess of the derivative liability recognized as interest
expense.
The promissory notes are convertible, at any
time at the lender’s option, at $2.40 per share. However, in the event the Company’s market capitalization (as defined)
falls below $30,000,000, the conversion rate is 60% of the 3 lowest closing trade prices due the 20 trading days immediately preceding
date of conversion, subject to additional adjustments, as defined. In addition, the promissory note includes certain anti-dilution
provisions should the Company subsequently issue any common stock or equivalents at an effective price less than the lender conversion
price. The Company has a right to prepayment of the note, subject to a 15% prepayment premium and is secured by a trust deed of
certain assets of the Company.
Effective March 25, 2019, the Company issued
a secured convertible promissory note in the amount of $580,000 to St George Investments LLC (“St George”). The promissory
note bears interest at 10% compounded daily, is due upon maturity on January 24, 2020 and includes an original issue discount (“OID”)
of $75,000. In addition, the Company agreed to pay $5,000 for legal, accounting and other transaction costs of the lender. During
the nine months ended September 30, 2019, the promissory note was funded in the amount of $580,000 resulting in net proceeds of
$500,000 under this note. As an investment incentive, the Company issued 375,000 five-year warrants, exercisable at $2.40 per share,
with certain reset provisions. The aggregate fair value of the issued warrants was $258,701. The face value of the debt was then
allocated, on a relative fair value basis, between the debt and the warrants. The portion allocated to warrants has been added
to the debt discount with a resulting increase in additional paid-in capital. As of the funding date of this note, the Company
determined the fair value of the embedded derivative associated with the convertibility of this note. The fair value of the embedded
derivative has been added to the debt discount (total debt discount is limited to the face value of the debt) with any excess of
the derivative liability recognized as interest expense. The aggregate debt discount of $483,966 is being amortized to interest
expense over the term of the note.
The promissory notes are convertible, at any
time at the lender’s option, at $2.40 per share. However, in the event the Company’s market capitalization (as defined)
falls below $30,000,000, the conversion rate is 60% of the 3 lowest closing trade prices due the 20 trading days immediately preceding
date of conversion, subject to additional adjustments, as defined. In addition, the promissory note includes certain anti-dilution
provisions should the Company subsequently issue any common stock or equivalents at an effective price less than the lender conversion
price. The Company has a right to prepayment of the note, subject to a 15% prepayment premium and is secured by a trust deed of
certain assets of the Company. .
In December 2020, the Company entered into
two convertible promissory notes in the aggregate amount of $160,000 of principal with an Bucktown Capital LLC, entity controlled
by the owners of St. George. The Company received net proceeds of $150,000. The notes mature in December 2020 and bear interest
at 8% or 22% in the event of default. The notes are convertible at the lender’s option at any time at a fixed price of $0.002
per common share, subject to normal adjustment for common stock splits.
As of December 31, 2020, the Company owed $1,160,726 of principal and $349,458 of accrued interest
on the above convertible promissory notes.
Convertible notes payable - Robert L. Hymers
III
On December 23, 2019, the Company issued convertible
promissory notes in the aggregate principal amount of $96,552 to Robert L. Hymers III (“Hymers”) in satisfaction of
funds owed to Mr. Hymers from his consulting contract with the Company for past services rendered and completed. The promissory
notes bear interest at 10% per anum, and is due six months from the respective issuance date of the note along with accrued and
unpaid interest. Principal and interest to be payable as provided below on that date which is six months from the date of issuance
(the “Maturity Date”). All payments due hereunder (to the extent not converted into common stock, $0.001 par value
per share (the “Common Stock”) in accordance with the terms of this agreement and shall be made in lawful money of
the United States of America. All payments shall be made at such address as the Holder shall hereafter give to the Company by written
notice made in accordance with the provisions of this Note. Whenever any amount expressed to be due by the terms of this Note is
due on any day which is not a business day, the same shall instead be due on the next succeeding day which is a business day and,
in the case of any interest payment date which is not the date on which this Note is paid in full, the extension of the due date
thereof shall not be taken into account for purposes of determining the amount of interest due on such date. As used in this Note,
the term “business day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the
city of New York, New York are authorized or required by law or executive order to remain closed.
For so long as
there remains any amount due hereunder, the Holder shall have the option to convert all or any portion of the unpaid principal
amount of this Note, plus accrued interest (together with the unpaid principal amount, the “Converted Amount”), into
shares of the Company’s common stock. The conversion price (the “Conversion Price”) shall be equal to a fifty
percent (50%) discount to the lowest closing bid of the previous fifteen (15) day trading period, ending on the business day before
a Notice of Conversion is delivered to the Company. The number of shares of Common Stock into which the Converted Amount shall
be convertible (the “Conversion Shares”) shall be determined by dividing (i) the Converted Amount by (ii) the Conversion
Price. A conversion shall be deemed to occur on the date that the Company receives an executed copy of the Conversion Notice.
The aggregate debt discount of $46,666 is being
amortized to interest expense over the respective terms of the notes. As of December 31, 2020, the Company owed an aggregate of
$70,000 of principal and $1,005 of accrued interest on these convertible promissory notes. The derivative liability at December
31, 2020 associated with this convertible note was $149,067.
Convertible notes payable – Natural
Plant Extract
On April 15, 2019, we entered into a joint
venture with Natural Plant Extract of California, Inc., and subsidiaries, to operate a licensed psychoactive cannabis distribution
service in California. California legalized THC psychoactive cannabis for medicinal and recreational use on January 1, 2018. On
February 3, 2020, we terminated the joint venture.
The Original Material
Definitive Agreement
Pursuant to the original
material definitive agreement, we agreed to acquire twenty percent (equal to 200,000) of NPE’s authorized shares in exchange
for our payment of $2,000,000 and $1,000,000 worth of our restricted common stock. We agreed to form a joint venture with NPE incorporated
in California under the name “Viva Buds, Inc.” (“Viva Buds”) for the purpose of operating a California
licensed cannabis distribution business pursuant to California law legalizing THC psychoactive cannabis for recreational and medicinal
use.
Our payment obligations
were governed by a stock purchase agreement which required us to make the following payments:
a. Deposit of $350,000
within 5 days of the execution of the material definitive agreement;
b. Deposit of $250,000
payable within 30 days;
c. Deposit of $400,000
within 60 days;
d. Deposit of $500,000
within 75 days;
e. Deposit of $500,000
within 90 days
We made our initial payment
pursuant to this schedule, but otherwise failed to comply with the payment schedule and we were in breach of contract.
Settlement and Release
of All Claims Agreement
On February 3, 2020,
the Company and NPE entered into a settlement and release of all claims agreement. In exchange for a complete release of all claims,
the Company and NPE (1) agreed to reduce our interest in NPE from 20% to 5%; (2) we agreed to pay NPE a total of $85,000 as follows:
$35,000 concurrent with the execution of the Settlement and Release of All Claims Agreement, and $25,000 no later than the 5th
calendar day for each of the two months following execution of Settlement and Release of All Claims Agreement; and, (3) to retire
the balance of our original valuation obligation from the material definitive agreement, representing a shortfall of $56,085, in
a convertible promissory note, with terms allowing NPE to convert the note into common stock of MCOA at a 50% discount to the closing
price of MCOA’s common stock as of the maturity date.
As of the date of this filing, the Company satisfied its payment obligations
under the settlement agreement.
Summary:
The Company has identified the embedded derivatives
related to the above described notes and warrants. These embedded derivatives included certain conversion and reset features. The
accounting treatment of derivative financial instruments requires that the Company record fair value of the derivatives as of the
inception date of the note and to fair value as of each subsequent reporting date.
For the year ended December 31, 2020 and 2019,
the Company recorded a loss on the change in fair value of derivative liabilities of $4,698,072 and $2,123,570, respectively. For
the years ended December 31, 2020 and 2019, the Company recorded amortization of debt discounts of $1,658,395 and $2,906,843, respectively,
as a charge to interest expense, respectively.
At December 31, 2020, the Company determined the aggregate fair
values of $4,426,057 of embedded derivatives. The fair values were determined using a binomial model based on the following assumptions:
(1) dividend yield of 0%; (2) expected volatility of 164.49% to 278.82%, (3) weighted average risk-free interest rate of 0.09%
to 0.17%, (4) expected life of 0.5 years to 2.6 years, and (5) estimated fair value of the Company's common stock from $0.0041
per share.
NOTE 6 – DERIVATIVE LIABILITIES
As described in Notes 4 and 7, the Company
issued convertible notes and warrants that contained conversion features and a reset provisions. The accounting treatment of derivative
financial instruments requires that the Company record fair value of the derivatives as of the inception date and to fair value
as of each subsequent reporting date.
If an embedded conversion option in a convertible
debt instrument no longer meets the bifurcation criteria in this Subtopic, an issuer shall account for the previously bifurcated
conversion option by reclassifying the carrying amount of the liability for the conversion option (that is, its fair value on the
date of reclassification) to shareholders' equity. Any debt discount recognized when the conversion option was bifurcated from
the convertible debt instrument shall continue to be amortized.
NOTE 7 – STOCKHOLDERS’ DEFICIT
Preferred stock
The Company is authorized to issue 10,000,000
shares of $0.001 par value preferred stock as of December 31, 2020 and December 31, 2019. As of December 31, 2020, and 2019, the
Company has designated and issued 10,000,000 shares of Class A Preferred Stock.
Each share of Class A Preferred Stock is entitled
to 100 votes on all matters submitted to a vote to the stockholders of the Company, does not have conversion, dividend or distribution
upon liquidation rights. On November 9, 2020, the Company issued 2,000,000 shares of its Class B Preferred Common Stock to Jesus
Quintero. The Class B Preferred Stock carries a voting preference of One Thousand (1,000) times that number of votes on all matters
submitted to the shareholders that is equal to the number of shares of Common Stock (rounded to the nearest whole number), at the
record date for the determination of the shareholders entitled to vote on such matters or, if no such record date is established,
at the date such vote is taken or any written consent of such shareholders is affected. The issuance constitutes a change of control
of the Company, as the voting preference of the issued Class B Preferred Stock provides Mr. Quintero with the right to control
a majority of the votes of shareholders eligible to cast votes on any matter brought before the stockholders. The Class B shares
were valued at $2,229,027 and recognized as stock-based compensation expense during the year ended December 31, 2020. As of December
31, 2020 and 2019, there were 2,000,000 shares of Class B Preferred Stock outstanding. The Class B Preferred Stock is not convertible
into common shares.
Common stock
The Company is authorized to issue 15,000,000,000
shares of $0.001 par value common stock as of December 31, 2020 and 2019. As of December 31, 2020, and 2019, the Company had 3,136,774,861
and 77,958,081, respectively, common shares issued and outstanding.
In 2020, the Company issued an aggregate of
217,396,427 of its common stock for services rendered with an estimated fair value of $785,861.
In 2020, the Company issued an aggregate of
2,291,141,317 shares of its common stock in settlement of convertible notes payable and accrued interest with an estimated fair
value of $3,916,940.
In 2020, the Company issued an aggregate of
21,276,596 shares of its common stock in conversion of related party notes payable with an estimated fair value of $50,000.
In 2020, the Company issued an aggregate of
51,054,211 common shares of its common stock in exchange for exercise of warrants on a cashless basis.
In 2020, the Company sold shares 268,679,513
shares of its common stock with an estimated value of $478,685.
In 2020, the Company issued 205,582,494 shares
of its common stock with an estimated value of $762,723 to settle liabilities.
In 2020, the Company issued an aggregate of
3,677,889 common shares in settlement of a legal cases with an estimated fair value of $956,251.
In 2020, the Company issued an aggregate of
8,333 common shares to settle amounts previously accrued with an estimated value of $6,700.
On September 3, 2019, the Company completed
a 1 for 60 reverse stock-split of its common stock.
In 2019, the Company issued an aggregate of
141,669 shares of its common stock in settled amounts previously accrued with an estimated fair value of $193,800.
In 2019, the
Company issued an aggregate of 18,510,381 shares of its common stock for services rendered with an estimated fair value of $3,293,688.
In 2019,
the Company issued an aggregate of 9,251,217 shares of its common stock in settlement of convertible notes payable and accrued
interest with an estimated fair value of $3,388,774.
In 2019, the Company issued an aggregate of
1,000,000 shares of its common stock in issuance of warrants and BCF with convertible debt with an estimated fair value of $856,717.
In 2019, the Company issued an aggregate of
1,220,856 shares of its common stock in conversion of related party notes payable with an estimated fair value of $1,182,415.
In 2019, the Company issued an aggregate of
1,653,175 common shares of its common stock in exchange for exercise of warrants on a cashless basis.
In 2019, the Company sold shares 222,221 shares
of its common stock with an estimated value of $65,000.
In 2019, the Company issued an aggregate of
2,082,398 common shares in settlement of a legal cases with an estimated fair value of $541,424.
In 2019, the Company issued an aggregate of
2,222,047 common shares in settlement of a for investments in joint ventures with an estimated fair value of $1,219,040.
Options
Option valuation models
require the input of highly subjective assumptions. The fair value of stock-based payment awards was estimated using the Binomial
Option Pricing Model with a volatility figure derived from using the Company’s historical stock prices. Management determined
this assumption to be a more accurate indicator of value. The Company accounts for the expected life of options based on the contractual
life of options for non-employees. For employees, the Company accounts for the expected life of options in accordance with the
“simplified” method, which is used for “plain-vanilla" options, as defined in the accounting standards codification.
The risk-free interest
rate was determined from the implied yields of U.S. Treasury zero-coupon bonds with a remaining life consistent with the expected
term of the options.
In addition, the Company is required to estimate the expected
forfeiture rate and only recognize expense for those shares expected to vest. In estimating the Company’s forfeiture rate,
the Company analyzed its historical forfeiture rate, the remaining lives of unvested options, and the number of vested options
as a percentage of total options outstanding. If the Company’s actual forfeiture rate is materially different from its estimate,
or if the Company reevaluates the forfeiture rate in the future, the stock-based compensation expense could be significantly different
from what the Company has recorded in the current period.
The following table summarizes the stock option
activity for the years ended December 31, 2020 and 2019:
|
|
Shares
|
|
Weighted-Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual Term
|
|
Aggregate
Intrinsic
Value
|
Outstanding at December 31, 2019
|
|
|
16,666,667
|
|
|
$
|
0.30
|
|
|
|
7.76
|
|
|
$
|
15,400,000
|
|
Granted
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeitures or expirations
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2020
|
|
|
16,666,667
|
|
|
$
|
0.30
|
|
|
|
6.76
|
|
|
$
|
15,296,667
|
|
Granted
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeitures or expirations
|
|
|
(16,666,667
|
)
|
|
|
0.30
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2020
|
|
|
0
|
(1)
|
|
$
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Exercisable at December 31, 2020
|
|
|
0
|
(1)
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
(1) On February 27, 2019, Donald Steinberg
and Charles Larsen cancelled previously issued options to purchase an aggregate of 16,666,667 shares at an average exercise price
of $0.30 per share, representing 100% of all previously issued option.
The aggregate intrinsic value in the preceding
tables represents the total pretax intrinsic value, based on options with an exercise price less than the Company’s stock
price of $0 and $0 as of December 31, 2020 and 2019, respectively, which would have been received by the option holders had those
option holders exercised their options as of that date.
The following table presents information related to stock options
at December 31, 2020(1):
Options Outstanding(1)
|
|
|
Options Exercisable
|
|
Exercise
Price
|
|
|
Number of
Options
|
|
|
Weighted Average
Remaining Life
In Years
|
|
|
Exercisable
Number of
Options
|
|
$
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
The stock-based compensation
expense related to option grants was $0 and $0 during the years ended December 31, 2020 and 2019, respectively.
(1) On
February 27, 2019, Donald Steinberg and Charles Larsen cancelled previously issued options to purchase an aggregate of 16,666,667
shares at an average exercise price of $0.30 per share, representing 100% of all previously issued options.
Warrants
The following table summarizes the stock warrant
activity for the two years ended December 31, 2020:
|
|
Shares
|
|
Weighted-Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual Term
|
|
Aggregate
Intrinsic
Value
|
Outstanding at December 31, 2018
|
|
|
1,847,447
|
|
|
$
|
1.98
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
2,370,298
|
|
|
|
1.78
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(192,521
|
)
|
|
|
1.80
|
|
|
|
|
|
|
|
|
|
Forfeitures or expirations
|
|
|
(14,113,000
|
)
|
|
$
|
1.98
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2019
|
|
|
4,011,111
|
|
|
|
2.15
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
6,980,769
|
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(192,521
|
)
|
|
|
1.78
|
|
|
|
|
|
|
|
|
|
Increase due to reset provision
|
|
|
322,906,286
|
|
|
|
0.0004
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(40,843,463
|
)
|
|
|
0.0027
|
|
|
|
|
|
|
|
|
|
Forfeitures or expirations
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2020
|
|
|
293,054,702
|
|
|
$
|
0.0011
|
|
|
|
2.2
|
|
|
$
|
1,023,306
|
|
Exercisable at December 31, 2020
|
|
|
293,054,702
|
|
|
$
|
0.0011
|
|
|
|
2.27
|
|
|
$
|
1,023,306
|
|
Certain warrants issued to debt holders have
reset provisions whereby upon subsequent issuances of common stock at a price below the current exercise price, the number of warrants
increase and the exercise price is reduced to the new price. The aggregate intrinsic value in the preceding tables represents the
total pretax intrinsic value, based on warrants with an exercise price less than the Company’s stock price of $0.004 and
$0.07 as of December 31, 2020 and 2019, respectively, which would have been received by the warrant holders had those option holders
exercised their warrants as of that date.
NOTE 8 — FAIR VALUE MEASUREMENT
The Company adopted the provisions of Accounting
Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”) on January 1, 2008. ASC 825-10 defines
fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required
or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact
and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer
restrictions, and risk of nonperformance. ASC 825-10 establishes a fair value hierarchy that requires an entity to maximize the
use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825-10 establishes three levels
of inputs that may be used to measure fair value:
Level 1 – Quoted prices in active markets
for identical assets or liabilities.
Level 2 – Observable inputs other than Level 1 prices
such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions
(less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally
from or corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 – Unobservable inputs to the
valuation methodology that are significant to the measurement of fair value of assets or liabilities.
All items required to be recorded or measured
on a recurring basis are based upon level 3 inputs.
To the extent that valuation is based on models
or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain
cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure
purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed and is determined based on
the lowest level input that is significant to the fair value measurement.
Upon adoption of ASC 825-10, there was no cumulative
effect adjustment to beginning retained earnings and no impact on the financial statements.
The carrying value of the Company’s cash
and cash equivalents, accounts receivable, accounts payable, short-term borrowings (including convertible notes payable), and other
current assets and liabilities approximate fair value because of their short-term maturity.
As of December 31, 2020, and 2019, the Company
did not have any items that would be classified as level 1 or 2 disclosures.
The Company recognizes its derivative liabilities
as level 3 and values its derivatives using the methods discussed in note 6. While the Company believes that its valuation methods
are appropriate and consistent with other market participants, it recognizes that the use of different methodologies or assumptions
to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting
date. The primary assumptions that would significantly affect the fair values using the methods discussed in Notes 4 and 5 are
that of volatility and market price of the underlying common stock of the Company.
As of December 31, 2020, and 2019, the Company
did not have any derivative instruments that were designated as hedges.
The combined derivative and warrant liability
as of December 31, 2020 and 2019, in the amounts of $4,426,057 and $5,693,071 respectively, have a level 3 classification.
The following table provides a summary of changes
in fair value of the Company’s Level 3 financial liabilities for the two years ended December 31, 2020:
The derivative
liabilities as of December 31, 2020 and 2019, in the amount of $4,426,057 and $5,693,071, respectively, have a level 3 classification.
The following
table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities for the year ended December
31, 2020:
|
|
Debt
Derivative
|
Balance, December 31, 2019
|
|
$
|
5,693,071
|
|
Increase resulting from initial issuances of additional convertible notes payable
|
|
|
1,714,442
|
|
Decreases resulting from conversion or payoff of convertible notes payable
|
|
|
(7,679,528
|
)
|
Loss due to change in fair value included in earnings
|
|
|
4,698,072
|
|
Balance, December 31, 2020
|
|
$
|
4,426,057
|
|
|
|
|
|
|
Fluctuations
in the Company’s stock price are a primary driver for the changes in the derivative valuations during each reporting period.
During the year ended December 31, 2020, the Company’s stock price decreased significantly from initial valuations. As the
stock price decreases for each of the related derivative instruments, the value to the holder of the instrument generally decreases.
Stock price is one of the significant unobservable inputs used in the fair value measurement of each of the Company’s derivative
instruments.
NOTE 9 — RELATED PARTY TRANSACTIONS
The Company’s current officers and stockholders
advanced funds to the Company for travel related and working capital purposes. As of December 31, 2020, and 2019, there were no
related party advances outstanding.
As of December 31, 2020 and 2019, accrued compensation
due officers and executives included as accrued compensation was $79,214 and $4,875, respectively.
For the years ended December 31, 2020 and 2019,
the Company had sales to related parties of $13,069 and $21,157, respectively.
During the year ended December 31, 2020, the
Company issued 2,000,000 shares of Class B Preferred Stock to the Company’s CEO that were valued at $2,229,027. See Note
7.
NOTE 10 — COMMITMENTS AND CONTINGENCIES
Employment contracts
On February 3, 2020, we entered into
an executive employment agreement with Jesus Quintero, our CEO and CFO providing for gross salary of $15,000 monthly, consisting
of $12,000 in cash and $3,000 worth of our common stock valued on the closing price of our common stock on the last trading day
of each month.
On February 28, 2020, the Company entered into
executive contracts with its directors Edward Manolos and Themistocles Psomiadis. The agreements are for a term lasting
from the effective date until the earlier of the date of the next annual or special stockholders meeting called for the purposes
of electing directors, and the earliest of the following to occur: (a) the death of the Director; (b) the termination of the Director
from his membership on the Board by the mutual agreement of the Company and the Director; (c) the removal of the Director from
the Board by the majority stockholders of the Company; and (d) the resignation by the Director from the Board. Mr. Psomiadis and
Mr. Manolos’ 2020 contracts provide for payments of $5,000 quarterly.
Operating lease
To evaluate the impact on adoption of ASC842
– Leases, on the accounting treatment for leasing of real office property referred to as the “Premises”. The
premises is located in Escondido, CA.
On July 1, 2019, the Company entered into a
lease extension agreement for its single operating lease, whereby the Company extended its office lease Escondido, California, in
for two year. The extension period commenced on June 30, 2020 and will expire on June 30, 2021 at a base monthly lease rate of
$1,308.88 per month through June 30, 2020, and $1,348.14 to June 30, 2021.
To evaluate the impact
on adoption of ASC842 – Leases, on the accounting treatment for leasing of real office property referred to as the “Premises”.
The premises is located in Escondido, CA.
The Company utilizes
the incremental borrowing rate in determining the present value of lease payments unless the implicit rate is readily determinable.
The Company used an estimated incremental borrowing rate of 10% to estimate the present value of the right of use liability.
The Company has right-of-use
assets of $7,858 and operating lease liabilities of $7,858 as of December 31, 2020. Operating lease expense for the year ended
December 31, 2020 was $51,526. The Company had cash used in operating activities related to leases of $29,931 during the year ended
December 31, 2020. The lease has a remaining term of six months.
The following table
provides the maturities of lease liabilities at December 31, 2020:
Maturity of Lease Liabilities at December 31, 2020
|
|
|
|
|
2020
|
|
$
|
—
|
|
2021
|
|
|
8,089
|
|
2021 and thereafter
|
|
|
—
|
|
|
|
|
—
|
|
Total future undiscounted lease payments
|
|
|
8,089
|
|
Less: Interest
|
|
|
(231
|
)
|
Present value of lease liabilities
|
|
$
|
7,858
|
|
Minimum lease payments
under the Company’s operating lease under ASC 842 for 2021 is $7,858.
Litigation
The
Company is subject at times to other legal proceedings and claims, which arise in the ordinary course of its business. Although
occasional adverse decisions or settlements may occur, the Company believes that the final disposition of such matters should not
have a material adverse effect on its financial position, results of operations or liquidity.
Bougainville Ventures
On September 20, 2018, the Company filed suit against Bougainville Ventures, Inc., BV-MCOA Management, LLC, Andy Jagpal, Richard
Cindric, et al. in Okanogan County Washington Superior Court, case number 18-2- 0045324.
Background
On
March 16, 2017, we entered into a joint venture agreement with Bougainville Ventures, Inc., a Canadian corporation. The purpose
of the joint venture was for the Company and Bougainville to jointly engage in the development and promotion of products in the
legalized cannabis industry in Washington State; (ii) utilize Bougainville’s high quality cannabis grow operations in the
State of Washington, where it claimed to have an ownership interest in real property for use within the legalized cannabis industry;
(iii) leverage Bougainville’s agreement with a I502 Tier 3 license holder to grow cannabis on the site; provide technical
and management services and resources including, but not limited to: sales and marketing, agricultural procedures, operations security
and monitoring, processing and delivery, branding, capital resources and financial management; and, (iv) optimize collaborative
business opportunities. The Company and Bougainville agreed to operate through a Washington State Limited Liability Company, and
BV-MCOA Management, LLC was organized in the State of Washington on May 16, 2017.
As
our contribution to the joint venture, the Company committed to raise not less than $1 million dollars to fund joint venture operations
based upon a funding schedule. The Company also committed to providing branding and systems for the representation of cannabis
related products and derivatives comprised of management, marketing and various proprietary methodologies directly tailored to
the cannabis industry. The Company and Bougainville's agreement provided that funding provided by the Company would go, in part,
towards the joint venture’s ultimate purchase of the land consisting of a one-acre parcel located in Okanogan County, Washington,
for joint venture operations.
As
disclosed on Form 8-K on December 11, 2017, the Company did not comply with the funding schedule for the joint venture. On November
6, 2017, the Company and Bougainville amended the joint venture agreement to reduce the amount of the Company's commitment to $800,000
and also required the Company to issue Bougainville 15 million shares of the Company's restricted common stock. The Company completed
its payments pursuant to the amended agreement on November 7, 2017, and on November 9, 2017, issued to Bougainville 15 million
shares of restricted common stock. The amended agreement provided that Bougainville would deed the real property to the joint venture
within thirty days of its receipt of payment.
Thereafter,
the Company determined that Bougainville had no ownership interest in the property in Washington State, but rather was a party
to a purchase agreement for real property that was in breach for non-payment. Bougainville also did not possess an agreement with
a Tier 3 I502 license holder to grow Marijuana on the property. Nonetheless, as a result of funding arranged for by the Company,
Bougainville and an unrelated third party, Green Ventures Capital Corp., purchased the land. The land is currently pending the
payment of delinquent property taxes that would allow for the Okanogan County Assessor to sub-divide the property, so that the
appropriate portion could be deeded to the joint venture. Although Bougainville represented it would pay the delinquent taxes,
it has not. To date, the property has not been deeded to the joint venture.
To
clarify the respective contributions and roles of the parties, the Company also offered to enter into good faith negotiations to
revise and restate the joint venture agreement with Bougainville. The Company diligently attempted to communicate with Bougainville
in good faith to accomplish a revised and restated joint venture agreement, and efforts towards satisfying the conditions to complete
the subdivision of the land by the Okanogan County Assessor. However, Bougainville failed to cooperate or communicate with the
Company in good faith, and failed to pay the delinquent taxes on the real property that would allow for sub-division and the deeding
of the real property to the joint venture.
Company
Determines to File Suit.
On
August 10, 2018, the Company advised its independent auditor that Bougainville did not cooperate or communicate with the Company
regarding its requests for information concerning the audit of Bougainville’s receipt and expenditures of funds contributed
by the Company in the joint venture agreement. Bougainville had a material obligation to do so under the joint venture agreement.
The Company believes that some of the funds it paid to Bougainville were misappropriated and that there was self-dealing with respect
to those funds. Additionally, the Company believes that Bougainville misrepresented material facts in the joint venture agreement,
as amended, including, but not limited to, Bougainville’s representations that: (i) it had an ownership interest in real
property that was to be deeded to the joint venture; (ii) it had an agreement with a Tier 3 # I502 cannabis license holder to grow
cannabis on the real property; and, (iii) that clear title to the real property associated with the Tier 3 # I502 license would
be deeded to the joint venture thirty days after the Company made its final funding contribution. As a result, on September 20,
2018, the Company filed suit against Bougainville Ventures, Inc., BV-MCOA Management, LLC, Andy Jagpal, Richard Cindric, et al.
in Okanogan County Washington Superior Court, case number 18-2- 0045324. The Company’s complaint seeks legal and equitable
relief for breach of contract, fraud, breach of fiduciary duty, conversion, recession of the joint venture agreement, an accounting,
quiet title to real property in the name of the Company, for the appointment of a receiver, the return to treasury of 15 million
shares issued to Bougainville, and, for treble damages pursuant to the Consumer Protection Act in Washington State. The registrant
has filed a lis pendens on the real property. The case is currently in litigation.
Caren Glasser
On March 2, 2020, Caren Glasser filed
a request for arbitration against the Company alleging non-payment for past due compensation. The case was filed in the in the
American Arbitration Association under Case no. 01-20-0000-6290. The Company and Ms. Glasser agreed to settle her dispute on May
7, 2020. The settlement agreement obligates the Company to pay Ms. Glasser $24,000 thirty days after Ms. Glasser executes the agreement,
consistent with the Older Workers Benefit Protection Act (29 U.S.C. § 626(f). The Company made this payment and the case concluded.
NOTE 11 – INCOME TAXES
As of December 31, 2020, the Company has available
for federal income tax purposes a net operating loss carry forward of approximately $86,309,595, expiring in the year 2038, that
may be used to offset future taxable income, but could be limited under Section 382. The Company has provided a valuation reserve
against the full amount of the net operating loss benefit, since in the opinion of management based upon the earnings history of
the Company; it is more likely than not that the benefits will not be realized. Due to possible significant changes in the Company's
ownership, the future use of its existing net operating losses may be limited. All or portion of the remaining valuation allowance
may be reduced in future years based on an assessment of earnings sufficient to fully utilize these potential tax benefits.
We have adopted the provisions of ASC 740-10-25,
which provides recognition criteria and a related measurement model for uncertain tax positions taken or expected to be taken in
income tax returns. ASC 740-10-25 requires that a position taken or expected to be taken in a tax return be recognized
in the financial statements when it is more likely than not that the position would be sustained upon examination by tax authorities.
Tax position that meet the more likely than
not threshold is then measured using a probability weighted approach recognizing the largest amount of tax benefit that is greater
than 50% likely of being realized upon ultimate settlement. The Company had no tax positions relating to open income
tax returns that were considered to be uncertain. We file income tax returns in the U.S.
and in the state of California and Utah with varying statutes of limitations.
The Company is required to file income tax
returns in the U.S. Federal jurisdiction and in California. The Company is no longer subject to income tax examinations by tax
authorities for tax years ending before December 31, 2017.
The Company’s deferred taxes as of December
31, 2020 and 2019 consist of the following:
|
|
2020
|
|
2019
|
Non-Current deferred tax asset:
|
|
|
|
|
|
|
|
|
Net operating loss carry-forwards
|
|
$
|
86,309,595
|
|
|
$
|
74,164,213
|
|
Valuation allowance
|
|
|
(86,309,595
|
)
|
|
|
(74,164,213
|
)
|
Net non-current deferred tax asset
|
|
$
|
—
|
|
|
$
|
—
|
|
NOTE 12 – SUBSEQUENT EVENTS
On January 5, 2021, the registrant appointed
Tad Mailander as an independent member of its board of directors.
On February 26, 2021,
the “Company”) entered into a Share Exchange Agreement with Eco Innovation Group, Inc., a Nevada corporation quoted
on OTC Markets Pink (“ECOX”), to acquire the number of shares of ECOX’s common stock, par value $0.001, equal
in value to $650,000 based on the per-share price of $0.06, in exchange for the number of shares of Company common stock, par value
$0.001, equal in value to $650,000 based on the closing price for the trading day immediately preceding the effective date (the
“Share Exchange Agreement”). For both parties, the Share Exchange Agreement contains a “true-up” provision
requiring the issuance of additional common stock in the event that a decline in the market value of either parties’ common
stock should cause the aggregate value of the stock acquired pursuant to the Share Exchange Agreement to fall below $650,000.
Complementary
to the Share Exchange Agreement, the Company and ECOX entered into a Lock-Up Agreement dated February 26, 2021 (the “Lock-Up
Agreement”), providing that the shares of common stock acquired pursuant to the Share Exchange Agreement shall be subject
to a lock-up period preventing its sale for a period of 12 months following issuance and limiting the subsequent sale to aggregate
maximum sale value of $20,000 per week, or $80,000 per month.