Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to _____________

Commission File Number: 333-210190

Veritas Farms, Inc.

(Exact name of registrant as specified in its charter)

Nevada		90-1254190
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

401 E. Las Olas Boulevard, Suite 1400, Fort Lauderdale, FL 33301

(Address of principal executive offices, including zip code)

(833) 691-4367

(Registrant’s telephone number, including area code)

No Changes

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (ss.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☐	Accelerated Filer	☐
Non-accelerated Filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant’s common stock, $0.001 par value, as of August 10, 2023 was 41,625,331 shares.

VERITAS FARMS, INC.

Quarterly Report on Form 10-Q for the six month period ended June 30, 2023

TABLE OF CONTENTS

		Page
PART I – FINANCIAL INFORMATION		1

Item 1.	Financial Statements (unaudited)	1
	Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022	1
	Condensed Consolidated Statements of Operations for the six and three months ended June 30, 2023 and 2022	2
	Condensed Consolidated Statements of Shareholders’ Equity for the six and three months ended June 30, 2023 and 2022	3
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022	4
	Notes to Condensed Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26

Item 4.	Controls and Procedures	26

PART II - OTHER INFORMATION		28

Item 1.	Legal Proceedings	28

Item 1A.	Risk Factors	28

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28

Item 3.	Defaults Upon Senior Securities	28

Item 4.	Mine Safety Disclosures	28

Item 5.	Other Information	28

Item 6.	Exhibits	28

SIGNATURES		29

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

In addition to historical information, certain information in this Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, including statements concerning our plans, objectives, goals, beliefs, business strategies, future events, business conditions, our results of operations, financial position and our business outlook, business trends and other information, may be forward-looking statements. You can identify these forward-looking statements by the words “believes,” “intends,” “expects,” “might,” “may,” “will,” “should,” “plans,” “projects,” “contemplates,” “intends,” “budgets,” “potential,” “predicts,” “estimates,” “anticipates,” “future,” “goal,” and variations of such words or similar expressions. These statements are based on our beliefs, as well as assumptions we have used based upon information currently available to us. Because these statements reflect our current views concerning future events, these statements involve risks, uncertainties, and assumptions, many of which, by their nature, are inherently uncertain and beyond our control. Our expectations, beliefs, estimates and projections are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that management’s expectations, beliefs, estimates and projections will result or be achieved and actual future results may differ materially from what is expressed in or indicated by the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A, under the heading “Risk Factors,” of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission (“SEC”), and under “Part II, Item 1A., Risk Factors” in this Quarterly Report on Form 10-Q, if and as such risk factors may be updated from time to time in our periodic filings with the SEC. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and a reader, whether investing in our common stock or not, should not place undue reliance on these forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments.

We caution you that the risks, uncertainties and other factors referenced above may not contain all of the risks, uncertainties and other factors that are important to you. In addition, we cannot assure you that we will realize the results, benefits or developments that we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our business in the way expected. There can be no assurance that (i) we have correctly measured or identified all of the factors affecting our business or the extent of these factors’ likely impact, (ii) the available information with respect to these factors on which such analysis is based is complete or accurate, (iii) such analysis is correct or (iv) our strategy, which is based in part on this analysis, will be successful. All forward-looking statements in this Quarterly Report on Form 10-Q apply only as of the date of this Quarterly Report on Form 10-Q or as of the date they were made or as otherwise specified herein. We assume no obligation to revise or update any forward-looking statements for any reason, except as required by law.

Investors and others should note that we use our website (https://theveritasfarms.com), as well as social media, press releases, and SEC filings, as channels of distribution of Company information. The information we post through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following our press releases and SEC filings. The contents of our websites and social media posts, however, are not incorporated by reference into this Quarterly Report on Form 10-Q. Further, our references to website URLs in this filing are intended to be inactive textual references only.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

VERITAS FARMS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

	June 30, 2023			December 31, 2022
ASSETS
CURRENT ASSETS
Cash	$	119,915		$	55,273
Inventories		1,683,455			2,242,528
Accounts receivable, net of allowance for doubtful accounts		23,263			34,445
Employee retention credit receivable		36,301			623,907
Assets held for sale		460,173			502,709
Prepaid expenses		87,745			73,428
Total current assets		2,410,852			3,532,290
Property and equipment, net of accumulated depreciation		2,701,405			2,806,790
Intangible assets, net of accumulated amortization		55,000			55,000
Right of use assets, net of accumulated amortization		184,655			264,182
Other assets		109,956			136,209

TOTAL ASSETS	$	5,461,868		$	6,794,471

LIABILITIES AND SHAREHOLDERS’ (DEFICIT)

CURRENT LIABILITIES
Accounts payable	$	1,228,498		$	1,247,759
Accrued expenses		453,824			250,160
Accrued interest		520,871			297,453
Dividends payable		794,186			595,830
Convertible notes payable		200,000			200,000
Contract liability		453,277			422,919
Operating lease liability		128,895			150,052
Notes payable, current portion		-			3,278
Total current liabilities		3,779,551			3,167,451

LONG TERM LIABILITIES
Notes payable, long term, net of current portion		150,000			150,000
Related party convertible notes payable, long term, net of discount		2,843,155			3,969,167
Operating lease liability, net of current portion		55,760			114,130

TOTAL LIABILITIES		6,828,466			7,400,748

COMMITMENTS AND CONTINGENCIES (See Note 12)

SHAREHOLDERS’ (DEFICIT)
Preferred stock, 20,000,000 shares authorized, 15,000,000 shares undesignated at $0.001 par value
Series A convertible preferred stock, 4,000,000 shares authorized, 4,000,000 and 4,000,000 issued and outstanding, respectively, at $0.001 par value		4,000			4,000
Series B convertible preferred stock, 1,000,000 shares authorized, 1,000,000 and 1,000,000 issued and outstanding, respectively, at $0.001 par value		1,000			1,000
Common stock, 800,000,000 shares authorized, 41,623,366 shares issued and 41,625,331 shares outstanding, at June 30, 2023 and December 31, 2022, respectively, at $0.001 par value respectively, at $0.001 par value		41,625			41,625
Additional paid in capital		40,601,518			38,821,720
Accumulated (deficit)		(42,014,741	)		(39,474,622	)

TOTAL SHAREHOLDERS’ (DEFICIT)		(1,366,598	)		(606,277	)

TOTAL LIABILITIES AND SHAREHOLDERS’ (DEFICIT)	$	5,461,868		$	6,794,471

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

VERITAS FARMS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

	For the three months ended						For the six months ended
	June 30,						June 30,
	2023			2022			2023			2022
Revenues	$	169,864		$	273,932		$	379,652		$	694,839

Cost of goods sold		133,340			324,813			293,650			643,641
Inventory write-down		423,194			-			423,194			-
Total cost of goods sold		556,534			324,813			716,844			643,641

Gross margin/(expense)		(386,670	)		(50,881	)		(337,192	)		51,198

Operating expenses
Selling, general and administrative		801,552			1,275,014			1,600,910			2,569,928
Total operating expenses		801,552			1,275,014			1,600,910			2,569,928

Operating (loss)		(1,188,222	)		(1,325,895	)		(1,938,102	)		(2,518,730	)

Other income/(expense)
Interest expense, related parties		(198,185	)		(96,215	)		(349,057	)		(164,827	)
Interest expense		(12,465	)		(11,223	)		(24,490	)		(32,688	)
Gain on loan forgiveness		-			812,981			-			812,981
Gain/(loss) on disposal		(21,660	)		14,185			(30,114	)		14,185
Total other income/(expense)		(232,310	)		719,728			(403,661	)		629,651
(Loss) before income taxes		(1,420,532	)		(606,167	)		(2,341,763	)		(1,889,079	)
Income tax provision		-			-			-			-
Net (loss)		(1,420,532	)		(606,167	)		(2,341,763	)		(1,889,079	)
Preferred stock dividends
Preferred stock dividends in arrears
Series A preferred stock		(79,781	)		(79,781	)		(158,685	)		(158,685	)
Series B preferred stock		(19,945	)		(19,945	)		(39,671	)		(39,671	)
Total preferred stock dividends		(99,726	)		(99,726	)		(198,356	)		(198,356	)
Net (loss) attributable to common shareholders	$	(1,520,258	)	$	(705,893	)	$	(2,540,119	)	$	(2,087,435	)

Net (loss) per share
Basic	$	(0.04	)	$	(0.02	)	$	(0.06	)	$	(0.05	)
Diluted	$	(0.04	)	$	(0.02	)	$	(0.06	)	$	(0.05	)
Weighted average number of shares outstanding
Basic		41,625,331			41,625,331			41,625,331			41,625,331
Diluted		41,625,331			41,625,331			41,625,331			41,625,331

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

VERITAS FARMS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY/(DEFICIT)

(unaudited)

FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2023

	Preferred Stock
	Series A Preferred				Series B Preferred				Common Stock				Additional					Total
	Number		$0.001		Number		$0.001		Number		$0.001		paid in		Accumulated			shareholders’
	of shares		Par value		of shares		Par value		of shares		Par value		capital		(deficit)			equity/(deficit)
Balances at December 31, 2022		4,000,000	$	4,000		1,000,000	$	1,000		41,625,331	$	41,625	$	38,821,720	$	(39,474,622	)	$	(606,277	)

Stock-based compensation														4,820					4,820

Preferred stock dividends																(98,630	)		(98,630	)

Net (loss)																(921,231	)		(921,231	)

Balances at March 31, 2023		4,000,000		4,000		1,000,000		1,000		41,625,331		41,625		38,826,540		(40,494,483	)		(1,621,318	)

Stock-based compensation														24,978					24,978

Beneficial conversion feature														1,750,000					1,750,000

Preferred stock dividends																(99,726	)		(99,726	)

Net (loss)																(1,420,532	)		(1,420,532	)

Balances at June 30, 2023		4,000,000	$	4,000		1,000,000	$	1,000		41,625,331	$	41,625	$	40,601,518	$	(42,014,741	)	$	(1,366,598	)

FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2022

	Preferred Stock
	Series A Preferred				Series B Preferred				Common Stock				Additional					Total
	Number		$0.001		Number		$0.001		Number		$0.001		paid in		Accumulated			shareholders’
	of shares		Par value		of shares		Par value		of shares		Par value		capital		(deficit)			equity/(deficit)
Balances at December 31, 2021		4,000,000	$	4,000		1,000,000	$	1,000		41,625,331	$	41,625	$	38,709,374	$	(33,930,714	)	$	4,825,285

Stock-based compensation														27,671					27,671

Preferred stock dividends																(98,630	)		(98,630	)

Net (loss)																(1,282,912	)		(1,282,912	)

Balances at March 31, 2022		4,000,000		4,000		1,000,000		1,000		41,625,331		41,625		38,737,045		(35,312,256	)		3,471,414

Stock-based compensation														62,399					62,399

Preferred stock dividends																(99,726	)		(99,726	)

Net (loss)																(606,167	)		(606,167	)

Balances at June 30, 2022		4,000,000	$	4,000		1,000,000	$	1,000		41,625,331	$	41,625	$	38,799,444	$	(36,018,149	)	$	2,827,920

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

VERITAS FARMS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

	For the six months ended
	June 30,
	2023			2022

CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss)	$	(2,341,763	)	$	(1,889,079	)
Adjustment to reconcile net income/(loss) to net cash provided by/(used in) operating activities
Depreciation and amortization		104,308			237,980
Stock-based compensation		29,798			90,070
Gain on loan forgiveness		-			(812,981	)
Amortization of debt discount		123,988			80,238
Loss on disposal of property and equipment assets		30,114			28,076
Inventory write down		423,194			-
Changes in operating assets and liabilities
Inventories		135,879			(235,989	)
Prepaid expenses		(14,317	)		34,589
Accounts receivable		11,182			(232,614	)
Employee retention credit receivable		587,606			-
Other assets		26,252			169,978
Contract liability		30,358			271,608
Accrued interest		223,418			80,319
Accrued expenses		203,664			(32,536	)
Accounts payable		(19,261	)		(58,421	)
Net cash (used in) operating activities		(445,580	)		(2,268,762	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		-			(5,069	)
Sale of property and equipment		13,500			28,690
Net cash provided by investing activities		13,500			23,621

CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of notes payable		(3,278	)		(72,239	)
Proceeds from convertible notes payable		500,000			2,000,000
Net cash provided by financing activities		496,722			1,927,761

Net increase/(decrease) in cash and cash equivalents		64,642			(317,380	)
Cash and cash equivalents at beginning of period		55,273			481,763

Cash and cash equivalents at end of period	$	119,915		$	164,383

Supplemental disclosures of cash flow information:
Cash paid during the period for:
Income taxes	$	-		$	-
Interest	$	9,973		$	9,973

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

Veritas Farms, Inc. and Subsidiary
Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 1: NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

Veritas Farms, Inc. (“Company,” “Veritas Farms,” “we,” “us” and “our”), was incorporated as Armeau Brands Inc. in the State of Nevada on March 15, 2011. On October 13, 2017, the Company filed Amended and Restated Articles of Incorporation with the Nevada Secretary of State changing the name from “Armeau Brands Inc.” to “SanSal Wellness Holdings, Inc.,” and on January 31, 2019, the Company filed a Certificate of Amendment to the Articles of Incorporation with the Nevada Secretary of State changing the name from “SanSal Wellness Holdings, Inc.” to “Veritas Farms, Inc.” The Company’s business objectives are to produce natural rich-hemp products, using natural protocols and materials yielding broad spectrum phytocannabinoid rich hemp oils, distillates and isolates. The Company is licensed by the Colorado Department of Agriculture to grow industrial hemp on its 140-acre farm pursuant to federal law.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial statements and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by U.S. GAAP for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of June 30, 2023 and December 31, 2022, and the results of operations and cash flows for the periods presented. The results of operations for the six months ending June 30, 2023, are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Form 10-K for the year ended December 31, 2022.

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements reflect the accounts of Veritas Farms, Inc. and its wholly owned subsidiary 271 Lake Davis Holdings, LLC, a Delaware limited liability company. All significant inter-company accounts and transactions have been eliminated in consolidation.

Estimates in Financial Statements

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from these estimates.

Veritas Farms, Inc. and Subsidiary
Notes to Condensed Consolidated Financial Statements

(Unaudited)

Correction of Previously Issued Financial Statements

The accompanying unaudited condensed consolidated statement of operations for the six months ended June 30, 2022 has been corrected for the following: an adjustment to reclassify selling, general and administrative expenses of $72,799 as a reduction of revenue as such amounts were related to consideration payable to a customer which the Company determined was not for distinct goods or services received. The Company assessed the materiality of the misstatement quantitatively and qualitatively and has concluded that the correction of the classification error is immaterial to the consolidated financials taken as a whole. As a result of the correction, revenue decreased from $767,638 to $694,839 with a corresponding decrease of gross margin from $123,997 to $51,198 and selling, general and administrative expenses decreased from $2,642,727 to $2,569,928. The correction had no impact on total operating loss and net loss.

NOTE 2: GOING CONCERN

The accompanying financial statements have been prepared in conformity with U.S. GAAP, which contemplate continuation of the Company as a going concern. The Company has sustained substantial losses from operations since its inception. As of and for the period ended June 30, 2023, the Company had an accumulated deficit of $42,014,741, and a net loss attributable to common shareholders of $2,540,119. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern. A going concern disclosure means that there is substantial doubt that the company can continue as an ongoing business for a period of at least the next 12 months from the date the financial statements are issued. Continuation as a going concern is dependent on the ability to raise additional capital and financing until the Company can achieve a level of operational profitability, though there is no assurance of success.

To satisfy our capital requirements, the Company may seek additional financing through debt and equity financings. There can be no assurance that any such funding will be available to the Company on favorable terms or at all. If adequate funds are not available when needed, the Company may be required to delay, scale back or eliminate some or all of our marketing programs. If the Company is successful in obtaining additional financings, the terms of such financings may have the effect of diluting or adversely affecting the holdings or the rights of the holders of our common and preferred stock or result in increased interest expense in future periods.

The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

Veritas Farms, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 3: INVENTORIES, NET

Inventories consist of:

	June 30, 2023		December 31, 2022
Hemp and oil	$	498,563	$	568,559
Finished goods		280,178		360,331
Raw materials		904,714		1,313,638
Inventories	$	1,683,455	$	2,242,528

Inventory values include total inventory impairment write-downs of $423,194 to raw materials for the period ended June 30, 2023 and total inventory impairment write-downs of $802,493 which include reductions of $90,564 to finished goods and $711,929 to hemp and oil for the year ended December 31, 2022.

NOTE 4: PROPERTY AND EQUIPMENT

	June 30, 2023						December 31, 2022						Estimated
	Cost		Accumulated depreciation		Net book value		Cost		Accumulated depreciation		Net book value		useful life (years)
Land and land improvements	$	398,126	$	-	$	398,126	$	398,126	$	-	$	398,126		-
Buildings and improvements		1,525,712		266,301		1,259,411		1,528,294		245,951		1,282,343		39
Greenhouse		965,388		171,121		794,267		965,388		157,630		807,758		39
Fencing and irrigation		203,793		127,498		76,295		203,793		117,579		86,214		15
Machinery and equipment		735,457		569,331		166,126		621,457		425,368		196,089		7
Furniture and fixtures		82,202		76,359		5,843		94,485		77,595		16,890		7
Computer equipment		22,038		20,701		1,337		22,038		20,503		1,535		5
Vehicles		3,400		3,400		-		56,058		38,223		17,835		5
Total	$	3,936,116	$	1,234,711	$	2,701,405	$	3,889,639	$	1,082,849	$	2,806,790

Total depreciation expense was $104,308 and $237,980 for the six month periods ending June 30, 2023 and June 30, 2022, respectively. Total depreciation expense was $53,929 and $117,943 for the three month periods ending June 30, 2023 and June 30, 2022, respectively.

As of December 31, 2022, there was $502,709 in assets held for sale previously classified as property and equipment with $42,536 in assets held for sale sold during the six month period ended June 30, 2023. As of June 30, 2023 there was $460,173 in assets held for sale. It is the Company’s intention to complete the sales of these assets within the twelve months following the end of the period.

Veritas Farms, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 5: NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE

The following tables summarize the notes payable and convertible notes payable outstanding as of June 30, 2023.

						Ending		Non related party				Related party
	Origination	Maturity	Interest			principal				Long				Long
Description	date	date	rate			June 30, 2023		Current		term		Current		term
Economic Injury Disaster Loan	6/24/2020	6/24/2050		3.75	%		150,000		-		150,000		-		-
Total						$	150,000	$	-	$	150,000	$	-	$	-

								Non related party				Related party
	Origination	Maturity	Interest			Ending principal June 30,				Long				Long					Long term, Net of
Description	date	date	rate			2023		Current		term		Current		term		Discount			discount
Convertible Promissory Note Payable	3/6/2020	10/1/2022		10	%	$	200,000	$	200,000	$	-	$	-	$	-	$	-		$	-
2021 Secured Convertible Promissory Note Payable	10/12/2021	10/1/2024		10	%		3,000,000		-		-		-		3,000,000		(200,595	)		2,799,405
2023 Secured Convertible Promissory Note Payable	6/7/2023	10/1/2026		10	%		1,750,000		-		-		-		1,750,000		(1,706,250	)		43,750
Total						$	4,950,000	$	200,000	$	-	$	-	$	4,750,000	$	(1,906,845	)	$	2,843,155

Future principal payments for the next five years are as follows for the future years ended December 31:

2023	$	201,602
2024		3,003,295
2025		3,420
2026		1,753,551
2027		3,686
Thereafter		134,446
Total	$	5,100,000

Paycheck Protection Program

In February 2021, as part of the business incentives offered in the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), the Company received a loan in the amount of $803,994 under the SBA Paycheck Protection Program (“2021 PPP Loan”). In April 2022, the 2021 PPP Loan principal and all accrued interest totaling $812,981 was forgiven in full.

Economic Injury Disaster Loan

In June 2020, the Company received a loan in the amount of $150,000 from the SBA as an Economic Injury Disaster Loan (“EIDL”). The EIDL accrues interest at the rate of three and three quarters percent (3.75%) per annum and has a term of 30 years. The EIDL is secured by the Company’s assets. The first payment due was deferred two and a half years and came due in December 2022. The principal balance of the EIDL as of June 30, 2023 has been classified as a long-term liability in notes payable.

Veritas Farms, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

(Unaudited)

10% Convertible Promissory Note Payable

In March 2020, the Company received a $200,000 loan from a single investor, evidenced by a one-year convertible promissory note (“Convertible Note”). The Convertible Note bears interest at the rate of ten percent (10%) per annum, which accrues and is payable together with principal at maturity. Principal and accrued interest under the Convertible Note may, at the option of the holder, be converted in its entirety into shares of our common stock at a conversion price of $0.40 per share, subject to adjustment for stock splits, stock dividends and similar recapitalization transactions. On May 14, 2021, the Company paid $20,000 in accrued interest to the holder, and the Company and the investor extended the maturity date of the Convertible Note to September 6, 2021. In September 2021, the Company and the investor further extended the maturity date of the Convertible Note to October 1, 2022. From October 2, 2022 until the present the Company is in default in the payment of principal. This default does not trigger any other default events for any other notes payable.

The Company determined that there was a beneficial conversion feature of $95,000 relating to the Convertible Note which is being amortized over the life of the note, using the effective interest method. The note is presented net of a discount of $0 as of June 30, 2023 and $0 as of December 31, 2022 on the accompanying balance sheet.

10% Secured Convertible Promissory Notes Payable

On October 12, 2021, the Company issued a secured convertible credit line promissory note in the principal amount for up to $1,500,000 (“2021 Secured Convertible Promissory Note”), which 2021 Secured Convertible Promissory Note was issued to the Wit Trust. On March 9, 2022, the Company amended the 2021 Secured Convertible Promissory Note originally dated October 12, 2021 to increase the total available principal balance to $3,000,000. The 2021 Secured Convertible Promissory Note is secured by the Company’s assets and contains certain non-financial covenants and customary events of default, the occurrence of which could result in an acceleration of the 2021 Secured Convertible Promissory Note. The 2021 Secured Convertible Promissory Note is convertible as follows: aggregate outstanding loaned principal and accrued interest under the 2021 Secured Convertible Promissory Note may, at the option of the holder, be converted in its entirety into shares of our common stock at a conversion price of $0.05 per share. The 2021 Secured Convertible Promissory Note will accrue interest on the aggregate amount loaned at a rate of ten percent (10%) per annum. All unpaid principal, together with any then unpaid and accrued interest and other amounts payable under the 2021 Secured Convertible Promissory Note, is due and payable if not converted pursuant to the terms and conditions of the 2021 Secured Convertible Promissory Note on the earlier of (i) October 1, 2024, or (ii) following an event of default. The Company determined that there was a beneficial conversion feature of $475,000 relating to this note which is being amortized over the life of the note, using the using the effective interest method. The note is presented net of a discount of $200,595 on the accompanying balance sheet with amortization to interest expense of $80,238 and $80,238 for the six month periods ended June 30, 2023 and June 30, 2022, respectively. At June 30, 2023, $3,000,000 was outstanding on the 2021 Secured Convertible Promissory Note.

On August 2, 2022, the Company issued a secured convertible promissory note in the principal amount of $250,000 to the Wit Trust in exchange for $250,000. The note carried an interest rate of ten percent (10%) per annum and had a maturity date of October 1, 2024. On June 7, 2023 the secured convertible promissory note was amended, replaced and superseded in its entirety, and included in and part of the 2023 Secured Convertible Promissory Note as further described below.

On August 17, 2022, the Company issued a secured convertible promissory note in the principal amount of $250,000 to the Wit Trust in exchange for $250,000. The note carried an interest rate of ten percent (10%) per annum and had a maturity date of October 1, 2024. On June 7, 2023 the secured convertible promissory note was amended, replaced and superseded in its entirety, and included in and part of the 2023 Secured Convertible Promissory Note as further described below.

On September 6, 2022, the Company issued a secured convertible promissory note in the principal amount of $250,000 to the Wit Trust in exchange for $250,000. The note carried an interest rate of ten percent (10%) per annum and had a maturity date of October 1, 2024. On June 7, 2023 the secured convertible promissory note was amended, replaced and superseded in its entirety, and included in and part of the 2023 Secured Convertible Promissory Note as further described below.

Veritas Farms, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

(Unaudited)

On October 11, 2022, the Company issued a secured convertible promissory note in the principal amount of $250,000 to the Wit Trust in exchange for $250,000. The note carried an interest rate of ten percent (10%) per annum and had a maturity date of October 1, 2024. On June 7, 2023 the secured convertible promissory note was amended, replaced and superseded in its entirety, and included in and part of the 2023 Secured Convertible Promissory Note as further described below.

On November 16, 2022, the Company issued a secured convertible promissory note in the principal amount of $250,000 to the Wit Trust in exchange for $250,000. The note carried an interest rate of ten percent (10%) per annum and had a maturity date of October 1, 2024. On June 7, 2023 the secured convertible promissory note was amended, replaced and superseded in its entirety, and included in and part of the 2023 Secured Convertible Promissory Note as further described below.

On January 3, 2023, the Company issued a secured convertible promissory note in the principal amount of $250,000 to the Wit Trust in exchange for $250,000. The note carried an interest rate of ten percent (10%) per annum and had a maturity date of October 1, 2024. On June 7, 2023 the secured convertible promissory note was amended, replaced and superseded in its entirety, and included in and part of the 2023 Secured Convertible Promissory Note as further described below.

On May 30, 2023, the Company issued a secured convertible promissory note in the principal amount of $250,000 to the Wit Trust in exchange for $250,000. The note carried an interest rate of ten percent (10%) per annum and had a maturity date of October 1, 2024. On June 7, 2023 the secured convertible promissory note was amended, replaced and superseded in its entirety, and included in and part of the 2023 Secured Convertible Promissory Note as further described below.

On June 7, 2023, the Company issued a secured convertible credit line promissory note in the principal amount for up to $3,000,000 (“2023 Secured Convertible Promissory Note”), which 2023 Secured Convertible Promissory Note was issued to the Wit Trust. The 2023 Secured Convertible Promissory Note includes and evidences an aggregate of $1,750,000 of outstanding indebtedness of the Company to the Wit Trust under previously executed and delivered secured convertible promissory notes as described above. The 2023 Secured Convertible Promissory Note is secured by the Company’s assets and contains certain non-financial covenants and customary events of default, the occurrence of which could result in an acceleration of the 2023 Secured Convertible Promissory Note. The 2023 Secured Convertible Promissory Note is convertible as follows: aggregate outstanding loaned principal and accrued interest under the 2023 Secured Convertible Promissory Note may, at the option of the holder, be converted in its entirety into shares of our common stock at a conversion price of $0.02 per share. The 2023 Secured Convertible Promissory Note will accrue interest on the aggregate amount loaned at a rate of ten percent (10%) per annum. All unpaid principal, together with any then unpaid and accrued interest and other amounts payable under the 2023 Secured Convertible Promissory Note, is due and payable if not converted pursuant to the terms and conditions of the 2023 Secured Convertible Promissory Note on the earlier of (i) October 1, 2026, or (ii) following an event of default. The Company determined that there was a beneficial conversion feature of $1,750,000 relating to this note which is being amortized over the life of the note, using the using the effective interest method. The note is presented net of a discount of $1,706,250 on the accompanying balance sheet with amortization to interest expense of $43,750 and $0 for the six month periods ended June 30, 2023 and June 30, 2022, respectively. At June 30, 2023, $1,750,000 was outstanding on the 2023 Secured Convertible Promissory Note.

NOTE 6: STOCK-BASED COMPENSATION

The Company approved its 2017 Stock Incentive Plan on September 27, 2017 (“2017 Plan”) which authorizes the Company to grant or issue non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units and other equity awards up to a total of 6,867,747 shares of common stock. Under the terms of the 2017 Plan, awards may be granted to our employees, directors or independent contractors. Awards issued under the 2017 Plan vest as determined at the time of grant by the Board of Directors or any committees appointed under the 2017 Plan. On March 31, 2023, the 2017 Plan terminated upon the approval of the 2023 Equity Incentive Plan (“2023 Plan”).

The Company approved its 2023 Plan on March 31, 2023 which authorizes the Company to grant or issue non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units and other equity awards to our employees, directors and independent contractors. The 2023 Plan initially provides for the issuance of up to 40,000,000 shares of our common stock. In addition, the number of shares of common stock available for issuance under the 2023 Plan automatically increases on the first trading day of January each year for a period of nine (9) years commencing on January 2024, in an amount equal to ten percent (10%) of the total number of shares then authorized under the 2023 Plan. Awards issued under the 2023 Plan vest as determined at the time of grant by the Board of Directors or any committees appointed under the 2023 Plan. The 2023 Plan is a successor to the Company’s 2017 Plan and, accordingly, no new grants will be made under the 2017 Plan from and after the effective date of the 2023 Plan. No equity awards have been granted under the 2023 Plan as of June 30, 2023.

The Company’s outstanding stock options typically have a 10-year term. Outstanding non-qualified stock options granted to employees and independent contractors vest on a case-by-case basis. Outstanding incentive stock options issued to employees typically vest over a three-year period. The equity awards granted vest based solely upon continued employment or service with the Company. The Company’s time-based share awards typically vest in thirty three and a third percent (33.3%) increments on each of the three anniversary dates of the date of grant.

Veritas Farms, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

(Unaudited)

On January 1, 2022, the Company granted an aggregate 625,000 options to employees, including 300,000 options to Dave Smith, our former Chief Operating Officer under the 2017 Plan, at a per share exercise price of $0.049 with a term of ten (10) years. The stock options will vest ratably on the first three anniversaries of the grant date subject to the employee’s continuous service to the Company.

On June 30, 2022, the Company granted an aggregate 950,000 options to employees and directors, including five non-employee directors with an annual grant of stock options under the 2017 Plan to purchase 100,000 shares of common stock each, at a per share exercise price of $0.031 with a term of ten (10) years, with twenty five percent (25%) of the options vesting every ninety (90) days following the grant date subject to the director’s continuous service to the Company. The employee stock options will vest ratably on the first three anniversaries of the grant date subject to the employee’s continuous service to the Company.

On December 8, 2022, the Company granted one non-employee directors with an annual grant of stock options under the 2017 Plan to purchase 100,000 shares of common stock each, at a per share exercise price of $0.019 with a term of ten (10) years, with 25% of the options vesting every ninety (90) days following the grant date subject to the director’s continuous service to the Company.

The aggregate fair value for all options granted for the six months ended June 30, 2023 was $0.

Total stock based compensation expense was $29,798 and $90,070 for the six month periods ending June 30, 2023 and June 30, 2022, respectively. Total stock based compensation expense was $24,978 and $62,399 for the three month periods ending June 30, 2023 and June 30, 2022, respectively.

The following table summarizes the stock option activity for the Company’s 2017 Plan:

	Number of options			Weighted average exercise price (per share)		Weighted average remaining contractual term (in years)

Outstanding at December 31, 2021		5,189,167		$	0.86		7.71
Granted		1,675,000			0.04		9.34
Exercised		-			-
Forfeited/cancelled/expired		(1,404,167	)		0.49
Outstanding at December 31, 2022		5,460,000			0.70		7.18
Granted		-			-
Exercised		-			-
Forfeited/cancelled/expired		(200,000	)		0.13
Outstanding at June 30, 2023		5,260,000		$	0.72		6.63

Vested and exercisable at June 30, 2023		4,831,666		$	0.78		6.45

Below are the assumptions for the fair value of share-based payments for the six month period ended June 30, 2023 and the year ended December 31, 2022.

	Stock option assumptions for the period ended
Stock option assumptions	June 30, 2023			December 31, 2022
Risk-free interest rate		5.40	%		4.50	%
Expected dividend yield		0.0	%		0.0	%
Expected volatility		244.8	%		182.8	%
Expected life of options (in years)		10			10

Veritas Farms, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 7: LEASES

On February 11, 2021, the Company entered into a three year lease with Cheyenne Avenue Holdings, LLC for warehouse and distribution facilities. The lease contains annual escalators. The Company analyzed the classification of the lease under ASC 842, Leases (“ASC 842”) and as it did not meet any of the criteria for a financing lease it has been classified as an operating lease. The Company determined the ROU asset and lease liability values at inception by calculating the present value of all future lease payments for the lease term, using an incremental borrowing rate of five percent (5%). The ROU asset value was $160,476 and the liability was $160,476. The lease liability will be expensed each month, on a straight-line basis, over the life of the lease.

On September 8, 2021, the Company entered into a thirty nine month lease with 1815 Building Company, for the lease of the Company’s principal executive offices in Dania Beach, Florida. The lease contains annual escalators and charges Florida sales tax. The lease commenced into effect on October 12, 2021 and expires on January 31, 2025. The Company analyzed the classification of the lease under ASC 842, and as it did not meet any of the criteria for a financing lease it has been classified as an operating lease. The Company determined the ROU asset and lease liability values at inception by calculating the present value of all future lease payments for the lease term, using an incremental borrowing rate of five percent (5%). The ROU asset value was $298,364 and the liability was $298,364. The lease liability will be expensed each month, on a straight-line basis, over the life of the lease.

Total lease amortization expense was $79,527 and $79,668 for the six month periods ending June 30, 2023 and June 30, 2022, respectively. Total lease amortization expense was $39,975 and $40,069 for the three month periods ending June 30, 2023 and June 30, 2022, respectively.

As of June 30, 2023, and December 31, 2022, operating leases have no minimum rental commitments.

NOTE 8: SHAREHOLDERS’ (DEFICIT)

Our authorized capital stock consists of 800,000,000 shares of common stock, $0.001 par value per share and 20,000,000 shares of preferred stock, par value $0.001 per share, of which 4,000,000 shares of preferred stock have been designated as Series A Convertible Preferred Stock and 1,000,000 shares of preferred stock have been designated as Series B Convertible Preferred Stock.

As of June 30, 2023 the Company had the following issued and outstanding securities:

●

41,625,331 shares of common stock;

●

4,000,000 shares of Series A Convertible Preferred Stock;

●

1,000,000 shares of Series B Convertible Preferred Stock;

●

2,595,270 warrants to purchase shares of our common stock;

●

5,260,000 options to purchase shares of our common stock; and

●

$4,950,000 principal amount of convertible promissory notes convertible into 148,000,000 shares of common stock.

Veritas Farms, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Common Stock

Holders of common stock are entitled to one vote for each share on all matters submitted to a stockholder vote. Holders of our voting securities do not have cumulative voting rights. Holders of common stock are entitled to share in all dividends that the Board of Directors, in its discretion, declares from legally available funds. In the event of our liquidation, dissolution or winding up each outstanding share of common stock entitles its holder to participate in all assets that remain after payment of liabilities and after providing for each class of stock, if any, having preference over the common stock.

Holders of common stock have no conversion, preemptive or other subscription rights, and there are no redemption provisions for the common stock. The rights of the holders of common stock are subject to any rights that may be fixed for holders of preferred stock, when and if any preferred stock is outstanding. All outstanding shares of common stock are duly authorized, validly issued, fully paid and non-assessable.

Effective March 31, 2023 the Company filed Amended and Restated Articles of Incorporation of the Company which increased the number of authorized common stock from 200,000,000 shares to 800,000,000 shares, par value $0.001 per share.

Preferred Stock

Effective March 31, 2023 the Company filed Amended and Restated Articles of Incorporation of the Company which increased the number of authorized preferred stock from 5,000,000 shares to 20,000,000 shares, par value $0.001 per share.

Veritas Farms, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Series A Convertible Preferred Stock

The Series A Preferred Shares have a stated value of $1.00 per share. Each Series A Preferred Share is convertible into the Company’s common stock at the option of the holder thereof at a conversion rate of $0.05 per share of common stock. The conversion rate is subject to adjustment in the event of stock splits, stock dividends, other recapitalizations and similar events, as well as in the event of issuance by the Company of shares of common stock or securities exercisable for, convertible into or exchangeable for common stock at an effective price per share less than the conversion rate then in effect (other than certain customary exceptions). In respect of rights to the payment of dividends and the distribution of assets in the event of any liquidation, dissolution or winding-up of the Company, the Series A Preferred Shares rank (a) junior to the Company’s Series B Preferred Shares; and (b) senior to (i) the Company’s common stock and any other class or series of stock (including other series of Preferred Stock) of the Company (collectively, “Junior Stock”). From and after the date of the issuance of Series A Preferred Shares, dividends at the rate per annum of eight percent (8%), compounded annually, accrue daily on the stated value (“Series A Accruing Dividends”). Series A Accruing Dividends shall accrue from day to day, whether or not declared, and shall be cumulative; provided, however, such Series A Accruing Dividends shall be payable only when, as, and if declared by the Board of Directors and the Company shall be under no obligation to pay such Series A Accruing Dividends except as set forth herein. The Company shall not declare, pay or set aside any dividends on shares of any other class or series of capital stock of the Company (other than dividends on (a) shares of Series B Preferred Shares; and (b) common stock payable in shares of common stock) unless (in addition to the obtaining of any consents required elsewhere in the Articles of Incorporation) the holders of the Series A Preferred Shares then outstanding shall first receive, or simultaneously receive, a dividend on each outstanding share of Series A Preferred Share in an amount at least equal to the sum of (a) the amount of the aggregate Series A Accruing Dividends then accrued on such Series A Preferred Shares and not previously paid; and (b) (i) in the case of a dividend on common stock or any class or series that is convertible into common stock, that dividend per Series A Preferred Share as would equal the product of (A) the dividend payable on each share of such class or series determined, if applicable, as if all shares of such class or series had been converted into common stock; and (B) the number of shares of common stock issuable upon conversion of a Series A Preferred Share, in each case calculated on the record date for determination of holders entitled to receive such dividend; or (ii) in the case of a dividend on any class or series that is not convertible into common stock, at a rate per Series A Preferred Share determined by (A) dividing the amount of the dividend payable on each share of such class or series of capital stock by the original issuance price of such class or series of capital stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to such class or series); and (B) multiplying such fraction by an amount equal to the stated value of the Series A Preferred Shares; provided, that if the Company declares, pays or sets aside, on the same date, a dividend on shares of more than one class or series of capital stock of the Company, the dividend payable to the holders of Series A Preferred Shares shall be calculated based upon the dividend on the class or series of capital stock that would result in the highest Series A Preferred Share dividend. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company or any deemed liquidation event, (collectively, a “Liquidation Event”), the holders of Series A Preferred Shares shall be entitled to receive, after payment to all holders of Series B Preferred Shares of a liquidation preference equal to the aggregate amount of one hundred fifty percent (150%) of the stated value of the Series B Preferred Shares and the amount of the accrued but unpaid dividends on the Series B Preferred Shares, but prior and in preference to any distribution of any of the assets of the Company to the holders of Junior Stock by reason of their ownership thereof, an aggregate amount per share equal to the stated value of the Series A Preferred Shares and the accrued but unpaid dividends thereon. After the payment to all holders of Series B Preferred Shares of a liquidation preference equal to the aggregate amount of one hundred fifty percent (150%) of the stated value of the Series B Preferred Shares and the amount of the accrued but unpaid dividends on the Series B Preferred Shares and to all holders of the Series A Preferred Shares the full liquidation preference hereunder, the remaining assets of the Company available for distribution to its shareholders shall be distributed among the holders of the shares of Series B Preferred Shares and Junior Stock, pro rata, on an “as converted basis,” determined immediately prior to such Liquidation Event, and the Series A Preferred Shares shall not be entitled to participate in such distribution of the remaining assets of the Company. The Series A Preferred Shares shall vote together with holders of Series B Preferred Shares and holders of common stock as a single class on all matters brought to a vote of shareholders. Each Series A Preferred Share shall entitle the holder thereof to such number of votes as equal the number of shares of common stock then issuable upon conversion of the Series A Preferred Share. The Series A Preferred Shares also contain protective provisions which provide that the Company shall not undertake certain transactions without the prior approval of the holder(s) of a majority of the Series A Preferred Shares.

Veritas Farms, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Series B Convertible Preferred Stock

The Series B Preferred Shares have a stated value of $1.00 per share. Each Series B Preferred Share is convertible into common stock at the option of the holder thereof at a conversion rate of $0.20 per share of common stock. The conversion rate is subject to adjustment in the event of stock splits, stock dividends, other recapitalizations and similar events, as well as in the event of issuance by the Company of shares of common stock or securities exercisable for, convertible into or exchangeable for common stock at an effective price per share less than the conversion rate then in effect (other than certain customary exceptions). In respect of rights to the payment of dividends and the distribution of assets in the event of any liquidation, dissolution or winding-up of the Company, the Series B Preferred Shares rank senior to the (a) Series A Preferred Shares; (b) the Company’s common stock and any other class or series of Junior Stock. From and after the date of the issuance of Series B Preferred Shares, dividends at the rate per annum of eight percent (8%), compounded annually, accrue daily on the stated value (“Series B Accruing Dividends”). Series B Accruing Dividends shall accrue from day to day, whether or not declared, and shall be cumulative; provided, however, such Series B Accruing Dividends shall be payable only when, as, and if declared by the Board of Directors and the Company shall be under no obligation to pay such Series B Accruing Dividends except as set forth herein. The Company shall not declare, pay or set aside any dividends on shares of any other class or series of capital stock of the Company (other than dividends on (a) shares of Series B Preferred Shares; and (b) common stock payable in shares of common stock) unless (in addition to the obtaining of any consents required elsewhere in the Articles of Incorporation) the holders of the Series B Preferred Shares then outstanding shall first receive, or simultaneously receive, a dividend on each outstanding share of Series B Preferred Share in an amount at least equal to the sum of (a) the amount of the aggregate Series B Accruing Dividends then accrued on such Series B Preferred Shares and not previously paid; and (b) (i) in the case of a dividend on common stock or any class or series that is convertible into common stock, that dividend per Series B Preferred Share as would equal the product of (A) the dividend payable on each share of such class or series determined, if applicable, as if all shares of such class or series had been converted into common stock; and (B) the number of shares of common stock issuable upon conversion of a Series B Preferred Share, in each case calculated on the record date for determination of holders entitled to receive such dividend; or (ii) in the case of a dividend on any class or series that is not convertible into common stock, at a rate per Series B Preferred Share determined by (A) dividing the amount of the dividend payable on each share of such class or series of capital stock by the original issuance price of such class or series of capital stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to such class or series); and (B) multiplying such fraction by an amount equal to the stated value of the Series B Preferred Shares; provided, that if the Company declares, pays or sets aside, on the same date, a dividend on shares of more than one class or series of capital stock of the Company, the dividend payable to the holders of Series B Preferred Shares shall be calculated based upon the dividend on the class or series of capital stock that would result in the highest Series B Preferred Share dividend. In the event of a Liquidation Event, the holders of Series B Preferred Shares shall be entitled to receive, prior and in preference to any distribution of any of the assets of the Company to the holders of Junior Stock (including Series A Preferred Shares), a liquidation preference equal to the aggregate amount of one hundred fifty percent (150%) of the stated value of the Series B Preferred Shares and the amount of the accrued but unpaid dividends on the Series B Preferred Shares. After the payment to all holders of Series B Preferred Shares of such liquidation preference and to all holders of the Series A Preferred Shares their full liquidation preference, the remaining assets of the Company available for distribution to its shareholders shall be distributed among the holders of the shares of Series B Preferred Shares and Junior Stock other than Series A Preferred Shares, pro rata, on an “as converted basis,” as applicable. The Series B Preferred Shares shall vote together with holders of Series A Preferred Shares and holders of common stock as a single class on all matters brought to a vote of shareholders. Each Series B Preferred Share shall entitle the holder thereof to such number of votes as equal the number of shares of common stock then issuable upon conversion of the Series B Preferred Share multiplied by 50. The Series B Preferred Shares also contain protective provisions which provide that the Company shall not undertake certain transactions without the prior approval of the holder of the Series B Preferred Shares.

Veritas Farms, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Preferred Stock Dividends

The following table presents undeclared preferred stock dividends for the three and six month periods ended June 30, 2023 and June 30, 2022, respectively.

	Undeclared dividends				Undeclared dividends
	For the three months ended				For the six months ended
	June 30,				June 30,
Series of preferred stock	2023		2022		2023		2022
Series A preferred stock dividends	$	79,781	$	79,781	$	158,685	$	158,685
Series B preferred stock dividends		19,945		19,945		39,671		39,671
Total undeclared preferred stock dividends	$	99,726	$	99,726	$	198,356	$	198,356

The following table presents the cumulative undeclared dividends by class of preferred stock as of June 30, 2023 and December 31, 2022, respectively. These cumulative undeclared dividends are recorded in Dividends payable on our balance sheet as of June 30, 2023 and December 31, 2022.

	Cumulative undeclared dividends as of
Series of preferred stock	June 30, 2023		December 31, 2022
Series A preferred stock	$	623,447	$	464,762
Series B preferred stock		170,739		131,068
Cumulative undeclared preferred stock dividends	$	794,186	$	595,830

NOTE 9: CHANNEL REPORTING

The Company’s product revenue is generated primarily through two sales channels, e-commerce sales and wholesale sales. The Company believes that these categories appropriately reflect how the nature, amount, timing and uncertainty of revenue and cash flows are impacted by economic factors.

A description of the Company’s principal revenue generating activities are as follows:

●

E-commerce sales - consumer products sold through the Company’s online and telephonic channels. Revenue is recognized when control of the merchandise is transferred to the customer, which generally occurs upon shipment. Payment is typically due prior to the date of shipment; and

●

Wholesale sales - products sold to the Company’s wholesale customers for subsequent resale. Revenue is recognized when control of the goods is transferred to the wholesale customer, in accordance with the terms of the applicable agreement. Payment terms vary and can typically be 30 days from the date control over the product is transferred to the customer.

The following table represents a disaggregation of revenue by sales channel:

	For the three months ended				For the six months ended
	June 30,				June 30,
	2023		2022		2023		2022
Wholesale revenue	$	5,212	$	76,256	$	31,770	$	242,941
E-commerce revenue		164,652		197,676		347,882		451,898
Total revenue	$	169,864	$	273,932	$	379,652	$	694,839

NOTE 10: CONCENTRATIONS

The Company had no single customer for the six months ended June 30, 2023 that accounted for more than 10% of sales. For the six months ended June 30, 2022, one customer accounted for 10% of sales.

The Company had two customers at June 30, 2023 accounting for 41% and 12% of total accounts receivable. At December 31, 2022, the Company had three customers accounting for 33%, 16% and 10% of total accounts receivable.

Veritas Farms, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 11: RELATED PARTY

Veritas Farms, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

(Unaudited)

For the six month period ended June 30, 2023 the Company incurred $349,057 in interest expense to related parties and $164,827 in interest expense to related parties for the six month period ended June 30, 2022. For the three month period ended June 30, 2023 the Company incurred $198,185 in interest expense to related parties and $96,215 in interest expense to related parties for the three month period ended June 30, 2022.

Veritas Farms, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 12: COMMITMENTS AND CONTINGENCIES

Legal Matters and Routine Proceedings

As of June 30, 2023, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations.

From time to time, the Company may be involved in and subject to disputes and legal proceedings, as well as demands, claims and threatened litigation that arise in the ordinary course of its business. These proceedings may include allegations involving business practices, infringement of intellectual property, employment or other matters. The ultimate outcome of any legal proceeding is often uncertain, there can be no assurance that the Company will be successful in any legal proceeding, and unfavorable outcomes could have a negative impact on our results of operations and financial condition. The Company records a liability in its financial statements for these matters when a loss is known or considered probable and the amount can be reasonably estimated. The Company reviews the status of each significant matter each accounting period as additional information is known and adjusts the loss provision when appropriate. If a matter is both probable to result in a liability and the amounts of loss can be reasonably estimated, the Company estimates and discloses the possible loss or range of loss to the extent necessary to make the financial statements not misleading. If the loss is not probable or cannot be reasonably estimated, a liability is not recorded in the Company’s financial statements. Gain contingencies are not recorded until they are realized. Legal costs related to any legal matters are expensed as incurred

Employment Agreements

The Company has an employment agreement in place with Ramon A. Pino, our Chief Financial Officer.

The employment agreement provides, among other things, for participation in employee benefits available to employees and executives. The agreement will renew for successive one-year terms unless the agreement is expressly terminated by either the employee or the Company prior to the end of the then current term as provided for in the employment agreement. Under the terms of the agreement, the Company may terminate the employee’s employment upon 30 or 60 days notice of a material breach and the employee may terminate the agreement under the same terms and conditions. The employment agreement contains non-disclosure provisions, as well as non-compete clauses. The agreement contains severance provisions which entitles the employee to severance pay equal to one (1) year’s salary and benefits in the event of (i) the employee’s termination by the Company for any reason other than for cause, as described in the employment agreement, (ii) termination by the employee pursuant to a material breach of the agreement by the Company or for good reason in connection with a change of control, or (iii) non-renewal of the employment agreement by the Company.

NOTE 13: SUBSEQUENT EVENTS

On July 13, 2023 the Company received an additional $250,000 from the 2023 Secured Convertible Promissory Note.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Unless the context otherwise requires, references in this report to “the Company,” “Veritas Farms,” “Veritas,” “we,” “us” and “our” refer to Veritas Farms, Inc. and its subsidiary.

Forward-Looking Statements

Certain statements made in this report are “forward-looking statements” regarding the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. Our plans and objectives are based, in part, on assumptions involving judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that our assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein particularly in view of the current state of our operations, the inclusion of such information should not be regarded as a statement by us or any other person that our objectives and plans will be achieved. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

Business Overview

Veritas Farms, Inc. is an agribusiness focused on growing, producing, marketing, and distributing superior quality, whole plant, full spectrum hemp oils and extracts containing naturally occurring phytocannabinoids (collectively, “CBD”). Veritas Farms owns and operates a 140 acre farm in Pueblo, Colorado, capable of producing over 200,000 proprietary full spectrum hemp plants which can potentially yield a minimum annual harvest of 250,000 to 300,000 pounds of outdoor-grown industrial hemp. While part of the cannabis family, hemp, which contains less than 0.3% tetrahydrocannabinol (“THC”), the psychoactive compound that produces the “high” in marijuana, is distinguished from marijuana by its use, physical appearance and lower THC concentration (marijuana generally has a THC level of 10% or more). The Company also operates approximately 15,000 square feet of climate-controlled greenhouses to produce a consistent supply of year-round indoor-cultivated hemp. In addition, there is a 10,000 square foot onsite facility used for processing raw hemp, oil extraction, formulation laboratories and quality/purity testing. Veritas Farms is registered with the Colorado Department of Agriculture to grow industrial hemp and with the Colorado Department of Public Health and Environment to process hemp and manufacture hemp products in accordance with Colorado’s hemp program. The Company primarily conducts its business operations through its wholly-owned subsidiary, 271 Lake Davis Holdings, LLC, a Delaware limited liability company.

Veritas Farms meticulously processes its hemp crop to produce superior quality whole-plant hemp oil, extracts and derivatives which contain the entire full spectrum of cannabinoids extracted from the flowers and leaves of hemp plants. Veritas Farms employs the use of the cold ethanol extraction method to extract the whole plant hemp oil from its hemp crop. Whole-plant hemp oil is known to provide the essential phytocannabinoid “entourage effect” resulting from the synergistic absorption of the entire full spectrum of unique hemp cannabinoids by the receptors of the human endocannabinoid system. As a result, Veritas Farms believes that its products are premier quality cannabinoids and are highly sought after by consumers and manufacturers of premium hemp products.

Veritas Farms has developed a wide variety of formulated phytocannabinoid-rich hemp products containing CBD which are marketed and distributed by the Company under its Veritas Farms brand name. Our products are also available in bulk, white label and private label formulations for distributors and retailers. These types of products are in high demand by health food markets, wellness centers, pet suppliers, physicians and other healthcare practitioners.

Veritas Farms products include capsules, gummies, tinctures, lotions, salves, creams, balm sticks, lip balms and pet chews. All product applications come in various flavors and strength formulations, in addition to bulk volume sales. Many of the Company’s whole-plant hemp oil products and formulations are available for purchase online directly from the Company through its Veritas Farms website, www.theVeritasFarms.com, as well as through numerous other online retailers and “brick and mortar” retail outlets.

Recent Developments

Management Changes

Since June 2022 as previously reported in our Current Reports on Form 8-K, there have been significant changes to our executive officers and board of directors which includes the following: (1) on June 1, 2022, Kristen High (“Ms. High”) was elected and appointed as a director on the board of directors; (2) on June 30, 2022, Dave Smith, the Company’s COO, resigned; (3) on July 25, 2022, (i) Stephen E. Johnson stepped down as Chief Executive Officer, President and a director, and (ii) Alessandro M. Annoscia (“Mr. Annoscia”) was appointed as Chief Executive Officer, President and a director on the board of directors, (4) on November 7, 2022, (i) Mr. Annoscia stepped down as Chief Executive Officer, President, and a director, and (ii) Thomas E. Vickers, chair of the board of directors was appointed interim Chief Executive Officer and interim President, and (5) on December 8, 2022, (i) Kellie Newton, Craig Fabel, and Ms. High were removed as directors on the board of directors, and (ii) Gary A. Shangold was elected and appointed as a director on the board of directors.

Corporate Information

The Company was incorporated in the state of Nevada on March 15, 2011 under the name Armeau Brands Inc. and changed its name to SanSal Wellness Holdings, Inc. on October 13, 2017. On January 31, 2019, the Company changed its name from SanSal Wellness Holdings, Inc. to Veritas Farms, Inc.

Our executive offices are located at 401 E. Las Olas Boulevard, Suite 1400, Fort Lauderdale, FL 33301 and our telephone number is (833) 691-4367. The Company’s year-end is December 31. Our corporate website is www.TheVeritasFarms.com. Information appearing on our website is not part of this Quarterly Report on Form 10-Q.

Current Economic Conditions, Challenges, and Risks

Macroeconomic factors, including inflation, increased interest rates, significant capital market and supply chain volatility, and global economic and geopolitical developments, have direct and indirect impacts on our results of operations that are difficult to isolate and quantify. In addition, rising fuel, utility, and food costs, rising interest rates, and recessionary fears may impact customer demand and our ability to forecast consumer spending patterns. We also expect the current macroeconomic environment and enterprise customer cost optimization efforts to impact our revenue growth rates. We expect some or all of these factors to continue to impact our operations in 2023.

Results of Operations

The six months ended June 30, 2023 compared to the six months ended June 30, 2022

Revenues. Revenues for the six months ended June 30, 2023 decreased to $379,652, as compared to revenues of $694,839 for the six months ended June 30, 2022. The decrease reflects a significant contraction of retail sales in 2023 from 2022, primarily as a result of increased competition and decreased acceptance in big box retail leading to reduced inventory turnover. The changes in consumer behavior due to macroeconomic factors make future sales somewhat challenging to predict. Sales include bulk oils for wholesale, capsules, gummies, tinctures, lotions, salves, creams, balm sticks, lip balms and pet chews, all in various potency levels and flavors.

Cost of goods sold. All expenses incurred to grow, process, and package the finished goods are included in our cost of goods sold. Cost of goods sold for the six months ended June 30, 2023 increased to $716,844 from $643,641 for the six months ended June 30, 2022. The increase in cost of sales can be attributed to the disposal of obsolete inventory during the six months ended June 30, 2023 as compared to the six months ended June 30, 2022.

Gross margin. We had gross expense of $337,192 for the six months ended June 30, 2023, as compared to gross margin of $51,198 for the six months ended June 30, 2022. The decrease in gross margin can be attributed to the decrease in sales in addition to the disposal of obsolete inventory during the six months ended June 30, 2023 as compared to the six months ended June 30, 2022.

Selling, general and administrative expenses. Selling, general and administrative expenses decreased to $1,600,910 for the six months ended June 30, 2023, from $2,569,928 for the six months ended June 30, 2022. The decrease to selling, general and administrative expenses is primarily due to reductions in total salary and related expenses. Selling, general and administrative expenses consist primarily of administrative personnel costs, facilities expenses, professional fee expenses and marketing costs for our Veritas Farms brand products.

Other income/(expense). Interest expense for the six months ended June 30, 2023 was $373,547, as compared to $197,515 for the six months ended June 30, 2022. Interest expense increased in the six months ending June 30, 2023 compared to the six months ending June 30, 2022 due to an increase in interest bearing notes payable.

Net loss. As a result of all the foregoing, net loss for the six months ended June 30, 2023, decreased to $2,540,119 or $0.06 per share based on 41,625,331 weighted average shares outstanding, from $2,087,435 or $0.05 per share for the six months ended June 30, 2022, based on 41,625,331 weighted average shares outstanding.

The three months ended June 30, 2023 compared to the three months ended June 30, 2022

Revenues. Revenues for the three months ended June 30, 2023 decreased to $169,864, as compared to revenues of $273,932 for the three months ended June 30, 2022. The decrease reflects a significant contraction of retail sales in 2023 from 2022, primarily as a result of increased competition and decreased acceptance in big box retail leading to reduced inventory turnover. The changes in consumer behavior due to macroeconomic factors make future sales somewhat challenging to predict. Sales include bulk oils for wholesale, capsules, gummies, tinctures, lotions, salves, creams, balm sticks, lip balms and pet chews, all in various potency levels and flavors.

Cost of goods sold. All expenses incurred to grow, process, and package the finished goods are included in our cost of goods sold. Cost of goods sold for the three months ended June 30, 2023 increased to $556,534 from $324,813 for the three months ended June 30, 2022. The increase in cost of sales can be attributed to the disposal of obsolete inventory during the three months ended June 30, 2023 as compared to the three months ended June 30, 2022.

Gross margin. We had gross expense of $386,670 for the three months ended June 30, 2023, as compared to gross expense of $50,881 for the three months ended June 30, 2022. The decrease in gross margin can be attributed to the decrease in sales in addition to the disposal of obsolete inventory during the three months ended June 30, 2023 as compared to the three months ended June 30, 2022.

Selling, general and administrative expenses. Selling, general and administrative expenses decreased to $801,552 for the three months ended June 30, 2023, from $1,275,014 for the three months ended June 30, 2022. The decrease to selling, general and administrative expenses is primarily due to reductions in total salary and related expenses. Selling, general and administrative expenses consist primarily of administrative personnel costs, facilities expenses, professional fee expenses and marketing costs for our Veritas Farms brand products.

Other income/(expense). Interest expense for the three months ended June 30, 2023 was $210,650, as compared to $107,438 for the three months ended June 30, 2022. Interest expense increased in the three months ending June 30, 2023 compared to the three months ending June 30, 2022 due to an increase in interest bearing notes payable.

Net loss. As a result of all the foregoing, net loss for the three months ended June 30, 2023, decreased to $1,520,258 or $0.04 per share based on 41,625,331 weighted average shares outstanding, from $705,893 or $0.02 per share for the three months ended June 30, 2022, based on 41,625,331 weighted average shares outstanding.

Liquidity and Capital Resources

Liquidity is the ability of a company to generate adequate amounts of cash to meet its needs for cash. We have historically experienced negative cash flows and have relied on the proceeds from the sale of debt and equity securities to fund our operations. In addition, we have utilized stock-based compensation as a means of paying for consulting and salary related expenses. At June 30, 2023, we had working capital deficit of $1,368,699.

Cash increased to $119,915 at June 30, 2023 from $55,273 at December 31, 2022. The increase was primarily due to collections of our employee retention credit receivable.

As of June 30, 2023, total assets were $5,461,868 as compared to $6,794,471 at December 31, 2022. The decrease in assets is primarily due to collections of our employee retention credit receivable.

Total current liabilities as of June 30, 2023 were $3,779,551, as compared to $3,167,451 at December 31, 2022. The increase was mainly due to increases in accrued interest, dividends payable and accrued expenses.

Net cash used in operating activities was $445,580 for the six months ended June 30, 2023, as compared to net cash used in operating activities of $2,268,762 for the six months ended June 30, 2022. The decrease is largely attributable to collections of our employee retention credit receivable.

Net cash provided by investing activities was $13,500 for the six months ended June 30, 2023 as compared to net cash provided by investing activities of $23,621 for the six months ended June 30, 2022, reflecting a decrease in capital income in 2023.

Net cash provided by financing activities was $496,722 for the six months ended June 30, 2023 as compared to $1,927,761 for the six months ended June 30, 2022. Net cash provided by financing activities for the six months ended June 30, 2023 included net proceeds of $500,000 from convertible note payables received from the Wit Trust. Net cash provided by financing activities for the six months ended June 30, 2022 included net proceeds of $2,000,000 from convertible note payables received from the Wit Trust

Contractual Obligations

The following table sets forth our contractual obligations as of June 30, 2023:

Contractual obligation			Payments due by period
	Total		Less than 1 year			1-2 Years			2-3 Years		3+ Years
Promissory notes⁽¹⁾	$	150,000	$	3,233		$	3,357		$	3,485	$	139,925
Convertible notes⁽¹⁾		4,950,000		200,000	⁽²⁾		3,000,000	⁽³⁾		-		1,750,000	⁽⁴⁾
Operating lease obligations⁽⁵⁾		184,655		128,895			55,760			-		-
Total	$	5,284,655	$	332,128		$	3,059,117		$	3,485	$	1,889,925

(1)	Amounts do not include interest to be paid.
(2)	Includes $200,000 of 10% convertible notes payable that matured in October 2022.
(3)	Includes $3,000,000 of 10% convertible notes payable that mature in October 2024.
(4)	Includes $1,750,000 of 10% convertible notes payable that mature in October 2026.
(5)	Includes office lease obligations for our executive office in Florida and our warehouse facilities in Colorado.

Sources of Liquidity and Capital Resources; Debt Obligations

Our primary sources of capital to develop and implement our business plan and expand our operations have been the proceeds from private offerings of our debt and equity securities and notes payable.

In March 2020, the Company received a $200,000 loan from a single investor, evidenced by a one-year convertible promissory note (“Convertible Note”). The Convertible Note bears interest at the rate of ten percent (10%) per annum, which accrues and is payable together with principal at maturity. Principal and accrued interest under the Convertible Note may, at the option of the holder, be converted in its entirety into shares of our common stock at a conversion price of $0.40 per share, subject to adjustment for stock splits, stock dividends and similar recapitalization transactions. On May 14, 2021, the Company paid $20,000 in accrued interest to the holder, and the Company and the investor extended the maturity date of the Convertible Note to September 6, 2021. In September 2021, the Company and the investor further extended the maturity date of the Convertible Note to October 1, 2022. From October 2, 2022 until the present we are in default in the payment of principal. This default does not trigger any other default events for any other notes payable.

The accompanying financial statements have been prepared in conformity with U.S. GAAP, which contemplate continuation of the Company as a going concern. However, the Company has sustained substantial losses from operations since its inception. As of and for the period ended June 30, 2023, the Company had an accumulated deficit of $42,014,741 and a net loss attributable to common shareholders of $2,540,119. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern. Continuation as a going concern is dependent on the ability to raise additional capital and financing until we can achieve a level of operational profitability, though there is no assurance of success.

The Company believes that it will require additional financing to fund its growth and achieve profitability. The Company anticipates that such financing will be generated from subsequent private offerings of its equity and/or debt securities. While we believe additional financing will be available to us as needed, there can be no assurance that such financing will be available on commercially reasonable terms or otherwise, when needed. Moreover, any such additional financing may dilute the interests of existing shareholders. The absence of additional financing, when needed, could substantially harm the Company, its business, results of operations and financial condition.

Capital Expenditures

Any amounts expended for capital expenditures would be the result of an increase in the capacity needed to adequately service any increase in our business. To date we have paid for any needed additions to our capital equipment infrastructure from working capital funds and anticipate this being the case in the future.

Presently, we have approximately $20,000 planned for capital expenditures to further develop the Company’s infrastructure to allow for growth in our operations over the next 12 months. We expect to fund these capital expenditure needs through a combination of vendor provided financing, the use of operating or capital equipment leases and cash provided from operations.

Factors Affecting Future Performance

Item 1A of our 2022 Form 10-K sets forth risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements contained in this report. If any of these risks, or any risks not presently known to us or that we currently believe are not significant, develops into an actual event, then our business, financial condition, and results of operations could be adversely affected.

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and our discussion and analysis of our financial condition and operating results require our management to make judgments, assumptions and estimates that affect the amounts reported in our consolidated financial statements and accompanying notes. Note 1: Nature of Business and Summary of Significant Accounting Policies of the Notes to our unaudited condensed consolidated financial statements appearing elsewhere in this report describes the significant accounting policies and methods used in the preparation of our unaudited condensed consolidated financial statements. Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates, and such differences may be material.

Please see Part II, Item 7 – Critical Accounting Policies appearing in our 2022 Form 10-K for the critical accounting policies we believe involve the more significant judgments and estimates used in the preparation of our consolidated financial statements and are the most critical to aid you in fully understanding and evaluating our reported financial results. Management considers these policies critical because they are both important to the portrayal of our financial condition and operating results, and they require management to make judgments and estimates about inherently uncertain matters.

Item 3. Quantitative and Qualitative Disclosures About Market Risks.

As a “smaller reporting company,” we are not required to provide the information required by this Item.

Item 4. Controls and Procedures.

Management’s Report on Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, (“Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial and Accounting Officer, as appropriate, to allow timely decisions regarding required financial disclosure.

Internal control over financial reporting is a process designed by, or under the supervision of, our Chief Executive Officer (our Principal Executive Officer) and our Chief Financial Officer (our Principal Financial and Accounting Officer), to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S. GAAP. Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of our unaudited condensed consolidated financial statements in accordance with U.S. GAAP, and that receipts and expenditures of our Company are being made only in accordance with authorizations of management and directors of our Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our Company’s assets that could have a material effect on our unaudited condensed consolidated financial statements. Because of its inherent limitations, internal control over financial reporting may not provide absolute assurance that a misstatement of our unaudited condensed consolidated financial statements would be prevented or detected.

Further, the evaluation of the effectiveness of internal control over financial reporting was made as of a specific date, and continued effectiveness in future periods is subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our Chief Executive Officer (our Principal Executive Officer) and our Chief Financial Officer (our Principal Financial and Accounting Officer) conducted an evaluation of the effectiveness of our internal control over financial reporting as of June 30, 2023 in accordance with the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission Internal Control — Integrated Framework (2013). Based on this assessment, our Chief Executive Officer (our Principal Executive Officer) and our Chief Financial Officer (our Principal Financial and Accounting Officer) identified the following two material weaknesses that have caused management to conclude that, as of June 30, 2023, our disclosure controls and procedures, and our internal control over financial reporting, were not effective at the reasonable assurance level in that:

(a)

We do not have written documentation of our internal control policies and procedures. Our Chief Executive Officer and our Chief Financial Officer evaluated the impact of our failure to have written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.

(b)

We do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Documentation of our controls and the continued changes to assure segregation of duties are being performed. Our Chief Executive Officer and our Chief Financial Officer evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.

To address these material weaknesses, our Chief Executive Officer and our Chief Financial Officer performed additional analyses and other procedures to ensure that our unaudited condensed consolidated financial statements included in this report fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented. Accordingly, we believe that our unaudited condensed consolidated financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented. We intend to take further steps to rectify these material weaknesses, subject to the availability of working capital to fund the costs thereof.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act, during the quarter ended June 30, 2023 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

As a result of the COVID-19 pandemic that commenced in early spring of 2020, our workforce continued to operate primarily in a work from home environment for the quarter ended June 30, 2023 and we are monitoring our control environment with increased vigilance to ensure changes as a result of our employees working remotely are addressed and all increased risks are mitigated.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

There is no material legal proceeding, arbitration or governmental proceeding currently pending against us or any members of our management team in their capacity as such. From time to time, we may become party to litigation or other legal proceedings that we consider to be a part of the ordinary course of our business.

Item 1A. Risk Factors.

The business, financial condition and operating results of the Company can be affected by a number of factors, whether currently known or unknown, including but not limited to those described in Part I, Item 1A of the 2022 Form 10-K, under the heading “Risk Factors,” any one or more of which could, directly or indirectly, cause the Company’s actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect the Company’s business, financial condition, operating results and stock price. There have been no material changes to the Company’s risk factors since the 2022 Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

Exhibit Number		Description of Exhibit
31.1*		Section 302 Certification of CEO pursuant to Rules 13a - 14(a) or Rule 15d - 14(a) under the Exchange Act

31.2*		Section 302 Certification of CFO pursuant to Rule 13a-14(a) or Rules 15d - 14(a) under the Exchange Act

32.1*		Section 906 Certification of CEO and CFO pursuant to Rules 13a - 14(b) or 15d - 14(b) under the Exchange Act and 18 USC 1350

101.INS*		Inline XBRL Instance Document

101.SCH*		Inline XBRL Taxonomy Extension Schema Document

101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*	Filed herewith

**	Furnished herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	VERITAS FARMS, INC.

Dated: August 11, 2023	By:	/s/ Thomas E. Vickers
		Thomas E. Vickers, Interim Chief Executive Officer and interim President
		(Principal Executive Officer)

Dated: August 11, 2023	By:	/s/ Ramon A. Pino
		Ramon A. Pino, Chief Financial Officer
		(Principal Financial and Accounting Officer)

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Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Thomas E. Vickers, Interim Chief Executive Officer (principal executive officer) of Veritas Farms, Inc., a Nevada corporation (the “Registrant”), certify that:

I have reviewed this report on Form 10-Q for the period ended June 30, 2023, of the Registrant;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, which involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: August 11, 2023

VERITAS FARMS, INC.

By:	/s/ Thomas E. Vickers
	Thomas E. Vickers, Interim Chief Executive Officer
	(Principal Executive Officer)

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Ramon A. Pino, Chief Financial Officer (principal financial and accounting officer) of Veritas Farms, Inc., a Nevada corporation (the “Registrant”), certify that:

I have reviewed this report on Form 10-Q for the period ended June 30, 2023, of the Registrant;

Any fraud, whether or not material, which involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: August 11, 2023

VERITAS FARMS, INC.

By:	/s/ Ramon A. Pino
	Ramon A. Pino, Chief Financial Officer
	(Principal Financial and Accounting Officer)

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Veritas Farms, Inc., a Nevada corporation (the “Company”) on Form 10-Q for the period ended June 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, being, Thomas E. Vickers, Interim Chief Executive Officer (principal executive officer) of the Company and Ramon A Pino, Chief Financial Officer (principal financial and accounting officer) of the Company, each hereby certifies, pursuant to 18 U.S.C. Section1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 11, 2023

By:	/s/ Thomas E. Vickers
	Thomas E. Vickers, Interim Chief Executive Officer
	(Principal Executive Officer)

Date: August 11, 2023

By:	/s/ Ramon A Pino
	Ramon A. Pino, Chief Financial Officer
	(Principal Financial and Accounting Officer)

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document. This certification shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, (“Exchange Act”) or otherwise subject to liability under that section. This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act except to the extent this Exhibit 32.1 is expressly and specifically incorporated by reference in any such filing. A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Document And Entity Information - shares	6 Months Ended
Document And Entity Information - shares	Jun. 30, 2023	Aug. 10, 2023
Document Information Line Items
Entity Registrant Name	Veritas Farms, Inc.
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		41,625,331
Amendment Flag	false
Entity Central Index Key	0001669400
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Document Period End Date	Jun. 30, 2023
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	333-210190
Entity Incorporation, State or Country Code	NV
Entity Tax Identification Number	90-1254190
Entity Address, Address Line One	401 E. Las Olas Boulevard
Entity Address, Address Line Two	Suite 1400
Entity Address, City or Town	Fort Lauderdale
Entity Address, State or Province	FL
Entity Address, Postal Zip Code	33301
City Area Code	(833)
Local Phone Number	691-4367
Entity Interactive Data Current	Yes

Condensed Consolidated Balance Sheets (Unaudited) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
CURRENT ASSETS
Cash	$ 119,915	$ 55,273
Inventories	1,683,455	2,242,528
Accounts receivable, net of allowance for doubtful accounts	23,263	34,445
Employee retention credit receivable	36,301	623,907
Assets held for sale	460,173	502,709
Prepaid expenses	87,745	73,428
Total current assets	2,410,852	3,532,290
Property and equipment, net of accumulated depreciation	2,701,405	2,806,790
Intangible assets, net of accumulated amortization	55,000	55,000
Right of use assets, net of accumulated amortization	184,655	264,182
Other assets	109,956	136,209
TOTAL ASSETS	5,461,868	6,794,471
CURRENT LIABILITIES
Accounts payable	1,228,498	1,247,759
Accrued expenses	453,824	250,160
Accrued interest	520,871	297,453
Dividends payable	794,186	595,830
Convertible notes payable	200,000	200,000
Contract liability	453,277	422,919
Operating lease liability	128,895	150,052
Notes payable, current portion		3,278
Total current liabilities	3,779,551	3,167,451
LONG TERM LIABILITIES
Notes payable, long term, net of current portion	150,000	150,000
Related party convertible notes payable, long term, net of discount	2,843,155	3,969,167
Operating lease liability, net of current portion	55,760	114,130
TOTAL LIABILITIES	6,828,466	7,400,748
COMMITMENTS AND CONTINGENCIES (See Note 12)
SHAREHOLDERS’ (DEFICIT)
Preferred stock, 20,000,000 shares authorized, 15,000,000 shares undesignated at $0.001 par value
Series A convertible preferred stock, 4,000,000 shares authorized, 4,000,000 and 4,000,000 issued and outstanding, respectively, at $0.001 par value	4,000	4,000
Series B convertible preferred stock, 1,000,000 shares authorized, 1,000,000 and 1,000,000 issued and outstanding, respectively, at $0.001 par value	1,000	1,000
Common stock, 800,000,000 shares authorized, 41,623,366 shares issued and 41,625,331 shares outstanding, at June 30, 2023 and December 31, 2022, respectively, at $0.001 par value respectively, at $0.001 par value	41,625	41,625
Additional paid in capital	40,601,518	38,821,720
Accumulated (deficit)	(42,014,741)	(39,474,622)
TOTAL SHAREHOLDERS’ (DEFICIT)	(1,366,598)	(606,277)
TOTAL LIABILITIES AND SHAREHOLDERS’ (DEFICIT)	$ 5,461,868	$ 6,794,471

Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - $ / shares	Jun. 30, 2023	Dec. 31, 2022
Preferred stock, shares authorized	20,000,000	20,000,000
Preferred stock, shares undesignated	15,000,000	15,000,000
Preferred stock, par value (in Dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	800,000,000	800,000,000
Common stock, shares issued	41,623,366	41,625,331
Common stock, shares outstanding	41,623,366	41,625,331
Common stock, par value (in Dollars per share)	$ 0.001	$ 0.001
Series A convertible preferred stock
Preferred stock, shares authorized	4,000,000	4,000,000
Preferred stock, par value (in Dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares issued	4,000,000	4,000,000
Preferred stock, shares outstanding	4,000,000	4,000,000
Series B convertible preferred stock
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, par value (in Dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares issued	1,000,000	1,000,000
Preferred stock, shares outstanding	1,000,000	1,000,000

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Statement [Abstract]
Revenues	$ 169,864	$ 273,932	$ 379,652	$ 694,839
Cost of goods sold	133,340	324,813	293,650	643,641
Inventory write-down	423,194		423,194
Total cost of goods sold	556,534	324,813	716,844	643,641
Gross margin/(expense)	(386,670)	(50,881)	(337,192)	51,198
Operating expenses
Selling, general and administrative	801,552	1,275,014	1,600,910	2,569,928
Total operating expenses	801,552	1,275,014	1,600,910	2,569,928
Operating (loss)	(1,188,222)	(1,325,895)	(1,938,102)	(2,518,730)
Other income/(expense)
Interest expense, related parties	(198,185)	(96,215)	(349,057)	(164,827)
Interest expense	(12,465)	(11,223)	(24,490)	(32,688)
Gain on loan forgiveness		812,981		812,981
Gain/(loss) on disposal	(21,660)	14,185	(30,114)	14,185
Total other income/(expense)	(232,310)	719,728	(403,661)	629,651
(Loss) before income taxes	(1,420,532)	(606,167)	(2,341,763)	(1,889,079)
Income tax provision
Net (loss)	(1,420,532)	(606,167)	(2,341,763)	(1,889,079)
Preferred stock dividends
Series A preferred stock	(79,781)	(79,781)	(158,685)	(158,685)
Series B preferred stock	(19,945)	(19,945)	(39,671)	(39,671)
Total preferred stock dividends	(99,726)	(99,726)	(198,356)	(198,356)
Net (loss) attributable to common shareholders	$ (1,520,258)	$ (705,893)	$ (2,540,119)	$ (2,087,435)
Net (loss) per share
Basic (in Dollars per share)	$ (0.04)	$ (0.02)	$ (0.06)	$ (0.05)
Diluted (in Dollars per share)	$ (0.04)	$ (0.02)	$ (0.06)	$ (0.05)
Weighted average number of shares outstanding
Basic (in Shares)	41,625,331	41,625,331	41,625,331	41,625,331
Diluted (in Shares)	41,625,331	41,625,331	41,625,331	41,625,331

Condensed Consolidated Statements of Shareholders’ Equity/(Deficit) (unaudited) - USD ($)	Series A Preferred Stock Preferred Stock	Series B Preferred Stock Preferred Stock	Common Stock	Additional paid in capital	Accumulated (deficit)	Total
Balance at Dec. 31, 2021	$ 4,000	$ 1,000	$ 41,625	$ 38,709,374	$ (33,930,714)	$ 4,825,285
Balance (in Shares) at Dec. 31, 2021	4,000,000	1,000,000	41,625,331
Stock-based compensation				27,671		27,671
Preferred stock dividends					(98,630)	(98,630)
Net (loss)					(1,282,912)	(1,282,912)
Balance at Mar. 31, 2022	$ 4,000	$ 1,000	$ 41,625	38,737,045	(35,312,256)	3,471,414
Balance (in Shares) at Mar. 31, 2022	4,000,000	1,000,000	41,625,331
Balance at Dec. 31, 2021	$ 4,000	$ 1,000	$ 41,625	38,709,374	(33,930,714)	4,825,285
Balance (in Shares) at Dec. 31, 2021	4,000,000	1,000,000	41,625,331
Net (loss)						(1,889,079)
Balance at Jun. 30, 2022	$ 4,000	$ 1,000	$ 41,625	38,799,444	(36,018,149)	2,827,920
Balance (in Shares) at Jun. 30, 2022	4,000,000	1,000,000	41,625,331
Balance at Mar. 31, 2022	$ 4,000	$ 1,000	$ 41,625	38,737,045	(35,312,256)	3,471,414
Balance (in Shares) at Mar. 31, 2022	4,000,000	1,000,000	41,625,331
Stock-based compensation				62,399		62,399
Preferred stock dividends					(99,726)	(99,726)
Net (loss)					(606,167)	(606,167)
Balance at Jun. 30, 2022	$ 4,000	$ 1,000	$ 41,625	38,799,444	(36,018,149)	2,827,920
Balance (in Shares) at Jun. 30, 2022	4,000,000	1,000,000	41,625,331
Balance at Dec. 31, 2022	$ 4,000	$ 1,000	$ 41,625	38,821,720	(39,474,622)	(606,277)
Balance (in Shares) at Dec. 31, 2022	4,000,000	1,000,000	41,625,331
Stock-based compensation				4,820		4,820
Preferred stock dividends					(98,630)	(98,630)
Net (loss)					(921,231)	(921,231)
Balance at Mar. 31, 2023	$ 4,000	$ 1,000	$ 41,625	38,826,540	(40,494,483)	(1,621,318)
Balance (in Shares) at Mar. 31, 2023	4,000,000	1,000,000	41,625,331
Balance at Dec. 31, 2022	$ 4,000	$ 1,000	$ 41,625	38,821,720	(39,474,622)	(606,277)
Balance (in Shares) at Dec. 31, 2022	4,000,000	1,000,000	41,625,331
Net (loss)						(2,341,763)
Balance at Jun. 30, 2023	$ 4,000	$ 1,000	$ 41,625	40,601,518	(42,014,741)	(1,366,598)
Balance (in Shares) at Jun. 30, 2023	4,000,000	1,000,000	41,625,331
Balance at Mar. 31, 2023	$ 4,000	$ 1,000	$ 41,625	38,826,540	(40,494,483)	(1,621,318)
Balance (in Shares) at Mar. 31, 2023	4,000,000	1,000,000	41,625,331
Stock-based compensation				24,978		24,978
Beneficial conversion feature				1,750,000		1,750,000
Preferred stock dividends					(99,726)	(99,726)
Net (loss)					(1,420,532)	(1,420,532)
Balance at Jun. 30, 2023	$ 4,000	$ 1,000	$ 41,625	$ 40,601,518	$ (42,014,741)	$ (1,366,598)
Balance (in Shares) at Jun. 30, 2023	4,000,000	1,000,000	41,625,331

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss)	$ (2,341,763)	$ (1,889,079)
Adjustment to reconcile net income/(loss) to net cash provided by/(used in) operating activities
Depreciation and amortization	104,308	237,980
Stock-based compensation	29,798	90,070
Gain on loan forgiveness		(812,981)
Amortization of debt discount	123,988	80,238
Loss on disposal of property and equipment assets	30,114	28,076
Inventory write down	423,194
Changes in operating assets and liabilities
Inventories	135,879	(235,989)
Prepaid expenses	(14,317)	34,589
Accounts receivable	11,182	(232,614)
Employee retention credit receivable	587,606
Other assets	26,252	169,978
Contract liability	30,358	271,608
Accrued interest	223,418	80,319
Accrued expenses	203,664	(32,536)
Accounts payable	(19,261)	(58,421)
Net cash (used in) operating activities	(445,580)	(2,268,762)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(5,069)
Sale of property and equipment	13,500	28,690
Net cash provided by investing activities	13,500	23,621
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of notes payable	(3,278)	(72,239)
Proceeds from convertible notes payable	500,000	2,000,000
Net cash provided by financing activities	496,722	1,927,761
Net increase/(decrease) in cash and cash equivalents	64,642	(317,380)
Cash and cash equivalents at beginning of period	55,273	481,763
Cash and cash equivalents at end of period	119,915	164,383
Supplemental disclosures of cash flow information:
Income taxes
Interest	$ 9,973	$ 9,973

Nature of Business and Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2023

Nature of Business and Summary of Significant Accounting Policies [Abstract]

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1: NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

Basis of Presentation

Principles of Consolidation

Estimates in Financial Statements

Correction of Previously Issued Financial Statements

Going Concern

6 Months Ended

Jun. 30, 2023

Going Concern [Abstract]

GOING CONCERN

NOTE 2: GOING CONCERN

Inventories, Net

6 Months Ended

Jun. 30, 2023

Inventories, Net [Abstract]

INVENTORIES, NET

NOTE 3: INVENTORIES, NET

Inventories consist of:

	June 30, 2023		December 31, 2022
Hemp and oil	$	498,563	$	568,559
Finished goods		280,178		360,331
Raw materials		904,714		1,313,638
Inventories	$	1,683,455	$	2,242,528

Property and Equipment

6 Months Ended

Jun. 30, 2023

Property and Equipment [Abstract]

PROPERTY AND EQUIPMENT

NOTE 4: PROPERTY AND EQUIPMENT

	June 30, 2023						December 31, 2022						Estimated
	Cost		Accumulated depreciation		Net book value		Cost		Accumulated depreciation		Net book value		useful life (years)
Land and land improvements	$	398,126	$	-	$	398,126	$	398,126	$	-	$	398,126		-
Buildings and improvements		1,525,712		266,301		1,259,411		1,528,294		245,951		1,282,343		39
Greenhouse		965,388		171,121		794,267		965,388		157,630		807,758		39
Fencing and irrigation		203,793		127,498		76,295		203,793		117,579		86,214		15
Machinery and equipment		735,457		569,331		166,126		621,457		425,368		196,089		7
Furniture and fixtures		82,202		76,359		5,843		94,485		77,595		16,890		7
Computer equipment		22,038		20,701		1,337		22,038		20,503		1,535		5
Vehicles		3,400		3,400		-		56,058		38,223		17,835		5
Total	$	3,936,116	$	1,234,711	$	2,701,405	$	3,889,639	$	1,082,849	$	2,806,790

Notes Payable and Convertible Notes Payable

6 Months Ended

Jun. 30, 2023

Notes Payable and Convertible Notes Payable [Abstract]

NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE

NOTE 5: NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE

The following tables summarize the notes payable and convertible notes payable outstanding as of June 30, 2023.

						Ending		Non related party				Related party
	Origination	Maturity	Interest			principal				Long				Long
Description	date	date	rate			June 30, 2023		Current		term		Current		term
Economic Injury Disaster Loan	6/24/2020	6/24/2050		3.75	%		150,000		-		150,000		-		-
Total						$	150,000	$	-	$	150,000	$	-	$	-

								Non related party				Related party
	Origination	Maturity	Interest			Ending principal June 30,				Long				Long					Long term, Net of
Description	date	date	rate			2023		Current		term		Current		term		Discount			discount
Convertible Promissory Note Payable	3/6/2020	10/1/2022		10	%	$	200,000	$	200,000	$	-	$	-	$	-	$	-		$	-
2021 Secured Convertible Promissory Note Payable	10/12/2021	10/1/2024		10	%		3,000,000		-		-		-		3,000,000		(200,595	)		2,799,405
2023 Secured Convertible Promissory Note Payable	6/7/2023	10/1/2026		10	%		1,750,000		-		-		-		1,750,000		(1,706,250	)		43,750
Total						$	4,950,000	$	200,000	$	-	$	-	$	4,750,000	$	(1,906,845	)	$	2,843,155

Future principal payments for the next five years are as follows for the future years ended December 31:

2023	$	201,602
2024		3,003,295
2025		3,420
2026		1,753,551
2027		3,686
Thereafter		134,446
Total	$	5,100,000

Paycheck Protection Program

Economic Injury Disaster Loan

10% Convertible Promissory Note Payable

10% Secured Convertible Promissory Notes Payable

Stock-Based Compensation

6 Months Ended

Jun. 30, 2023

Stock-Based Compensation [Abstract]

STOCK-BASED COMPENSATION

NOTE 6: STOCK-BASED COMPENSATION

The aggregate fair value for all options granted for the six months ended June 30, 2023 was $0.

The following table summarizes the stock option activity for the Company’s 2017 Plan:

	Number of options			Weighted average exercise price (per share)		Weighted average remaining contractual term (in years)

Outstanding at December 31, 2021		5,189,167		$	0.86		7.71
Granted		1,675,000			0.04		9.34
Exercised		-			-
Forfeited/cancelled/expired		(1,404,167	)		0.49
Outstanding at December 31, 2022		5,460,000			0.70		7.18
Granted		-			-
Exercised		-			-
Forfeited/cancelled/expired		(200,000	)		0.13
Outstanding at June 30, 2023		5,260,000		$	0.72		6.63

Vested and exercisable at June 30, 2023		4,831,666		$	0.78		6.45

Below are the assumptions for the fair value of share-based payments for the six month period ended June 30, 2023 and the year ended December 31, 2022.

	Stock option assumptions for the period ended
Stock option assumptions	June 30, 2023			December 31, 2022
Risk-free interest rate		5.40	%		4.50	%
Expected dividend yield		0.0	%		0.0	%
Expected volatility		244.8	%		182.8	%
Expected life of options (in years)		10			10

Leases

6 Months Ended

Jun. 30, 2023

Leases [Abstract]

LEASES

NOTE 7: LEASES

As of June 30, 2023, and December 31, 2022, operating leases have no minimum rental commitments.

Shareholders’ (Deficit)

6 Months Ended

Jun. 30, 2023

Shareholders’ (Deficit) [Abstract]

SHAREHOLDERS’ (DEFICIT)

NOTE 8: SHAREHOLDERS’ (DEFICIT)

As of June 30, 2023 the Company had the following issued and outstanding securities:

●

41,625,331 shares of common stock;

●

4,000,000 shares of Series A Convertible Preferred Stock;

●

1,000,000 shares of Series B Convertible Preferred Stock;

●

2,595,270 warrants to purchase shares of our common stock;

●

5,260,000 options to purchase shares of our common stock; and

●

$4,950,000 principal amount of convertible promissory notes convertible into 148,000,000 shares of common stock.

Common Stock

Preferred Stock

Series A Convertible Preferred Stock

Series B Convertible Preferred Stock

Preferred Stock Dividends

The following table presents undeclared preferred stock dividends for the three and six month periods ended June 30, 2023 and June 30, 2022, respectively.

	Undeclared dividends				Undeclared dividends
	For the three months ended				For the six months ended
	June 30,				June 30,
Series of preferred stock	2023		2022		2023		2022
Series A preferred stock dividends	$	79,781	$	79,781	$	158,685	$	158,685
Series B preferred stock dividends		19,945		19,945		39,671		39,671
Total undeclared preferred stock dividends	$	99,726	$	99,726	$	198,356	$	198,356

	Cumulative undeclared dividends as of
Series of preferred stock	June 30, 2023		December 31, 2022
Series A preferred stock	$	623,447	$	464,762
Series B preferred stock		170,739		131,068
Cumulative undeclared preferred stock dividends	$	794,186	$	595,830

Channel Reporting

6 Months Ended

Jun. 30, 2023

Channel Reporting [Abstract]

Channel Reporting

NOTE 9: CHANNEL REPORTING

A description of the Company’s principal revenue generating activities are as follows:

●

The following table represents a disaggregation of revenue by sales channel:

	For the three months ended				For the six months ended
	June 30,				June 30,
	2023		2022		2023		2022
Wholesale revenue	$	5,212	$	76,256	$	31,770	$	242,941
E-commerce revenue		164,652		197,676		347,882		451,898
Total revenue	$	169,864	$	273,932	$	379,652	$	694,839

Concentrations

6 Months Ended

Jun. 30, 2023

Concentrations [Abstract]

CONCENTRATIONS

NOTE 10: CONCENTRATIONS

The Company had no single customer for the six months ended June 30, 2023 that accounted for more than 10% of sales. For the six months ended June 30, 2022, one customer accounted for 10% of sales.

Related Party

6 Months Ended

Jun. 30, 2023

RELATED PARTY

NOTE 11: RELATED PARTY

Commitments and Contingencies

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 12: COMMITMENTS AND CONTINGENCIES

Legal Matters and Routine Proceedings

As of June 30, 2023, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations.

Employment Agreements

The Company has an employment agreement in place with Ramon A. Pino, our Chief Financial Officer.

Subsequent Events

6 Months Ended

Jun. 30, 2023

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 13: SUBSEQUENT EVENTS

On July 13, 2023 the Company received an additional $250,000 from the 2023 Secured Convertible Promissory Note.

Accounting Policies, by Policy (Policies)	6 Months Ended
Accounting Policies, by Policy (Policies)	Jun. 30, 2023
Nature of Business and Summary of Significant Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial statements and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by U.S. GAAP for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of June 30, 2023 and December 31, 2022, and the results of operations and cash flows for the periods presented. The results of operations for the six months ending June 30, 2023, are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Form 10-K for the year ended December 31, 2022.
Principles of Consolidation	Principles of Consolidation The accompanying unaudited condensed consolidated financial statements reflect the accounts of Veritas Farms, Inc. and its wholly owned subsidiary 271 Lake Davis Holdings, LLC, a Delaware limited liability company. All significant inter-company accounts and transactions have been eliminated in consolidation.
Estimates in Financial Statements	Estimates in Financial Statements The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from these estimates.
Correction of Previously Issued Financial Statements	Correction of Previously Issued Financial Statements The accompanying unaudited condensed consolidated statement of operations for the six months ended June 30, 2022 has been corrected for the following: an adjustment to reclassify selling, general and administrative expenses of $72,799 as a reduction of revenue as such amounts were related to consideration payable to a customer which the Company determined was not for distinct goods or services received. The Company assessed the materiality of the misstatement quantitatively and qualitatively and has concluded that the correction of the classification error is immaterial to the consolidated financials taken as a whole. As a result of the correction, revenue decreased from $767,638 to $694,839 with a corresponding decrease of gross margin from $123,997 to $51,198 and selling, general and administrative expenses decreased from $2,642,727 to $2,569,928. The correction had no impact on total operating loss and net loss.

Inventories, Net (Tables)

6 Months Ended

Jun. 30, 2023

Inventories, Net [Abstract]

Schedule of Inventories

Inventories consist of:

	June 30, 2023		December 31, 2022
Hemp and oil	$	498,563	$	568,559
Finished goods		280,178		360,331
Raw materials		904,714		1,313,638
Inventories	$	1,683,455	$	2,242,528

Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2023

Property and Equipment [Abstract]

Schedule of Property and Equipment

	June 30, 2023						December 31, 2022						Estimated
	Cost		Accumulated depreciation		Net book value		Cost		Accumulated depreciation		Net book value		useful life (years)
Land and land improvements	$	398,126	$	-	$	398,126	$	398,126	$	-	$	398,126		-
Buildings and improvements		1,525,712		266,301		1,259,411		1,528,294		245,951		1,282,343		39
Greenhouse		965,388		171,121		794,267		965,388		157,630		807,758		39
Fencing and irrigation		203,793		127,498		76,295		203,793		117,579		86,214		15
Machinery and equipment		735,457		569,331		166,126		621,457		425,368		196,089		7
Furniture and fixtures		82,202		76,359		5,843		94,485		77,595		16,890		7
Computer equipment		22,038		20,701		1,337		22,038		20,503		1,535		5
Vehicles		3,400		3,400		-		56,058		38,223		17,835		5
Total	$	3,936,116	$	1,234,711	$	2,701,405	$	3,889,639	$	1,082,849	$	2,806,790

Notes Payable and Convertible Notes Payable (Tables)

6 Months Ended

Jun. 30, 2023

Notes Payable and Convertible Notes Payable [Abstract]

Schedule of Notes Payable Outstanding

The following tables summarize the notes payable and convertible notes payable outstanding as of June 30, 2023.

						Ending		Non related party				Related party
	Origination	Maturity	Interest			principal				Long				Long
Description	date	date	rate			June 30, 2023		Current		term		Current		term
Economic Injury Disaster Loan	6/24/2020	6/24/2050		3.75	%		150,000		-		150,000		-		-
Total						$	150,000	$	-	$	150,000	$	-	$	-

								Non related party				Related party
	Origination	Maturity	Interest			Ending principal June 30,				Long				Long					Long term, Net of
Description	date	date	rate			2023		Current		term		Current		term		Discount			discount
Convertible Promissory Note Payable	3/6/2020	10/1/2022		10	%	$	200,000	$	200,000	$	-	$	-	$	-	$	-		$	-
2021 Secured Convertible Promissory Note Payable	10/12/2021	10/1/2024		10	%		3,000,000		-		-		-		3,000,000		(200,595	)		2,799,405
2023 Secured Convertible Promissory Note Payable	6/7/2023	10/1/2026		10	%		1,750,000		-		-		-		1,750,000		(1,706,250	)		43,750
Total						$	4,950,000	$	200,000	$	-	$	-	$	4,750,000	$	(1,906,845	)	$	2,843,155

Schedule of Future Principal Payments

Future principal payments for the next five years are as follows for the future years ended December 31:

2023	$	201,602
2024		3,003,295
2025		3,420
2026		1,753,551
2027		3,686
Thereafter		134,446
Total	$	5,100,000

Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2023

Stock-Based Compensation [Abstract]

Schedule the Stock Option Activity

The following table summarizes the stock option activity for the Company’s 2017 Plan:

	Number of options			Weighted average exercise price (per share)		Weighted average remaining contractual term (in years)

Outstanding at December 31, 2021		5,189,167		$	0.86		7.71
Granted		1,675,000			0.04		9.34
Exercised		-			-
Forfeited/cancelled/expired		(1,404,167	)		0.49
Outstanding at December 31, 2022		5,460,000			0.70		7.18
Granted		-			-
Exercised		-			-
Forfeited/cancelled/expired		(200,000	)		0.13
Outstanding at June 30, 2023		5,260,000		$	0.72		6.63

Vested and exercisable at June 30, 2023		4,831,666		$	0.78		6.45

Schedule of the Assumptions for the Fair Value of Share-Based Payments

Below are the assumptions for the fair value of share-based payments for the six month period ended June 30, 2023 and the year ended December 31, 2022.

	Stock option assumptions for the period ended
Stock option assumptions	June 30, 2023			December 31, 2022
Risk-free interest rate		5.40	%		4.50	%
Expected dividend yield		0.0	%		0.0	%
Expected volatility		244.8	%		182.8	%
Expected life of options (in years)		10			10

Shareholders’ (Deficit) (Tables)

6 Months Ended

Jun. 30, 2023

Shareholders’ (Deficit) [Abstract]

Schedule of Preferred Stock Dividends

The following table presents undeclared preferred stock dividends

	Undeclared dividends				Undeclared dividends
	For the three months ended				For the six months ended
	June 30,				June 30,
Series of preferred stock	2023		2022		2023		2022
Series A preferred stock dividends	$	79,781	$	79,781	$	158,685	$	158,685
Series B preferred stock dividends		19,945		19,945		39,671		39,671
Total undeclared preferred stock dividends	$	99,726	$	99,726	$	198,356	$	198,356

Schedule of the Cumulative Undeclared Dividends by Class of Preferred Stock

The following table presents the cumulative undeclared dividends by class of preferred stock

	Cumulative undeclared dividends as of
Series of preferred stock	June 30, 2023		December 31, 2022
Series A preferred stock	$	623,447	$	464,762
Series B preferred stock		170,739		131,068
Cumulative undeclared preferred stock dividends	$	794,186	$	595,830

Channel Reporting (Tables)

6 Months Ended

Jun. 30, 2023

Channel Reporting [Abstract]

Schedule of Disaggregation of Revenue

The following table represents a disaggregation of revenue by sales channel:

	For the three months ended				For the six months ended
	June 30,				June 30,
	2023		2022		2023		2022
Wholesale revenue	$	5,212	$	76,256	$	31,770	$	242,941
E-commerce revenue		164,652		197,676		347,882		451,898
Total revenue	$	169,864	$	273,932	$	379,652	$	694,839

Nature of Business and Summary of Significant Accounting Policies (Details)	6 Months Ended
	Jun. 30, 2023 USD ($)
Nature of Business and Summary of Significant Accounting Policies (Details) [Line Items]
Selling, general and administrative expenses	$ 72,799
Maximum [Member]
Nature of Business and Summary of Significant Accounting Policies (Details) [Line Items]
Selling, general and administrative expenses	2,642,727
Revenue	767,638
Gross margin	123,997
Minimum [Member]
Nature of Business and Summary of Significant Accounting Policies (Details) [Line Items]
Selling, general and administrative expenses	2,569,928
Revenue	694,839
Gross margin	$ 51,198

Going Concern (Details) - USD ($)	6 Months Ended
Going Concern (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Going Concern [Abstract]
Accumulated deficit	$ (42,014,741)	$ (39,474,622)
Net loss	$ 2,540,119

Inventories, Net (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Inventories, Net [Abstract]
Inventory impairment write-downs	$ 423,194	$ 802,493
Reductions amount of finished goods		90,564
Hemp and oil		$ 711,929

Inventories, Net (Details) - Schedule of Inventories - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Schedule of Inventories [Abstract]
Hemp and oil	$ 498,563	$ 568,559
Finished goods	280,178	360,331
Raw materials	904,714	1,313,638
Inventories	$ 1,683,455	$ 2,242,528

Property and Equipment (Details) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
Property and Equipment (Details) - USD ($)	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Property and Equipment (Details) [Line Items]
Depreciation	$ 53,929	$ 117,943	$ 104,308	$ 237,980
Assets held for sale			460,173
Property, Plant and Equipment [Member]
Property and Equipment (Details) [Line Items]
Assets held for sale					$ 502,709
Assets held for sale sold			$ 42,536

Property and Equipment (Details) - Schedule of Property and Equipment - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Cost	$ 3,936,116	$ 3,889,639
Accumulated depreciation	1,234,711	1,082,849
Net book value	2,701,405	2,806,790
Land and Land Improvements [Member]
Property, Plant and Equipment [Line Items]
Cost	398,126	398,126
Accumulated depreciation
Net book value	398,126	$ 398,126
Estimated useful life (years)
Buildings and Improvements [Member]
Property, Plant and Equipment [Line Items]
Cost	1,525,712	$ 1,528,294
Accumulated depreciation	266,301	245,951
Net book value	1,259,411	$ 1,282,343
Estimated useful life (years)		39 years
Greenhouse [Member]
Property, Plant and Equipment [Line Items]
Cost	965,388	$ 965,388
Accumulated depreciation	171,121	157,630
Net book value	794,267	$ 807,758
Estimated useful life (years)		39 years
Fencing and Irrigation [Member]
Property, Plant and Equipment [Line Items]
Cost	203,793	$ 203,793
Accumulated depreciation	127,498	117,579
Net book value	76,295	$ 86,214
Estimated useful life (years)		15 years
Machinery and Equipment [Member]
Property, Plant and Equipment [Line Items]
Cost	735,457	$ 621,457
Accumulated depreciation	569,331	425,368
Net book value	166,126	$ 196,089
Estimated useful life (years)		7 years
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Cost	82,202	$ 94,485
Accumulated depreciation	76,359	77,595
Net book value	5,843	$ 16,890
Estimated useful life (years)		7 years
Computer Equipment [Member]
Property, Plant and Equipment [Line Items]
Cost	22,038	$ 22,038
Accumulated depreciation	20,701	20,503
Net book value	1,337	$ 1,535
Estimated useful life (years)		5 years
Vehicles [Member]
Property, Plant and Equipment [Line Items]
Cost	3,400	$ 56,058
Accumulated depreciation	3,400	38,223
Net book value		$ 17,835
Estimated useful life (years)		5 years

Notes Payable and Convertible Notes Payable (Details)								1 Months Ended							6 Months Ended		12 Months Ended
Notes Payable and Convertible Notes Payable (Details)	Jun. 07, 2023 USD ($) $ / shares	Jan. 03, 2023 USD ($) shares	Oct. 11, 2022 USD ($)	Sep. 06, 2022 USD ($)	Aug. 02, 2022 USD ($)	Oct. 12, 2021 USD ($) $ / shares	May 14, 2021 USD ($)	May 30, 2023 USD ($) shares	Nov. 16, 2022 USD ($)	Aug. 17, 2022 USD ($)	Apr. 30, 2022 USD ($)	Feb. 28, 2021 USD ($)	Jun. 30, 2020 USD ($)	Mar. 31, 2020 USD ($) $ / shares $ / item	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)	Mar. 09, 2022 USD ($)
Notes Payable and Convertible Notes Payable (Details) [Line Items]
Convertible promissory note payable percentage (in Dollars per Item) \| $ / item														10
Convertible notes payable														$ 200,000	$ 200,000		$ 200,000
Percentage of interest rate	10.00%				10.00%	10.00%				10.00%				10.00%
Conversion price, per share (in Dollars per share) \| $ / shares	$ 0.02					$ 0.05								$ 0.4
Paid in accrued interest							$ 20,000
Maturity date		Oct. 01, 2024	Oct. 01, 2024	Oct. 01, 2024	Oct. 01, 2024		Oct. 01, 2022	Oct. 01, 2024	Oct. 01, 2024	Oct. 01, 2024
Beneficial conversion feature															95,000
Percentage of secured convertible promissory notes payable						10.00%
Principal amount	$ 3,000,000	$ 250,000	$ 250,000	$ 250,000	$ 250,000	$ 1,500,000		$ 250,000	$ 250,000	$ 250,000
Beneficial conversion feature															1,750,000
Net of a discount															43,750		0
Secured convertible promissory note outstanding															1,750,000
Trust in exchange			$ 250,000	$ 250,000	$ 250,000				$ 250,000	$ 250,000
Interest rate			10.00%	10.00%
Investment interest rate	10.00%	10.00%	10.00%	10.00%				10.00%	10.00%	10.00%
Exchange shares (in Shares) \| shares		250,000						250,000
Convertible promissory note	$ 1,750,000
Net of discount															1,706,250
Paycheck Protection Program [Member]
Notes Payable and Convertible Notes Payable (Details) [Line Items]
Loan amount received												$ 803,994
Accrued interest											$ 812,981
EIDL [Member]
Notes Payable and Convertible Notes Payable (Details) [Line Items]
Loan amount received													$ 150,000
Accrues interest rate													3.75%
Maturity term													30 years
10% Secured Convertible Promissory Note [Member]
Notes Payable and Convertible Notes Payable (Details) [Line Items]
Net of discount															0		$ 0
10% Secured Convertible Promissory Notes Payable [Member]
Notes Payable and Convertible Notes Payable (Details) [Line Items]
Beneficial conversion feature															475,000
Principal amount																		$ 3,000,000
Beneficial conversion feature															200,595
Net of a discount															80,238	$ 80,238
Secured convertible promissory note outstanding															$ 3,000,000

Notes Payable and Convertible Notes Payable (Details) - Schedule of Notes Payable Outstanding	6 Months Ended
	Jun. 30, 2023 USD ($)
Debt Instrument [Line Items]
Ending principal	$ 4,950,000
Non related party, Current	200,000
Non related party, Long term
Related party, Current
Related party, Long term	4,750,000
Discount	(1,906,845)
Long term, Net of discount	$ 2,843,155
Economic Injury Disaster Loan [Member]
Debt Instrument [Line Items]
Origination date	Jun. 24, 2020
Maturity date	Jun. 24, 2050
Interest rate	3.75%
Ending principal	$ 150,000
Non related party, Current
Non related party, Long term	150,000
Related party, Current
Related party, Long term
Total [Member]
Debt Instrument [Line Items]
Ending principal	150,000
Non related party, Current
Non related party, Long term	150,000
Related party, Current
Related party, Long term
Convertible Promissory Note Payable [Member]
Debt Instrument [Line Items]
Origination date	Mar. 06, 2020
Maturity date	Oct. 01, 2022
Interest rate	10.00%
Ending principal	$ 200,000
Non related party, Current	200,000
Non related party, Long term
Related party, Current
Related party, Long term
Discount
Long term, Net of discount
2021 Secured Convertible Promissory Note Payable [Member]
Debt Instrument [Line Items]
Origination date	Oct. 12, 2021
Maturity date	Oct. 01, 2024
Interest rate	10.00%
Ending principal	$ 3,000,000
Non related party, Current
Non related party, Long term
Related party, Current
Related party, Long term	3,000,000
Discount	(200,595)
Long term, Net of discount	$ 2,799,405
2023 Secured Convertible Promissory Note Payable [Member]
Debt Instrument [Line Items]
Origination date	Jun. 07, 2023
Maturity date	Oct. 01, 2026
Interest rate	10.00%
Ending principal	$ 1,750,000
Non related party, Current
Non related party, Long term
Related party, Current
Related party, Long term	1,750,000
Discount	(1,706,250)
Long term, Net of discount	$ 43,750

Notes Payable and Convertible Notes Payable (Details) - Schedule of Future Principal Payments	Jun. 30, 2023 USD ($)
Schedule of Future Principal Payments [Abstract]
2023	$ 201,602
2024	3,003,295
2025	3,420
2026	1,753,551
2027	3,686
Thereafter	134,446
Total	$ 5,100,000

Stock-Based Compensation (Details) - USD ($)		1 Months Ended		3 Months Ended		6 Months Ended
Stock-Based Compensation (Details) - USD ($)	Dec. 08, 2022	Mar. 31, 2023	Jan. 31, 2022	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Sep. 27, 2017
Stock-Based Compensation [Abstract]
Total shares of common stock								6,867,747
Common stock.share issued		40,000,000
Total number of shares authorized percentage		10.00%
Stock options year			10 years			10 years
Time-based share awards percentage						33.30%
Granted an aggregate options			625,000
Shares issued of options to employees			300,000
Exercise price of options (in Dollars per share)			$ 0.049
Granted aggregate shares						950,000
Purchase shares of common stock	100,000					100,000
Exercise price per share (in Dollars per share)	$ 0.019					$ 0.031
Vesting options percentage			25.00%			25.00%
Aggregate fair value of options granted (in Dollars)						$ 0
Stock based compensation expense (in Dollars)				$ 24,978	$ 62,399	$ 29,798	$ 90,070

Stock-Based Compensation (Details) - Schedule the Stock Option Activity - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Schedule of stock option [Abstract]
Number of options, Beginning	5,460,000	5,189,167
Weighted average exercise price (per share), Beginning	$ 0.7	$ 0.86
Weighted average remaining contractual term (in years) Beginning	7 years 2 months 4 days	7 years 8 months 15 days
Number of options, Granted		1,675,000
Weighted average exercise price (per share), Granted		$ 0.04
Weighted average remaining contractual term (in years), Granted		9 years 4 months 2 days
Number of options, Exercised
Weighted average exercise price (per share), Exercised
Weighted-Average Remaining Exercised
Number of options, Forfeited/cancelled/expired	(200,000)	(1,404,167)
Weighted average exercise price (per share), Forfeited/cancelled/expired	$ 0.13	$ 0.49
Weighted-Average Remaining Forfeited/Cancelled
Number of options, Ending	5,260,000	5,460,000
Weighted average exercise price (per share), Ending	$ 0.72	$ 0.7
Weighted average remaining contractual term (in years) Ending	6 years 7 months 17 days	7 years 2 months 4 days
Number of options, Vested and exercisable	4,831,666
Weighted average exercise price (per share), Vested and exercisable	$ 0.78
Weighted average remaining contractual term (in years), Vested and exercisable	6 years 5 months 12 days

Stock-Based Compensation (Details) - Schedule of the Assumptions for the Fair Value of Share-Based Payments	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Schedule of assumptions for the fair value of share-based payments [Abstract]
Risk-free interest rate	5.40%	4.50%
Expected dividend yield	0.00%	0.00%
Expected volatility	244.80%	182.80%
Expected life of options (in years)	10 years	10 years

Leases (Details) - USD ($)			3 Months Ended		6 Months Ended
Leases (Details) - USD ($)	Sep. 08, 2021	Feb. 11, 2021	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Leases [Abstract]
Percentage of borrowing rate	5.00%	5.00%
Right of use asset	$ 298,364	$ 160,476
Right of use liability	$ 298,364	$ 160,476
Lease expiration term	Jan. 31, 2025
Lease amortization expense			$ 39,975	$ 40,069	$ 79,527	$ 79,668

Shareholders’ (Deficit) (Details) - USD ($)	6 Months Ended
Shareholders’ (Deficit) (Details) - USD ($)	Jun. 30, 2023	Mar. 31, 2023	Dec. 31, 2022
Shareholders’ (Deficit) (Details) [Line Items]
Preferred stock, par value (in Dollars per share)	$ 0.001		$ 0.001
Shares of common stock	41,625,331
Principal amount (in Dollars)	$ 4,950,000
Common stock shares authorized	800,000,000		800,000,000
Common stock par value (in Dollars per share)	$ 0.001		$ 0.001
Conversion price (in Dollars per share)	$ 0.05
Preferred stock aggregate amount, percentage	150.00%
Conversion rate of per share of common stock (in Dollars per share)	$ 0.2
Preferred Stock [Member]
Shareholders’ (Deficit) (Details) [Line Items]
Preferred stock, par value (in Dollars per share)	$ 0.001
Shares of preferred stock	20,000,000
Common Stock [Member]
Shareholders’ (Deficit) (Details) [Line Items]
Common stock, authorized capital	800,000,000
Shares of common stock		800,000,000
Warrants purchase share	2,595,270
Options to purchase shares	5,260,000
Shares of convertible promissory notes	148,000,000
Common stock shares authorized		200,000,000
Common stock par value (in Dollars per share)		$ 0.001
Series A Convertible Preferred Stock [Member]
Shareholders’ (Deficit) (Details) [Line Items]
Shares of preferred stock	4,000,000
Series B convertible preferred stock (in Dollars)	$ 4,000,000
Series B Convertible Preferred Stock [Member]
Shareholders’ (Deficit) (Details) [Line Items]
Shares of preferred stock	1,000,000
Series B convertible preferred stock (in Dollars)	$ 1,000,000
Preferred Stock [Member]
Shareholders’ (Deficit) (Details) [Line Items]
Preferred stock, par value (in Dollars per share)		$ 0.001
Preferred stock shares authorized		5,000,000
Shares of preferred stock		20,000,000
Series A Convertible Preferred Stock [Member]
Shareholders’ (Deficit) (Details) [Line Items]
Preferred stock, par value (in Dollars per share)	$ 0.001		0.001
Stated value of per share (in Dollars per share)	$ 1
Dividend rate percentage	8.00%
Series B Preferred Stock [Member]
Shareholders’ (Deficit) (Details) [Line Items]
Preferred stock, par value (in Dollars per share)	$ 0.001		$ 0.001
Stated value of per share (in Dollars per share)	$ 1
Dividend rate percentage	8.00%
Preferred stock aggregate amount, percentage	150.00%
Liquidation preference equal to the aggregate amount percentage	150.00%

Shareholders’ (Deficit) (Details) - Schedule of Preferred Stock Dividends - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Shareholders’ (Deficit) (Details) - Schedule of Preferred Stock Dividends [Line Items]
Total undeclared preferred stock dividends	$ 99,726	$ 99,726	$ 198,356	$ 198,356
Series A Preferred Stock [Member]
Shareholders’ (Deficit) (Details) - Schedule of Preferred Stock Dividends [Line Items]
Preferred stock dividends	79,781	79,781	158,685	158,685
Series B Preferred Stock [Member]
Shareholders’ (Deficit) (Details) - Schedule of Preferred Stock Dividends [Line Items]
Preferred stock dividends	$ 19,945	$ 19,945	$ 39,671	$ 39,671

Shareholders’ (Deficit) (Details) - Schedule of the Cumulative Undeclared Dividends by Class of Preferred Stock - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Class of Stock [Line Items]
Cumulative undeclared preferred stock dividends	$ 794,186	$ 595,830
Series A Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock	623,447	464,762
Series B Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock	$ 170,739	$ 131,068

Channel Reporting (Details) - Schedule of Disaggregation of Revenue - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Disaggregation of Revenue [Line Items]
Total revenue	$ 169,864	$ 273,932	$ 379,652	$ 694,839
Wholesale revenue [Member]
Disaggregation of Revenue [Line Items]
Total revenue	5,212	76,256	31,770	242,941
E-commerce revenue [Member]
Disaggregation of Revenue [Line Items]
Total revenue	$ 164,652	$ 197,676	$ 347,882	$ 451,898

Concentrations (Details)	6 Months Ended		12 Months Ended
Concentrations (Details)	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
One Customer [Member]
Concentrations (Details) [Line Items]
Sales percentage		10.00%
Accounts Receivable [Member] \| Single customer [Member]
Concentrations (Details) [Line Items]
Concentration risk percentage	10.00%
Accounts Receivable [Member] \| One Customer [Member]
Concentrations (Details) [Line Items]
Concentration risk percentage			33.00%
Accounts Receivable [Member] \| One Customer [Member] \| Concentration [Member]
Concentrations (Details) [Line Items]
Concentration risk percentage	41.00%
Accounts Receivable [Member] \| Two Customer [Member]
Concentrations (Details) [Line Items]
Concentration risk percentage			16.00%
Accounts Receivable [Member] \| Two Customer [Member] \| Concentration [Member]
Concentrations (Details) [Line Items]
Concentration risk percentage	12.00%
Accounts Receivable [Member] \| Three Customer [Member]
Concentrations (Details) [Line Items]
Accounts receivable percentage			10.00%

Related Party (Details) - USD ($)								1 Months Ended			3 Months Ended		6 Months Ended
Related Party (Details) - USD ($)	Jun. 07, 2023	May 30, 2023	Jan. 03, 2023	Oct. 11, 2022	Sep. 06, 2022	Aug. 02, 2022	Oct. 12, 2021	Nov. 16, 2022	Aug. 17, 2022	Mar. 31, 2020	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Mar. 09, 2022
Related Party (Details) [Line Items]
Principal amount	$ 3,000,000						$ 1,500,000
Convertible promissory note	$ 3,000,000	$ 250,000	$ 250,000	$ 250,000	$ 250,000	$ 250,000	$ 1,500,000	$ 250,000	$ 250,000
Conversion price per share (in Dollars per share)	$ 0.02						$ 0.05			$ 0.4
Aggregate amount	10.00%					10.00%	10.00%		10.00%	10.00%
Maturity date		Oct. 01, 2024	Oct. 01, 2024	Oct. 01, 2024	Oct. 01, 2024	Oct. 01, 2024		Oct. 01, 2024	Oct. 01, 2024
Conversion feature													$1,750,000
Net discount											$ 1,706,250		$ 1,706,250
Interest expense													43,750	$ 0
Secured convertible promissory note outstanding											1,750,000		1,750,000
Trust in exchange				$ 250,000	$ 250,000	$ 250,000		$ 250,000	$ 250,000
Related party transaction rate						10.00%
Interest rate	10.00%	10.00%	10.00%	10.00%	10.00%			10.00%	10.00%
Trust in exchange amount		$ 250,000	$ 250,000
Convertible promissory note	$ 1,750,000
Interest expense payable to related parties											198,185	$ 96,215	$ 349,057	164,827
Secured Convertible Promissory Notes [Member]
Related Party (Details) [Line Items]
Convertible promissory note															$ 3,000,000
Conversion feature													$475,000
Net discount											200,595		$ 200,595
Secured convertible promissory note outstanding											$ 3,000,000		3,000,000
Promissory Notes [Member]
Related Party (Details) [Line Items]
Interest expense													$ 80,238	$ 80,238
Secured Convertible Promissory Notes [Member]
Related Party (Details) [Line Items]
Maturity date													Oct. 01, 2024