Subsequent Events

12 Months Ended

Dec. 31, 2018

Subsequent Events [Abstract]

Subsequent Events

NOTE 20 – SUBSEQUENT EVENTS

GenCanna Debentures Conversion

In February 2019, the Company converted the entire $30 million investment in subordinated secured convertible debentures of GenCanna plus accrued interest through the conversion date into common stock of GenCanna equal to a 33.5% ownership interest on a fully diluted basis. As a result of the conversion, the Company will account for this investment in accordance with the equity method.

Also during this month, the Company’s CEO was appointed to GenCanna’s board.

Acquisitions

In February 2019, the Company contracted to purchase a 70% interest in Meditaurus LLC, a company established by Dr. Jokubas Ziburkas who holds a PhD in neuroscience and is a leading authority on hemp-based CBD and the endocannabinoid system. Meditaurus currently operates in the United States and Europe and has developed proprietary CBD formulations sold under its Florance brand.

Real Estate

In March 2019, the Company entered into a lease with an option to purchase a 100,000 square foot warehouse located in Milford, Delaware. The lease term is 10 years, with an option to extend the term for three additional five-year periods. Build-out of the first 60,000 square feet into a cultivation and processing facility has commenced, and is expected to be completed by October 2019.

Investment

In January 2019, the Company entered into an agreement with Maryland Health & Wellness Center Inc. (“MHWC”, an entity that has been pre-approved for a cannabis dispensing license, to provide MHWC with a construction loan of $300,000 in connection with the buildout of MHWC’s proposed dispensary location. MHWC issued a promissory note to the Company for the amount of the loan at a rate of 8% per annum that matures in January 2023, provided however, upon the two year anniversary of the date of final state approval of MHWC’s dispensing license, the Company shall have the right, subject to state approval, to convert the note into shares of MHWC’s common stock which shall be equivalent to 20% ownership of MWHC.

Consulting Agreement

At the same time as the aforementioned investment in MHWC, the Company entered into a consulting services agreement with MHWC whereby the Company will provide advisory and oversight services to MHWC over a three-year period relating to the development, administration, operation, and management of MHWC's proposed dispensary in Maryland. The Company’s fee for such services shall be equal to 20% of MHWC’s net income of the business, as defined in the agreement.

Promissory Note Issuance

In March 2019, the Company raised $6 million from the issuance a of promissory note bearing interest at the rate of 10% per annum. This note is due and payable in January 2020.

Conversion of Note Receivable

In January, the Company’s note receivable balance of approximately $258,000 from Chooze Corp. was converted into a 2.7% ownership interest in Chooze. As of the conversion date, the Company will account for this investment in accordance with the provisions of ASC 321, Investments – Equity Securities.

Equity Transactions

● The Company sold 799,995 shares of common stock at a price of $3.25 per share resulting in aggregate proceeds of $2.6 million.

● Warrants to purchased 22,000 shares of common stock were exercised at exercise prices of $0.50 to $0.40. The Company received exercise proceeds of $15,800 from these exercises.

● Options to purchase 50,000 shares of common stock were exercised at an exercise price of $0.26 per share. The Company received exercise proceeds of $13,000 from this exercise.

● Options to purchase 350,000 shares of common stock were exercised on a cashless basis with the exercise prices paid via the surrender of 139,985 shares of common stock.

● The holder of the $10M Debentures converted $600,000 of principal and approximately $97,000 of accrued interest into 233,194 shares of common stock at conversion prices ranging from $2.90 and $3.06 per share.

● The Company issued 97,136 shares of common stock associated with the same number common stock subscriptions outstanding on December 31, 2018.