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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended September 30, 2023

 

o 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: 000-56325

 

CuraScientific Corp.
(Exact name of registrant as specified in its charter)

 

Florida   84-5079920
(State or other jurisdiction of
incorporation or organization)		   (I.R.S. Employer
Identification No.)

 

51544 Cesar Chavez Street, Coachella, California 92236
(Address of principal executive offices) (Zip Code)

 

(909) 435-1642
(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Exchange Act: N/A

 

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 x No o

 

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 (§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 x No o

 

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 o Accelerated filer o
  Non-accelerated Filer x Smaller reporting company x
      Emerging growth company x

 

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. x

 

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

 

As of December 8, 2023, the registrant had 2,811,110,633 shares of common stock, $0.0001 par value per share, outstanding.

 

 

 

 

TABLE OF CONTENTS

 

Part I. Financial Information 3
Item 1. Consolidated Financial Statements 3
Consolidated Balance Sheets - As of September 30, 2023 (unaudited) and December 31, 2022 (audited) 3
Consolidated Statements of Operations - For the three and nine months ended September 30, 2023 and 2022 (unaudited) 4
Consolidated Statements of Changes in shareholders’ Equity (Deficit) for the three and nine months ended September 30, 2023 and 2022 (unaudited) 5
Statements of consolidated Cash Flows for the nine months ended September 30, 2023 and 2022 (unaudited) 6
Notes to the Consolidated Financial Statements 7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 28
Item 3. Quantitative and Qualitative Disclosures about Market Risk 32
Item 4. Controls and Procedures 32
   
Part II. Other Information 33
Item 1. Legal Proceedings 33
Item 1A. Risk Factors 33
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 33
Item 3. Defaults upon Senior Securities 33
Item 4. Mine Safety Disclosures 33
Item 5. Other Information 33
Item 6. Exhibits 33
   
Signatures 34

2

 

PART I — FINANCIAL INFORMATION

 

Item 1. Consolidated Financial Statements

 

CuraScientific Corp.
Consolidated Balance Sheets

 

   September 30,   December 31, 
   2023
(unaudited)		   2022
(audited) (*)		 
ASSETS          
Current Assets:          
Cash and cash equivalents  $40,911   $130 
Accounts receivable   1,868    — 
Inventory   44,824    — 
Prepaid expenses and other assets   992,104    39,738 
Total Current Assets   1,079,707    39,868 
           
Property and equipment, net   171,253    86,917 
Right-of-use operating asset   115,896    — 
Capitalized licensing fees, net   249,774    1,425,000 
           
TOTAL ASSETS  $1,616,630   $1,551,785 
           
LIABILITIES          
Current Liabilities:          
Accounts payable  $854,812   $330,489 
Convertible notes payable, net of discount   456,383    150,000 
Lease liability - current   22,610    — 
Loans payable   161,652    2,487,314 
Accrued interest   140,036    86,816 
Derivative liability   697,550    1,026,942 
Related party liabilities   87,330    103,997 
Series A Preferred Liability: $0.0001 par value; 20,000,000 shares authorized, 6,952,029 and 6,662,422 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively   23,636,899    66,624,220 
Total Current Liabilities   26,057,272    70,809,778 
           
Related party Liabilities   250,000    250,000 
Lease liability, non-current   93,286    — 
Total Non-Current Liabilities   343,286    250,000 
           
Total Liabilities   26,400,558    71,059,778 
           
Commitments and contingencies (note 11)          
           
SHAREHOLDERS’ DEFICIT          
           
Preferred stock, Series B: $0.0001 par value; 2,500 shares authorized 2,000 shares issued and outstanding at September 30, 2023 and December 31, 2022   —    — 
Common stock, $0.0001 par value; 30,000,000,000 shares authorized 2,629,582,856 and 6,659,375 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively   262,958    666 
Stock Payable   2,520,000    900,000 
Additional paid in capital   (44,888,216)   (53,954,412)
Retained earnings (Accumulated deficit)   17,321,330    (16,454,247)
Total Shareholders’ Deficit   (24,783,928)   (69,507,993)
TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT  $1,616,630   $1,551,785 

 

(*)The number of shares has been retroactively restated to reflect the one for five hundred (1 for 500) reverse stock split, which was effective on April 24, 2023.

 

The accompanying notes are an integral part of these unaudited consolidated condensed financial statements.

3

 

CuraScientific Corp.
Consolidated Statements of Operations
For the Three and Nine Months Ended September 30, 2023 and 2022
(unaudited) 

 

   Three Months Ended   Nine Months Ended 
   September 30,   September 30, 
   2023(**)   2022   2023(**)   2022 
Sales  $230,274   $—   $1,052,401   $34,434 
Cost of sales   120,595    —    577,224    12,514 
Gross profit   109,679    —    475,177    21,920 
                     
Operating expenses                    
General and administrative   248,229    68,505    584,009    336,040 
Stock-based compensation   (66,000)   85,000    534,000    375,000 
Professional fees   51,630    21,859    157,978    113,365 
Licensing fees   675,195    150,000    1,100,226    450,000 
Impairment loss   —    —    1,275,000    — 
Salaries and wages   81,230    285,333    331,599    466,333 
Depreciation   4,895    4,252    13,350    12,007 
Total operating expenses   995,179    614,949    3,996,162    1,752,745 
                     
Loss from operations   (885,500)   (614,949)   (3,520,985)   (1,730,825)
                     
Other income (expense)                    
Gain (Loss) on settlement of debt   —    2,160,125    (722,687)   2,160,125 
Change in fair value of liability   —    —    45,344,831    — 
Other income   2,737    —    5,377    — 
Change in fair value of derivative liability   (235,710)   (880,189)   356,963    (1,239,397)
Loss on Series A conversion   (4,442,946)   (73,000)   (5,912,746)   (1,588,140)
Interest expense, net   (155,060)   (397,864)   (196,550)   (1,211,471)
Other income (expense)   (4,830,979)   809,072    38,875,188    (1,878,883)
                     
Income (Loss) before income taxes   (5,716,479)   194,123    35,354,203    (3,609,708)
                     
Provision for income taxes   —    —    —    — 
                     
Net Income (Loss)  $(5,716,479)  $194,123   $35,354,203   $(3,609,708)
                     
Basic net income (loss) per share (*)  $0.00   $3.03   $0.12   $(0.89)
Diluted net income (loss) per share (*)  $—   $3.03   $0.04   $(0.89)
Weighted average common share outstanding, basic (*)   756,676,539    6,393,433    292,568,930    4,073,796 
Weighted average common share outstanding, diluted (*)   756,676,539    6,393,433    988,915,323    4,073,796 

 

(*)The number of shares has been retroactively restated to reflect the one for five hundred (1 for 500) reverse stock split, which was effective on April 24, 2023.

 

(**)Cal Care Group and CuraScientific Corp results of operations are combined as of the beginning of the period or January 1, 2023, since it was determined that there was a change in the reporting entity pursuant to ASC 250-10-45-21 and the transaction was accounted for under ASC 805-50 Common control Transactions.

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

4

 

CuraScientific Corp.
Consolidated Statement of Shareholders’ Equity (Deficit)
For the Three and Nine Months Ended September 30, 2023 and 2022
(Unaudited)
 

For the Three and Nine Months Ended September 30, 2023

 

   Preferred Stock           Additional           Total 
   Series B   Common Stock (*)   Paid-In       Accumulated   Shareholders’ 
   Shares   Amount   Shares   Amount   Capital (*)   Stock Payable   Deficit (**)   Deficit (**) 
Balance at December 31, 2022   2,000   $—    6,659,375   $666   $(53,954,412)   900,000   $(16,454,247)  $(69,507,993)
                                         
Shares of common stock issued pursuant to conversion preferred stock   —    —    333,000    33    16,617    —    —    16,650 
Preferred stock issued pursuant to consulting agreement   —    —    —    —    —    (300,000)   —    (300,000)
Net loss (*)   —    —    —    —    —    —    (204,265)   (204,265)
Balance at March 31, 2023   2,000   $—    6,992,375   $699   $(53,937,795)   600,000   $(16,658,512)  $(69,995,608)
                             
   Preferred Stock           Additional           Total 
   Series B   Common Stock   Paid-In       Accumulated   Shareholders’ 
   Shares   Amount   Shares   Amount   Capital   Stock Payable   Income (Deficit)   Income (Deficit) 
Balance at March 31, 2023   2,000   $—    6,992,375   $699   $(53,937,795)  $600,000   $(16,658,512)  $(69,995,608)
                                         
Shares of common stock issued pursuant to conversion of preferred stock   —    —    141,712,420    14,171    3,358,909    —    —    3,373,080 
Proceeds from issuance of convertible notes allocated to embedded warrants   —    —    —    —    39,251    —    —    39,251 
Preferred stock issuable to a related party pursuant to director and employment agreements   —    —    —    —    —    300,000    —    300,000 
Preferred stock issuable pursuant to a licensing agreement   —    —    —    —    —    600,000    —    600,000 
Preferred stock issuable pursuant to settlement of debt   —    —    —    —    —    100,000    —    100,000 
Acquisition of Cal Care Group   —    —    —    —    —    —    (1,578,625)   (1,578,625)
Net Income   —    —    —    —    —    —    41,274,946    41,274,946 
Balance at June 30, 2023   2,000   $—    148,704,795   $14,870   $(50,539,635)  $1,600,000   $23,037,809   $(25,886,956)
                             
   Preferred Stock           Additional           Total 
   Series B   Common Stock (*)   Paid-In       Accumulated   Shareholders’ 
   Shares   Amount   Shares   Amount   Capital (*)   Stock Payable   Profit (**)   Deficit (**) 
Balance at June 30, 2023   2,000   $—    148,704,795   $14,870   $(50,539,635)  $1,600,000   $23,037,809   $(25,886,956)
                                         
Shares of common stock issued pursuant to conversion preferred stock   —    —    2,480,878,061    248,088    5,651,419    —    —    5,899,507 
Preferred stock issued pursuant to executed Agreements   —    —    —    —    —    1,020,000    —    1,020,000 
Shares of Series A issued pursuant to settlement agreement   —    —    —    —    —    (100,000)   —    (100.000)
Net loss (*)   —    —    —    —    —    —    (5,716,479)   (5,716,479)
Balance at September 30, 2023   2,000   $—    2,629,582,856   $262,958   $(44,888,216)  $2,520,000   $17,321,330   $(24,783,928)

 

(*)The number of shares has been retroactively restated to reflect the one for five hundred (1 for 500) reverse stock split, which was effective on April 24, 2023.

 

(**)Cal Care Group and CuraScientific Corp results of operations are combined as of the beginning of the period or January 1, 2023, since it was determined that there was a change in the reporting entity pursuant to ASC 250-10-45-21 and both entities were under common control under the entire period.

 

For the Three and Nine Months Ended September 30, 2022

 

   Preferred Stock   Preferred Stock           Additional           Total 
   Series A   Series B   Common Stock (***)   Paid-In       Accumulated   Stockholders’ 
   Shares   Amount   Shares   Amount   Shares   Amount   Capital (***)   Stock Payable   Deficit   Deficit 
Balance at December 31, 2021   —   $—    1,000   $—    400,511,582   $40,051   $(58,490,434)   250,000   $(11,186,133)  $(69,386,516)
                                                   
Shares of common stock issued pursuant to conversion preferred stock   —    —    —    —    1,037,674,922    103,768    2,668,797    —    —    2,772,565 
Preferred stock issuable pursuant to consulting and director agreements   —    —    —    —    —    —    —    150,000    —    150,000 
Net loss   —    —    —    —    —    —    —    —    (4,567,535)   (4,567,535)
Balance at March 31, 2022   —   $—    1,000   $—    1,438,186,504   $143,819   $(55,821,637)   400,000   $(15,753,668)  $(71,031,486)
                                                   
Shares of common stock issued pursuant to conversion preferred stock   —    —    —    —    1,158,167,857    115,817    930,338    —    —    1,046,155 
Preferred stock issuable pursuant to consulting and director agreements   —    —    —    —    —    —    —    90,000    —    90,000 
Net loss   —    —    —    —    —    —    —    —    763,704    763,704 
Balance at June 30, 2022   —   $—    1,000   $—    2,596,354,361   $259,636   $(54,891,299)   490,000   $(14,989,964)  $(69,131,627)
                                                   
Shares of common stock issued pursuant to conversion preferred stock   —    —    —    —    733,333,332    73,333    236,667    —    —    310,000 
                                                   
Preferred stock issuable pursuant to consulting and director agreements   —    —    —    —    —    —    —    60,000    —    60,000 
                                                   
Settlement of related party payable   —    —    —    —    —    —    —    (50,000)   —    (50,000)
Net loss   —    —    —    —    —    —    —    —    194,123    194,123 
                                                   
Balance at September 30, 2022   —    —    1,000   $—    3,329,687,693   $332,969   $(54,654,632)  $500,000   $(14,795,841)  $(68,617,504)

 

(***)The number of shares and per share amounts have been retroactively restated to reflect the one for five hundred (1 for 500) reverse stock split, which was effective on April 24, 2023.

 

The accompanying notes are an integral part of these unaudited consolidated condensed financial statements.

5

 

CuraScientific Corp.
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2023 and 2022
(Unaudited) 

 

   September 30,
2023		   September 30,
2022		 
Cash flows from operating activities:          
Net Income (loss)  $35,354,203   $(3,609,708)
Adjustments to reconcile net income (loss) to net cash used in operating activities:          
Depreciation   13,350    12,007 
Amortization of convertible debt discount   43,376    610,757 
Amortization right of use asset   4,493    — 
(Gain) Loss on debt extinguishment   722,687    (2,160,125)
Amortization capitalized license fees   1,100,226    450,000 
Fair value of Preferred stock issued with licensing agreements   —    200,000 
Impairment loss on intangible   1,275,000    — 
Change in fair value of derivative liability   (356,963)   1,239,397 
Change in fair value of Series A liability   (45,344,831)   — 
Stock-based compensation   534,000    375,000 
Non-cash interest expense   —    419,168 
Loss on Series A conversion   5,912,746    1,588,140 
Decrease (increase) in operating assets and liabilities          
Accounts receivable   (1,868)   16,693 
Inventory   56,746    (5,285)
Prepaid and other assets   68,714    — 
Accounts payable   281,806    175,230 
Related party liabilities   (16,667)   279,896 
Lease liability   (4,493)   — 
Accrued interest   53,219    155,166 
Net cash used in operating activities   (304,256)   (253,664)
           
Cash flows from investing activities:          
Cash paid for acquisition of licenses   (50,000)   — 
Acquisition of fixed assets   (97,686)   (14,914)
Cash acquired from Cal Care common control transaction   126,738    — 
Net cash provided by (used in) investing activities   (20,948)   (14,914)
           
Cash flows from financing activities:          
Proceeds from convertible debt   327,875    245,394 
Proceeds from promissory notes   38,110    — 
Net cash provided by financing activities   365,985    245,394 
           
Net increase (decrease) in cash   40,781    (23,184)
           
Cash, beginning of period   130    23,360 
Cash, end of period  $40,911   $176 
           
Supplemental Disclosures of Cash Flow Information          
           
Cash paid for interest  $—   $3,336 
Cash paid for taxes  $—   $— 
           
Supplemental Disclosures of Non-Cash Investing and Financing Activities          
           
Common shares issued pursuant to Series Preferred conversion  $16,650   $— 
Preferred stock issued pursuant to consulting agreement  $300,000   $— 
Original debt discount related to new debt  $66,822   $515,356 
Corporate expenses paid by investors  $13,542   $— 
Acquisition of license with preferred stock  $1,100,000   $— 
Initial recognition of right-of-use asset  $120,389   $— 
Series Preferred issued for leasing of cannabis equipment  $1,020,000   $— 

 

The accompanying notes are an integral part of these unaudited consolidated condensed financial statements.

6

 

CuraScientific Corp.
Notes to the Consolidated Financial Statements
September 30, 2023
 

NOTE 1 – NATURE OF OPERATIONS AND GOING CONCERN

 

Organization and Description of Business

 

CuraScientific Corp. (“Cura,” the “Company,” and “our”), formerly known as Boon Industries Inc. (“Boon”), is currently a bioscience company that manufactures commercial chemical products with various applications in commercial sterilization for agriculture, warehousing, hospitality and medical facilities. The Company’s wholly owned subsidiary, Matrix of Life Tech Trust, works with the Company with applications in the beverage and nutritional supplement industries, and water bottling operations in Grants Pass, Oregon, where it produces bottled water and a range of products for the health and wellness industry.

 

On October 1, 2022, the Company executed a share exchange agreement with Cal Care Group, Inc. (“Cal Care”) and William Reed, the current Company’s President, Chief Executive Officer, director and controlling shareholder of the Company and sole shareholder of Cal Care.

 

Cal Care is a California corporation with products and services in the cannabis retail, manufacturing, distribution, and delivery. Cal Care is a licensed delivery and distribution company with locations in Southern and Northern California. Headquartered in San Jacinto, California, Cal Care’s core strategic business is its end-market access as a central player in the growing California cannabis delivery marketplace while developing its in-house cannabis production capacity to verticalize operations in the space. The Company acquired all of the issued and outstanding shares of Cal Care in exchange for 500,000 Series A preferred shares of the Company on April 5, 2023. Although the agreement provided for closing on the same date the agreement was entered into, the promised contractual consideration, being the 500,000 shares of Series A preferred stock, was not issued to Mr. Reed until April 5, 2023. Accordingly, the Board of Directors of the Company concluded that the closing of the transactions under the agreement was not effective until April 5, 2023. The Company accounted for this transaction as a common-control business combination under ASC 805-50 Business Combinations Related Issues. The Company recognized the assets and liabilities at their carrying amounts in the financial statements of Cal Care on the date of transfer. The difference between the proceeds transferred and the carrying amounts of the net assets was considered equity transactions that was eliminated in consolidation, and no gain or loss was recognized in the consolidated financial statements of CuraScientific, Inc.

 

On April 25, 2023, Cal Care and JW Brands LLC executed an intellectual property license purchase under which Cal Care acquired three cannabis licenses C9-0000183 (Retail), C11-0000327 (Distribution), and CDPH-10003817 (Manufacturing) for a total consideration of $600,000.

 

The company operates under the licenses of JW Brands, LLC, including a cannabis retailer non-storefront license adult-use and medicinal (business name: JW BRANDS, LLC Palm Delivery License Number: C9-0000183-LIC License Type: Provisional Retailer Non storefront), a cannabis distributor license adult-use and medicinal License Number: C11-0000327-LIC, and a cannabis manufacturer license, and cannabis manufacturer license adult-use and medicinal (business name: JW BRANDS, LLC Palm Delivery License Number: CDPH-10003817-LIC License Type: Provisional Type-7: Volatile Solvent Extraction).

 

On May 24, 2023, Cal Care acquired the commercial microbusiness cannabis license C12-0000334 for a total consideration of $600,000 payable by the issuance of 60,000 shares of Series A with a stated value of $10 per share.

 

Reincorporation Merger

 

On November 8, 2022, the shareholders of Boon Industries, Inc. approved an agreement and plan of merger, pursuant to which Boon merged with and into CuraScientific corporation, a newly formed Florida corporation and a wholly owned subsidiary of Boon, which resulted in Boon’s reincorporation from the State of Oklahoma to the State of Florida and change the Company’s name to CuraScientific corporation.

7

 

The shareholders also approved the implementation of a reverse stock split of its common stock on the basis of the issuance of one share of CuraScientific corporation’s common stock for each 500 shares of common stock of Boon issued and outstanding prior to the reincorporation merger (“reverse stock split”). Each share of Series A preferred stock of the Company converted into one share of Series A preferred stock of CuraScientific Corp. and each share of Series B preferred stock of the Company converted into one share of Series B preferred stock of CuraScientific Corp.

 

The reverse stock split and name change became effective with the Financial Industry Regulatory Authority (“FINRA”) on April 24, 2023, whereupon the shares of CuraScientific common stock began trading on a split-adjusted basis under the trading symbol “CSTF”. All share and per share related numbers in these consolidated financial statements give effect to the reverse stock split, which was effective on April 24, 2023.

 

On September 15, 2023, the Company entered into an intellectual property exchange agreement with Bavana, LLC (“Bavana”). The Company’s wholly owned subsidiary, Cal Care, is the owner of J.W Brands LLC that holds three cannabis licenses. The Company exchanged and acquired from Bavana, free and clear of all encumbrances, all of Bavana’s right, title, and interest, in and to assets with a total fair value of $863,000 in exchange for 300,000 Series A preferred stock and the assignment to Bavana of the cannabis manufacturer license adult-use and medicinal (license number: CDPH-10003817-LIC).

 

Going concern, liquidity, and capital resources

 

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As of September 30, 2023, the Company’s current liabilities exceeded its current assets by approximately $25.0 million. The Company has recorded a net income of $35.4 million for the nine months ended September 30, 2023, of which $45.3 million is a non cash item resulting from the mark to market revaluation of the Company’s series A preferred stock liability, has negative cash flow from operations of approximately $0.3 million, has an accumulated profit of $17.4 million as of September 30, 2023 mainly due to the revaluation of the Company’s Series A liability for $45.3 million, and has limited business operations, has operating loss of $3.5 million, which raises substantial doubt about the Company’s ability to continue as a going concern.

 

The ability of the Company to meet its commitments as they become payable is dependent on the ability of the Company to obtain necessary financing or to achieve a profitable level of operations.

 

The Company has arranged financing through convertible debts and intends to utilize the cash received to fund its operations. The Company plans to seek additional financing, if necessary, in private or public equity offering to secure future funding for operations until the Company becomes profitable. If the Company is not able to secure additional funding, the implementation of the Company’s business plan will be impaired. There can be no assurance that such additional financing will be available to the Company on acceptable terms or at all.

 

These consolidated financial statements do not give effect to adjustments to the amounts and classification to assets and liabilities that would be necessary should the Company be unable to continue as a going concern.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The Company maintains its accounting records on an accrual basis in accordance with GAAP. These consolidated financial statements are presented in United States dollars. The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q. All adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations for the interim periods have been made and are of a recurring nature unless otherwise disclosed herein.

8

 

Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management regularly evaluates estimates and assumptions related to the valuation of assets and liabilities. Management bases its estimates and assumptions on current facts, historical experience, and various other factors that 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 and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from management’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Significant estimates include:

 

■Liability for legal contingencies.

 

■Useful life of assets.

 

■Deferred income taxes and related valuation allowance.

 

■Impairment of finite-life intangible.

 

■Obsolescence of inventory

 

■Stock-based compensation using the Black Scholes option pricing model.

 

Segment Reporting

 

The Company operates as one reportable segment under ASC 280, Segment Reporting. The Chief operating decision maker regularly reviews the financial information of the Company at a consolidated level in deciding how to allocate resources and in assessing performance.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid investments with maturities of 90 days or less from the date of purchase to be cash equivalents. The Company did not have any cash equivalents as of September 30, 2023, and December 31, 2022, respectively.

 

Fair value of Financial Instruments and Fair Value Measurements

 

Accounting Standards Codification (“ASC”) 820 Fair Value Measurements and Disclosures, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value.

 

Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability.

 

In addition to defining fair value, the standard expands the disclosure requirements around the value and establishing a fair value hierarchy for valuation inputs is expanded. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring the value are observable in the market.

 

A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

 

Level 1 – Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.

 

Level 2 – Inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in market that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 

Level 3 – Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models and similar techniques.

9

 

The reported fair values for financial instruments that use Level 2 and Level 3 inputs to determine fair value are based on a variety of factors and assumptions. Accordingly, certain fair values may not represent actual values of the Company’s financial instruments that could have been realized as of September 30, 2023, or that will be recognized in the future, and do not include expenses that could be incurred in an actual settlement.

 

The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts receivable, inventory, prepaid expenses and other assets, accounts payable, accrued interest, related party liabilities approximate fair value due to their relatively short maturities.

 

The Company’s convertible notes payable and loans payable approximates the fair value of such liabilities based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements and due to the short-term nature of these instruments at September 30, 2023, and December 31, 2022.

 

The fair value of the Company’s recorded derivative liability is determined based on unobservable inputs that are not corroborated by market data, which require a Level 3 classification. A Black-Sholes option valuation model was used to determine the fair value. The Company records derivative liability on the balance sheets at fair value with changes in fair value recorded in the statements of operation.

 

The following table presents balances of the liabilities with significant unobservable inputs (Level 3) as of September 30, 2023, and December 31, 2022:

 

   Fair Value Measurements at September 30, 2023, Using 
   Quoted
Prices in
Active
Markets for		   Significant
Other
Observable		   Significant
Unobservable		     
   Identical Assets   Inputs   Inputs     
   (Level 1)   (Level 2)   (Level 3)   Total 
Derivative liability  $—   $—   $697,550   $697,550 
Total  $—   $—   $697,550   $697,550 
                     
   Fair Value Measurements at December 31, 2022, Using 
   Quoted
Prices in
Active
Markets for		   Significant
Other
Observable		   Significant
Unobservable		     
   Identical Assets   Inputs   Inputs     
   (Level 1)   (Level 2)   (Level 3)   Total 
Derivative liability  $—   $—   $1,026,942   $1,026,942 
Total  $—   $—   $1,026,942   $1,026,942 

10

 

The following table presents changes of the liabilities with significant unobservable inputs (Level 3) for the nine months ended September 30, 2023:

 

 

   Derivative 
   Liability 
Balance December 31, 2022  $1,026,942 
New derivative from convertible notes   27,571 
Change in fair value of derivative   (356,963)
Balance September 30, 2023  $697,550 

 

Derivative Liability

 

The Company measures the derivative liability using the Black-Scholes option valuation model using the following assumptions:

 

   September 30, 2023
    
Expected term  1 month – 1 year
Exercise price  $0.00008-$0.00820
Expected volatility  342%-658%
Expected dividends  None
Risk-free interest rate  4.74%-5.50%
Forfeitures  None

 

The assumptions used in determining fair value represent management’s best estimates, but these estimates involve inherent uncertainties and the application of management’s judgment. As a result, if factors change, including changes in the market value of the Company’s common stock, managements’ assessment, or significant fluctuations in the volatility of the trading market for the Company’s common stock, the Company’s fair value estimates could be materially different in the future.

 

The Company computes the fair value of the derivative liability at each reporting period and the change in the fair value is recorded as non-cash expense or non-cash income. The key component in the value of the derivative liability is the Company’s stock price, which is subject to significant fluctuation and is not under its control, and the assessment of volatility. The resulting effect on net income (loss) is therefore subject to significant fluctuation and will continue to be so until the Company’s variable rate debentures, which the convertible feature is associated with, are converted into common stock or paid in full with cash. Assuming all other fair value inputs remain constant, the Company will record non-cash expense when its stock price increases and non-cash income when its stock price decreases.

 

Stock-Based Compensation

 

The Company accounts for employee stock-based compensation in accordance with the fair value recognition provisions of ASC Topic 718, Compensation – Stock Compensation (“ASC 718”). Under this method, compensation expense includes compensation expense for all stock-based payments based on the grant-date fair value. Such amounts have been reduced to reflect the Company’s estimate of forfeitures of all unvested awards.

 

The Company uses the Black-Scholes pricing model to determine the fair value of the stock- based compensation that it grants to employees and non-employees. The Black-Scholes pricing model takes into consideration such factors as the estimated term of the securities, the conversion or exercise price of the securities, the volatility of the price of the Company’s common stock, interest rates, and the probability that the securities will be converted or exercised to determine the fair value of the securities. The selection of these criteria requires management judgment and may impact on the Company’s net income or loss. The computation of volatility is intended to produce a value that is representative of the Company’s expectations about the future volatility of the price of its common stock over an expected term. The Company used its share price history to determine volatility and cannot predict what the price of its shares of common stock will be in the future. As a result, the volatility value that the Company calculated may differ from the actual volatility of the price of its shares of common stock in the future.

 

The Company does not have any stock options as of September 30, 2023, and December 31, 2022.

11

 

Convertible Instruments

 

The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with ASC 815 “Derivatives and Hedging”. ASC 815 generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur, and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. Professional standards also provide an exception to this rule when the host instrument is deemed to be conventional as defined under professional standards as “The Meaning of Conventional Convertible Debt Instrument.”

 

ASC 815-40 “Derivatives and Hedging - Contracts in Entity’s Own Equity” provides that, among other things, generally, if an event is not within the entity’s control could or require net cash settlement, then the contract shall be classified as an asset or a liability.

 

Debt issuance costs and debt discounts

 

Debt issuance costs and debt discounts are being amortized over the lives of the related financings on a basis that approximates the effective interest method. Costs and discounts are presented as a reduction of the related debt in the accompanying consolidated balance sheets.

 

Revenue Recognition

 

The Company recognizes revenue in accordance with ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606).

 

Under ASU 2014-9, the Company recognizes revenue when its customers obtain control of the promised good or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. The Company applies the following five-step: (i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation.

 

At contract inception, once the contract is determined to be within the scope of ASU 2014-09, the Company identifies the performance obligation(s) in the contract by assessing whether the goods or services promised within each contract are distinct.

 

Revenue is recognized when the control of the promised goods or services, through performance obligation, is transferred/provided to the customer in an amount that reflects the consideration we expect to be entitled to in exchange for the performance obligations.

 

The Company generates revenue from the sale of cannabis products, which is recognized at one point in time, at delivery.

12

 

For the three and nine months ended September 30, 2023 and 2022, the sources of revenue were as follows:

 

   Three Months Ended   Nine Months Ended 
   September 30,   September 30, 
   2023   2022   2023   2022 
Revenue from sale of cannabis at one point in time  $230,274   $—   $1,052,401   $— 
Service income at point in time   —    —    —    34,434 
Total revenue  $230,274   $—   $1,052,401   $34,434 

 

The Company’s performance obligations are established when a customer submits a purchase order notification (in writing, electronically or verbally) for goods, and the Company accepts the order. The Company identifies the performance obligation as the delivery of the requested product in appropriate quantities and to the location specified in the customer’s contract and/or purchase order. The Company generally recognizes revenue when the product or service has been transferred to the customer, at which time the Company has an unconditional right to receive payment. The Company’s sales and sale prices are final, and the selling prices are not affected by contingent events that could impact the transaction price.

 

Concentration of Credit Risk

 

The Company maintains its cash in bank and financial institution deposits that at times may exceed federally insured limits. The Company has not experienced any losses in such accounts through September 30, 2023.

 

Capitalized licensing fees

 

The Company records its intangible assets at cost in accordance with ASC 350, Intangibles – Goodwill and Other. The Company reviews the intangible assets for impairment on an annual basis or if events or changes in circumstances indicate it is more likely than not that they are impaired. These events could include a significant change in the business climate, legal factors, a decline in operating performance, competition, sale, or disposition of a significant portion of the business, or other factors. If the review indicates the impairment, an impairment loss would be recorded for the difference of the value recorded and the new value.

 

For the nine months ended September 30, 2023 and 2022, the Company recognized $1,275,000 of impairment loss related to the exclusive distribution and licensing agreement with C Group LLC.

 

During the nine months ended September 30, 2023, the Company recognized $600,000 of capitalized licensing fee regarding the three licenses acquired from JW Brands LLC. The Company amortizes the capitalized licensing fees over the remaining legal term of the underlying licensing agreement.

 

During the nine months ended September 30, 2023, the Company recognized $600,000 of capitalized licensing fee regarding the three licenses acquired from Chad Enterprises LLC. The Company amortizes the capitalized licensing fees over the remaining legal term of the underlying licensing agreement.

 

Impairment of Long-Lived Assets

 

The Company reviews long-lived assets, including definite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of these assets is determined by comparing the forecasted undiscounted net cash flows of the operation to which the assets relate to the carrying amount. If the operation is determined to be unable to recover the carrying amount of its assets, then these assets are written down first, followed by other long-lived assets of the operation to fair value. Fair value is determined based on discounted cash flows or appraised values, depending on the nature of the assets. For the three and nine months ended September 30, 2023 and 2022, there were no impairment losses recognized for long-lived assets.

13

 

Inventories

 

Inventories are stated at the lower of cost, computed using the first-in, first-out method (“FIFO”), and net realizable value. Any adjustments to reduce the cost of inventories to their net realizable value are recognized in earnings in the current period.

 

Accounts Receivable

 

Accounts receivable are stated at net realizable value, and as such, earnings are charged with a provision for doubtful accounts based on our best estimate of the amount of probable credit losses in our existing accounts receivable. We determine an allowance based on historical write-off experience and specific account information available. Accounts receivable are reflected in the accompanying consolidated balance sheets net of a valuation allowance of $0 as of September 30, 2023, and December 31, 2022. When internal collection efforts on accounts have been exhausted, the accounts are written off by reducing the allowance for doubtful accounts and the related customer receivable. The Company did not recognize any bad debt expense during the nine months ended September 30, 2023.

 

Basic and Diluted Income (Loss) Per Share

 

In accordance with ASC Topic 280 – “Earnings Per Share”, the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.

 

The Company does not have any stock options or warrants as of September 30, 2023. The Company has approximately $[   ] of principal and accrued interest from convertible notes, of which $[   ] are currently convertible and have a conversion option in the money as of September 30, 2023. This would result in the issuance of [   ] shares of common stock for the diluted income per share for the three and nine months ended September 30, 2023.

 

Income Taxes

 

The Company records deferred taxes in accordance with FASB ASC No. 740, Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and loss carry forwards and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rules on deferred tax assets and liabilities is recognized in operations in the year of change. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized.

 

Business Combinations under common control

 

Pursuant to ASC 805-50, a common-control transaction does not meet the definition of a business combination because there is no change in control over the net assets before and after the transaction. The accounting for these transactions is addressed in the “Transactions Between Entities Under Common Control”. The net assets are derecognized by the transferring entity and recognized by the receiving entity at the historical cost of the parent of the entities under common control. Any difference between the proceeds transferred or received and the carrying amounts of the net assets is recognized in equity in the transferring and receiving entities’ separate financial statements and eliminated in consolidation. The change in accounting principle is applied retroactively for all periods presented.

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Recent Accounting Pronouncements

 

In August 2020, the FASB issued “ASU 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)” (“ASU 2020-06”) which simplifies the accounting for convertible instruments. The guidance removes certain accounting models which separate the embedded conversion features from the host contract for convertible instruments. Either a modified retrospective method of transition or a fully retrospective method of transition was permissible for the adoption of this standard. Update No. 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption was permitted no earlier than the fiscal year beginning after December 15, 2020. The Company adopted ASU 2020-06 on January 1, 2023, which eliminated, among other things, the beneficial conversion model and requires the instrument to be recorded as a single liability. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

 

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments included in ASU 2016-13 require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Although the new standard, known as the current expected credit loss (“CECL”) model, has a greater impact on financial institutions, most other organizations with financial instruments or other assets (trade receivables, contract assets, lease receivables, financial guarantees, loans and loan commitments, and held-to-maturity (HTM) debt securities) are subject to the CECL model and will need to use forward-looking information to better evaluate their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. ASU 2016-13 was originally effective for public companies for fiscal years beginning after December 15, 2019. In November of 2019, the FASB issued ASU 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, which delayed the implementation of ASU 2016-13 to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years for smaller reporting companies. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

 

The Company has evaluated all the recent accounting pronouncements and determined that there are no accounting pronouncements that will have a material effect on the Company’s financial statements.

 

NOTE 3 – PROPERTY AND EQUIPMENT

 

Property and equipment consisted of the following at September 30, 2023, and December 31, 2022:

 

Schedule of Property and Equipment

   September 30,   December 31, 
   2023   2022 
Emulsification equipment  $163,651   $163,651 
Leasehold improvements   6,877    6,877 
Cannabis equipment   97,686    — 
Truck   10,000    10,000 
Fixed assets, gross   278,214    180,528 
Less accumulated depreciation   (106,961)   (93,611)
Property and Equipment, Net  $171,253   $86,917 

 

Depreciation was $13,350 and $12,007 for the nine months ended September 30, 2023 and 2022, respectively. Depreciation was approximately $4,895 and $4,252 for the three months ended September 30, 2023 and 2022, respectively.

15

 

NOTE 4 – INTANGIBLE, NET

 

Intangible consisted of the following at September 30, 2023, and December 31, 2022:

 

 

   September 30,   December 31, 
   2023   2022 
C-Group LLC Capitalized Licensing fees  $3,000,000   $3,000,000 
Chad Enterprises LLC licensing fees   600,000    — 
JW Brands LLC Licensing fees   600,000    — 
Gross Amount Capitalized Licensing fees   4,200,000    3,000,000 
Less accumulated depreciation   (2,675,226)   (1,575,000)
Less impairment of C-Group licensing fees   (1,275,000)   — 
Licensing fees, net  $249,774   $1,425,000 

 

C Group LLC

 

On May 13, 2020, we entered into an exclusive distribution and licensing agreement with C Group LLC, a former convertible notes holder, under which we intend to sell indoor agricultural growing pods utilizing C-Group’s proprietary technology to our existing and future customers. The growing pods are a self-contained 800 sq ft steel container consisting of computerized climate and irrigation control. Pursuant to this agreement, the Company issued 300,000 shares of our Series A Preferred Stock to Anthony Super, the President of C Group LLC.

 

The Company is amortizing the capitalized licensing fees over the five-year term of the exclusive distribution and licensing agreement. Amortization expenses were $150,000 and $450,000 for the nine months ended September 30, 2023 and 2022, respectively. The Company fully impaired the remaining carrying cost of $1,275,000 as of September 30, 2023. Such amount was reported as impairment loss in the Company’s consolidated condensed statement of operation for the nine months ended September 30, 2023.

 

JW Brands Licensing Agreement

 

On April 25, 2023, the Company, through its wholly owned subsidiary, executed a license agreement with JW Brands LLC (“JW”). JW is the owner of Cannabis licenses C9-0000183 (retail), C11-0000327 (Distribution), and CDPH-10003817 (Manufacturing) in good standing in the State of California, which the Company acquired for a total consideration of $600,000 worth of the Company’s shares of Series A. The Company issued 40,000 shares of Series A for a total stated value of $400,000 as of September 30, 2023. The balance of $200,000 is to be paid in $50,000 monthly increments commencing on June 1, 2023, and ending on September 1, 2023. The Company paid $50,000 as of June 30, 2023. The remaining amount owed is $150,000 and is reported under accounts payable in the consolidated balance sheet as of September 30, 2023. The Company amortized the capitalized licensing fees over the remaining legal term of such licenses. There was no impairment of such capitalized licensing fees for the nine months ended September 30, 2023.

 

Amortization expense was $600,000 for the nine months ended September 30, 2023, and the remaining unamortized capitalized licensing fees were $0 as of September 30, 2023.

 

On September 15, 2023, the Company executed an asset exchange agreement with a twelve-month term with Bavana, LLC, under which the Company through its wholly owned subsidiary rented non-monetary assets for the exchange of the JW Brands LLC manufacturing type 7 cannabis license with a carrying value of $0 and 300,000 shares of Series A preferred stock. Concurrently with such agreement, the Company executed a revenue sharing agreement under which Bavana, LLC will provide all personnel to operate, maintain and produce all products for extraction in return for 10% of the net profits of all products produced under the Type-7 license. The Company accounted for such a transaction as a rental arrangement and recorded the fair value of the Series A shares as prepaid and recognized rent over the twelve-month period of the agreement.

16

 

Chad Enterprises, LLC Licensing Agreement

 

On May 24, 2023, the Company, through its wholly owned subsidiary, executed a license agreement with Chad Enterprises, LLC (“Chad”). Chad is the owner of a commercial microbusiness Cannabis license C12-0000334, which the Company acquired for a total consideration of $600,000 worth of the Company’s shares of Series A. The license is for distributor, level 1 manufacturer, retailer non-storefront adult-use and medicinal and expires on December 31, 2023. The shares of Series A have not yet been issued as of September 30, 2023, and are reported under stock payable in the Company’s consolidated condensed balance sheet as of September 30, 2023. There was no impairment of such capitalized licensing fees for the nine months ended September 30, 2023.

 

Amortization expense was approximately $350,226 for the nine months ended September 30, 2023, and the remaining unamortized capitalized licensing fees was $249,774 as of September 30, 2023.

 

NOTE 5 – CONVERTIBLE NOTES PAYABLE

 

As of September 30, 2023, and December 31, 2022, convertible notes payable are comprised of the following:

 

   Original  Original  Due  Interest  Conversion  September 30,   December 31, 
   Note Amount  Note Date  Date  Rate  Rate  2023   2022 
V Group (in default)  150,000  12/12/2019  12/12/2020  12%  Variable   150,000    150,000 
1800 Diagonal Lending #1  57,750  6/2/2023  3/2/2024  9%  Variable   57,750    — 
1800 Diagonal Lending #2  47,250  7/12/2023  4/12/2024  9%  Variable   47,250    — 
GS Capital Partners  125,000  6/2/2023  12/2/2023  8%  Fix   125,000    — 
Fourth Man LLC (in default)  115,000  6/20/2023  6/20/2024  12%  Fix   115,000    — 
Pacific Pier Capital (in default)  60,000  8/29/2023  8/29/2024  12%      60,000    — 
 Total convertible notes, gross                  $555,000   $150,000 
Debt discount                  (98,617)   — 
Total Notes payable, net of discount                 $456,383   $150,000 
 Notes payable, current                 $(456,383)  $(150,000)
Notes payable, non-current                 $—   $— 
Accrued interest                 $91,088   $48,970 

 

During the three and nine months ended September 30, 2023, the Company recognized $16,479 and $44,617 of interest on the existing convertible notes payable, respectively.

 

1800 Diagonal Lending (“diagonal #1”)

 

On June 2, 2023, the Company issued a convertible promissory note to Diagonal for $50,000 of cash consideration, net of $7,750 of financing costs and original issue discount, for principal amount of $57,750. The interest rate under the convertible promissory note is 9% per year or 22% upon an event of default, and the principal and all accrued but unpaid interest are due on March 2, 2024. The note is convertible at any time 180 days following issuance at a discount to market price, as a result the note is not convertible as of September 30, 2023. The note includes a prepayment feature at a premium of 28% from the issuance date and up to 180 days. The note includes a 50% penalty premium on unpaid principal and interest upon an event of default. The note is not in default as of September 30, 2023 (see note 12).

 

The Company incurred approximately $1,310 and $1,709 of interest during the three and nine months ended September 30, 2023, respectively. The Company amortized through interest expense approximately $3,394 of debt discount from the original issue discount. The remaining unamortized debt discount amounts to $4,356 as of September 30, 2023.

17

 

1800 Diagonal Lending (“diagonal #2”)

 

On July 12, 2023, the Company issued a convertible promissory note to Diagonal for $40,000 of cash consideration, net of $7,250 of financing costs and original issue discount, for principal amount of $47,250. The interest rate under the convertible promissory note is 9% per year or 22% upon an event of default, and the principal and all accrued but unpaid interest are due on April 12, 2024. The note is convertible at any time 180 days following issuance at a discount to market price, as a result the note is not convertible as of September 30, 2023. The note includes a prepayment feature at a premium of 28% from the issuance date and up to 180 days. The note includes a 50% penalty premium on unpaid principal and interest upon an event of default. The note is not in default as of September 30, 2023 (see note 12). The Company incurred approximately $930 of interest during the three and nine months ended September 30, 2023. The Company amortized through interest expense approximately $2,110 of debt discount from the original issue discount during the three and nine months ended September 30, 2023. The remaining unamortized debt discount amounts to $5,141 as of September 30, 2023.

 

GS Capital Partners (“GS”)

 

On June 2, 2023, the Company issued a convertible redeemable promissory note to GS for cash proceeds of $110,000, net of $15,000 of financing costs and original issue discount for a principal amount of $125,000. The interest rate under the convertible promissory note is 8% per year or 24% upon an event of default, and the principal and all accrued but unpaid interest are due on December 2, 2023. The note is convertible at any time at a fixed conversion price. Upon an event of default, the note is convertible at a lower fixed conversion price, or a variable rate calculated as the lowest trading price during the default period. The note can be prepaid without penalty. Any sale event would result in a premium to the principal of 50%.

 

The Company incurred approximately $5,014 of interest during the nine months ended September 30, 2023. The Company amortized through interest expense approximately $9,840 of debt discount from the original issue discount during the nine months ended September 30, 2023. The remaining unamortized debt discount amounts to approximately $5,160 as of September 30, 2023.

 

Fourth Man LLC (“Fourth Man”) in technical default

 

On June 20, 2023, the Company issued a convertible promissory note to Fourth Man for cash consideration of $84,475, net of $30,525 of financing costs and original issue discount for principal amount of $115,000. The interest rate under the convertible promissory note is 12% per year or 16% upon an event of default, and the principal and all accrued but unpaid interest are due on June 20, 2024. The note has a guaranteed twelve-month coupon or $13,800. The note is convertible at any time at a fixed conversion price initially set at $0.05, but subject to down round protection. The note requires ten (10) mandatory monthly installments starting in September 2023. The note includes a 50% penalty premium on unpaid principal and interest upon an event of default.

 

Fourth Man note is in technical default as of September 30, 2023, as the Company entered into a variable rate transaction and also failed to make the required monthly amortization payment to Fourth Man pursuant to the terms of the promissory note agreement. Upon the occurrence of any event of default the holder can adjust the conversion price to $0.0014 per share of Common Stock. As the note is in technical default, the Company accrued $64,400 of default penalty premium, which is reported in accounts payable and accrued liabilities in the consolidated condensed balance sheet as of September 30, 2023.

 

In connection with the issuance of the Fourth Man note, the Company also issued 4,762,917 common stock warrants to purchase an equivalent number of the Company’s shares of common stock. The stock warrants have a fixed conversion price subject to standard anti-dilution provisions and a five-year term.

 

The Company incurred $13,800 of interest during the nine months ended September 30, 2023. The Company amortized through interest expense approximately $26,585 of debt discount from the original issue discount, deferred financing costs, proceeds allocated to the warrants and the derivative liability during the nine months ended September 30, 2023. The remaining unamortized debt discount amounts to $68,808 as of September 30, 2023.

18

 

Pacific Pier Capital (“Pacific”) – In default from cross default

 

On August 29, 2023, the Company issued a convertible promissory note to Pacific for cash consideration of $43,400, net of $16,600 of financing costs and original issue discount for principal amount of $60,000. The interest rate under the convertible promissory note is 12% per year or 16% upon an event of default, and the principal and all accrued but unpaid interest are due on August 29, 2024. The note has a guaranteed twelve-month coupon or $7,200. The note is a self-amortization note with required repayments starting on November 29, 2023. The note includes a 50% penalty premium on unpaid principal and interest upon an event of default. Following the occurrence of default of Fourth Man, the Pacific note was considered in technical default pursuant to the cross-default provision of the agreement as of September 30, 2023. The Company accrued $33,600 of penalty resulting from this default representing 50% of the principal and interest as of September 30, 2023, which is reported in accounts payable and accrued liabilities as of September 30, 2023.

 

The note is convertible upon an event of default at a fixed conversion rate, subject to down round provision.

 

During the nine months ended September 30, 2023, the Company incurred $7,200 of interest. Accrued interest was $7,200 as of September 30, 2023. The Company amortized through interest expense approximately $1,452 of debt discount from the original issue discount. The remaining unamortized debt discount amounts to $15,150 as of September 30, 2023.

 

In addition, the Company issued 6,000,000 common stock purchase warrants to Pacific to acquire an equivalent number of the Company’s common stock. Such warrants are exercisable at any time after issuance at a strike price of $0.02 and subject to adjustments with a term of five years and contain a cashless feature. The Company determined that the fair value of these warrants was de minimis on grant date.

 

NOTE 6 – SHORT TERM LIABILITIES

 

As of September 30, 2023, and December 31, 2022, short term debt was comprised of the following:

 

 

   Original  Original  Due  Interest  September 30,   December 31, 
   Note Amount  Note Date  Date  Rate  2023   2022 
Carolyn Hamburger (in default)  100,000  12/12/2014  12/12/2019  10%   100,000    100,000 
Doris Notter (in default)  10,000  12/31/2014  12/31/2019  15%   10,000    10,000 
Charles Hatley  25,000  9/29/2023  9/28/2024  10%   25,000    — 
Direct Capital cash advances  3,757  —  —  —   3,757    — 
Maguire cash advances  22,895  —  —  —   22,895    — 
Maguire & Associate  1,008,919  9/30/2022  12/31/2022  0%   —    1,008,920 
Maguire & Associate  1,368,394  9/30/2022  12/31/2022  0%   —    1,368,394 
Total short-term liabilities              $161,652   $2,487,314 
Accrued interest              $46,447   $37,846 

 

Carolyn Hamburger (in default)

 

On December 12, 2014, the Company’s predecessor Matrix received a $100,000 loan from Carolyn Hamburger at 10% interest evidenced by a note for $100,000 issued by Matrix. The note matured on December 12, 2019. The note is secured by the Company’s emulsification equipment acquired in the Matrix Acquisition. This Note does not convert into securities of the Company. As of September 30, 2023, and December 31, 2022, the note had a principal balance of $100,000. Accrued interest totaled $33,321 and $25,841, as of September 30, 2023, and December 31, 2022, respectively.

 

During the nine months ended September 30, 2023, the Company paid $0 of interest in cast and incurred $7,480 of interest. This note is currently past maturity, but no notice of default has been received by the Company as of September 30, 2023

19

 

Doris Notter (in default)

 

On December 31, 2014, Matrix received a $10,000 unsecured loan from Doris Notter at 15% interest and a maturity date of December 31, 2019. As of September 30, 2023, and December 31, 2022, the note had a principal balance of $10,000. Accrued interest was $13,126 and 12,004 as of September 30, 2023, and December 31, 2022, respectively. No payment was made during the nine months ended September 30, 2023. This note is currently past maturity, but no notice of default has been received by the Company as September 30, 2023.

 

Maguire and Associates Inc. #1 (“Maguire”)

 

On September 30, 2022, Maguire and Associates Inc. converted all of the outstanding convertible notes from Optempus Investments LLC, Direct Capital Group, Inc., and C Group LLC for a total principal balance of $834,000 with the issuance of a non-interest promissory note in the amount of $1,008,920 with a maturity date of December 31, 2022. The note is secured with $1,100,000 of Preferred Series A with a stated value of $10 per share or 110,000 shares of Preferred Series A. Pursuant to the default provision, the Company issued 110,000 Series A preferred stock with a stated value of $1,100,000 for full settlement of the principal amount, which resulted in the recognition of $91,081 loss from debt extinguishment.

 

During the nine months ended September 30, 2023, Maguire paid $22,895 of working capital expenses of the Company.

 

Maguire and Associates Inc. #2 (“Maguire”)

 

On September 30, 2022, the Company executed a debt settlement agreement with Maguire & Associates, LLC, a holder of convertible notes in the aggregate principal amount of $1,368,394. Maguire agreed to cancel all of the convertible notes, inclusive of the principal and all accumulated interest and penalties in exchange for an interest free promissory note in the amount of $1,368,394. The principal is due on December 31, 2022 (“Due date”). The promissory note will be secured by 200,000 Shares of Preferred Series A with a stated value of $2,000,000. The secured Series A preferred stock will be fully earned if the Company fails to repay the promissory note at its due date. The Company may prepay the promissory note without any penalties. Pursuant to the default provision, the Company issued 200,000 Series A preferred stock with a stated value of $2,000,000 for full settlement of the principal amount, which resulted in the recognition of $631,606 loss from debt extinguishment. The note if fully settled as of September 30, 2023.

 

Charles Hatley – unsecured promissory note

 

During the nine months ended September 30, 2023, the Company issued a $25,000 unsecured promissory note with a one-year term. The note carries a coupon of 10%. The interest of $2.500 is guaranteed at issuance. In the event the Company fails to pay the principal and guaranteed interest at maturity, the Company is required to issue 2,000 Series A preferred stock as collateral. The shares have not yet been issued as of September 30, 2023. The Company incurred $2,500 of interest expense in the three and nine months ended September 30, 2023. Accrued interest was $2,500 as of September 30, 2023.

 

NOTE 7 – COMMON CONTROL BUSINESS ACQUISITION

 

On October 1, 2022, the Company entered into a share exchange agreement (the “agreement”) with Cal Care Group, Inc (“Cal Care” or the “seller”), and William Reed, the Company’s President, Chief Executive Officer, director and controlling shareholder of the Company and sole shareholder of Cal Care.

 

Cal Care is a licensed delivery and distribution company with locations in Southern and Northern California.

 

The agreement provides for the acquisition by the Company of all of the issued and outstanding shares of Cal Care for a contractual consideration of $5,000,000, payable by the issuance of 500,000 shares of the Company’s Series A Preferred Stock with a stated value of $10 per share.

 

Although the agreement provided for closing on the same date the agreement was entered into, the promised contractual consideration, being the 500,000 shares of Series A preferred stock, were not issued to Mr. Reed until April 5, 2023. Accordingly, the Board of Directors of the Company concluded that the closing of the transactions under the agreement was not effective until April 5, 2023.

20

 

The Company accounted for this transaction as a common control business combination under ASC 805-50 Business Combinations Related Issues. The Company recognized the assets and liabilities at their carrying amounts in the financial statements of Cal Care on the date of transfer. The difference between the proceeds transferred and the carrying amounts of the net assets was considered equity transactions that was eliminated in consolidation, and no gain or loss was recognized in the consolidated financial statements of CuraScientific Corp.

 

The acquisition-date fair value of the consideration transferred is as follows:

 

   April 5, 2023 
Fair value of Series A preferred stock  $1,700,000 

 

The Company issued 500,000 shares of Series A preferred stock. The fair value of the non-monetary exchange was determined based on a valuation report obtained from an independent third-party valuation firm. The fair value of the Company’s Series A preferred was determined based on a weighted combination of income approach and market approach. The income approach estimates fair value based on a three-year discounted cash flow model. The market approach estimates fair value based on comparable transactions.

 

The assets and liabilities and operations of the two entities were combined at their historical carrying amount and all historical periods were adjusted as if the businesses had always been combined since the common control transaction resulted in a change in the reporting entity. Indeed, as the two entities have never been presented together, the resulting financial statements are effectively considered to be those of a different reporting entity. The change in reporting entity requires retrospective combination of the entities for all periods presented as if the combination had been in effect since inception of common control in accordance with ASC 250-10-45-21. Both entities are under common control since November 8, 2022, at which time, the Company’s Chief Executive Officer was granted 1,000 super voting rights shares of Series B preferred stock.

 

The results of operations of CuraScientific Corp. and Cal Care Group are combined in the period in which the transfer occurs as through the entities had been combined as of the beginning of the period. As such, the results of operations include the results of operations of CuraScientific Corp. and Cal Care for the three and nine months ended September 30, 2023.

 

NOTE 8 – RELATED PARTY TRANSACTIONS

 

Mr. William Reed, Chairman, Chief Executive Officer, President, Secretary, Treasurer, and Director and previous sole shareholder of Cal Care.

 

On September 7, 2022, the Company appointed William Reed as Chairman, Chief Executive Officer, President, Secretary, Treasurer, and Director of the Company. The Company and Mr. Reed entered into an employee agreement that includes an annual salary of $200,000 and 15,000 shares of the Company’s Series A Preferred Stock with a stated value of $150,000.

 

During the nine months ended September 30, 2023, the Company accrued wages of $50,000 and paid $177,769 of compensation. The balance of accrued wages was $0 and $66,667 as of September 30, 2023, and December 31, 2022, respectively.

 

During the nine months ended September 30, 2023, the Company issued 500,000 shares of Series A pursuant to the acquisition of Cal Care (note 7).

 

During the nine months ended September 30, 2023, the Company issued 120,000,000 shares of common stock from the conversion of 120,000 Series A preferred stock.

21

 

During the nine months ended September 30, 2023, the Company issued 2,323,529,411 shares of common stock from the conversion of 395,000 Series A preferred stock. The Company issued shares of common stock at a discount to the market, which is in contravention of the conversion rate pursuant to the certificate of designation of the Series A, which resulted in the issuance of additional 677,696,078 shares of common stock, with an estimated fair value of $1.6 million, which is presented as a non-cash expense in the consolidated condensed statement of operations in the nine months ended September 30, 2023.

 

Mr. Justin Gonzalez, Former Chief Executive Officer and New Chief Operating Officer and a Director

 

On March 2, 2020, the Company appointed Justin Gonzalez as Chief Executive Officer of the Company. The Company and Mr. Gonzalez entered into an employment agreement that includes an annual salary of $200,000 and $100,000 to be issued in common stock. Unpaid wages will accrue interest at 6% per annum and may be converted to restricted common stock at fair market value at the time of conversion.

 

On September 7, 2022, Justin Gonzalez resigned from his position of Chief Executive Officer. Justin Gonzalez will continue to serve as a director and Chief Operating Officer of the Company. The Company entered into a resignation and settlement agreement with Justin Gonzalez under which all prior agreements were terminated, and the Company agreed to pay Justin Gonzalez $250,000 on or prior to August 29, 2024, to satisfy all accrued obligations owed in the aggregated amount of $492,777. In the event the Company fails to the settlement amount when due, such amount will increase by 200% and will begin to accrue interest at a rate of ten percent (10%) per annum.

 

The balance of accrued compensation pursuant to the terms of the resignation and settlement agreement is $250,000 and is presented in the related party liabilities (non-current) in the consolidated balance sheet as of September 30, 2023, and December 31, 2022.

 

On September 7, 2022, the Company entered into an employment agreement with Justin Gonzalez as Chief Operating Officer. Pursuant to the employment agreement, Justin Gonzalez will receive an annual salary of $100,000, which may be paid by the issuance of shares of the Company’s Series A preferred stock.

 

During the nine months ended September 30, 2023, the Company incurred a total of $50,000 of compensation and paid $0 compensation. The balance of accrued wages was $83,333 and $33,333 as of September 30, 2023, and December 31, 2022, respectively. On July 1, 2023, the Company terminated the employment agreement of Jason Gonzalez as Chief Operating Officer, but he remains a director of the Company.

 

Mr. Eric Watson, former Chief Operating Officer, and Director

 

On March 2, 2020, the Company appointed Eric Watson as Chief Operating Officer and a director of the Company. The Company and Mr. Watson entered into an employee agreement that includes an annual salary of $162,000 and $50,000 to be issued in common stock. Unpaid wages will accrue interest at 6% per annum and may be converted to restricted common stock at fair market value at the time of conversion.

 

On September 7, 2022, Eric Watson resigned from his position of Chief Operating Officer. The Company entered into a resignation and settlement agreement with Eric Watson under which all prior agreements were terminated, and under which, the Company agreed to pay Eric Watson $125,150 of shares of the Company Series A to satisfy all accrued obligations owed in the aggregated amount of $250,290. The Company has agreed to repurchase the shares of Series A Preferred Stock by August 29, 2024. In the event the Company fails to the settlement amount when due, such amount will increase by 200% and will begin to accrue interest at a rate of ten percent (10%) per annum.

 

There was no activity during the three and nine months ended September 30, 2023.

 

Paul Goyette, Director

 

On September 29, 2022, the Board of Directors of the Company appointed Paul Goyette to serve as a director of the Company.

22

 

Pursuant to his director’s agreement, Paul Goyette will be paid a cash fee of $2,000 per meeting and be issued 10,000 shares of the Company’s Series A Preferred Stock for a stated value of $100,000. No shares of Series A were issued as of September 30, 2023, and December 31, 2022. The Company accrued $100,000 of stock payable as of September 30, 2023, and December 31, 2022, which is presented under stock payable in the Company shareholders’ equity (deficit).

 

Chris Bennett, Chief Marketing Officer, and a director

 

On May 26, 2023, the Board of Directors of the Company appointed Chris Bennett to serve as Chief Marketing Officer and a director of the Company.

 

Mr. Bennett entered into a Board of Directors Agreement with the Company, pursuant to which Mr. Bennett will be paid a cash fee of $200 per meeting.

 

On May 26, 2023, the Company and Mr. Bennett entered into an employment agreement that includes an annual salary of $120,000 and $150,000 worth of shares of the Company’s Series A preferred stock. Any unpaid or accrued salary can be converted to the Company’s Series A stock upon the approval and authorization of both parties.

 

During the nine months ended September 30, 2023, the Company incurred a total of $50,000 of compensation and paid $50,000 compensation. The balance of accrued wages was $0 as of September 30, 2023, and December 31, 2022.

 

During the nine months ended September 30, 2023, the Company recognized $300,000 of stock-based compensation related to the 30,000 shares of Series A preferred stock, issuable pursuant to the director and employment agreements as of September 30, 2023. The value of the Series A are presented in stock payable in the consolidated condensed balance sheet as of September 30, 2023.

 

Johann Loewen, a former director

 

On September 21, 2021, the Company appointed Johann Loewen as director of the Company for an initial one-year term. As director of the Company, Johann Loewen is entitled to 5,000 shares of Series A at a stated value of $10.00 per share.

 

On September 7, 2022, Johann Loewen resigned from his position as director of the Company. The Company entered into a resignation and settlement agreement with Johann Loewen under which all prior agreements were terminated, and under which, the Company agreed to pay Johann Loewen $3,140 on or prior to March 1, 2023, to satisfy all accrued obligations owed in the aggregated amount of $53,140. No shares have been issued as of September 30, 2023 and December 31, 2022 but the $50,000 liability related to the 5,000 shares of Series A was previously recorded as stock payable in the Company’s consolidated balance sheet as of December 31, 2021, which was fully reversed upon the execution of the settlement agreement in September 2022.

 

In the event the Company fails to the settlement amount when due, such amount will increase by 200% and will begin to accrue interest at a rate of ten percent (10%) per annum.

 

Edouard Beaudette, a former director

 

On October 15, 2021, the Company appointed Edouard Beaudette as director and Chief Strategy Officer of the Company for an initial one-year term. As director of the Company, Edouard Beaudette is entitled to one-time 5,000 shares of Series A at a stated value of $10.00 per share. Under the director’s agreement, no shares have been issued as of September 30, 2023 and December 31, 2022, and the liability is recorded as stock payable in the Company’s consolidated condensed balance sheets for a total amount of $50,000 as of September 30, 2023. Under his employment agreement, Edouard Beaudette accrued 10,000 shares of Series A with a stated value of $100,000, which are recorded and presented as stock payable as of September 30, 2023.

 

On September 3, 2022, Mr. Beaudette resigned from his position of director and the consulting agreement terminated.

 

There was no activity during the three and nine months ended September 30, 2023.

23

 

NOTE 9 – PREFERRED STOCK

 

The Company’s authorized preferred stock at September 30, 2023 was 25,000,000 shares of preferred, consisting of 20,000,000 authorized Series A preferred shares, and 2,500 Series B preferred shares, all with a par value of $0.0001 per share.

 

As of September 30, 2023, and December 31, 2022, 6,952,029 and 6,662,422 shares of Series A Preferred Stock were issued and outstanding and 2,000 of Series B Preferred Stock were issued and outstanding, respectively.

 

Series A

 

Series A preferred stock (“Series A”) has no voting rights and have no dividends and in the event of a voluntary or involuntary liquidation, dissolution or winding-up of the Company, each share of Series A has a stated value of $10 per share. Each share of Series A is convertible to common stock at the closing price of common stock on the date of conversion.

 

The Company follows ASC 480-10, “Distinguishing Liabilities from Equity” in its evaluation of the accounting for the Series A Preferred Stock. ASC 480-10-25-14 requires liability accounting for certain financial instruments, including shares that embody an unconditional obligation to transfer a variable number of shares, provided that the monetary value of the obligation is based solely or predominantly on one of the following three characteristics:

 

  ■ A fixed monetary amount known at inception.

 

  ■ Variations in something other than the fair value of the issuer’s equity shares; or

 

  ■ Variations in the fair value of the issuer’s equity shares, but the monetary value to the counterparty moves in the opposite direction as the value of the issuer’s shares.

 

The number of shares delivered is determined on the basis of (1) the fixed monetary amount determined as the stated value and (2) the current stock price at settlement, so that the aggregate fair value of the shares delivered equals the monetary value of the obligation, which is fixed or predominantly fixed. Accordingly, the holder is not significantly exposed to gains and losses attributable to changes in the fair value of the Company’s equity shares. Instead, the Company is using its own equity shares as currency to settle a monetary obligation.

 

The Series A Preferred Stock has been classified as a liability in accordance with ASC 480-10 and the Company has elected to record the Series A Preferred Stock at fair value with changes in fair value recorded through earnings.

 

The fair value of the Series A preferred stock was determined at $3.40 per share following a combination of weighted income and market approaches, which resulted in a change in the fair value of $45,344,831 during the nine months ended September 30, 2023.

 

For the nine months ended September 30, 2023

 

During the nine months ended September 30, 2023, 620,393 shares of Series A Preferred stock were converted to 2,622,923,481 shares of common stock in accordance with the conversion terms. This resulted in the recognition of $5,912,746 of non-cash loss from conversion of Series A Preferred Stock into common stock for the nine months ended September 30, 2023.

 

During the nine months ended September 30, 2023, the Company issued 310,000 Series A Preferred Stock with a stated value of $3,100,000 ($10 stated value per share) for the extinguishment of $2,377,313 of principal related to the promissory notes.

24

 

During the nine months ended September 30, 2023, the Company issued 20,000 Series A preferred stock for the settlement of a debt pertaining to JW Brands LLC for a total amount of $125,000.

 

During the nine months ended September 30, 2023, the Company issued 40,000 Series A preferred stock towards the purchase price of the cannabis licenses (retail, distribution, and manufacturing) from JW Brands LLC (see note 4).

 

During the nine months ended September 30, 2023, the Company issued 500,000 Series A preferred stock for the acquisition of all of the issued and outstanding shares of Cal Care Corp (see note 7).

 

During the nine months ended September 30, 2023, the Company issued 10,000 Series A preferred stock pursuant to a settlement agreement.

 

For the nine months ended September 30, 2022

 

During the nine months ended September 30, 2022, 332,944 shares of Series A Preferred stock were converted to 2,929,176,111 shares of common stock in accordance with the conversion terms. This resulted in the recognition of $1,588,140 of non-cash loss from conversion of Series A Preferred Stock into common stock for the nine months ended September 30, 2022.

 

Series B

 

On November 16, 2022, the Company approved to increase the number of shares authorized from 1,000 to 2,500.

 

Each share of Series B preferred stock (“Series B”) is equal to and counted as four (4) times the votes of all of the shares of the Company’s common stock. The stated value of Series B is $0.0001. Series B have no conversion rights, are not entitled to dividends, and have no value in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company.

 

On March 2, 2020, Justin Gonzalez, the Company’s former Chief Executive Officer, was issued 1,000 Preferred Series B Shares, pursuant to the Asset Purchase Agreement dated March 2, 2020.

 

There was no activity during the nine months ended September 30, 2023.

 

NOTE 10 – COMMON STOCK

 

On August 30, 2023, the Company amended its articles of incorporation, which increased the authorized shares of common stock to 30,000,000,000 with par value of $0.0001 and the number of authorized shares of preferred stock to 25,000,000 par value $0.0001, which are comprised of 20,000,000 designated Series A shares and 2,500 designated Series B shares and 4,997,500 undesignated.

 

The Company’s common stock at September 30, 2023, consisted of 30,000,000,000 authorized common shares with a par value of $0.0001 per share.

 

As of September 30, 2023, and December 31, 2022, there were 2,629,582,856 and 6,659,375 (post 1 for 500 reverse split effective on April 24, 2023) shares of common stock issued and outstanding, respectively.

 

For the nine months ended September 30, 2023

 

During the nine months ended September 30, 2023, 620,393 shares of Series A Preferred stock were converted to 2,622,923,481 shares of common stock in accordance with the conversion terms. This resulted in the recognition of $5,912,746 of non-cash loss from conversion of Series A Preferred Stock into common stock for the nine months ended September 30, 2023.

25

 

For the nine months ended September 30, 2022

 

During the nine months ended September 30, 2022, 332,944 shares of Series A Preferred stock were converted to 2,929,176,111 shares of common stock in accordance with the conversion terms. This resulted in the recognition of $1,588,140 of non-cash loss from conversion of Series A Preferred Stock into common stock for the nine months ended September 30, 2022.

 

Warrants

 

The balance and activity of all warrants outstanding as of September 30, 2023, is as follows:

 

       Weighted
Average		   Weighted
Average
Remaining		 
       Exercise Price   Contractual 
   Warrants   Per Share   Term (years) 
Outstanding at December 31, 2022   —   $—    — 
Granted   10,762,917   $0.03    5.0 
Cancelled   —   $—    — 
Exercised   —   $—    — 
Outstanding at September 30, 2023   10,762,917   $0.03    4.8 
                
Exercisable at September 30, 2023   10,762,917   $0.03    — 

 

The Black-Scholes option pricing model is used by the Company to determine the weighted-average fair value of share-based payments. The weighted average grant date fair value of the warrants issued during the nine months ended September 30, 2023, was de minimis. The Company’s recognizes forfeitures as they occur. The fair value of the common stock purchase warrants on the grant date was determined using the following weighted-average assumptions during the nine months ended September 30, 2023 and 2022:

 

   For The Nine Months Ending
September 30,
   2023  2022
Expected term  5  —
Expected volatility  648%-783%  —
Expected dividends  None  —
Risk-free interest rate  3.95%-4.38%  —
Forfeitures  None  —

 

NOTE 11 – COMMITMENTS AND CONTINGENCIES

 

Mr. Justin Gonzalez, Former Chief Executive Officer, President, Secretary, Treasurer, and Director

 

On September 7, 2022, March 2, 2020, the Company also entered into a resignation and settlement agreement under which the Company will pay Mr. Gonzalez $250,000 on or prior to August 29, 2024, to satisfy accrued obligations owed to him in the aggregate amount of $492,777, consisting primarily of unpaid wages. In the event the Company fails to pay the settlement amount when due, the amount will increase by 200% and begin to accrue interest at the rate of 10% per annum.

 

Mr. Eric Watson, former Chief Operating Officer, and Director

 

The Company also entered into a resignation and settlement agreement with Mr. Watson, under which all prior agreement between Mr. Watson and the Company was terminated, and under which the Company issue Mr. Watson 12,515 shares of the Company’s Series A preferred stock worth $125,150, to satisfy accrued obligations owed to him in the aggregate amount of $250,290 for unpaid wages. The Company has agreed to repurchase the shares of Series A Preferred Stock by August 29, 2024. In the event of a default by the Company to Mr. Watson, the settlement amount will increase by 200% and begin to accrue interest at the rate of 10% per annum.

26

 

Lease

 

Facility in Grants Pass, Oregon

 

The Company leases a product production and water bottling facility in Grants Pass, Oregon on a month-to-month basis at a cost of $2,000 per month.

 

Commercial lease in San Bernadino, CA

 

The Company leases property under an operating lease. For leases with terms greater than 12 months, the Company records the related assets and obligations at the present value of the lease payments over the lease term. The lease does not contain any renewal option and/or termination option that are factored into our determination of the lease payments. The Company uses its incremental borrowing rate to discount lease payments to present value, as the rate implicit in its lease is not readily determinable. The incremental borrowing rate is based on the estimated interest rate for collateralized borrowing over a similar term of the lease at the commencement date.

 

The Company recognized an operating lease liability in the amount of the net present value of the future minimum lease payments, and a right-of-use asset. The Company recognized an initial right of use asset of $120,389 and an equivalent amount for lease liability.

 

The discount rate used for this lease was 6.75%, which was determined to be the incremental borrowing rate based on comparative secured financing in the marketplace at the inception of the fixed lease payments. Lease expense was approximately $30,543 for the nine months ended September 30, 2023.

 

Future estimated minimum lease payments by year and in aggregate, under the Company’s fixed payment operating lease consisted of the following at September 30, 2023:

 

   Operating 
   Lease 
For the twelve months ended September 30,     
2024  $29,750 
2025   30,000 
2026   30,000 
2027   30,000 
2028   15,000 
Total  $134,750 
Less amount representing interest   (18,854)
Present value of the net minimum payments  $115,896 

 

NOTE 12 – SUBSEQUENT EVENTS

 

The Company has evaluated subsequent events for adjustment to or disclosure in its consolidated financial statements through the date of this report, and has not identified any recordable or disclosable events, not otherwise reported in these consolidated financial statements or the notes thereto, except for the following:

 

Subsequent to September 30, 2023, the Company issued 181,527,777 shares of common stock following the conversion of 12,700 shares of Series A preferred stock.

 

Subsequent to September 30, 2023, the Company entered into an unsecured promissory note for a principal amount of $14,990 with a one-year term.

 

Subsequent to September 30, 2023, the Company entered into a settlement agreement with Chad Enterprises LLC pursuant to which the Company terminates the license purchase dated May 24, 2023, and cancels the 60,000 Series A preferred stock that were issuable as consideration for the acquisition of the license.

27

 

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

 

General Overview

 

We are an innovative bioscience company that has developed an effective germ fighter, DiOx+, a disinfectant sterilizer that kills 99.99% of harmful pathogens without dangerous toxic exposure to the user or the environment. Our DiOx+ is an activated chlorine dioxide (Cl02) broad spectrum disinfectant that kills dangerous pathogens with no residual toxicity. It protects the environment and human health from viruses, bacteria and harmful by-products left by other cleaning sanitizers, without a harsh smell or skin irritation. Our proprietary chemical formulas and processes make DiOx+ ideal for sterilizing mission critical, high value medical equipment and disinfecting air and surfaces in laboratory and hospital environments. DiOx+ helps protect agricultural crops from disease and other pathogens like mold and fungus. It is used in water treatment plants, and helps reduce operational costs in warehousing, distribution centers, and ecommerce support facilities.

 

On October 1, 2022, the Company executed a share exchange agreement with Cal Care Group, Inc. (“Cal Care”), a California Corporation with products and services in the cannabis retail, manufacturing, distribution, and delivery. Cal Care is a product and brand marketing company investing in operations with disruptive or hyper growth potential. Headquartered in San Jacinto, California, Cal Care’s core strategic business is its end-market access as a central player in the growing California cannabis delivery marketplace while developing its in-house cannabis production capacity to verticalize operations in the space.

 

On April 25, 2023, Cal Care and JW Brands LLC executed an intellectual property license purchase under which Cal Care acquired three cannabis licenses C9-0000183 (Retail), C11-0000327 (Distribution), and CDPH-10003817 (Manufacturing) for a total consideration of $600,000.

 

On May 24, 2023, the Company, through its wholly owned subsidiary, executed a license agreement with Chad Enterprises, LLC (“Chad”). Chad is the owner of a commercial microbusiness Cannabis license C12-0000334, which the Company acquired for a total consideration of $600,000 worth of the Company’s shares of Series A. The license is for distributor, level 1 manufacturer, retailer non-storefront adult-use and medicinal and expires on December 31, 2023.

 

Cal Care Grp is a product and brand marketing company investing in operations with disruptive or hyper growth potential. Headquartered in San Jacinto, California, the company’s core strategic business is its end-market access as a central player in the growing California cannabis delivery marketplace while developing its in-house cannabis production capacity to verticalize operations in the space.

 

Through a combination of organic growth and strategic acquisitions, Cal Care Grp has a full farm-to-door vertically integrated cannabis business. The Cannabis portfolio includes their own brands and contracted brands as follows: Lucky Fortune, Uncle Jerry, Hell Yeah Dude, Dogma, Nothing, Muscrow, Wicked Wolf, and the THC Design brands.

28

 

Results of Operations for the Nine Months Ended September 30, 2023, and 2022

 

   For the Nine Months ended
September 30,		         
   2023   2022   Change ($)   Change (%) 
Revenue  $1,052,401   $34,434    1,017,967    2,956%
Cost of revenue   577,224    12,514    (564,710)   4,512%
Gross profit   475,177    21,920    453,257    2,068%
                     
Operating expenses   3,996,163    1,752,745    (2,243,418)   128%
                     
Loss from operations   (3,520,986)   (1,730,825)   (1,790,161)   103%
                     
Other income (expense)   38,875,188    (1,878,883)   40,754,071    2,169%
                     
Net income (loss)  $35,354,202   $(3,609,708)  $38,963,910    1,079%

 

Revenue

 

Revenue increased by $1,017,967 or 2,956% from the comparable period in previous year to $1,052,401 during the nine months ended September 30, 2023, compared to $34,434 during the previous period. The increase results from the cannabis business revenue generated from the Cal Care acquisition. Cal Care is a California corporation with products and services in the cannabis retail, manufacturing, and delivery.

 

Cost of Revenue

 

The Company’s cost of revenue was $577,224 for the nine months ended September 30, 2023, an increase of $564,710 or approximately 4,512 %, compared to $12,514 for the nine months ended September 30, 2022. The increase relates to the corresponding cost attributable to the cannabis revenue generated by the Company following the acquisition of Cal Care.

 

Operating Expenses

 

Operating expenses were $3,996,163 for the nine months ended September 30, 2023, an increase of $2,243,418 or 128% compared to $1,752,745 for the nine months ended September 30, 2022. The increase was primarily due to a $1,275,000 impairment loss attributable to the full impairment of the remaining capitalized licensing fees from the C Group agreement, an increase of $159,000 in stock-based compensation, an increase in licensing fees amortization of $650,226 due to the acquisition of the various cannabis licenses.

 

Other Income (Expense)

 

Other income for the nine months ended September 30, 2023, was $38,875,188, compared to other expense of $1,878,883 for the nine months ended September 30, 2022.

 

Other income for the nine months ended September 30, 2023, consisted of $356,963 of income resulting from the change in fair value of derivatives, $45,344,831 of income resulting from the mark to market of the fair value of the liability classified Series A preferred stock, offset by $196,550 of interest expense, $5,912,746 of loss on Series A Preferred Stock conversion to common stock and $722,687 of loss on debt extinguishment.

 

Other expense for the nine months ended September 30, 2022, consisted of $1,239,397 of expense resulting from the change in fair value of derivatives, $1,211,471 of interest expense, $1,588,140 of loss on Series A preferred stock conversion to common stock, offset by $2,160,125 of gain from debt extinguishment.

29

 

Net Income (Loss)

 

Net income for the nine months ended September 30, 2023, was $35,354,202, compared to a net loss of $3,609,708 for the nine months ended September 30, 2022. The increase in our net income resulted from the changes outlined above.

 

Results of Operations for the Three Months Ended September 30, 2023, and 2022

 

   For the Three Months ended
September 30,		         
   2023   2022   Change ($)   Change (%) 
                 
Revenue  $230,274   $—    230,274    100%
Cost of revenue   120,595    —    (120,595)   100%
Gross profit   109,679    —    109,679    100%
                     
Operating expenses   995,179    614,949    (353,230)   57%
                     
Loss from operations   (885,500)   (614,949)   (270,551)   44%
                     
Other income (expense)   (4,830,979)   809,072    (5,640,051)   697%
                     
Net Income  $(5,716,479)  $194,123   $(5,910,602)   3,044%

 

Revenue

 

Revenue increased by $230,274 or 100% from the comparable period in previous year to $230,274 during the three months ended September 30, 2023, compared to $0 during the previous period. The increase results from the cannabis business revenue generated from the Cal Care acquisition. The Company had limited revenue generating activities prior to the acquisition of Cal Care.

 

Cost of Revenue

 

The Company’s cost of revenue was $120,595 for the three months ended September 30, 2023, an increase of $120,595 or 100 %, compared to $0 for the three months ended September 30, 2022. The increase relates to the corresponding cost attributable to the cannabis revenue generated by the Company following the acquisition of Cal Care.

 

Operating Expenses

 

Operating expenses were $995,179 for the three months ended September 30, 2023, an increase of $353,230 or 57% compared to $614,949 for the three months ended September 30, 2022. The increase was primarily due to an increase of $525,000 in licensing fees amortization, an increase of approximately $179,000 in general and administrative expense, offset by a decrease of approximately $204,000 in salaries.

 

Other Income (Expense)

 

Other expense for the three months ended September 30, 2023, was $4,830,979, compared to other income of $809,072 for the three months ended September 30, 2022.

 

Other expense for the three months ended September 30, 2023, consisted of $155,060 of interest expense, $4,442,946 of loss on Series A Preferred Stock conversion to common stock and $235,710 of expense resulting from the change in fair value of derivatives.

30

 

Other income for the three months ended September 30, 2022, consisted of 2,160,125 of gain from debt conversion, offset by $880,189 of loss resulting from the change in fair value of derivatives, $397,864 of interest expense, and $73,000 of loss on Series A Preferred Stock conversion to common stock and $2,160,125 of gain from debt conversion.

 

Net income (expense)

 

Net loss for the three months ended September 30, 2023, was $5,716,479 compared to net income of $194,123 for the three months ended September 30, 2022. The decrease in our net income resulted from the changes outlined above.

 

Liquidity and Capital Resources

 

Our working capital deficiency as of September 30, 2023, and December 31, 2022, was as follows:

 

   September 30,
2023		   December 31,
2022		 
Current Assets  $1,079,707   $39,868 
Current Liabilities  $26,057,272   $70,809,778 
Working Capital Deficit  $(24,977,565)  $(70,769,910)
           

The overall working capital deficit decreased from $70,769,910 at December 31, 2022, to $24,977,565 at September 30, 2023. The current liabilities primarily consist of accounts payable, loans payable, convertible notes payable, derivative liability from the bifurcated conversion feature embedded in the hybrid debt instruments, related party liabilities, and liability-classified Series A Preferred Stock. The decrease in working capital deficit is mainly attributable to the mark to market of the Company’s Series A Preferred stock during the nine month ended September 30, 2023 for approximately $45.3 million, which was reported under other income in the consolidated condensed statement of operations for the nine months ended September 30, 2023.

 

The following is selected information from the statements of cash flow for the nine months ended September 30, 2023 and 2022:

 

   September 30,   September 30, 
   2023   2022 
Cash used in Operating Activities  $(304,256)  $(253,664)
Cash provided by (used in) Investing Activities  $(20,948)  $(14,914)
Cash provided by Financing Activities  $365,985   $245,394 
Net increase (decrease) in Cash During Period  $40,781   $(23,184)

 

Off-Balance Sheet Arrangements

 

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources that are material to shareholders.

 

Seasonality

 

Management does not believe that our current business segment is seasonal to any material extent.

 

Critical Accounting Polices

 

There have been no material changes to our critical accounting policies, as compared to the critical accounting policies and significant judgments and estimates disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on April 17, 2023.

31

 

Contingencies

 

For a discussion of contingencies, see Note 11, Commitments and Contingencies, to the Notes to the Consolidated condensed Financial Statements of the Quarterly Report.

 

Off-balance Sheet Arrangements

 

During the period ended September 30, 2023, we have not engaged in any off-balance sheet arrangements.

 

Recent Accounting Pronouncements

 

For a listing of our new and recently adopted accounting standards, See Note 2, Summary of Significant Accounting Policies, to the note to the consolidated condensed financial statements of this Quarterly Report.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

Not required under Regulation S-K for “smaller reporting companies.”

 

Item 4. Controls and Procedures

 

The Company’s Principal Executive Officer and Principal Financial Officer (the Certifying Officers) are responsible for establishing and maintaining disclosure controls and procedures for the Company. An evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934) was carried out by us under the supervision and with the participation of our Certifying Officers. Based upon that evaluation, our Certifying Officers have concluded that as of September 30, 2023, our disclosure controls and procedures, that are designed to ensure (i) that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and (ii) that such information is accumulated and communicated to management, including our Certifying Officers, in order to allow timely decisions regarding required disclosure, were not effective.

 

As of September 30, 2023, based on evaluation of these disclosure controls and procedures, management concluded that our disclosure controls and procedures were not effective. We will be required to spend time and resources hiring and engaging additional staff and outside consultants with the appropriate experience to remedy the weaknesses described below. We cannot assure you that management will be successful in locating and retaining appropriate candidates or that newly engaged staff or outside consultants will be successful in remedying material weaknesses thus far identified or identifying material weaknesses in the future.

 

A material weakness is a control deficiency (within the meaning of the Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 2) or combination of control deficiencies that result in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. Management has identified the following two material weaknesses which have caused management to conclude that as of September 30, 2023, our disclosure controls and procedures were not effective at the reasonable assurance level:

 

1. We do not have written documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act which is applicable to us for the nine months ended September 30, 2023. Management 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.

 

2. 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 authorization of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. The recording of transactions function is maintained by a third-party consultant whereas authorization and custody remains under the Company’s Chief Executive Officer’s responsibility. Management 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.

32

 

To address these material weaknesses, management performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented.

 

Changes in Internal Control over Financial Reporting

 

There has been no change to our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

PART II — OTHER INFORMATION

 

Item 1. Legal Proceedings

 

We are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.

 

Item 1A. Risk Factors

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

 

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

 

During the nine months ended September 30, 2023, the Company issued an aggregate of 2,622,923,481 shares of common stock pursuant to the conversion of 620,393 Series A Preferred stock.

 

Item 3. Defaults upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not Applicable.

 

Item 5. Other Information

 

None.

 

Item 6. Exhibits

 

(a) Exhibits

 

Exhibit No.   Description
31.1*   Certification of Principal Executive Officer and Principal Financial Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
32.1*   Certification of Principal Executive Officer and Principal Financial Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
101*   Inline XBRL Document set for the financial statements and accompanying notes in Part I, Item 1, of this Quarterly Report on Form 10-Q.
     
104*   Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set.
     

Exhibits designated by the symbol * are filed or furnished with this Quarterly Report on Form 10-Q

33

 

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.

 

Signature   Title   Date
         
/s/ William Reed   President, Chief Executive Officer, Secretary, Treasurer and Chairman of the Board   December 8, 2023
William Reed   (Principal Executive, Financial and Accounting Officer)    

34

 

 

Exhibit 31.1

 

Certification of Principal Executive Officer and Principal Financial Officer
Pursuant to 18 U.S.C. 1350
(Section 302 of the Sarbanes-Oxley Act of 2002)

 

I, William Reed, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of CuraScientific Corp. (the “Company”).

 

2. 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.

 

3. 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 Company as of, and for, the periods presented in this report.

 

4. I am 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 the Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

 

a) 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 Company, 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.

 

b) 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.

 

c) evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as the end of the period covered by this report based on such evaluation; and

 

d) disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

 

5. I have disclosed, based on the most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent function):

 

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

 

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting.

 

Date: December 8, 2023

 

/s/ William Reed  
William Reed  
President, Chief Executive Officer, Secretary, Treasurer and Chairman of the Board  

 

 

 

Exhibit 32.1

 

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

 

I, William Reed, President, Chief Executive Officer, Secretary, Treasurer and Chairman of the Board of CuraScientific Corp. (the “Company”), certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002 that:

 

(1) The Quarterly Report on Form 10-Q of the Company for the period ended September 30, 2023 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the periods covered in the Report.

 

Date: December 8, 2023

 

/s/ William Reed  
William Reed  
President, Chief Executive Officer, Secretary, Treasurer and Chairman of the Board  
   

 

v3.23.3
Cover - shares
 9 Months Ended
Sep. 30, 2023
Dec. 08, 2023
Cover [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Quarterly Report true  
Document Transition Report false  
Document Period End Date Sep. 30, 2023  
Document Fiscal Period Focus Q3  
Document Fiscal Year Focus 2023  
Current Fiscal Year End Date --12-31  
Entity File Number 000-56325  
Entity Registrant Name CuraScientific Corp.  
Entity Central Index Key 0001877788  
Entity Tax Identification Number 84-5079920  
Entity Incorporation, State or Country Code FL  
Entity Address, Address Line One 51544 Cesar Chavez Street  
Entity Address, City or Town Coachella  
Entity Address, State or Province CA  
Entity Address, Postal Zip Code 92236  
City Area Code (909)  
Local Phone Number 435-1642  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company true  
Elected Not To Use the Extended Transition Period true  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   2,811,110,633
v3.23.3
Consolidated Balance Sheets (Unaudited) - USD ($)
Sep. 30, 2023
Dec. 31, 2022
 [1]
Current Assets:    
Cash and cash equivalents $ 40,911 $ 130
Accounts receivable 1,868
Inventory 44,824
Prepaid expenses and other assets 992,104 39,738
Total Current Assets 1,079,707 39,868
Property and equipment, net 171,253 86,917
Right-of-use operating asset 115,896
Capitalized licensing fees, net 249,774 1,425,000
TOTAL ASSETS 1,616,630 1,551,785
Current Liabilities:    
Accounts payable 854,812 330,489
Convertible notes payable, net of discount 456,383 150,000
Lease liability - current 22,610
Loans payable 161,652 2,487,314
Accrued interest 140,036 86,816
Derivative liability 697,550 1,026,942
Related party liabilities 87,330 103,997
Series A Preferred Liability: $0.0001 par value; 20,000,000 shares authorized, 6,952,029 and 6,662,422 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively 23,636,899 66,624,220
Total Current Liabilities 26,057,272 70,809,778
Related party Liabilities 250,000 250,000
Lease liability, non-current 93,286
Total Non-Current Liabilities 343,286 250,000
Total Liabilities 26,400,558 71,059,778
SHAREHOLDERS’ DEFICIT    
Preferred stock, Series B: $0.0001 par value; 2,500 shares authorized 2,000 shares issued and outstanding at September 30, 2023 and December 31, 2022
Common stock, $0.0001 par value; 30,000,000,000 shares authorized 2,629,582,856 and 6,659,375 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively 262,958 666
Stock Payable 2,520,000 900,000
Additional paid in capital (44,888,216) (53,954,412)
Retained earnings (Accumulated deficit) 17,321,330 (16,454,247)
Total Shareholders’ Deficit [2] (24,783,928) (69,507,993)
TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT $ 1,616,630 $ 1,551,785
[1] The number of shares has been retroactively restated to reflect the one for five hundred (1 for 500) reverse stock split, which was effective on April 24, 2023.
[2] Cal Care Group and CuraScientific Corp results of operations are combined as of the beginning of the period or January 1, 2023, since it was determined that there was a change in the reporting entity pursuant to ASC 250-10-45-21 and both entities were under common control under the entire period.
v3.23.3
Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares
Sep. 30, 2023
Aug. 30, 2023
Dec. 31, 2022
Nov. 16, 2022
Nov. 15, 2022
Common Stock, Par or Stated Value Per Share $ 0.0001   $ 0.0001    
Common Stock, Shares Authorized 30,000,000,000 30,000,000,000 30,000,000,000    
Common Stock, Shares, Issued 2,629,582,856   6,659,375    
Common Stock, Shares, Outstanding 2,629,582,856   6,659,375    
Series A Preferred Stock [Member]          
Preferred Stock, Par or Stated Value Per Share $ 0.0001   $ 0.0001    
Preferred Stock, Shares Authorized 20,000,000   20,000,000    
Preferred Stock, Shares Issued 6,952,029   6,662,422    
Preferred Stock, Shares Outstanding 6,952,029   6,662,422    
Series B Preferred Stock [Member]          
Preferred Stock, Par or Stated Value Per Share $ 0.0001   $ 0.0001    
Preferred Stock, Shares Authorized 2,500   2,500 2,500 1,000
Preferred Stock, Shares Issued 2,000   2,000    
Preferred Stock, Shares Outstanding 2,000   2,000    
Common Stock, Par or Stated Value Per Share $ 0.0001 $ 0.0001      
v3.23.3
Consolidated Statements of Operations (Unaudited) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2023
 [1]
Sep. 30, 2022
Sep. 30, 2023
 [1]
Sep. 30, 2022
Income Statement [Abstract]        
Sales $ 230,274 $ 1,052,401 $ 34,434
Cost of sales 120,595 577,224 12,514
Gross profit 109,679 475,177 21,920
Operating expenses        
General and administrative 248,229 68,505 584,009 336,040
Stock-based compensation (66,000) 85,000 534,000 375,000
Professional fees 51,630 21,859 157,978 113,365
Licensing fees 675,195 150,000 1,100,226 450,000
Impairment loss 1,275,000
Salaries and wages 81,230 285,333 331,599 466,333
Depreciation 4,895 4,252 13,350 12,007
Total operating expenses 995,179 614,949 3,996,162 1,752,745
Loss from operations (885,500) (614,949) (3,520,985) (1,730,825)
Other income (expense)        
Gain (Loss) on settlement of debt 2,160,125 (722,687) 2,160,125
Change in fair value of liability 45,344,831
Other income 2,737 5,377
Change in fair value of derivative liability (235,710) (880,189) 356,963 (1,239,397)
Loss on Series A conversion (4,442,946) (73,000) (5,912,746) (1,588,140)
Interest expense, net (155,060) (397,864) (196,550) (1,211,471)
Other income (expense) (4,830,979) 809,072 38,875,188 (1,878,883)
Income (Loss) before income taxes (5,716,479) 194,123 35,354,203 (3,609,708)
Provision for income taxes
Net Income (Loss) $ (5,716,479) [2],[3] $ 194,123 $ 35,354,203 $ (3,609,708)
Basic net income (loss) per share [4] $ 0.00 $ 3.03 $ 0.12 $ (0.89)
Diluted net income (loss) per share [4] $ 3.03 $ 0.04 $ (0.89)
Weighted average common share outstanding, basic [4] 756,676,539 6,393,433 292,568,930 4,073,796
Weighted average common share outstanding, diluted [4] 756,676,539 6,393,433 988,915,323 4,073,796
[1] Cal Care Group and CuraScientific Corp results of operations are combined as of the beginning of the period or January 1, 2023, since it was determined that there was a change in the reporting entity pursuant to ASC 250-10-45-21 and the transaction was accounted for under ASC 805-50 Common control Transactions.
[2] Cal Care Group and CuraScientific Corp results of operations are combined as of the beginning of the period or January 1, 2023, since it was determined that there was a change in the reporting entity pursuant to ASC 250-10-45-21 and both entities were under common control under the entire period.
[3] The number of shares has been retroactively restated to reflect the one for five hundred (1 for 500) reverse stock split, which was effective on April 24, 2023.
[4] The number of shares has been retroactively restated to reflect the one for five hundred (1 for 500) reverse stock split, which was effective on April 24, 2023.
v3.23.3
Consolidated Statement of Shareholders' Equity (Deficit) (Unaudited) - USD ($)
Preferred Stock [Member]
Series B Preferred Stock [Member]
Preferred Stock [Member]
Series A Preferred Stock [Member]
Common Stock [Member]
Additional Paid-in Capital [Member]
Stock Payable [Member]
Retained Earnings [Member]
Total
Beginning balance, value at Dec. 31, 2021 $ 40,051 [1] $ (58,490,434) [1] $ 250,000 $ (11,186,133) $ (69,386,516)
Beginning Balance, Shares at Dec. 31, 2021 1,000 400,511,582 [1]        
Shares of common stock issued pursuant to conversion preferred stock $ 103,768 [1] 2,668,797 [1] 2,772,565
Shares of common stock issued pursuant to conversion preferred stock, Shares [1]     1,037,674,922        
Net loss [1] [1] (4,567,535) (4,567,535)
Preferred stock issuable pursuant to consulting and director agreements [1] [1] 150,000 150,000
Ending balance, value at Mar. 31, 2022 $ 143,819 [1] (55,821,637) [1] 400,000 (15,753,668) (71,031,486)
Ending Balance, Shares at Mar. 31, 2022 1,000 1,438,186,504 [1]        
Beginning balance, value at Dec. 31, 2021 $ 40,051 [1] (58,490,434) [1] 250,000 (11,186,133) (69,386,516)
Beginning Balance, Shares at Dec. 31, 2021 1,000 400,511,582 [1]        
Shares of common stock issued pursuant to conversion preferred stock, Shares   332,944 2,929,176,111        
Net loss             (3,609,708)
Preferred stock issued pursuant to executed Agreements            
Ending balance, value at Sep. 30, 2022 $ 332,969 [1] (54,654,632) [1] 500,000 (14,795,841) (68,617,504)
Ending Balance, Shares at Sep. 30, 2022 1,000 3,329,687,693 [1]        
Beginning balance, value at Mar. 31, 2022 $ 143,819 [1] (55,821,637) [1] 400,000 (15,753,668) (71,031,486)
Beginning Balance, Shares at Mar. 31, 2022 1,000 1,438,186,504 [1]        
Shares of common stock issued pursuant to conversion preferred stock $ 115,817 [1] 930,338 [1] 1,046,155
Shares of common stock issued pursuant to conversion preferred stock, Shares [1]     1,158,167,857        
Net loss [1] [1] 763,704 763,704
Preferred stock issuable pursuant to consulting and director agreements [1] [1] 90,000 90,000
Ending balance, value at Jun. 30, 2022 $ 259,636 [1] (54,891,299) [1] 490,000 (14,989,964) (69,131,627)
Ending Balance, Shares at Jun. 30, 2022 1,000 2,596,354,361 [1]        
Shares of common stock issued pursuant to conversion preferred stock $ 73,333 [1] 236,667 [1] 310,000
Shares of common stock issued pursuant to conversion preferred stock, Shares [1]     733,333,332        
Net loss [1] [1] 194,123 194,123
Preferred stock issuable pursuant to consulting and director agreements [1] [1] 60,000 60,000
Settlement of related party payable [1] [1] (50,000) (50,000)
Ending balance, value at Sep. 30, 2022 $ 332,969 [1] (54,654,632) [1] 500,000 (14,795,841) (68,617,504)
Ending Balance, Shares at Sep. 30, 2022 1,000 3,329,687,693 [1]        
Beginning balance, value at Dec. 31, 2022   $ 666 [2] (53,954,412) [2] 900,000 (16,454,247) [3] (69,507,993) [3],[4]
Beginning Balance, Shares at Dec. 31, 2022 [2] 2,000   6,659,375        
Shares of common stock issued pursuant to conversion preferred stock   $ 33 [2] $ 16,617 [2] [3] $ 16,650 [3]
Shares of common stock issued pursuant to conversion preferred stock, Shares [2]     333,000        
Preferred stock issued pursuant to consulting agreement   [2] [2] (300,000) [3] (300,000) [3]
Net loss [2]   $ (204,265) [3] $ (204,265) [3]
Ending balance, value at Mar. 31, 2023   $ 699 [2] (53,937,795) [2] 600,000 (16,658,512) [3] (69,995,608) [3]
Ending Balance, Shares at Mar. 31, 2023 [2] 2,000   6,992,375        
Beginning balance, value at Dec. 31, 2022   $ 666 [2] (53,954,412) [2] 900,000 (16,454,247) [3] (69,507,993) [3],[4]
Beginning Balance, Shares at Dec. 31, 2022 [2] 2,000   6,659,375        
Shares of common stock issued pursuant to conversion preferred stock, Shares   620,393 2,622,923,481        
Net loss [5]             35,354,203
Preferred stock issued pursuant to executed Agreements             1,020,000
Ending balance, value at Sep. 30, 2023   $ 262,958 [2] (44,888,216) [2] 2,520,000 17,321,330 [3] (24,783,928) [3]
Ending Balance, Shares at Sep. 30, 2023 [2] 2,000   2,629,582,856        
Beginning balance, value at Mar. 31, 2023   $ 699 [2] (53,937,795) [2] 600,000 (16,658,512) [3] (69,995,608) [3]
Beginning Balance, Shares at Mar. 31, 2023 [2] 2,000   6,992,375        
Shares of common stock issued pursuant to conversion preferred stock   $ 14,171 [2] 3,358,909 [2] [3] 3,373,080 [3]
Shares of common stock issued pursuant to conversion preferred stock, Shares [2]     141,712,420        
Net loss   [2] [2] 41,274,946 [3] 41,274,946 [3]
Proceeds from issuance of convertible notes allocated to embedded warrants   [2] 39,251 [2] [3] 39,251 [3]
Preferred stock issuable to a related party pursuant to director and employment agreements   [2] [2] 300,000 [3] 300,000 [3]
Preferred stock issuable pursuant to a licensing agreement   [2] [2] 600,000 [3] 600,000 [3]
Preferred stock issuable pursuant to settlement of debt   [2] [2] 100,000 [3] 100,000 [3]
Acquisition of Cal Care Group   [2] [2] (1,578,625) [3] (1,578,625) [3]
Ending balance, value at Jun. 30, 2023   $ 14,870 [2] (50,539,635) [2] 1,600,000 23,037,809 [3] (25,886,956) [3]
Ending Balance, Shares at Jun. 30, 2023 [2] 2,000   148,704,795        
Shares of common stock issued pursuant to conversion preferred stock   $ 248,088 [2] 5,651,419 [2] [3] 5,899,507 [3]
Shares of common stock issued pursuant to conversion preferred stock, Shares [2]     2,480,878,061        
Net loss [2]   (5,716,479) [3] (5,716,479) [3],[5]
Preferred stock issued pursuant to executed Agreements   [2] [2] 1,020,000 [3] 1,020,000 [3]
Shares of Series A issued pursuant to settlement agreement   [2] [2] (100,000) [3] (100.000) [3]
Ending balance, value at Sep. 30, 2023   $ 262,958 [2] $ (44,888,216) [2] $ 2,520,000 $ 17,321,330 [3] $ (24,783,928) [3]
Ending Balance, Shares at Sep. 30, 2023 [2] 2,000   2,629,582,856        
[1] The number of shares and per share amounts have been retroactively restated to reflect the one for five hundred (1 for 500) reverse stock split, which was effective on April 24, 2023.
[2] The number of shares has been retroactively restated to reflect the one for five hundred (1 for 500) reverse stock split, which was effective on April 24, 2023.
[3] Cal Care Group and CuraScientific Corp results of operations are combined as of the beginning of the period or January 1, 2023, since it was determined that there was a change in the reporting entity pursuant to ASC 250-10-45-21 and both entities were under common control under the entire period.
[4] The number of shares has been retroactively restated to reflect the one for five hundred (1 for 500) reverse stock split, which was effective on April 24, 2023.
[5] Cal Care Group and CuraScientific Corp results of operations are combined as of the beginning of the period or January 1, 2023, since it was determined that there was a change in the reporting entity pursuant to ASC 250-10-45-21 and the transaction was accounted for under ASC 805-50 Common control Transactions.
v3.23.3
Consolidated Statements of Cash Flows (Unaudited) - USD ($)
 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Cash flows from operating activities:    
Net Income (loss) $ 35,354,203 [1] $ (3,609,708)
Adjustments to reconcile net income (loss) to net cash used in operating activities:    
Depreciation 13,350 [1] 12,007
Amortization of convertible debt discount 43,376 610,757
Amortization right of use asset 4,493
(Gain) Loss on debt extinguishment 722,687 [1] (2,160,125)
Amortization capitalized license fees 1,100,226 450,000
Fair value of Preferred stock issued with licensing agreements 200,000
Impairment loss on intangible 1,275,000 [1]
Change in fair value of derivative liability (356,963) [1] 1,239,397
Change in fair value of Series A liability (45,344,831) [1]
Stock-based compensation 534,000 [1] 375,000
Non-cash interest expense 419,168
Loss on Series A conversion 5,912,746 [1] 1,588,140
Decrease (increase) in operating assets and liabilities    
Accounts receivable (1,868) 16,693
Inventory 56,746 (5,285)
Prepaid and other assets 68,714
Accounts payable 281,806 175,230
Related party liabilities (16,667) 279,896
Lease liability (4,493)
Accrued interest 53,219 155,166
Net cash used in operating activities (304,256) (253,664)
Cash flows from investing activities:    
Cash paid for acquisition of licenses (50,000)
Acquisition of fixed assets (97,686) (14,914)
Cash acquired from Cal Care common control transaction 126,738
Net cash provided by (used in) investing activities (20,948) (14,914)
Cash flows from financing activities:    
Proceeds from convertible debt 327,875 245,394
Proceeds from promissory notes 38,110
Net cash provided by financing activities 365,985 245,394
Net increase (decrease) in cash 40,781 (23,184)
Cash, beginning of period 130 [2] 23,360
Cash, end of period 40,911 176
Supplemental Disclosures of Cash Flow Information    
Cash paid for interest 3,336
Cash paid for taxes
Supplemental Disclosures of Non-Cash Investing and Financing Activities    
Common shares issued pursuant to Series Preferred conversion 16,650
Preferred stock issued pursuant to consulting agreement 300,000
Original debt discount related to new debt 66,822 515,356
Corporate expenses paid by investors 13,542
Acquisition of license with preferred stock 1,100,000
Initial recognition of right-of-use asset 120,389
Series Preferred issued for leasing of cannabis equipment $ 1,020,000
[1] Cal Care Group and CuraScientific Corp results of operations are combined as of the beginning of the period or January 1, 2023, since it was determined that there was a change in the reporting entity pursuant to ASC 250-10-45-21 and the transaction was accounted for under ASC 805-50 Common control Transactions.
[2] The number of shares has been retroactively restated to reflect the one for five hundred (1 for 500) reverse stock split, which was effective on April 24, 2023.
v3.23.3
NATURE OF OPERATIONS AND GOING CONCERN
 9 Months Ended
Sep. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
NATURE OF OPERATIONS AND GOING CONCERN

NOTE 1 – NATURE OF OPERATIONS AND GOING CONCERN

 

Organization and Description of Business

 

CuraScientific Corp. (“Cura,” the “Company,” and “our”), formerly known as Boon Industries Inc. (“Boon”), is currently a bioscience company that manufactures commercial chemical products with various applications in commercial sterilization for agriculture, warehousing, hospitality and medical facilities. The Company’s wholly owned subsidiary, Matrix of Life Tech Trust, works with the Company with applications in the beverage and nutritional supplement industries, and water bottling operations in Grants Pass, Oregon, where it produces bottled water and a range of products for the health and wellness industry.

 

On October 1, 2022, the Company executed a share exchange agreement with Cal Care Group, Inc. (“Cal Care”) and William Reed, the current Company’s President, Chief Executive Officer, director and controlling shareholder of the Company and sole shareholder of Cal Care.

 

Cal Care is a California corporation with products and services in the cannabis retail, manufacturing, distribution, and delivery. Cal Care is a licensed delivery and distribution company with locations in Southern and Northern California. Headquartered in San Jacinto, California, Cal Care’s core strategic business is its end-market access as a central player in the growing California cannabis delivery marketplace while developing its in-house cannabis production capacity to verticalize operations in the space. The Company acquired all of the issued and outstanding shares of Cal Care in exchange for 500,000 Series A preferred shares of the Company on April 5, 2023. Although the agreement provided for closing on the same date the agreement was entered into, the promised contractual consideration, being the 500,000 shares of Series A preferred stock, was not issued to Mr. Reed until April 5, 2023. Accordingly, the Board of Directors of the Company concluded that the closing of the transactions under the agreement was not effective until April 5, 2023. The Company accounted for this transaction as a common-control business combination under ASC 805-50 Business Combinations Related Issues. The Company recognized the assets and liabilities at their carrying amounts in the financial statements of Cal Care on the date of transfer. The difference between the proceeds transferred and the carrying amounts of the net assets was considered equity transactions that was eliminated in consolidation, and no gain or loss was recognized in the consolidated financial statements of CuraScientific, Inc.

 

On April 25, 2023, Cal Care and JW Brands LLC executed an intellectual property license purchase under which Cal Care acquired three cannabis licenses C9-0000183 (Retail), C11-0000327 (Distribution), and CDPH-10003817 (Manufacturing) for a total consideration of $600,000.

 

The company operates under the licenses of JW Brands, LLC, including a cannabis retailer non-storefront license adult-use and medicinal (business name: JW BRANDS, LLC Palm Delivery License Number: C9-0000183-LIC License Type: Provisional Retailer Non storefront), a cannabis distributor license adult-use and medicinal License Number: C11-0000327-LIC, and a cannabis manufacturer license, and cannabis manufacturer license adult-use and medicinal (business name: JW BRANDS, LLC Palm Delivery License Number: CDPH-10003817-LIC License Type: Provisional Type-7: Volatile Solvent Extraction).

 

On May 24, 2023, Cal Care acquired the commercial microbusiness cannabis license C12-0000334 for a total consideration of $600,000 payable by the issuance of 60,000 shares of Series A with a stated value of $10 per share.

 

Reincorporation Merger

 

On November 8, 2022, the shareholders of Boon Industries, Inc. approved an agreement and plan of merger, pursuant to which Boon merged with and into CuraScientific corporation, a newly formed Florida corporation and a wholly owned subsidiary of Boon, which resulted in Boon’s reincorporation from the State of Oklahoma to the State of Florida and change the Company’s name to CuraScientific corporation.

The shareholders also approved the implementation of a reverse stock split of its common stock on the basis of the issuance of one share of CuraScientific corporation’s common stock for each 500 shares of common stock of Boon issued and outstanding prior to the reincorporation merger (“reverse stock split”). Each share of Series A preferred stock of the Company converted into one share of Series A preferred stock of CuraScientific Corp. and each share of Series B preferred stock of the Company converted into one share of Series B preferred stock of CuraScientific Corp.

 

The reverse stock split and name change became effective with the Financial Industry Regulatory Authority (“FINRA”) on April 24, 2023, whereupon the shares of CuraScientific common stock began trading on a split-adjusted basis under the trading symbol “CSTF”. All share and per share related numbers in these consolidated financial statements give effect to the reverse stock split, which was effective on April 24, 2023.

 

On September 15, 2023, the Company entered into an intellectual property exchange agreement with Bavana, LLC (“Bavana”). The Company’s wholly owned subsidiary, Cal Care, is the owner of J.W Brands LLC that holds three cannabis licenses. The Company exchanged and acquired from Bavana, free and clear of all encumbrances, all of Bavana’s right, title, and interest, in and to assets with a total fair value of $863,000 in exchange for 300,000 Series A preferred stock and the assignment to Bavana of the cannabis manufacturer license adult-use and medicinal (license number: CDPH-10003817-LIC).

 

Going concern, liquidity, and capital resources

 

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As of September 30, 2023, the Company’s current liabilities exceeded its current assets by approximately $25.0 million. The Company has recorded a net income of $35.4 million for the nine months ended September 30, 2023, of which $45.3 million is a non cash item resulting from the mark to market revaluation of the Company’s series A preferred stock liability, has negative cash flow from operations of approximately $0.3 million, has an accumulated profit of $17.4 million as of September 30, 2023 mainly due to the revaluation of the Company’s Series A liability for $45.3 million, and has limited business operations, has operating loss of $3.5 million, which raises substantial doubt about the Company’s ability to continue as a going concern.

 

The ability of the Company to meet its commitments as they become payable is dependent on the ability of the Company to obtain necessary financing or to achieve a profitable level of operations.

 

The Company has arranged financing through convertible debts and intends to utilize the cash received to fund its operations. The Company plans to seek additional financing, if necessary, in private or public equity offering to secure future funding for operations until the Company becomes profitable. If the Company is not able to secure additional funding, the implementation of the Company’s business plan will be impaired. There can be no assurance that such additional financing will be available to the Company on acceptable terms or at all.

 

These consolidated financial statements do not give effect to adjustments to the amounts and classification to assets and liabilities that would be necessary should the Company be unable to continue as a going concern.
v3.23.3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 9 Months Ended
Sep. 30, 2023
Accounting Policies [Abstract]  
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The Company maintains its accounting records on an accrual basis in accordance with GAAP. These consolidated financial statements are presented in United States dollars. The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q. All adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations for the interim periods have been made and are of a recurring nature unless otherwise disclosed herein.

Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management regularly evaluates estimates and assumptions related to the valuation of assets and liabilities. Management bases its estimates and assumptions on current facts, historical experience, and various other factors that 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 and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from management’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Significant estimates include:

 

■Liability for legal contingencies.

 

■Useful life of assets.

 

■Deferred income taxes and related valuation allowance.

 

■Impairment of finite-life intangible.

 

■Obsolescence of inventory

 

■Stock-based compensation using the Black Scholes option pricing model.

 

Segment Reporting

 

The Company operates as one reportable segment under ASC 280, Segment Reporting. The Chief operating decision maker regularly reviews the financial information of the Company at a consolidated level in deciding how to allocate resources and in assessing performance.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid investments with maturities of 90 days or less from the date of purchase to be cash equivalents. The Company did not have any cash equivalents as of September 30, 2023, and December 31, 2022, respectively.

 

Fair value of Financial Instruments and Fair Value Measurements

 

Accounting Standards Codification (“ASC”) 820 Fair Value Measurements and Disclosures, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value.

 

Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability.

 

In addition to defining fair value, the standard expands the disclosure requirements around the value and establishing a fair value hierarchy for valuation inputs is expanded. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring the value are observable in the market.

 

A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

 

Level 1 – Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.

 

Level 2 – Inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in market that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 

Level 3 – Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models and similar techniques.

The reported fair values for financial instruments that use Level 2 and Level 3 inputs to determine fair value are based on a variety of factors and assumptions. Accordingly, certain fair values may not represent actual values of the Company’s financial instruments that could have been realized as of September 30, 2023, or that will be recognized in the future, and do not include expenses that could be incurred in an actual settlement.

 

The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts receivable, inventory, prepaid expenses and other assets, accounts payable, accrued interest, related party liabilities approximate fair value due to their relatively short maturities.

 

The Company’s convertible notes payable and loans payable approximates the fair value of such liabilities based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements and due to the short-term nature of these instruments at September 30, 2023, and December 31, 2022.

 

The fair value of the Company’s recorded derivative liability is determined based on unobservable inputs that are not corroborated by market data, which require a Level 3 classification. A Black-Sholes option valuation model was used to determine the fair value. The Company records derivative liability on the balance sheets at fair value with changes in fair value recorded in the statements of operation.

 

The following table presents balances of the liabilities with significant unobservable inputs (Level 3) as of September 30, 2023, and December 31, 2022:

 

   Fair Value Measurements at September 30, 2023, Using 
   Quoted
Prices in
Active
Markets for		   Significant
Other
Observable		   Significant
Unobservable		     
   Identical Assets   Inputs   Inputs     
   (Level 1)   (Level 2)   (Level 3)   Total 
Derivative liability  $—   $—   $697,550   $697,550 
Total  $—   $—   $697,550   $697,550 
                     
   Fair Value Measurements at December 31, 2022, Using 
   Quoted
Prices in
Active
Markets for		   Significant
Other
Observable		   Significant
Unobservable		     
   Identical Assets   Inputs   Inputs     
   (Level 1)   (Level 2)   (Level 3)   Total 
Derivative liability  $—   $—   $1,026,942   $1,026,942 
Total  $—   $—   $1,026,942   $1,026,942 

The following table presents changes of the liabilities with significant unobservable inputs (Level 3) for the nine months ended September 30, 2023:

 

 

   Derivative 
   Liability 
Balance December 31, 2022  $1,026,942 
New derivative from convertible notes   27,571 
Change in fair value of derivative   (356,963)
Balance September 30, 2023  $697,550 

 

Derivative Liability

 

The Company measures the derivative liability using the Black-Scholes option valuation model using the following assumptions:

 

   September 30, 2023
    
Expected term  1 month – 1 year
Exercise price  $0.00008-$0.00820
Expected volatility  342%-658%
Expected dividends  None
Risk-free interest rate  4.74%-5.50%
Forfeitures  None

 

The assumptions used in determining fair value represent management’s best estimates, but these estimates involve inherent uncertainties and the application of management’s judgment. As a result, if factors change, including changes in the market value of the Company’s common stock, managements’ assessment, or significant fluctuations in the volatility of the trading market for the Company’s common stock, the Company’s fair value estimates could be materially different in the future.

 

The Company computes the fair value of the derivative liability at each reporting period and the change in the fair value is recorded as non-cash expense or non-cash income. The key component in the value of the derivative liability is the Company’s stock price, which is subject to significant fluctuation and is not under its control, and the assessment of volatility. The resulting effect on net income (loss) is therefore subject to significant fluctuation and will continue to be so until the Company’s variable rate debentures, which the convertible feature is associated with, are converted into common stock or paid in full with cash. Assuming all other fair value inputs remain constant, the Company will record non-cash expense when its stock price increases and non-cash income when its stock price decreases.

 

Stock-Based Compensation

 

The Company accounts for employee stock-based compensation in accordance with the fair value recognition provisions of ASC Topic 718, Compensation – Stock Compensation (“ASC 718”). Under this method, compensation expense includes compensation expense for all stock-based payments based on the grant-date fair value. Such amounts have been reduced to reflect the Company’s estimate of forfeitures of all unvested awards.

 

The Company uses the Black-Scholes pricing model to determine the fair value of the stock- based compensation that it grants to employees and non-employees. The Black-Scholes pricing model takes into consideration such factors as the estimated term of the securities, the conversion or exercise price of the securities, the volatility of the price of the Company’s common stock, interest rates, and the probability that the securities will be converted or exercised to determine the fair value of the securities. The selection of these criteria requires management judgment and may impact on the Company’s net income or loss. The computation of volatility is intended to produce a value that is representative of the Company’s expectations about the future volatility of the price of its common stock over an expected term. The Company used its share price history to determine volatility and cannot predict what the price of its shares of common stock will be in the future. As a result, the volatility value that the Company calculated may differ from the actual volatility of the price of its shares of common stock in the future.

 

The Company does not have any stock options as of September 30, 2023, and December 31, 2022.

Convertible Instruments

 

The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with ASC 815 “Derivatives and Hedging”. ASC 815 generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur, and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. Professional standards also provide an exception to this rule when the host instrument is deemed to be conventional as defined under professional standards as “The Meaning of Conventional Convertible Debt Instrument.”

 

ASC 815-40 “Derivatives and Hedging - Contracts in Entity’s Own Equity” provides that, among other things, generally, if an event is not within the entity’s control could or require net cash settlement, then the contract shall be classified as an asset or a liability.

 

Debt issuance costs and debt discounts

 

Debt issuance costs and debt discounts are being amortized over the lives of the related financings on a basis that approximates the effective interest method. Costs and discounts are presented as a reduction of the related debt in the accompanying consolidated balance sheets.

 

Revenue Recognition

 

The Company recognizes revenue in accordance with ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606).

 

Under ASU 2014-9, the Company recognizes revenue when its customers obtain control of the promised good or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. The Company applies the following five-step: (i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation.

 

At contract inception, once the contract is determined to be within the scope of ASU 2014-09, the Company identifies the performance obligation(s) in the contract by assessing whether the goods or services promised within each contract are distinct.

 

Revenue is recognized when the control of the promised goods or services, through performance obligation, is transferred/provided to the customer in an amount that reflects the consideration we expect to be entitled to in exchange for the performance obligations.

 

The Company generates revenue from the sale of cannabis products, which is recognized at one point in time, at delivery.

For the three and nine months ended September 30, 2023 and 2022, the sources of revenue were as follows:

 

   Three Months Ended   Nine Months Ended 
   September 30,   September 30, 
   2023   2022   2023   2022 
Revenue from sale of cannabis at one point in time  $230,274   $—   $1,052,401   $— 
Service income at point in time   —    —    —    34,434 
Total revenue  $230,274   $—   $1,052,401   $34,434 

 

The Company’s performance obligations are established when a customer submits a purchase order notification (in writing, electronically or verbally) for goods, and the Company accepts the order. The Company identifies the performance obligation as the delivery of the requested product in appropriate quantities and to the location specified in the customer’s contract and/or purchase order. The Company generally recognizes revenue when the product or service has been transferred to the customer, at which time the Company has an unconditional right to receive payment. The Company’s sales and sale prices are final, and the selling prices are not affected by contingent events that could impact the transaction price.

 

Concentration of Credit Risk

 

The Company maintains its cash in bank and financial institution deposits that at times may exceed federally insured limits. The Company has not experienced any losses in such accounts through September 30, 2023.

 

Capitalized licensing fees

 

The Company records its intangible assets at cost in accordance with ASC 350, Intangibles – Goodwill and Other. The Company reviews the intangible assets for impairment on an annual basis or if events or changes in circumstances indicate it is more likely than not that they are impaired. These events could include a significant change in the business climate, legal factors, a decline in operating performance, competition, sale, or disposition of a significant portion of the business, or other factors. If the review indicates the impairment, an impairment loss would be recorded for the difference of the value recorded and the new value.

 

For the nine months ended September 30, 2023 and 2022, the Company recognized $1,275,000 of impairment loss related to the exclusive distribution and licensing agreement with C Group LLC.

 

During the nine months ended September 30, 2023, the Company recognized $600,000 of capitalized licensing fee regarding the three licenses acquired from JW Brands LLC. The Company amortizes the capitalized licensing fees over the remaining legal term of the underlying licensing agreement.

 

During the nine months ended September 30, 2023, the Company recognized $600,000 of capitalized licensing fee regarding the three licenses acquired from Chad Enterprises LLC. The Company amortizes the capitalized licensing fees over the remaining legal term of the underlying licensing agreement.

 

Impairment of Long-Lived Assets

 

The Company reviews long-lived assets, including definite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of these assets is determined by comparing the forecasted undiscounted net cash flows of the operation to which the assets relate to the carrying amount. If the operation is determined to be unable to recover the carrying amount of its assets, then these assets are written down first, followed by other long-lived assets of the operation to fair value. Fair value is determined based on discounted cash flows or appraised values, depending on the nature of the assets. For the three and nine months ended September 30, 2023 and 2022, there were no impairment losses recognized for long-lived assets.

Inventories

 

Inventories are stated at the lower of cost, computed using the first-in, first-out method (“FIFO”), and net realizable value. Any adjustments to reduce the cost of inventories to their net realizable value are recognized in earnings in the current period.

 

Accounts Receivable

 

Accounts receivable are stated at net realizable value, and as such, earnings are charged with a provision for doubtful accounts based on our best estimate of the amount of probable credit losses in our existing accounts receivable. We determine an allowance based on historical write-off experience and specific account information available. Accounts receivable are reflected in the accompanying consolidated balance sheets net of a valuation allowance of $0 as of September 30, 2023, and December 31, 2022. When internal collection efforts on accounts have been exhausted, the accounts are written off by reducing the allowance for doubtful accounts and the related customer receivable. The Company did not recognize any bad debt expense during the nine months ended September 30, 2023.

 

Basic and Diluted Income (Loss) Per Share

 

In accordance with ASC Topic 280 – “Earnings Per Share”, the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.

 

The Company does not have any stock options or warrants as of September 30, 2023. The Company has approximately $[   ] of principal and accrued interest from convertible notes, of which $[   ] are currently convertible and have a conversion option in the money as of September 30, 2023. This would result in the issuance of [   ] shares of common stock for the diluted income per share for the three and nine months ended September 30, 2023.

 

Income Taxes

 

The Company records deferred taxes in accordance with FASB ASC No. 740, Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and loss carry forwards and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rules on deferred tax assets and liabilities is recognized in operations in the year of change. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized.

 

Business Combinations under common control

 

Pursuant to ASC 805-50, a common-control transaction does not meet the definition of a business combination because there is no change in control over the net assets before and after the transaction. The accounting for these transactions is addressed in the “Transactions Between Entities Under Common Control”. The net assets are derecognized by the transferring entity and recognized by the receiving entity at the historical cost of the parent of the entities under common control. Any difference between the proceeds transferred or received and the carrying amounts of the net assets is recognized in equity in the transferring and receiving entities’ separate financial statements and eliminated in consolidation. The change in accounting principle is applied retroactively for all periods presented.

Recent Accounting Pronouncements

 

In August 2020, the FASB issued “ASU 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)” (“ASU 2020-06”) which simplifies the accounting for convertible instruments. The guidance removes certain accounting models which separate the embedded conversion features from the host contract for convertible instruments. Either a modified retrospective method of transition or a fully retrospective method of transition was permissible for the adoption of this standard. Update No. 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption was permitted no earlier than the fiscal year beginning after December 15, 2020. The Company adopted ASU 2020-06 on January 1, 2023, which eliminated, among other things, the beneficial conversion model and requires the instrument to be recorded as a single liability. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

 

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments included in ASU 2016-13 require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Although the new standard, known as the current expected credit loss (“CECL”) model, has a greater impact on financial institutions, most other organizations with financial instruments or other assets (trade receivables, contract assets, lease receivables, financial guarantees, loans and loan commitments, and held-to-maturity (HTM) debt securities) are subject to the CECL model and will need to use forward-looking information to better evaluate their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. ASU 2016-13 was originally effective for public companies for fiscal years beginning after December 15, 2019. In November of 2019, the FASB issued ASU 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, which delayed the implementation of ASU 2016-13 to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years for smaller reporting companies. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

 

The Company has evaluated all the recent accounting pronouncements and determined that there are no accounting pronouncements that will have a material effect on the Company’s financial statements.
v3.23.3
PROPERTY AND EQUIPMENT
 9 Months Ended
Sep. 30, 2023
Property, Plant and Equipment [Abstract]  
PROPERTY AND EQUIPMENT

NOTE 3 – PROPERTY AND EQUIPMENT

 

Property and equipment consisted of the following at September 30, 2023, and December 31, 2022:

 

Schedule of Property and Equipment

   September 30,   December 31, 
   2023   2022 
Emulsification equipment  $163,651   $163,651 
Leasehold improvements   6,877    6,877 
Cannabis equipment   97,686    — 
Truck   10,000    10,000 
Fixed assets, gross   278,214    180,528 
Less accumulated depreciation   (106,961)   (93,611)
Property and Equipment, Net  $171,253   $86,917 

 

Depreciation was $13,350 and $12,007 for the nine months ended September 30, 2023 and 2022, respectively. Depreciation was approximately $4,895 and $4,252 for the three months ended September 30, 2023 and 2022, respectively.
v3.23.3
INTANGIBLE, NET
 9 Months Ended
Sep. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]  
INTANGIBLE, NET

NOTE 4 – INTANGIBLE, NET

 

Intangible consisted of the following at September 30, 2023, and December 31, 2022:

 

 

   September 30,   December 31, 
   2023   2022 
C-Group LLC Capitalized Licensing fees  $3,000,000   $3,000,000 
Chad Enterprises LLC licensing fees   600,000    — 
JW Brands LLC Licensing fees   600,000    — 
Gross Amount Capitalized Licensing fees   4,200,000    3,000,000 
Less accumulated depreciation   (2,675,226)   (1,575,000)
Less impairment of C-Group licensing fees   (1,275,000)   — 
Licensing fees, net  $249,774   $1,425,000 

 

C Group LLC

 

On May 13, 2020, we entered into an exclusive distribution and licensing agreement with C Group LLC, a former convertible notes holder, under which we intend to sell indoor agricultural growing pods utilizing C-Group’s proprietary technology to our existing and future customers. The growing pods are a self-contained 800 sq ft steel container consisting of computerized climate and irrigation control. Pursuant to this agreement, the Company issued 300,000 shares of our Series A Preferred Stock to Anthony Super, the President of C Group LLC.

 

The Company is amortizing the capitalized licensing fees over the five-year term of the exclusive distribution and licensing agreement. Amortization expenses were $150,000 and $450,000 for the nine months ended September 30, 2023 and 2022, respectively. The Company fully impaired the remaining carrying cost of $1,275,000 as of September 30, 2023. Such amount was reported as impairment loss in the Company’s consolidated condensed statement of operation for the nine months ended September 30, 2023.

 

JW Brands Licensing Agreement

 

On April 25, 2023, the Company, through its wholly owned subsidiary, executed a license agreement with JW Brands LLC (“JW”). JW is the owner of Cannabis licenses C9-0000183 (retail), C11-0000327 (Distribution), and CDPH-10003817 (Manufacturing) in good standing in the State of California, which the Company acquired for a total consideration of $600,000 worth of the Company’s shares of Series A. The Company issued 40,000 shares of Series A for a total stated value of $400,000 as of September 30, 2023. The balance of $200,000 is to be paid in $50,000 monthly increments commencing on June 1, 2023, and ending on September 1, 2023. The Company paid $50,000 as of June 30, 2023. The remaining amount owed is $150,000 and is reported under accounts payable in the consolidated balance sheet as of September 30, 2023. The Company amortized the capitalized licensing fees over the remaining legal term of such licenses. There was no impairment of such capitalized licensing fees for the nine months ended September 30, 2023.

 

Amortization expense was $600,000 for the nine months ended September 30, 2023, and the remaining unamortized capitalized licensing fees were $0 as of September 30, 2023.

 

On September 15, 2023, the Company executed an asset exchange agreement with a twelve-month term with Bavana, LLC, under which the Company through its wholly owned subsidiary rented non-monetary assets for the exchange of the JW Brands LLC manufacturing type 7 cannabis license with a carrying value of $0 and 300,000 shares of Series A preferred stock. Concurrently with such agreement, the Company executed a revenue sharing agreement under which Bavana, LLC will provide all personnel to operate, maintain and produce all products for extraction in return for 10% of the net profits of all products produced under the Type-7 license. The Company accounted for such a transaction as a rental arrangement and recorded the fair value of the Series A shares as prepaid and recognized rent over the twelve-month period of the agreement.

Chad Enterprises, LLC Licensing Agreement

 

On May 24, 2023, the Company, through its wholly owned subsidiary, executed a license agreement with Chad Enterprises, LLC (“Chad”). Chad is the owner of a commercial microbusiness Cannabis license C12-0000334, which the Company acquired for a total consideration of $600,000 worth of the Company’s shares of Series A. The license is for distributor, level 1 manufacturer, retailer non-storefront adult-use and medicinal and expires on December 31, 2023. The shares of Series A have not yet been issued as of September 30, 2023, and are reported under stock payable in the Company’s consolidated condensed balance sheet as of September 30, 2023. There was no impairment of such capitalized licensing fees for the nine months ended September 30, 2023.

 

Amortization expense was approximately $350,226 for the nine months ended September 30, 2023, and the remaining unamortized capitalized licensing fees was $249,774 as of September 30, 2023.
v3.23.3
CONVERTIBLE NOTES PAYABLE
 9 Months Ended
Sep. 30, 2023
Convertible Notes Payable  
CONVERTIBLE NOTES PAYABLE

NOTE 5 – CONVERTIBLE NOTES PAYABLE

 

As of September 30, 2023, and December 31, 2022, convertible notes payable are comprised of the following:

 

   Original  Original  Due  Interest  Conversion  September 30,   December 31, 
   Note Amount  Note Date  Date  Rate  Rate  2023   2022 
V Group (in default)  150,000  12/12/2019  12/12/2020  12%  Variable   150,000    150,000 
1800 Diagonal Lending #1  57,750  6/2/2023  3/2/2024  9%  Variable   57,750    — 
1800 Diagonal Lending #2  47,250  7/12/2023  4/12/2024  9%  Variable   47,250    — 
GS Capital Partners  125,000  6/2/2023  12/2/2023  8%  Fix   125,000    — 
Fourth Man LLC (in default)  115,000  6/20/2023  6/20/2024  12%  Fix   115,000    — 
Pacific Pier Capital (in default)  60,000  8/29/2023  8/29/2024  12%      60,000    — 
 Total convertible notes, gross                  $555,000   $150,000 
Debt discount                  (98,617)   — 
Total Notes payable, net of discount                 $456,383   $150,000 
 Notes payable, current                 $(456,383)  $(150,000)
Notes payable, non-current                 $—   $— 
Accrued interest                 $91,088   $48,970 

 

During the three and nine months ended September 30, 2023, the Company recognized $16,479 and $44,617 of interest on the existing convertible notes payable, respectively.

 

1800 Diagonal Lending (“diagonal #1”)

 

On June 2, 2023, the Company issued a convertible promissory note to Diagonal for $50,000 of cash consideration, net of $7,750 of financing costs and original issue discount, for principal amount of $57,750. The interest rate under the convertible promissory note is 9% per year or 22% upon an event of default, and the principal and all accrued but unpaid interest are due on March 2, 2024. The note is convertible at any time 180 days following issuance at a discount to market price, as a result the note is not convertible as of September 30, 2023. The note includes a prepayment feature at a premium of 28% from the issuance date and up to 180 days. The note includes a 50% penalty premium on unpaid principal and interest upon an event of default. The note is not in default as of September 30, 2023 (see note 12).

 

The Company incurred approximately $1,310 and $1,709 of interest during the three and nine months ended September 30, 2023, respectively. The Company amortized through interest expense approximately $3,394 of debt discount from the original issue discount. The remaining unamortized debt discount amounts to $4,356 as of September 30, 2023.

1800 Diagonal Lending (“diagonal #2”)

 

On July 12, 2023, the Company issued a convertible promissory note to Diagonal for $40,000 of cash consideration, net of $7,250 of financing costs and original issue discount, for principal amount of $47,250. The interest rate under the convertible promissory note is 9% per year or 22% upon an event of default, and the principal and all accrued but unpaid interest are due on April 12, 2024. The note is convertible at any time 180 days following issuance at a discount to market price, as a result the note is not convertible as of September 30, 2023. The note includes a prepayment feature at a premium of 28% from the issuance date and up to 180 days. The note includes a 50% penalty premium on unpaid principal and interest upon an event of default. The note is not in default as of September 30, 2023 (see note 12). The Company incurred approximately $930 of interest during the three and nine months ended September 30, 2023. The Company amortized through interest expense approximately $2,110 of debt discount from the original issue discount during the three and nine months ended September 30, 2023. The remaining unamortized debt discount amounts to $5,141 as of September 30, 2023.

 

GS Capital Partners (“GS”)

 

On June 2, 2023, the Company issued a convertible redeemable promissory note to GS for cash proceeds of $110,000, net of $15,000 of financing costs and original issue discount for a principal amount of $125,000. The interest rate under the convertible promissory note is 8% per year or 24% upon an event of default, and the principal and all accrued but unpaid interest are due on December 2, 2023. The note is convertible at any time at a fixed conversion price. Upon an event of default, the note is convertible at a lower fixed conversion price, or a variable rate calculated as the lowest trading price during the default period. The note can be prepaid without penalty. Any sale event would result in a premium to the principal of 50%.

 

The Company incurred approximately $5,014 of interest during the nine months ended September 30, 2023. The Company amortized through interest expense approximately $9,840 of debt discount from the original issue discount during the nine months ended September 30, 2023. The remaining unamortized debt discount amounts to approximately $5,160 as of September 30, 2023.

 

Fourth Man LLC (“Fourth Man”) in technical default

 

On June 20, 2023, the Company issued a convertible promissory note to Fourth Man for cash consideration of $84,475, net of $30,525 of financing costs and original issue discount for principal amount of $115,000. The interest rate under the convertible promissory note is 12% per year or 16% upon an event of default, and the principal and all accrued but unpaid interest are due on June 20, 2024. The note has a guaranteed twelve-month coupon or $13,800. The note is convertible at any time at a fixed conversion price initially set at $0.05, but subject to down round protection. The note requires ten (10) mandatory monthly installments starting in September 2023. The note includes a 50% penalty premium on unpaid principal and interest upon an event of default.

 

Fourth Man note is in technical default as of September 30, 2023, as the Company entered into a variable rate transaction and also failed to make the required monthly amortization payment to Fourth Man pursuant to the terms of the promissory note agreement. Upon the occurrence of any event of default the holder can adjust the conversion price to $0.0014 per share of Common Stock. As the note is in technical default, the Company accrued $64,400 of default penalty premium, which is reported in accounts payable and accrued liabilities in the consolidated condensed balance sheet as of September 30, 2023.

 

In connection with the issuance of the Fourth Man note, the Company also issued 4,762,917 common stock warrants to purchase an equivalent number of the Company’s shares of common stock. The stock warrants have a fixed conversion price subject to standard anti-dilution provisions and a five-year term.

 

The Company incurred $13,800 of interest during the nine months ended September 30, 2023. The Company amortized through interest expense approximately $26,585 of debt discount from the original issue discount, deferred financing costs, proceeds allocated to the warrants and the derivative liability during the nine months ended September 30, 2023. The remaining unamortized debt discount amounts to $68,808 as of September 30, 2023.

Pacific Pier Capital (“Pacific”) – In default from cross default

 

On August 29, 2023, the Company issued a convertible promissory note to Pacific for cash consideration of $43,400, net of $16,600 of financing costs and original issue discount for principal amount of $60,000. The interest rate under the convertible promissory note is 12% per year or 16% upon an event of default, and the principal and all accrued but unpaid interest are due on August 29, 2024. The note has a guaranteed twelve-month coupon or $7,200. The note is a self-amortization note with required repayments starting on November 29, 2023. The note includes a 50% penalty premium on unpaid principal and interest upon an event of default. Following the occurrence of default of Fourth Man, the Pacific note was considered in technical default pursuant to the cross-default provision of the agreement as of September 30, 2023. The Company accrued $33,600 of penalty resulting from this default representing 50% of the principal and interest as of September 30, 2023, which is reported in accounts payable and accrued liabilities as of September 30, 2023.

 

The note is convertible upon an event of default at a fixed conversion rate, subject to down round provision.

 

During the nine months ended September 30, 2023, the Company incurred $7,200 of interest. Accrued interest was $7,200 as of September 30, 2023. The Company amortized through interest expense approximately $1,452 of debt discount from the original issue discount. The remaining unamortized debt discount amounts to $15,150 as of September 30, 2023.

 

In addition, the Company issued 6,000,000 common stock purchase warrants to Pacific to acquire an equivalent number of the Company’s common stock. Such warrants are exercisable at any time after issuance at a strike price of $0.02 and subject to adjustments with a term of five years and contain a cashless feature. The Company determined that the fair value of these warrants was de minimis on grant date.
v3.23.3
SHORT TERM LIABILITIES
 9 Months Ended
Sep. 30, 2023
Debt Disclosure [Abstract]  
SHORT TERM LIABILITIES

NOTE 6 – SHORT TERM LIABILITIES

 

As of September 30, 2023, and December 31, 2022, short term debt was comprised of the following:

 

 

   Original  Original  Due  Interest  September 30,   December 31, 
   Note Amount  Note Date  Date  Rate  2023   2022 
Carolyn Hamburger (in default)  100,000  12/12/2014  12/12/2019  10%   100,000    100,000 
Doris Notter (in default)  10,000  12/31/2014  12/31/2019  15%   10,000    10,000 
Charles Hatley  25,000  9/29/2023  9/28/2024  10%   25,000    — 
Direct Capital cash advances  3,757  —  —  —   3,757    — 
Maguire cash advances  22,895  —  —  —   22,895    — 
Maguire & Associate  1,008,919  9/30/2022  12/31/2022  0%   —    1,008,920 
Maguire & Associate  1,368,394  9/30/2022  12/31/2022  0%   —    1,368,394 
Total short-term liabilities              $161,652   $2,487,314 
Accrued interest              $46,447   $37,846 

 

Carolyn Hamburger (in default)

 

On December 12, 2014, the Company’s predecessor Matrix received a $100,000 loan from Carolyn Hamburger at 10% interest evidenced by a note for $100,000 issued by Matrix. The note matured on December 12, 2019. The note is secured by the Company’s emulsification equipment acquired in the Matrix Acquisition. This Note does not convert into securities of the Company. As of September 30, 2023, and December 31, 2022, the note had a principal balance of $100,000. Accrued interest totaled $33,321 and $25,841, as of September 30, 2023, and December 31, 2022, respectively.

 

During the nine months ended September 30, 2023, the Company paid $0 of interest in cast and incurred $7,480 of interest. This note is currently past maturity, but no notice of default has been received by the Company as of September 30, 2023

Doris Notter (in default)

 

On December 31, 2014, Matrix received a $10,000 unsecured loan from Doris Notter at 15% interest and a maturity date of December 31, 2019. As of September 30, 2023, and December 31, 2022, the note had a principal balance of $10,000. Accrued interest was $13,126 and 12,004 as of September 30, 2023, and December 31, 2022, respectively. No payment was made during the nine months ended September 30, 2023. This note is currently past maturity, but no notice of default has been received by the Company as September 30, 2023.

 

Maguire and Associates Inc. #1 (“Maguire”)

 

On September 30, 2022, Maguire and Associates Inc. converted all of the outstanding convertible notes from Optempus Investments LLC, Direct Capital Group, Inc., and C Group LLC for a total principal balance of $834,000 with the issuance of a non-interest promissory note in the amount of $1,008,920 with a maturity date of December 31, 2022. The note is secured with $1,100,000 of Preferred Series A with a stated value of $10 per share or 110,000 shares of Preferred Series A. Pursuant to the default provision, the Company issued 110,000 Series A preferred stock with a stated value of $1,100,000 for full settlement of the principal amount, which resulted in the recognition of $91,081 loss from debt extinguishment.

 

During the nine months ended September 30, 2023, Maguire paid $22,895 of working capital expenses of the Company.

 

Maguire and Associates Inc. #2 (“Maguire”)

 

On September 30, 2022, the Company executed a debt settlement agreement with Maguire & Associates, LLC, a holder of convertible notes in the aggregate principal amount of $1,368,394. Maguire agreed to cancel all of the convertible notes, inclusive of the principal and all accumulated interest and penalties in exchange for an interest free promissory note in the amount of $1,368,394. The principal is due on December 31, 2022 (“Due date”). The promissory note will be secured by 200,000 Shares of Preferred Series A with a stated value of $2,000,000. The secured Series A preferred stock will be fully earned if the Company fails to repay the promissory note at its due date. The Company may prepay the promissory note without any penalties. Pursuant to the default provision, the Company issued 200,000 Series A preferred stock with a stated value of $2,000,000 for full settlement of the principal amount, which resulted in the recognition of $631,606 loss from debt extinguishment. The note if fully settled as of September 30, 2023.

 

Charles Hatley – unsecured promissory note

 

During the nine months ended September 30, 2023, the Company issued a $25,000 unsecured promissory note with a one-year term. The note carries a coupon of 10%. The interest of $2.500 is guaranteed at issuance. In the event the Company fails to pay the principal and guaranteed interest at maturity, the Company is required to issue 2,000 Series A preferred stock as collateral. The shares have not yet been issued as of September 30, 2023. The Company incurred $2,500 of interest expense in the three and nine months ended September 30, 2023. Accrued interest was $2,500 as of September 30, 2023.
v3.23.3
COMMON CONTROL BUSINESS ACQUISITION
 9 Months Ended
Sep. 30, 2023
Business Combination and Asset Acquisition [Abstract]  
COMMON CONTROL BUSINESS ACQUISITION

NOTE 7 – COMMON CONTROL BUSINESS ACQUISITION

 

On October 1, 2022, the Company entered into a share exchange agreement (the “agreement”) with Cal Care Group, Inc (“Cal Care” or the “seller”), and William Reed, the Company’s President, Chief Executive Officer, director and controlling shareholder of the Company and sole shareholder of Cal Care.

 

Cal Care is a licensed delivery and distribution company with locations in Southern and Northern California.

 

The agreement provides for the acquisition by the Company of all of the issued and outstanding shares of Cal Care for a contractual consideration of $5,000,000, payable by the issuance of 500,000 shares of the Company’s Series A Preferred Stock with a stated value of $10 per share.

 

Although the agreement provided for closing on the same date the agreement was entered into, the promised contractual consideration, being the 500,000 shares of Series A preferred stock, were not issued to Mr. Reed until April 5, 2023. Accordingly, the Board of Directors of the Company concluded that the closing of the transactions under the agreement was not effective until April 5, 2023.

The Company accounted for this transaction as a common control business combination under ASC 805-50 Business Combinations Related Issues. The Company recognized the assets and liabilities at their carrying amounts in the financial statements of Cal Care on the date of transfer. The difference between the proceeds transferred and the carrying amounts of the net assets was considered equity transactions that was eliminated in consolidation, and no gain or loss was recognized in the consolidated financial statements of CuraScientific Corp.

 

The acquisition-date fair value of the consideration transferred is as follows:

 

   April 5, 2023 
Fair value of Series A preferred stock  $1,700,000 

 

The Company issued 500,000 shares of Series A preferred stock. The fair value of the non-monetary exchange was determined based on a valuation report obtained from an independent third-party valuation firm. The fair value of the Company’s Series A preferred was determined based on a weighted combination of income approach and market approach. The income approach estimates fair value based on a three-year discounted cash flow model. The market approach estimates fair value based on comparable transactions.

 

The assets and liabilities and operations of the two entities were combined at their historical carrying amount and all historical periods were adjusted as if the businesses had always been combined since the common control transaction resulted in a change in the reporting entity. Indeed, as the two entities have never been presented together, the resulting financial statements are effectively considered to be those of a different reporting entity. The change in reporting entity requires retrospective combination of the entities for all periods presented as if the combination had been in effect since inception of common control in accordance with ASC 250-10-45-21. Both entities are under common control since November 8, 2022, at which time, the Company’s Chief Executive Officer was granted 1,000 super voting rights shares of Series B preferred stock.

 

The results of operations of CuraScientific Corp. and Cal Care Group are combined in the period in which the transfer occurs as through the entities had been combined as of the beginning of the period. As such, the results of operations include the results of operations of CuraScientific Corp. and Cal Care for the three and nine months ended September 30, 2023.
v3.23.3
RELATED PARTY TRANSACTIONS
 9 Months Ended
Sep. 30, 2023
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS

NOTE 8 – RELATED PARTY TRANSACTIONS

 

Mr. William Reed, Chairman, Chief Executive Officer, President, Secretary, Treasurer, and Director and previous sole shareholder of Cal Care.

 

On September 7, 2022, the Company appointed William Reed as Chairman, Chief Executive Officer, President, Secretary, Treasurer, and Director of the Company. The Company and Mr. Reed entered into an employee agreement that includes an annual salary of $200,000 and 15,000 shares of the Company’s Series A Preferred Stock with a stated value of $150,000.

 

During the nine months ended September 30, 2023, the Company accrued wages of $50,000 and paid $177,769 of compensation. The balance of accrued wages was $0 and $66,667 as of September 30, 2023, and December 31, 2022, respectively.

 

During the nine months ended September 30, 2023, the Company issued 500,000 shares of Series A pursuant to the acquisition of Cal Care (note 7).

 

During the nine months ended September 30, 2023, the Company issued 120,000,000 shares of common stock from the conversion of 120,000 Series A preferred stock.

During the nine months ended September 30, 2023, the Company issued 2,323,529,411 shares of common stock from the conversion of 395,000 Series A preferred stock. The Company issued shares of common stock at a discount to the market, which is in contravention of the conversion rate pursuant to the certificate of designation of the Series A, which resulted in the issuance of additional 677,696,078 shares of common stock, with an estimated fair value of $1.6 million, which is presented as a non-cash expense in the consolidated condensed statement of operations in the nine months ended September 30, 2023.

 

Mr. Justin Gonzalez, Former Chief Executive Officer and New Chief Operating Officer and a Director

 

On March 2, 2020, the Company appointed Justin Gonzalez as Chief Executive Officer of the Company. The Company and Mr. Gonzalez entered into an employment agreement that includes an annual salary of $200,000 and $100,000 to be issued in common stock. Unpaid wages will accrue interest at 6% per annum and may be converted to restricted common stock at fair market value at the time of conversion.

 

On September 7, 2022, Justin Gonzalez resigned from his position of Chief Executive Officer. Justin Gonzalez will continue to serve as a director and Chief Operating Officer of the Company. The Company entered into a resignation and settlement agreement with Justin Gonzalez under which all prior agreements were terminated, and the Company agreed to pay Justin Gonzalez $250,000 on or prior to August 29, 2024, to satisfy all accrued obligations owed in the aggregated amount of $492,777. In the event the Company fails to the settlement amount when due, such amount will increase by 200% and will begin to accrue interest at a rate of ten percent (10%) per annum.

 

The balance of accrued compensation pursuant to the terms of the resignation and settlement agreement is $250,000 and is presented in the related party liabilities (non-current) in the consolidated balance sheet as of September 30, 2023, and December 31, 2022.

 

On September 7, 2022, the Company entered into an employment agreement with Justin Gonzalez as Chief Operating Officer. Pursuant to the employment agreement, Justin Gonzalez will receive an annual salary of $100,000, which may be paid by the issuance of shares of the Company’s Series A preferred stock.

 

During the nine months ended September 30, 2023, the Company incurred a total of $50,000 of compensation and paid $0 compensation. The balance of accrued wages was $83,333 and $33,333 as of September 30, 2023, and December 31, 2022, respectively. On July 1, 2023, the Company terminated the employment agreement of Jason Gonzalez as Chief Operating Officer, but he remains a director of the Company.

 

Mr. Eric Watson, former Chief Operating Officer, and Director

 

On March 2, 2020, the Company appointed Eric Watson as Chief Operating Officer and a director of the Company. The Company and Mr. Watson entered into an employee agreement that includes an annual salary of $162,000 and $50,000 to be issued in common stock. Unpaid wages will accrue interest at 6% per annum and may be converted to restricted common stock at fair market value at the time of conversion.

 

On September 7, 2022, Eric Watson resigned from his position of Chief Operating Officer. The Company entered into a resignation and settlement agreement with Eric Watson under which all prior agreements were terminated, and under which, the Company agreed to pay Eric Watson $125,150 of shares of the Company Series A to satisfy all accrued obligations owed in the aggregated amount of $250,290. The Company has agreed to repurchase the shares of Series A Preferred Stock by August 29, 2024. In the event the Company fails to the settlement amount when due, such amount will increase by 200% and will begin to accrue interest at a rate of ten percent (10%) per annum.

 

There was no activity during the three and nine months ended September 30, 2023.

 

Paul Goyette, Director

 

On September 29, 2022, the Board of Directors of the Company appointed Paul Goyette to serve as a director of the Company.

Pursuant to his director’s agreement, Paul Goyette will be paid a cash fee of $2,000 per meeting and be issued 10,000 shares of the Company’s Series A Preferred Stock for a stated value of $100,000. No shares of Series A were issued as of September 30, 2023, and December 31, 2022. The Company accrued $100,000 of stock payable as of September 30, 2023, and December 31, 2022, which is presented under stock payable in the Company shareholders’ equity (deficit).

 

Chris Bennett, Chief Marketing Officer, and a director

 

On May 26, 2023, the Board of Directors of the Company appointed Chris Bennett to serve as Chief Marketing Officer and a director of the Company.

 

Mr. Bennett entered into a Board of Directors Agreement with the Company, pursuant to which Mr. Bennett will be paid a cash fee of $200 per meeting.

 

On May 26, 2023, the Company and Mr. Bennett entered into an employment agreement that includes an annual salary of $120,000 and $150,000 worth of shares of the Company’s Series A preferred stock. Any unpaid or accrued salary can be converted to the Company’s Series A stock upon the approval and authorization of both parties.

 

During the nine months ended September 30, 2023, the Company incurred a total of $50,000 of compensation and paid $50,000 compensation. The balance of accrued wages was $0 as of September 30, 2023, and December 31, 2022.

 

During the nine months ended September 30, 2023, the Company recognized $300,000 of stock-based compensation related to the 30,000 shares of Series A preferred stock, issuable pursuant to the director and employment agreements as of September 30, 2023. The value of the Series A are presented in stock payable in the consolidated condensed balance sheet as of September 30, 2023.

 

Johann Loewen, a former director

 

On September 21, 2021, the Company appointed Johann Loewen as director of the Company for an initial one-year term. As director of the Company, Johann Loewen is entitled to 5,000 shares of Series A at a stated value of $10.00 per share.

 

On September 7, 2022, Johann Loewen resigned from his position as director of the Company. The Company entered into a resignation and settlement agreement with Johann Loewen under which all prior agreements were terminated, and under which, the Company agreed to pay Johann Loewen $3,140 on or prior to March 1, 2023, to satisfy all accrued obligations owed in the aggregated amount of $53,140. No shares have been issued as of September 30, 2023 and December 31, 2022 but the $50,000 liability related to the 5,000 shares of Series A was previously recorded as stock payable in the Company’s consolidated balance sheet as of December 31, 2021, which was fully reversed upon the execution of the settlement agreement in September 2022.

 

In the event the Company fails to the settlement amount when due, such amount will increase by 200% and will begin to accrue interest at a rate of ten percent (10%) per annum.

 

Edouard Beaudette, a former director

 

On October 15, 2021, the Company appointed Edouard Beaudette as director and Chief Strategy Officer of the Company for an initial one-year term. As director of the Company, Edouard Beaudette is entitled to one-time 5,000 shares of Series A at a stated value of $10.00 per share. Under the director’s agreement, no shares have been issued as of September 30, 2023 and December 31, 2022, and the liability is recorded as stock payable in the Company’s consolidated condensed balance sheets for a total amount of $50,000 as of September 30, 2023. Under his employment agreement, Edouard Beaudette accrued 10,000 shares of Series A with a stated value of $100,000, which are recorded and presented as stock payable as of September 30, 2023.

 

On September 3, 2022, Mr. Beaudette resigned from his position of director and the consulting agreement terminated.

 

There was no activity during the three and nine months ended September 30, 2023.
v3.23.3
PREFERRED STOCK
 9 Months Ended
Sep. 30, 2023
Equity [Abstract]  
PREFERRED STOCK

NOTE 9 – PREFERRED STOCK

 

The Company’s authorized preferred stock at September 30, 2023 was 25,000,000 shares of preferred, consisting of 20,000,000 authorized Series A preferred shares, and 2,500 Series B preferred shares, all with a par value of $0.0001 per share.

 

As of September 30, 2023, and December 31, 2022, 6,952,029 and 6,662,422 shares of Series A Preferred Stock were issued and outstanding and 2,000 of Series B Preferred Stock were issued and outstanding, respectively.

 

Series A

 

Series A preferred stock (“Series A”) has no voting rights and have no dividends and in the event of a voluntary or involuntary liquidation, dissolution or winding-up of the Company, each share of Series A has a stated value of $10 per share. Each share of Series A is convertible to common stock at the closing price of common stock on the date of conversion.

 

The Company follows ASC 480-10, “Distinguishing Liabilities from Equity” in its evaluation of the accounting for the Series A Preferred Stock. ASC 480-10-25-14 requires liability accounting for certain financial instruments, including shares that embody an unconditional obligation to transfer a variable number of shares, provided that the monetary value of the obligation is based solely or predominantly on one of the following three characteristics:

 

  ■ A fixed monetary amount known at inception.

 

  ■ Variations in something other than the fair value of the issuer’s equity shares; or

 

  ■ Variations in the fair value of the issuer’s equity shares, but the monetary value to the counterparty moves in the opposite direction as the value of the issuer’s shares.

 

The number of shares delivered is determined on the basis of (1) the fixed monetary amount determined as the stated value and (2) the current stock price at settlement, so that the aggregate fair value of the shares delivered equals the monetary value of the obligation, which is fixed or predominantly fixed. Accordingly, the holder is not significantly exposed to gains and losses attributable to changes in the fair value of the Company’s equity shares. Instead, the Company is using its own equity shares as currency to settle a monetary obligation.

 

The Series A Preferred Stock has been classified as a liability in accordance with ASC 480-10 and the Company has elected to record the Series A Preferred Stock at fair value with changes in fair value recorded through earnings.

 

The fair value of the Series A preferred stock was determined at $3.40 per share following a combination of weighted income and market approaches, which resulted in a change in the fair value of $45,344,831 during the nine months ended September 30, 2023.

 

For the nine months ended September 30, 2023

 

During the nine months ended September 30, 2023, 620,393 shares of Series A Preferred stock were converted to 2,622,923,481 shares of common stock in accordance with the conversion terms. This resulted in the recognition of $5,912,746 of non-cash loss from conversion of Series A Preferred Stock into common stock for the nine months ended September 30, 2023.

 

During the nine months ended September 30, 2023, the Company issued 310,000 Series A Preferred Stock with a stated value of $3,100,000 ($10 stated value per share) for the extinguishment of $2,377,313 of principal related to the promissory notes.

During the nine months ended September 30, 2023, the Company issued 20,000 Series A preferred stock for the settlement of a debt pertaining to JW Brands LLC for a total amount of $125,000.

 

During the nine months ended September 30, 2023, the Company issued 40,000 Series A preferred stock towards the purchase price of the cannabis licenses (retail, distribution, and manufacturing) from JW Brands LLC (see note 4).

 

During the nine months ended September 30, 2023, the Company issued 500,000 Series A preferred stock for the acquisition of all of the issued and outstanding shares of Cal Care Corp (see note 7).

 

During the nine months ended September 30, 2023, the Company issued 10,000 Series A preferred stock pursuant to a settlement agreement.

 

For the nine months ended September 30, 2022

 

During the nine months ended September 30, 2022, 332,944 shares of Series A Preferred stock were converted to 2,929,176,111 shares of common stock in accordance with the conversion terms. This resulted in the recognition of $1,588,140 of non-cash loss from conversion of Series A Preferred Stock into common stock for the nine months ended September 30, 2022.

 

Series B

 

On November 16, 2022, the Company approved to increase the number of shares authorized from 1,000 to 2,500.

 

Each share of Series B preferred stock (“Series B”) is equal to and counted as four (4) times the votes of all of the shares of the Company’s common stock. The stated value of Series B is $0.0001. Series B have no conversion rights, are not entitled to dividends, and have no value in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company.

 

On March 2, 2020, Justin Gonzalez, the Company’s former Chief Executive Officer, was issued 1,000 Preferred Series B Shares, pursuant to the Asset Purchase Agreement dated March 2, 2020.

 

There was no activity during the nine months ended September 30, 2023.
v3.23.3
COMMON STOCK
 9 Months Ended
Sep. 30, 2023
Equity [Abstract]  
COMMON STOCK

NOTE 10 – COMMON STOCK

 

On August 30, 2023, the Company amended its articles of incorporation, which increased the authorized shares of common stock to 30,000,000,000 with par value of $0.0001 and the number of authorized shares of preferred stock to 25,000,000 par value $0.0001, which are comprised of 20,000,000 designated Series A shares and 2,500 designated Series B shares and 4,997,500 undesignated.

 

The Company’s common stock at September 30, 2023, consisted of 30,000,000,000 authorized common shares with a par value of $0.0001 per share.

 

As of September 30, 2023, and December 31, 2022, there were 2,629,582,856 and 6,659,375 (post 1 for 500 reverse split effective on April 24, 2023) shares of common stock issued and outstanding, respectively.

 

For the nine months ended September 30, 2023

 

During the nine months ended September 30, 2023, 620,393 shares of Series A Preferred stock were converted to 2,622,923,481 shares of common stock in accordance with the conversion terms. This resulted in the recognition of $5,912,746 of non-cash loss from conversion of Series A Preferred Stock into common stock for the nine months ended September 30, 2023.

For the nine months ended September 30, 2022

 

During the nine months ended September 30, 2022, 332,944 shares of Series A Preferred stock were converted to 2,929,176,111 shares of common stock in accordance with the conversion terms. This resulted in the recognition of $1,588,140 of non-cash loss from conversion of Series A Preferred Stock into common stock for the nine months ended September 30, 2022.

 

Warrants

 

The balance and activity of all warrants outstanding as of September 30, 2023, is as follows:

 

       Weighted
Average		   Weighted
Average
Remaining		 
       Exercise Price   Contractual 
   Warrants   Per Share   Term (years) 
Outstanding at December 31, 2022   —   $—    — 
Granted   10,762,917   $0.03    5.0 
Cancelled   —   $—    — 
Exercised   —   $—    — 
Outstanding at September 30, 2023   10,762,917   $0.03    4.8 
                
Exercisable at September 30, 2023   10,762,917   $0.03    — 

 

The Black-Scholes option pricing model is used by the Company to determine the weighted-average fair value of share-based payments. The weighted average grant date fair value of the warrants issued during the nine months ended September 30, 2023, was de minimis. The Company’s recognizes forfeitures as they occur. The fair value of the common stock purchase warrants on the grant date was determined using the following weighted-average assumptions during the nine months ended September 30, 2023 and 2022:

 

   For The Nine Months Ending
September 30,
   2023  2022
Expected term  5  —
Expected volatility  648%-783%  —
Expected dividends  None  —
Risk-free interest rate  3.95%-4.38%  —
Forfeitures  None  —
v3.23.3
COMMITMENTS AND CONTINGENCIES
 9 Months Ended
Sep. 30, 2023
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES

NOTE 11 – COMMITMENTS AND CONTINGENCIES

 

Mr. Justin Gonzalez, Former Chief Executive Officer, President, Secretary, Treasurer, and Director

 

On September 7, 2022, March 2, 2020, the Company also entered into a resignation and settlement agreement under which the Company will pay Mr. Gonzalez $250,000 on or prior to August 29, 2024, to satisfy accrued obligations owed to him in the aggregate amount of $492,777, consisting primarily of unpaid wages. In the event the Company fails to pay the settlement amount when due, the amount will increase by 200% and begin to accrue interest at the rate of 10% per annum.

 

Mr. Eric Watson, former Chief Operating Officer, and Director

 

The Company also entered into a resignation and settlement agreement with Mr. Watson, under which all prior agreement between Mr. Watson and the Company was terminated, and under which the Company issue Mr. Watson 12,515 shares of the Company’s Series A preferred stock worth $125,150, to satisfy accrued obligations owed to him in the aggregate amount of $250,290 for unpaid wages. The Company has agreed to repurchase the shares of Series A Preferred Stock by August 29, 2024. In the event of a default by the Company to Mr. Watson, the settlement amount will increase by 200% and begin to accrue interest at the rate of 10% per annum.

Lease

 

Facility in Grants Pass, Oregon

 

The Company leases a product production and water bottling facility in Grants Pass, Oregon on a month-to-month basis at a cost of $2,000 per month.

 

Commercial lease in San Bernadino, CA

 

The Company leases property under an operating lease. For leases with terms greater than 12 months, the Company records the related assets and obligations at the present value of the lease payments over the lease term. The lease does not contain any renewal option and/or termination option that are factored into our determination of the lease payments. The Company uses its incremental borrowing rate to discount lease payments to present value, as the rate implicit in its lease is not readily determinable. The incremental borrowing rate is based on the estimated interest rate for collateralized borrowing over a similar term of the lease at the commencement date.

 

The Company recognized an operating lease liability in the amount of the net present value of the future minimum lease payments, and a right-of-use asset. The Company recognized an initial right of use asset of $120,389 and an equivalent amount for lease liability.

 

The discount rate used for this lease was 6.75%, which was determined to be the incremental borrowing rate based on comparative secured financing in the marketplace at the inception of the fixed lease payments. Lease expense was approximately $30,543 for the nine months ended September 30, 2023.

 

Future estimated minimum lease payments by year and in aggregate, under the Company’s fixed payment operating lease consisted of the following at September 30, 2023:

 

   Operating 
   Lease 
For the twelve months ended September 30,     
2024  $29,750 
2025   30,000 
2026   30,000 
2027   30,000 
2028   15,000 
Total  $134,750 
Less amount representing interest   (18,854)
Present value of the net minimum payments  $115,896 
v3.23.3
SUBSEQUENT EVENTS
 9 Months Ended
Sep. 30, 2023
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS

NOTE 12 – SUBSEQUENT EVENTS

 

The Company has evaluated subsequent events for adjustment to or disclosure in its consolidated financial statements through the date of this report, and has not identified any recordable or disclosable events, not otherwise reported in these consolidated financial statements or the notes thereto, except for the following:

 

Subsequent to September 30, 2023, the Company issued 181,527,777 shares of common stock following the conversion of 12,700 shares of Series A preferred stock.

 

Subsequent to September 30, 2023, the Company entered into an unsecured promissory note for a principal amount of $14,990 with a one-year term.

 

Subsequent to September 30, 2023, the Company entered into a settlement agreement with Chad Enterprises LLC pursuant to which the Company terminates the license purchase dated May 24, 2023, and cancels the 60,000 Series A preferred stock that were issuable as consideration for the acquisition of the license.
v3.23.3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
 9 Months Ended
Sep. 30, 2023
Accounting Policies [Abstract]  
Basis of Presentation

Basis of Presentation

 

The Company maintains its accounting records on an accrual basis in accordance with GAAP. These consolidated financial statements are presented in United States dollars. The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q. All adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations for the interim periods have been made and are of a recurring nature unless otherwise disclosed herein.
Use of Estimates

Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management regularly evaluates estimates and assumptions related to the valuation of assets and liabilities. Management bases its estimates and assumptions on current facts, historical experience, and various other factors that 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 and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from management’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Significant estimates include:

 

■Liability for legal contingencies.

 

■Useful life of assets.

 

■Deferred income taxes and related valuation allowance.

 

■Impairment of finite-life intangible.

 

■Obsolescence of inventory

 

■Stock-based compensation using the Black Scholes option pricing model.

 
Segment Reporting

Segment Reporting

 

The Company operates as one reportable segment under ASC 280, Segment Reporting. The Chief operating decision maker regularly reviews the financial information of the Company at a consolidated level in deciding how to allocate resources and in assessing performance.

 
Cash and Cash Equivalents

Cash and Cash Equivalents

 

The Company considers all highly liquid investments with maturities of 90 days or less from the date of purchase to be cash equivalents. The Company did not have any cash equivalents as of September 30, 2023, and December 31, 2022, respectively.

 
Fair value of Financial Instruments and Fair Value Measurements

Fair value of Financial Instruments and Fair Value Measurements

 

Accounting Standards Codification (“ASC”) 820 Fair Value Measurements and Disclosures, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value.

 

Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability.

 

In addition to defining fair value, the standard expands the disclosure requirements around the value and establishing a fair value hierarchy for valuation inputs is expanded. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring the value are observable in the market.

 

A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

 

Level 1 – Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.

 

Level 2 – Inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in market that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 

Level 3 – Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models and similar techniques.

The reported fair values for financial instruments that use Level 2 and Level 3 inputs to determine fair value are based on a variety of factors and assumptions. Accordingly, certain fair values may not represent actual values of the Company’s financial instruments that could have been realized as of September 30, 2023, or that will be recognized in the future, and do not include expenses that could be incurred in an actual settlement.

 

The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts receivable, inventory, prepaid expenses and other assets, accounts payable, accrued interest, related party liabilities approximate fair value due to their relatively short maturities.

 

The Company’s convertible notes payable and loans payable approximates the fair value of such liabilities based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements and due to the short-term nature of these instruments at September 30, 2023, and December 31, 2022.

 

The fair value of the Company’s recorded derivative liability is determined based on unobservable inputs that are not corroborated by market data, which require a Level 3 classification. A Black-Sholes option valuation model was used to determine the fair value. The Company records derivative liability on the balance sheets at fair value with changes in fair value recorded in the statements of operation.

 

The following table presents balances of the liabilities with significant unobservable inputs (Level 3) as of September 30, 2023, and December 31, 2022:

 

   Fair Value Measurements at September 30, 2023, Using 
   Quoted
Prices in
Active
Markets for		   Significant
Other
Observable		   Significant
Unobservable		     
   Identical Assets   Inputs   Inputs     
   (Level 1)   (Level 2)   (Level 3)   Total 
Derivative liability  $—   $—   $697,550   $697,550 
Total  $—   $—   $697,550   $697,550 
                     
   Fair Value Measurements at December 31, 2022, Using 
   Quoted
Prices in
Active
Markets for		   Significant
Other
Observable		   Significant
Unobservable		     
   Identical Assets   Inputs   Inputs     
   (Level 1)   (Level 2)   (Level 3)   Total 
Derivative liability  $—   $—   $1,026,942   $1,026,942 
Total  $—   $—   $1,026,942   $1,026,942 

The following table presents changes of the liabilities with significant unobservable inputs (Level 3) for the nine months ended September 30, 2023:

 

 

   Derivative 
   Liability 
Balance December 31, 2022  $1,026,942 
New derivative from convertible notes   27,571 
Change in fair value of derivative   (356,963)
Balance September 30, 2023  $697,550 

 

Derivative Liability

 

The Company measures the derivative liability using the Black-Scholes option valuation model using the following assumptions:

 

   September 30, 2023
    
Expected term  1 month – 1 year
Exercise price  $0.00008-$0.00820
Expected volatility  342%-658%
Expected dividends  None
Risk-free interest rate  4.74%-5.50%
Forfeitures  None

 

The assumptions used in determining fair value represent management’s best estimates, but these estimates involve inherent uncertainties and the application of management’s judgment. As a result, if factors change, including changes in the market value of the Company’s common stock, managements’ assessment, or significant fluctuations in the volatility of the trading market for the Company’s common stock, the Company’s fair value estimates could be materially different in the future.

 

The Company computes the fair value of the derivative liability at each reporting period and the change in the fair value is recorded as non-cash expense or non-cash income. The key component in the value of the derivative liability is the Company’s stock price, which is subject to significant fluctuation and is not under its control, and the assessment of volatility. The resulting effect on net income (loss) is therefore subject to significant fluctuation and will continue to be so until the Company’s variable rate debentures, which the convertible feature is associated with, are converted into common stock or paid in full with cash. Assuming all other fair value inputs remain constant, the Company will record non-cash expense when its stock price increases and non-cash income when its stock price decreases.

 
Stock-Based Compensation

Stock-Based Compensation

 

The Company accounts for employee stock-based compensation in accordance with the fair value recognition provisions of ASC Topic 718, Compensation – Stock Compensation (“ASC 718”). Under this method, compensation expense includes compensation expense for all stock-based payments based on the grant-date fair value. Such amounts have been reduced to reflect the Company’s estimate of forfeitures of all unvested awards.

 

The Company uses the Black-Scholes pricing model to determine the fair value of the stock- based compensation that it grants to employees and non-employees. The Black-Scholes pricing model takes into consideration such factors as the estimated term of the securities, the conversion or exercise price of the securities, the volatility of the price of the Company’s common stock, interest rates, and the probability that the securities will be converted or exercised to determine the fair value of the securities. The selection of these criteria requires management judgment and may impact on the Company’s net income or loss. The computation of volatility is intended to produce a value that is representative of the Company’s expectations about the future volatility of the price of its common stock over an expected term. The Company used its share price history to determine volatility and cannot predict what the price of its shares of common stock will be in the future. As a result, the volatility value that the Company calculated may differ from the actual volatility of the price of its shares of common stock in the future.

 

The Company does not have any stock options as of September 30, 2023, and December 31, 2022.
Convertible Instruments

Convertible Instruments

 

The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with ASC 815 “Derivatives and Hedging”. ASC 815 generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur, and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. Professional standards also provide an exception to this rule when the host instrument is deemed to be conventional as defined under professional standards as “The Meaning of Conventional Convertible Debt Instrument.”

 

ASC 815-40 “Derivatives and Hedging - Contracts in Entity’s Own Equity” provides that, among other things, generally, if an event is not within the entity’s control could or require net cash settlement, then the contract shall be classified as an asset or a liability.

 
Debt issuance costs and debt discounts

Debt issuance costs and debt discounts

 

Debt issuance costs and debt discounts are being amortized over the lives of the related financings on a basis that approximates the effective interest method. Costs and discounts are presented as a reduction of the related debt in the accompanying consolidated balance sheets.

 
Revenue Recognition

Revenue Recognition

 

The Company recognizes revenue in accordance with ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606).

 

Under ASU 2014-9, the Company recognizes revenue when its customers obtain control of the promised good or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. The Company applies the following five-step: (i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation.

 

At contract inception, once the contract is determined to be within the scope of ASU 2014-09, the Company identifies the performance obligation(s) in the contract by assessing whether the goods or services promised within each contract are distinct.

 

Revenue is recognized when the control of the promised goods or services, through performance obligation, is transferred/provided to the customer in an amount that reflects the consideration we expect to be entitled to in exchange for the performance obligations.

 

The Company generates revenue from the sale of cannabis products, which is recognized at one point in time, at delivery.

For the three and nine months ended September 30, 2023 and 2022, the sources of revenue were as follows:

 

   Three Months Ended   Nine Months Ended 
   September 30,   September 30, 
   2023   2022   2023   2022 
Revenue from sale of cannabis at one point in time  $230,274   $—   $1,052,401   $— 
Service income at point in time   —    —    —    34,434 
Total revenue  $230,274   $—   $1,052,401   $34,434 

 

The Company’s performance obligations are established when a customer submits a purchase order notification (in writing, electronically or verbally) for goods, and the Company accepts the order. The Company identifies the performance obligation as the delivery of the requested product in appropriate quantities and to the location specified in the customer’s contract and/or purchase order. The Company generally recognizes revenue when the product or service has been transferred to the customer, at which time the Company has an unconditional right to receive payment. The Company’s sales and sale prices are final, and the selling prices are not affected by contingent events that could impact the transaction price.

 
Concentration of Credit Risk

Concentration of Credit Risk

 

The Company maintains its cash in bank and financial institution deposits that at times may exceed federally insured limits. The Company has not experienced any losses in such accounts through September 30, 2023.

 
Capitalized licensing fees

Capitalized licensing fees

 

The Company records its intangible assets at cost in accordance with ASC 350, Intangibles – Goodwill and Other. The Company reviews the intangible assets for impairment on an annual basis or if events or changes in circumstances indicate it is more likely than not that they are impaired. These events could include a significant change in the business climate, legal factors, a decline in operating performance, competition, sale, or disposition of a significant portion of the business, or other factors. If the review indicates the impairment, an impairment loss would be recorded for the difference of the value recorded and the new value.

 

For the nine months ended September 30, 2023 and 2022, the Company recognized $1,275,000 of impairment loss related to the exclusive distribution and licensing agreement with C Group LLC.

 

During the nine months ended September 30, 2023, the Company recognized $600,000 of capitalized licensing fee regarding the three licenses acquired from JW Brands LLC. The Company amortizes the capitalized licensing fees over the remaining legal term of the underlying licensing agreement.

 

During the nine months ended September 30, 2023, the Company recognized $600,000 of capitalized licensing fee regarding the three licenses acquired from Chad Enterprises LLC. The Company amortizes the capitalized licensing fees over the remaining legal term of the underlying licensing agreement.

 
Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

 

The Company reviews long-lived assets, including definite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of these assets is determined by comparing the forecasted undiscounted net cash flows of the operation to which the assets relate to the carrying amount. If the operation is determined to be unable to recover the carrying amount of its assets, then these assets are written down first, followed by other long-lived assets of the operation to fair value. Fair value is determined based on discounted cash flows or appraised values, depending on the nature of the assets. For the three and nine months ended September 30, 2023 and 2022, there were no impairment losses recognized for long-lived assets.
Inventories

Inventories

 

Inventories are stated at the lower of cost, computed using the first-in, first-out method (“FIFO”), and net realizable value. Any adjustments to reduce the cost of inventories to their net realizable value are recognized in earnings in the current period.

 
Accounts Receivable

Accounts Receivable

 

Accounts receivable are stated at net realizable value, and as such, earnings are charged with a provision for doubtful accounts based on our best estimate of the amount of probable credit losses in our existing accounts receivable. We determine an allowance based on historical write-off experience and specific account information available. Accounts receivable are reflected in the accompanying consolidated balance sheets net of a valuation allowance of $0 as of September 30, 2023, and December 31, 2022. When internal collection efforts on accounts have been exhausted, the accounts are written off by reducing the allowance for doubtful accounts and the related customer receivable. The Company did not recognize any bad debt expense during the nine months ended September 30, 2023.

 
Basic and Diluted Income (Loss) Per Share

Basic and Diluted Income (Loss) Per Share

 

In accordance with ASC Topic 280 – “Earnings Per Share”, the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.

 

The Company does not have any stock options or warrants as of September 30, 2023. The Company has approximately $[   ] of principal and accrued interest from convertible notes, of which $[   ] are currently convertible and have a conversion option in the money as of September 30, 2023. This would result in the issuance of [   ] shares of common stock for the diluted income per share for the three and nine months ended September 30, 2023.

 
Income Taxes

Income Taxes

 

The Company records deferred taxes in accordance with FASB ASC No. 740, Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and loss carry forwards and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rules on deferred tax assets and liabilities is recognized in operations in the year of change. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized.

 
Business Combinations under common control

Business Combinations under common control

 

Pursuant to ASC 805-50, a common-control transaction does not meet the definition of a business combination because there is no change in control over the net assets before and after the transaction. The accounting for these transactions is addressed in the “Transactions Between Entities Under Common Control”. The net assets are derecognized by the transferring entity and recognized by the receiving entity at the historical cost of the parent of the entities under common control. Any difference between the proceeds transferred or received and the carrying amounts of the net assets is recognized in equity in the transferring and receiving entities’ separate financial statements and eliminated in consolidation. The change in accounting principle is applied retroactively for all periods presented.
Recent Accounting Pronouncements

Recent Accounting Pronouncements

 

In August 2020, the FASB issued “ASU 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)” (“ASU 2020-06”) which simplifies the accounting for convertible instruments. The guidance removes certain accounting models which separate the embedded conversion features from the host contract for convertible instruments. Either a modified retrospective method of transition or a fully retrospective method of transition was permissible for the adoption of this standard. Update No. 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption was permitted no earlier than the fiscal year beginning after December 15, 2020. The Company adopted ASU 2020-06 on January 1, 2023, which eliminated, among other things, the beneficial conversion model and requires the instrument to be recorded as a single liability. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

 

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments included in ASU 2016-13 require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Although the new standard, known as the current expected credit loss (“CECL”) model, has a greater impact on financial institutions, most other organizations with financial instruments or other assets (trade receivables, contract assets, lease receivables, financial guarantees, loans and loan commitments, and held-to-maturity (HTM) debt securities) are subject to the CECL model and will need to use forward-looking information to better evaluate their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. ASU 2016-13 was originally effective for public companies for fiscal years beginning after December 15, 2019. In November of 2019, the FASB issued ASU 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, which delayed the implementation of ASU 2016-13 to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years for smaller reporting companies. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

 

The Company has evaluated all the recent accounting pronouncements and determined that there are no accounting pronouncements that will have a material effect on the Company’s financial statements.
v3.23.3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)
 9 Months Ended
Sep. 30, 2023
Accounting Policies [Abstract]  
Schedule of Fair Value Measurements

The following table presents balances of the liabilities with significant unobservable inputs (Level 3) as of September 30, 2023, and December 31, 2022:

 

   Fair Value Measurements at September 30, 2023, Using 
   Quoted
Prices in
Active
Markets for		   Significant
Other
Observable		   Significant
Unobservable		     
   Identical Assets   Inputs   Inputs     
   (Level 1)   (Level 2)   (Level 3)   Total 
Derivative liability  $—   $—   $697,550   $697,550 
Total  $—   $—   $697,550   $697,550 
                     
   Fair Value Measurements at December 31, 2022, Using 
   Quoted
Prices in
Active
Markets for		   Significant
Other
Observable		   Significant
Unobservable		     
   Identical Assets   Inputs   Inputs     
   (Level 1)   (Level 2)   (Level 3)   Total 
Derivative liability  $—   $—   $1,026,942   $1,026,942 
Total  $—   $—   $1,026,942   $1,026,942 
Schedule of Derivative Liabilities at Fair Value

The following table presents changes of the liabilities with significant unobservable inputs (Level 3) for the nine months ended September 30, 2023:

 

 

   Derivative 
   Liability 
Balance December 31, 2022  $1,026,942 
New derivative from convertible notes   27,571 
Change in fair value of derivative   (356,963)
Balance September 30, 2023  $697,550 
Schedule of Fair Value Derivative Liability measured using Black-Scholes Valuation Model

The Company measures the derivative liability using the Black-Scholes option valuation model using the following assumptions:

 

   September 30, 2023
    
Expected term  1 month – 1 year
Exercise price  $0.00008-$0.00820
Expected volatility  342%-658%
Expected dividends  None
Risk-free interest rate  4.74%-5.50%
Forfeitures  None
Schedule of Revenue Recognition

For the three and nine months ended September 30, 2023 and 2022, the sources of revenue were as follows:

 

   Three Months Ended   Nine Months Ended 
   September 30,   September 30, 
   2023   2022   2023   2022 
Revenue from sale of cannabis at one point in time  $230,274   $—   $1,052,401   $— 
Service income at point in time   —    —    —    34,434 
Total revenue  $230,274   $—   $1,052,401   $34,434 
v3.23.3
PROPERTY AND EQUIPMENT (Tables)
 9 Months Ended
Sep. 30, 2023
Property, Plant and Equipment [Abstract]  
Schedule of Property and Equipment

Property and equipment consisted of the following at September 30, 2023, and December 31, 2022:

 

Schedule of Property and Equipment

   September 30,   December 31, 
   2023   2022 
Emulsification equipment  $163,651   $163,651 
Leasehold improvements   6,877    6,877 
Cannabis equipment   97,686    — 
Truck   10,000    10,000 
Fixed assets, gross   278,214    180,528 
Less accumulated depreciation   (106,961)   (93,611)
Property and Equipment, Net  $171,253   $86,917 
v3.23.3
INTANGIBLE, NET (Tables)
 9 Months Ended
Sep. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]  
Schedule of Capitalized Licensing fees

Intangible consisted of the following at September 30, 2023, and December 31, 2022:

 

 

   September 30,   December 31, 
   2023   2022 
C-Group LLC Capitalized Licensing fees  $3,000,000   $3,000,000 
Chad Enterprises LLC licensing fees   600,000    — 
JW Brands LLC Licensing fees   600,000    — 
Gross Amount Capitalized Licensing fees   4,200,000    3,000,000 
Less accumulated depreciation   (2,675,226)   (1,575,000)
Less impairment of C-Group licensing fees   (1,275,000)   — 
Licensing fees, net  $249,774   $1,425,000 
v3.23.3
CONVERTIBLE NOTES PAYABLE (Tables)
 9 Months Ended
Sep. 30, 2023
Convertible Notes Payable  
Schedule of Convertible Notes Payable

As of September 30, 2023, and December 31, 2022, convertible notes payable are comprised of the following:

 

   Original  Original  Due  Interest  Conversion  September 30,   December 31, 
   Note Amount  Note Date  Date  Rate  Rate  2023   2022 
V Group (in default)  150,000  12/12/2019  12/12/2020  12%  Variable   150,000    150,000 
1800 Diagonal Lending #1  57,750  6/2/2023  3/2/2024  9%  Variable   57,750    — 
1800 Diagonal Lending #2  47,250  7/12/2023  4/12/2024  9%  Variable   47,250    — 
GS Capital Partners  125,000  6/2/2023  12/2/2023  8%  Fix   125,000    — 
Fourth Man LLC (in default)  115,000  6/20/2023  6/20/2024  12%  Fix   115,000    — 
Pacific Pier Capital (in default)  60,000  8/29/2023  8/29/2024  12%      60,000    — 
 Total convertible notes, gross                  $555,000   $150,000 
Debt discount                  (98,617)   — 
Total Notes payable, net of discount                 $456,383   $150,000 
 Notes payable, current                 $(456,383)  $(150,000)
Notes payable, non-current                 $—   $— 
Accrued interest                 $91,088   $48,970 
v3.23.3
SHORT TERM LIABILITIES (Tables)
 9 Months Ended
Sep. 30, 2023
Debt Disclosure [Abstract]  
Schedule of Short Term Debt

As of September 30, 2023, and December 31, 2022, short term debt was comprised of the following:

 

 

   Original  Original  Due  Interest  September 30,   December 31, 
   Note Amount  Note Date  Date  Rate  2023   2022 
Carolyn Hamburger (in default)  100,000  12/12/2014  12/12/2019  10%   100,000    100,000 
Doris Notter (in default)  10,000  12/31/2014  12/31/2019  15%   10,000    10,000 
Charles Hatley  25,000  9/29/2023  9/28/2024  10%   25,000    — 
Direct Capital cash advances  3,757  —  —  —   3,757    — 
Maguire cash advances  22,895  —  —  —   22,895    — 
Maguire & Associate  1,008,919  9/30/2022  12/31/2022  0%   —    1,008,920 
Maguire & Associate  1,368,394  9/30/2022  12/31/2022  0%   —    1,368,394 
Total short-term liabilities              $161,652   $2,487,314 
Accrued interest              $46,447   $37,846 
v3.23.3
COMMON CONTROL BUSINESS ACQUISITION (Tables)
 9 Months Ended
Sep. 30, 2023
Business Combination and Asset Acquisition [Abstract]  
Schedule of Consideration Transferred in Business Acquisition

The acquisition-date fair value of the consideration transferred is as follows:

 

   April 5, 2023 
Fair value of Series A preferred stock  $1,700,000 
v3.23.3
COMMON STOCK (Tables)
 9 Months Ended
Sep. 30, 2023
Equity [Abstract]  
Schedule of Warrants Outstanding

The balance and activity of all warrants outstanding as of September 30, 2023, is as follows:

 

       Weighted
Average		   Weighted
Average
Remaining		 
       Exercise Price   Contractual 
   Warrants   Per Share   Term (years) 
Outstanding at December 31, 2022   —   $—    — 
Granted   10,762,917   $0.03    5.0 
Cancelled   —   $—    — 
Exercised   —   $—    — 
Outstanding at September 30, 2023   10,762,917   $0.03    4.8 
                
Exercisable at September 30, 2023   10,762,917   $0.03    — 
Schedule of Weighted Average Assumptions of Warrants

   For The Nine Months Ending
September 30,
   2023  2022
Expected term  5  —
Expected volatility  648%-783%  —
Expected dividends  None  —
Risk-free interest rate  3.95%-4.38%  —
Forfeitures  None  —
v3.23.3
COMMITMENTS AND CONTINGENCIES (Tables)
 9 Months Ended
Sep. 30, 2023
Commitments and Contingencies Disclosure [Abstract]  
Schedule of Future Minimum Lease Payment

Future estimated minimum lease payments by year and in aggregate, under the Company’s fixed payment operating lease consisted of the following at September 30, 2023:

 

   Operating 
   Lease 
For the twelve months ended September 30,     
2024  $29,750 
2025   30,000 
2026   30,000 
2027   30,000 
2028   15,000 
Total  $134,750 
Less amount representing interest   (18,854)
Present value of the net minimum payments  $115,896 
v3.23.3
NATURE OF OPERATIONS AND GOING CONCERN (Details Narrative) - shares
 9 Months Ended
Apr. 05, 2023
Sep. 30, 2023
Cal Care Group Inc [Member] | Preferred Stock [Member] | Series A Preferred Stock [Member]    
Stock Issued During Period, Shares, Acquisitions 500,000 500,000
v3.23.3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)
Sep. 30, 2023
Dec. 31, 2022
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Total $ 697,550 $ 1,026,942 [1]
Fair Value, Inputs, Level 1 [Member]    
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Total
Fair Value, Inputs, Level 2 [Member]    
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Total
Fair Value, Inputs, Level 3 [Member]    
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Total 697,550 1,026,942
Derivative Liability [Member]    
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Total 697,550 1,026,942
Derivative Liability [Member] | Fair Value, Inputs, Level 1 [Member]    
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Total
Derivative Liability [Member] | Fair Value, Inputs, Level 2 [Member]    
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Total
Derivative Liability [Member] | Fair Value, Inputs, Level 3 [Member]    
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]    
Total $ 697,550 $ 1,026,942
[1] The number of shares has been retroactively restated to reflect the one for five hundred (1 for 500) reverse stock split, which was effective on April 24, 2023.
v3.23.3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Accounting Policies [Abstract]        
Balance December 31, 2022 [1]     $ 1,026,942  
New derivative from convertible notes     27,571  
Change in fair value of derivative $ 235,710 [2] $ 880,189 (356,963) [2] $ 1,239,397
Balance September 30, 2023 $ 697,550   $ 697,550  
[1] The number of shares has been retroactively restated to reflect the one for five hundred (1 for 500) reverse stock split, which was effective on April 24, 2023.
[2] Cal Care Group and CuraScientific Corp results of operations are combined as of the beginning of the period or January 1, 2023, since it was determined that there was a change in the reporting entity pursuant to ASC 250-10-45-21 and the transaction was accounted for under ASC 805-50 Common control Transactions.
v3.23.3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) - Derivative Financial Instruments, Liabilities [Member]
 9 Months Ended
Sep. 30, 2023
USD ($)
$ / shares
Property, Plant and Equipment [Line Items]  
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Weighted Average Expected Dividend | $ $ 0
Minimum [Member]  
Property, Plant and Equipment [Line Items]  
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Term 1 month
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Exercise Price $ 0.00008
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Volatility Rate 342.00%
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Risk Free Interest Rate 4.74%
Maximum [Member]  
Property, Plant and Equipment [Line Items]  
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Term 1 year
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Exercise Price $ 0.00820
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Volatility Rate 658.00%
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Risk Free Interest Rate 5.50%
v3.23.3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 4) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Product Information [Line Items]        
Total revenue $ 230,274 [1] $ 1,052,401 [1] $ 34,434
Revenue From Sale Of Cannabis [Member]        
Product Information [Line Items]        
Total revenue 230,274 1,052,401
Service Income [Member]        
Product Information [Line Items]        
Total revenue $ 34,434
[1] Cal Care Group and CuraScientific Corp results of operations are combined as of the beginning of the period or January 1, 2023, since it was determined that there was a change in the reporting entity pursuant to ASC 250-10-45-21 and the transaction was accounted for under ASC 805-50 Common control Transactions.
v3.23.3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative)
 3 Months Ended 9 Months Ended
Sep. 30, 2023
USD ($)
 [1]
Sep. 30, 2022
USD ($)
Sep. 30, 2023
USD ($)
Number
Sep. 30, 2022
USD ($)
Product Information [Line Items]        
Number of Operating Segments | Number     1  
Finance Lease, Impairment Loss       $ 1,275,000
[custom:LicensingFees] $ 675,195 $ 150,000 $ 1,100,226 [1] $ 450,000
License From J W Brands L L C [Member]        
Product Information [Line Items]        
[custom:LicensingFees]     600,000  
License From Chad Enterprises L L C [Member]        
Product Information [Line Items]        
[custom:LicensingFees]     $ 600,000  
[1] Cal Care Group and CuraScientific Corp results of operations are combined as of the beginning of the period or January 1, 2023, since it was determined that there was a change in the reporting entity pursuant to ASC 250-10-45-21 and the transaction was accounted for under ASC 805-50 Common control Transactions.
v3.23.3
PROPERTY AND EQUIPMENT (Details) - USD ($)
Sep. 30, 2023
Dec. 31, 2022
Property, Plant and Equipment [Line Items]    
Fixed assets, gross $ 278,214 $ 180,528
Less accumulated depreciation (106,961) (93,611)
Property and Equipment, Net 171,253 86,917 [1]
Equipment [Member]    
Property, Plant and Equipment [Line Items]    
Fixed assets, gross 163,651 163,651
Leasehold Improvements [Member]    
Property, Plant and Equipment [Line Items]    
Fixed assets, gross 6,877 6,877
Cannabis Equipment [Member]    
Property, Plant and Equipment [Line Items]    
Fixed assets, gross 97,686
Trucks [Member]    
Property, Plant and Equipment [Line Items]    
Fixed assets, gross $ 10,000 $ 10,000
[1] The number of shares has been retroactively restated to reflect the one for five hundred (1 for 500) reverse stock split, which was effective on April 24, 2023.
v3.23.3
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Property, Plant and Equipment [Abstract]        
Depreciation $ 4,895 [1] $ 4,252 $ 13,350 [1] $ 12,007
[1] Cal Care Group and CuraScientific Corp results of operations are combined as of the beginning of the period or January 1, 2023, since it was determined that there was a change in the reporting entity pursuant to ASC 250-10-45-21 and the transaction was accounted for under ASC 805-50 Common control Transactions.
v3.23.3
Schedule of Capitalized Licensing fees (Details) - USD ($)
Sep. 30, 2023
Dec. 31, 2022
Capitalized Contract Cost [Line Items]    
Gross Amount Capitalized Licensing fees $ 4,200,000 $ 3,000,000
Less accumulated depreciation (2,675,226) (1,575,000)
Less impairment of C-Group licensing fees (1,275,000)
Licensing fees, net 249,774 1,425,000 [1]
C Group L L C [Member]    
Capitalized Contract Cost [Line Items]    
Gross Amount Capitalized Licensing fees 3,000,000 3,000,000
Chad Enterprises L L C [Member]    
Capitalized Contract Cost [Line Items]    
Gross Amount Capitalized Licensing fees 600,000
J W Brands L L C [Member]    
Capitalized Contract Cost [Line Items]    
Gross Amount Capitalized Licensing fees $ 600,000
[1] The number of shares has been retroactively restated to reflect the one for five hundred (1 for 500) reverse stock split, which was effective on April 24, 2023.
v3.23.3
CONVERTIBLE NOTES PAYABLE (Details) - USD ($)
 9 Months Ended
Sep. 30, 2023
Dec. 31, 2022
Debt Instrument [Line Items]    
Notes and Loans Payable $ 555,000  
Notes and Loans Payable 150,000  
Notes and Loans Payable 555,000 $ 150,000
Debt Instrument, Unamortized Discount (98,617)
Convertible Notes Payable 456,383 150,000
Convertible Notes Payable, Current (456,383) (150,000) [1]
Convertible Notes Payable, Noncurrent
Accrued Interest Current 91,088 48,970
V Group    
Debt Instrument [Line Items]    
Debt Instrument, Face Amount $ 150,000  
Debt Instrument, Issuance Date Dec. 12, 2019  
Debt Instrument, Maturity Date Dec. 12, 2020  
Debt Instrument, Interest Rate, Stated Percentage 12.00%  
Notes and Loans Payable $ 150,000  
Notes and Loans Payable 150,000  
Notes and Loans Payable 150,000 150,000
Eighteen Hundred Diagonal Lending 1 [Member]    
Debt Instrument [Line Items]    
Debt Instrument, Face Amount $ 57,750  
Debt Instrument, Issuance Date Jun. 02, 2023  
Debt Instrument, Maturity Date Mar. 02, 2024  
Debt Instrument, Interest Rate, Stated Percentage 9.00%  
Notes and Loans Payable $ 57,750  
Notes and Loans Payable  
Notes and Loans Payable 57,750
Eighteen Hundred Diagonal Lending 2 [Member]    
Debt Instrument [Line Items]    
Debt Instrument, Face Amount $ 47,250  
Debt Instrument, Issuance Date Jul. 12, 2023  
Debt Instrument, Maturity Date Apr. 12, 2024  
Debt Instrument, Interest Rate, Stated Percentage 9.00%  
Notes and Loans Payable $ 47,250  
Notes and Loans Payable  
Notes and Loans Payable 47,250
G S Capital Partners [Member]    
Debt Instrument [Line Items]    
Debt Instrument, Face Amount $ 125,000  
Debt Instrument, Issuance Date Jun. 02, 2023  
Debt Instrument, Maturity Date Dec. 02, 2023  
Debt Instrument, Interest Rate, Stated Percentage 8.00%  
Notes and Loans Payable $ 125,000  
Notes and Loans Payable  
Notes and Loans Payable 125,000
Fourth Man L L C [Member]    
Debt Instrument [Line Items]    
Debt Instrument, Face Amount $ 115,000  
Debt Instrument, Issuance Date Jun. 20, 2023  
Debt Instrument, Maturity Date Jun. 20, 2024  
Debt Instrument, Interest Rate, Stated Percentage 12.00%  
Notes and Loans Payable $ 115,000  
Notes and Loans Payable  
Notes and Loans Payable 115,000
Pacific Pier Capital [Member]    
Debt Instrument [Line Items]    
Debt Instrument, Face Amount $ 60,000  
Debt Instrument, Issuance Date Aug. 29, 2023  
Debt Instrument, Maturity Date Aug. 29, 2024  
Debt Instrument, Interest Rate, Stated Percentage 12.00%  
Notes and Loans Payable $ 60,000  
Notes and Loans Payable  
Notes and Loans Payable $ 60,000
[1] The number of shares has been retroactively restated to reflect the one for five hundred (1 for 500) reverse stock split, which was effective on April 24, 2023.
v3.23.3
SHORT TERM LIABILITIES (Details) - USD ($)
 9 Months Ended
Sep. 30, 2023
Dec. 31, 2022
Extinguishment of Debt [Line Items]    
Loans Payable, Current $ 161,652  
Loans Payable, Current [1] 2,487,314  
Loans Payable, Current 161,652 $ 2,487,314 [1]
Accrued Interest Current 91,088 48,970
Carolyn Hamburger [Member]    
Extinguishment of Debt [Line Items]    
Debt Instrument, Face Amount $ 100,000  
Debt Instrument, Issuance Date Dec. 12, 2014  
Debt Instrument, Maturity Date Dec. 12, 2019  
Debt Instrument, Interest Rate, Stated Percentage 10.00%  
Loans Payable, Current $ 100,000  
Loans Payable, Current 100,000  
Debt Instrument, Face Amount 100,000  
Loans Payable, Current 100,000 100,000
Accrued Interest Current 33,321 25,841
Doris Notter [Member]    
Extinguishment of Debt [Line Items]    
Debt Instrument, Face Amount $ 10,000  
Debt Instrument, Issuance Date Dec. 31, 2014  
Debt Instrument, Maturity Date Dec. 31, 2019  
Debt Instrument, Interest Rate, Stated Percentage 15.00%  
Loans Payable, Current $ 10,000  
Loans Payable, Current 10,000  
Debt Instrument, Face Amount 10,000  
Loans Payable, Current 10,000 10,000
Accrued Interest Current 13,126 12,004
Charles Hatley [Member]    
Extinguishment of Debt [Line Items]    
Debt Instrument, Face Amount $ 25,000  
Debt Instrument, Issuance Date Sep. 29, 2023  
Debt Instrument, Maturity Date Sep. 28, 2024  
Debt Instrument, Interest Rate, Stated Percentage 10.00%  
Loans Payable, Current $ 25,000  
Loans Payable, Current  
Debt Instrument, Face Amount 25,000  
Loans Payable, Current 25,000
Direct Capital Cash Advance [Member]    
Extinguishment of Debt [Line Items]    
Debt Instrument, Face Amount 3,757  
Loans Payable, Current 3,757  
Debt Instrument, Face Amount 3,757  
Loans Payable, Current 3,757  
Maguire Cash Advance [Member]    
Extinguishment of Debt [Line Items]    
Debt Instrument, Face Amount 22,895  
Loans Payable, Current 22,895  
Debt Instrument, Face Amount 22,895  
Loans Payable, Current 22,895  
Maguire And Associate 1 [Member]    
Extinguishment of Debt [Line Items]    
Debt Instrument, Face Amount $ 1,008,919  
Debt Instrument, Issuance Date Sep. 30, 2022  
Debt Instrument, Maturity Date Dec. 31, 2022  
Debt Instrument, Interest Rate, Stated Percentage 0.00%  
Loans Payable, Current  
Loans Payable, Current 1,008,920  
Debt Instrument, Face Amount 1,008,919  
Loans Payable, Current 1,008,920
Maguire And Associate 2 [Member]    
Extinguishment of Debt [Line Items]    
Debt Instrument, Face Amount $ 1,368,394  
Debt Instrument, Issuance Date Sep. 30, 2022  
Debt Instrument, Maturity Date Dec. 31, 2022  
Debt Instrument, Interest Rate, Stated Percentage 0.00%  
Loans Payable, Current  
Loans Payable, Current 1,368,394  
Debt Instrument, Face Amount 1,368,394  
Loans Payable, Current 1,368,394
Short-Term Debt [Member]    
Extinguishment of Debt [Line Items]    
Accrued Interest Current $ 46,447 $ 37,846
[1] The number of shares has been retroactively restated to reflect the one for five hundred (1 for 500) reverse stock split, which was effective on April 24, 2023.
v3.23.3
SHORT TERM LIABILITIES (Details Narrative) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Dec. 31, 2022
Extinguishment of Debt [Line Items]          
Accrued Interest Current $ 91,088   $ 91,088   $ 48,970
Interest Paid, Excluding Capitalized Interest, Operating Activities     $ 3,336  
Interest Expense 155,060 [1] $ 397,864 196,550 [1] $ 1,211,471  
Carolyn Hamburger [Member]          
Extinguishment of Debt [Line Items]          
Accrued Interest Current 33,321   33,321   25,841
Interest Paid, Excluding Capitalized Interest, Operating Activities     0    
Interest Expense     7,480    
Doris Notter [Member]          
Extinguishment of Debt [Line Items]          
Accrued Interest Current $ 13,126   $ 13,126   $ 12,004
[1] Cal Care Group and CuraScientific Corp results of operations are combined as of the beginning of the period or January 1, 2023, since it was determined that there was a change in the reporting entity pursuant to ASC 250-10-45-21 and the transaction was accounted for under ASC 805-50 Common control Transactions.
v3.23.3
COMMON CONTROL BUSINESS ACQUISITION (Details)
Apr. 05, 2023
USD ($)
Cal Care Group Inc [Member]  
Business Combination, Separately Recognized Transactions [Line Items]  
Business Combination, Consideration Transferred $ 1,700,000
v3.23.3
COMMON CONTROL BUSINESS ACQUISITION (Details Narrative) - shares
 9 Months Ended
Apr. 05, 2023
Sep. 30, 2023
Cal Care Group Inc [Member] | Preferred Stock [Member] | Series A Preferred Stock [Member]    
Business Combination, Separately Recognized Transactions [Line Items]    
Stock Issued During Period, Shares, Acquisitions 500,000 500,000
v3.23.3
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)
 1 Months Ended 3 Months Ended 9 Months Ended
Apr. 05, 2023
Sep. 07, 2022
Sep. 21, 2021
Mar. 02, 2020
Mar. 02, 2020
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Dec. 31, 2022
Salary and Wage, NonOfficer, Excluding Cost of Good and Service Sold           $ 81,230 [1] $ 285,333 $ 331,599 [1] $ 466,333  
Common Stock [Member]                    
Conversion of Stock, Shares Converted               120,000,000    
Cal Care Group Inc [Member] | Preferred Stock [Member] | Series A Preferred Stock [Member]                    
Stock Issued During Period, Shares, Acquisitions 500,000             500,000    
William Reed                    
Defined Benefit Plans General Information   On September 7, 2022, the Company appointed William Reed as Chairman, Chief Executive Officer, President, Secretary, Treasurer, and Director of the Company.                
Salary and Wage, NonOfficer, Excluding Cost of Good and Service Sold               $ 50,000    
Accrued Salaries           0   0   $ 66,667
Justin Gonzalez                    
Defined Benefit Plans General Information         On March 2, 2020, the Company appointed Justin Gonzalez as Chief Executive Officer of the Company.          
Salary and Wage, NonOfficer, Excluding Cost of Good and Service Sold               50,000    
Accrued Salaries           $ 83,333   $ 83,333   $ 33,333
Eric Watson                    
Defined Benefit Plans General Information       On March 2, 2020, the Company appointed Eric Watson as Chief Operating Officer and a director of the Company.            
Paul Goyette                    
Defined Benefit Plans General Information       Pursuant to his director’s agreement, Paul Goyette will be paid a cash fee of $2,000 per meeting and be issued 10,000 shares of the Company’s Series A Preferred Stock for a stated value of $100,000.            
Chris Bennett                    
Defined Benefit Plans General Information       On May 26, 2023, the Company and Mr. Bennett entered into an employment agreement that includes an annual salary of $120,000 and $150,000 worth of shares of the Company’s Series A preferred stock.            
Johann Loewen [Member]                    
Defined Benefit Plans General Information     On September 21, 2021, the Company appointed Johann Loewen as director of the Company for an initial one-year term. As director of the Company, Johann Loewen is entitled to 5,000 shares of Series A at a stated value of $10.00 per share.              
Edouard Beaudette [Member]                    
Defined Benefit Plans General Information     On October 15, 2021, the Company appointed Edouard Beaudette as director and Chief Strategy Officer of the Company for an initial one-year term. As director of the Company, Edouard Beaudette is entitled to one-time 5,000 shares of Series A at a stated value of $10.00 per share.              
[1] Cal Care Group and CuraScientific Corp results of operations are combined as of the beginning of the period or January 1, 2023, since it was determined that there was a change in the reporting entity pursuant to ASC 250-10-45-21 and the transaction was accounted for under ASC 805-50 Common control Transactions.
v3.23.3
PREFERRED STOCK (Details Narrative) - USD ($)
 3 Months Ended 9 Months Ended
Apr. 05, 2023
Sep. 30, 2023
Jun. 30, 2023
 [2]
Mar. 31, 2023
 [2]
Sep. 30, 2022
Jun. 30, 2022
 [3]
Mar. 31, 2022
 [3]
Sep. 30, 2023
Sep. 30, 2022
Dec. 31, 2022
Nov. 16, 2022
Nov. 15, 2022
Mar. 02, 2020
Class of Stock [Line Items]                          
[custom:LossOnSeriesAConversion]   $ 4,442,946 [1]     $ 73,000     $ 5,912,746 [1] $ 1,588,140        
Common Stock [Member]                          
Class of Stock [Line Items]                          
Stock Issued During Period, Shares, Conversion of Convertible Securities   2,480,878,061 [2] 141,712,420 333,000 733,333,332 [3] 1,158,167,857 1,037,674,922 2,622,923,481 2,929,176,111        
Series A Preferred Stock [Member]                          
Class of Stock [Line Items]                          
Preferred Stock, Shares Authorized   20,000,000           20,000,000   20,000,000      
Preferred Stock, Par or Stated Value Per Share   $ 0.0001           $ 0.0001   $ 0.0001      
Preferred Stock, Shares Issued   6,952,029           6,952,029   6,662,422      
Preferred Stock, Shares Outstanding   6,952,029           6,952,029   6,662,422      
Series A Preferred Stock [Member] | Preferred Stock [Member]                          
Class of Stock [Line Items]                          
Stock Issued During Period, Shares, Conversion of Convertible Securities               620,393 332,944        
Series A Preferred Stock [Member] | Preferred Stock [Member] | Cal Care Group Inc [Member]                          
Class of Stock [Line Items]                          
Stock Issued During Period, Shares, Acquisitions 500,000             500,000          
Series B Preferred Stock [Member]                          
Class of Stock [Line Items]                          
Preferred Stock, Shares Authorized   2,500           2,500   2,500 2,500 1,000  
Preferred Stock, Par or Stated Value Per Share   $ 0.0001           $ 0.0001   $ 0.0001      
Preferred Stock, Shares Issued   2,000           2,000   2,000      
Preferred Stock, Shares Outstanding   2,000           2,000   2,000      
Preferred Stock, Voting Rights               Each share of Series B preferred stock (“Series B”) is equal to and counted as four (4) times the votes of all of the shares of the Company’s common stock.          
Series B Preferred Stock [Member] | Eric Watson [Member]                          
Class of Stock [Line Items]                          
Preferred Stock, Shares Issued                         1,000
[1] Cal Care Group and CuraScientific Corp results of operations are combined as of the beginning of the period or January 1, 2023, since it was determined that there was a change in the reporting entity pursuant to ASC 250-10-45-21 and the transaction was accounted for under ASC 805-50 Common control Transactions.
[2] The number of shares has been retroactively restated to reflect the one for five hundred (1 for 500) reverse stock split, which was effective on April 24, 2023.
[3] The number of shares and per share amounts have been retroactively restated to reflect the one for five hundred (1 for 500) reverse stock split, which was effective on April 24, 2023.
v3.23.3
COMMON STOCK (Details) - Warrant [Member]
 9 Months Ended
Sep. 30, 2023
$ / shares
shares
Accumulated Other Comprehensive Income (Loss) [Line Items]  
Share-Based Compensation Arrangement by Share-Based Payment Award, Non-Option Equity Instruments, Outstanding, Number, Beginning Balance | shares
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value, Beginning Balance | $ / shares
Share-Based Compensation Arrangement by Share-Based Payment Award, Non-Option Equity Instruments, Granted | shares 10,762,917
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | $ / shares $ 0.03
[custom:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsGrantedWeightedAverageRemainingContractualTerms] 5 years
Share-Based Compensation Arrangement by Share-Based Payment Award, Non-Option Equity Instruments, Forfeitures | shares
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Forfeitures, Weighted Average Grant Date Fair Value | $ / shares
Share-Based Compensation Arrangement by Share-Based Payment Award, Non-Option Equity Instruments, Exercised | shares
[custom:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsExercisedWeightedAverageGrantDateFairValue] | $ / shares
Share-Based Compensation Arrangement by Share-Based Payment Award, Non-Option Equity Instruments, Outstanding, Number, Ending Balance | shares 10,762,917
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value, Ending Balance | $ / shares $ 0.03
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Outstanding, Weighted Average Remaining Contractual Terms 4 years 9 months 18 days
[custom:ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionEquityInstrumentsExercisableNumber-2] | shares 10,762,917
[custom:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsExercisableWeightedAverageGrantDateFairValue-2] | $ / shares $ 0.03
v3.23.3
COMMON STOCK (Details 2) - Warrant [Member]
 9 Months Ended
Sep. 30, 2023
Accumulated Other Comprehensive Income (Loss) [Line Items]  
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Term 5 years
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Dividend Rate 0.00%
Minimum [Member]  
Accumulated Other Comprehensive Income (Loss) [Line Items]  
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Volatility Rate 648.00%
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Risk Free Interest Rate 3.95%
Maximum [Member]  
Accumulated Other Comprehensive Income (Loss) [Line Items]  
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Volatility Rate 783.00%
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Risk Free Interest Rate 4.38%
v3.23.3
COMMON STOCK (Details Narrative) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2023
Jun. 30, 2023
 [2]
Mar. 31, 2023
 [2]
Sep. 30, 2022
Jun. 30, 2022
 [3]
Mar. 31, 2022
 [3]
Sep. 30, 2023
Sep. 30, 2022
Aug. 30, 2023
Dec. 31, 2022
Nov. 16, 2022
Nov. 15, 2022
Class of Stock [Line Items]                        
Common Stock, Shares Authorized 30,000,000,000           30,000,000,000   30,000,000,000 30,000,000,000    
Common Stock, Par or Stated Value Per Share $ 0.0001           $ 0.0001     $ 0.0001    
Common Stock, Shares, Outstanding 2,629,582,856           2,629,582,856     6,659,375    
Common Stock, Shares, Issued 2,629,582,856           2,629,582,856     6,659,375    
[custom:LossOnSeriesAConversion] $ 4,442,946 [1]     $ 73,000     $ 5,912,746 [1] $ 1,588,140        
Common Stock [Member]                        
Class of Stock [Line Items]                        
Stock Issued During Period, Shares, Conversion of Convertible Securities 2,480,878,061 [2] 141,712,420 333,000 733,333,332 [3] 1,158,167,857 1,037,674,922 2,622,923,481 2,929,176,111        
Series B Preferred Stock [Member]                        
Class of Stock [Line Items]                        
Common Stock, Par or Stated Value Per Share $ 0.0001           $ 0.0001   $ 0.0001      
Preferred Stock, Shares Authorized 2,500           2,500     2,500 2,500 1,000
Series A Preferred Stock [Member]                        
Class of Stock [Line Items]                        
Preferred Stock, Shares Authorized 20,000,000           20,000,000     20,000,000    
Series A Preferred Stock [Member] | Preferred Stock [Member]                        
Class of Stock [Line Items]                        
Stock Issued During Period, Shares, Conversion of Convertible Securities             620,393 332,944        
[1] Cal Care Group and CuraScientific Corp results of operations are combined as of the beginning of the period or January 1, 2023, since it was determined that there was a change in the reporting entity pursuant to ASC 250-10-45-21 and the transaction was accounted for under ASC 805-50 Common control Transactions.
[2] The number of shares has been retroactively restated to reflect the one for five hundred (1 for 500) reverse stock split, which was effective on April 24, 2023.
[3] The number of shares and per share amounts have been retroactively restated to reflect the one for five hundred (1 for 500) reverse stock split, which was effective on April 24, 2023.
v3.23.3
COMMITMENTS AND CONTINGENCIES (Details) - USD ($)
Sep. 30, 2023
Dec. 31, 2022
 [1]
Commitments and Contingencies Disclosure [Abstract]    
2024 $ 29,750  
2025 30,000  
2026 30,000  
2027 30,000  
2028 15,000  
Total 134,750  
Less amount representing interest (18,854)  
Present value of the net minimum payments $ 115,896
[1] The number of shares has been retroactively restated to reflect the one for five hundred (1 for 500) reverse stock split, which was effective on April 24, 2023.
v3.23.3
SUBSEQUENT EVENTS (Details Narrative) - shares
 2 Months Ended 3 Months Ended 9 Months Ended
Dec. 08, 2023
Sep. 30, 2023
 [1]
Jun. 30, 2023
 [1]
Mar. 31, 2023
 [1]
Sep. 30, 2022
 [2]
Jun. 30, 2022
 [2]
Mar. 31, 2022
 [2]
Sep. 30, 2023
Sep. 30, 2022
Common Stock [Member]                  
Subsequent Event [Line Items]                  
Stock Issued During Period, Shares, Conversion of Convertible Securities   2,480,878,061 141,712,420 333,000 733,333,332 1,158,167,857 1,037,674,922 2,622,923,481 2,929,176,111
Stock Issued During Period, Shares, Conversion of Convertible Securities   (2,480,878,061) (141,712,420) (333,000) (733,333,332) (1,158,167,857) (1,037,674,922) (2,622,923,481) (2,929,176,111)
Preferred Stock [Member] | Series A Preferred Stock [Member]                  
Subsequent Event [Line Items]                  
Stock Issued During Period, Shares, Conversion of Convertible Securities               620,393 332,944
Stock Issued During Period, Shares, Conversion of Convertible Securities               (620,393) (332,944)
Subsequent Event [Member] | Common Stock [Member]                  
Subsequent Event [Line Items]                  
Stock Issued During Period, Shares, Conversion of Convertible Securities 181,527,777                
Stock Issued During Period, Shares, Conversion of Convertible Securities (181,527,777)                
Subsequent Event [Member] | Preferred Stock [Member] | Series A Preferred Stock [Member]                  
Subsequent Event [Line Items]                  
Stock Issued During Period, Shares, Conversion of Convertible Securities (12,700)                
Stock Issued During Period, Shares, Conversion of Convertible Securities 12,700                
Stock Redeemed or Called During Period, Shares 60,000                
[1] The number of shares has been retroactively restated to reflect the one for five hundred (1 for 500) reverse stock split, which was effective on April 24, 2023.
[2] The number of shares and per share amounts have been retroactively restated to reflect the one for five hundred (1 for 500) reverse stock split, which was effective on April 24, 2023.
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