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 March 31, 2020
or
[ ]
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: 000-12350
EVIO,
INC.
(Exact
name of registrant as specified in its charter)
Colorado |
|
47-1890509 |
(State
of
Incorporation)
|
|
(I.R.S.
Employer
Identification
No.)
|
|
|
|
2654
W.
Horizon Ridge Pkwy, Suite B5-208
Henderson,
NV
|
|
89052
|
(Address
of principal executive offices) |
|
(Zip
Code) |
(702) 748-9944
(Registrant’s
telephone number, including area code)
Securities
registered pursuant to Section 12(b) of the Act:
Title
of each class |
|
Trading
Symbol(s) |
|
Name
of each exchange on which registered |
N/A |
|
N/A |
|
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 [ ]
Indicate
by check mark whether the registrant has submitted electronically
and posted on its corporate website if any, every Interactive Data
File required to be submitted and posted 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 and post such files). Yes [X] No
[ ]
Indicate
by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated
filer,” “accelerated filer” and “smaller reporting company” in Rule
12b-2 of the Exchange Act.
Large
accelerated filer |
[ ] |
Non-accelerated
filer |
[ ] |
Accelerated
filer |
[ ] |
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.
[ ]
Indicate
by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes [ ] No
[X]
As of
September 3, 2020 there were 89,142,473 shares of common stock
outstanding.
EVIO,
INC.
FORM
10-Q
QUARTERLY
PERIOD ENDED MARCH 31, 2020
TABLE
OF CONTENTS
PART I — FINANCIAL
INFORMATION
EVIO, INC.
Consolidated
Balance Sheets
|
|
March
31, |
|
|
September 30, |
|
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash
and cash equivalents |
|
$ |
16,457 |
|
|
$ |
110,325 |
|
Accounts
receivable, net |
|
|
172,389 |
|
|
|
133,022 |
|
Prepaid
expenses |
|
|
141,602 |
|
|
|
190,460 |
|
Other current
assets |
|
|
43,764 |
|
|
|
9,689 |
|
Note
receivable, current portion |
|
|
538,904 |
|
|
|
538,904 |
|
Total current
assets |
|
|
913,116 |
|
|
|
982,400 |
|
Right of use assets |
|
|
2,069,538 |
|
|
|
2,543,976 |
|
Capital assets, net |
|
|
1,206,745 |
|
|
|
1,383,828 |
|
Land |
|
|
212,550 |
|
|
|
212,550 |
|
Property and equipment, net |
|
|
2,834,587 |
|
|
|
3,080,426 |
|
Security deposits |
|
|
175,981 |
|
|
|
178,918 |
|
Prepaid
expenses, net |
|
|
- |
|
|
|
4,061 |
|
Total
assets |
|
$ |
7,412,517 |
|
|
$ |
8,386,159 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable
and accrued liabilities |
|
$ |
4,644,361 |
|
|
$ |
3,811,237 |
|
Client
deposits |
|
|
53,009 |
|
|
|
108,418 |
|
Interest
payable |
|
|
1,517,386 |
|
|
|
1,387,642 |
|
Capital lease
obligation, current |
|
|
875,946 |
|
|
|
957,673 |
|
Derivative
liability |
|
|
2,319,938 |
|
|
|
2,545,735 |
|
Convertible notes
payable, net of discounts |
|
|
3,584,043 |
|
|
|
3,695,484 |
|
Loans payable, net
of discounts, current |
|
|
787,960 |
|
|
|
762,476 |
|
Total current
liabilities |
|
|
13,782,643 |
|
|
|
13,268,665 |
|
Convertible debentures, net of loan
discounts |
|
|
3,049,007 |
|
|
|
1,734,890 |
|
Lease liabilities |
|
|
2,117,338 |
|
|
|
2,594,726 |
|
Capital lease obligation, net |
|
|
241,268 |
|
|
|
381,786 |
|
Loans payable, net |
|
|
708,550 |
|
|
|
657,603 |
|
Loans payable,
related party, net |
|
|
1,406,162 |
|
|
|
1,560,849 |
|
Total
liabilities |
|
|
21,304,968 |
|
|
|
20,198,519 |
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Stockholders’ Equity: |
|
|
|
|
|
|
|
|
Series B
convertible preferred stock, $0.0001 par value. 5,000,000
authorized; 5,000,000 shares issued and outstanding at March 31,
2020 and September 30, 2019, respectively |
|
|
500 |
|
|
|
500 |
|
Series C
convertible preferred stock, $0.0001 par value. 500,000 authorized;
500,000 shares issued and outstanding at March 31, 2020 and
September 30, 2019, respectively |
|
|
50 |
|
|
|
50 |
|
Series D
convertible preferred stock, $0.0001 par value. 1,000,000
authorized; 349,500 and 349,500 shares issued and outstanding at
March 31, 2020 and September 30, 2019, respectively |
|
|
34 |
|
|
|
34 |
|
Common stock, $0.0001 par value.
1,000,000,000 authorized; 78,717,471 and 29,314,419 shares issued
and outstanding at March 31, 2020 and September 30, 2019,
respectively |
|
|
7,872 |
|
|
|
2,931 |
|
Stock
subscriptions receivable |
|
|
- |
|
|
|
- |
|
Additional paid-in
capital |
|
|
29,695,137 |
|
|
|
26,498,076 |
|
Retained earnings
(accumulated deficit) |
|
|
(43,042,535 |
) |
|
|
(37,775,183 |
) |
Accumulated other comprehensive income |
|
|
(348,167 |
) |
|
|
(353,090 |
) |
Total
stockholders’ equity |
|
|
(13,687,109 |
) |
|
|
(11,626,682 |
) |
Noncontrolling interest |
|
|
(205,342 |
) |
|
|
(185,678 |
) |
Total
equity |
|
|
(13,892,451 |
) |
|
|
(11,812,360 |
) |
Total
liabilities and equity |
|
$ |
7,412,517 |
|
|
$ |
8,386,159 |
|
The
accompanying notes are an integral part of the consolidated
financial statements.
EVIO, INC.
Consolidated
Statements of Operations and Comprehensive Loss
(Unaudited)
|
|
Three Months Ended March 31, |
|
|
Three Months Ended March 31, |
|
|
Six Months Ended March 31, |
|
|
Six Months Ended March 31, |
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Testing revenue |
|
$ |
867,814 |
|
|
$ |
735,179 |
|
|
$ |
2,200,770 |
|
|
$ |
1,922,417 |
|
Consulting revenue |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Total revenues |
|
|
867,814 |
|
|
|
735,179 |
|
|
|
2,200,770 |
|
|
|
1,922,417 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Testing
services |
|
|
820,080 |
|
|
|
835,186 |
|
|
|
1,766,840 |
|
|
|
1,849,166 |
|
Consulting
services |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Depreciation and amortization |
|
|
200,366 |
|
|
|
321,856 |
|
|
|
455,920 |
|
|
|
612,304 |
|
Total cost of
revenue |
|
|
1,020,446 |
|
|
|
1,157,042 |
|
|
|
2,222,760 |
|
|
|
2,461,470 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin |
|
|
(152,632 |
) |
|
|
(421,863 |
) |
|
|
(21,990 |
) |
|
|
(539,053 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general
and administrative |
|
|
1,419,188 |
|
|
|
1,205,662 |
|
|
|
2,687,112 |
|
|
|
2,702,302 |
|
Depreciation and amortization |
|
|
27,277 |
|
|
|
57,116 |
|
|
|
55,507 |
|
|
|
115,982 |
|
Total
operating expenses |
|
|
1,446,465 |
|
|
|
1,262,778 |
|
|
|
2,742,619 |
|
|
|
2,836,284 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations |
|
|
(1,599,097 |
) |
|
|
(1,684,641 |
) |
|
|
(2,764,609 |
) |
|
|
(3,375,337 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
(expense), net |
|
|
(1,203,227 |
) |
|
|
(692,419 |
) |
|
|
(2,766,098 |
) |
|
|
(2,457,297 |
) |
Other income
(expense) |
|
|
13,874 |
|
|
|
(33,422 |
) |
|
|
17,895 |
|
|
|
(97,517 |
) |
Gain (loss) on
settlement of debt |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Impairment
charge |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Gain
(loss) on change in fair market value of derivative
liabilities |
|
|
(194,236 |
) |
|
|
(1,409,275 |
) |
|
|
225,797 |
|
|
|
(556,647 |
) |
Total
other income (expense) |
|
|
(1,383,589 |
) |
|
|
(2,135,116 |
) |
|
|
(2,522,406 |
) |
|
|
(3,111,461 |
) |
Income (loss)
before income taxes |
|
|
(2,982,686 |
) |
|
|
(3,819,757 |
) |
|
|
(5,287,015 |
) |
|
|
(6,486,798 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for
income taxes (benefit) |
|
|
- |
|
|
|
613 |
|
|
|
- |
|
|
|
2,969 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
|
(2,982,686 |
) |
|
|
(3,820,370 |
) |
|
|
(5,287,015 |
) |
|
|
(6,489,767 |
) |
Net income
(loss) attributable to noncontrolling interest |
|
|
(30,143 |
) |
|
|
(106,645 |
) |
|
|
(19,664 |
) |
|
|
(161,383 |
) |
Net income
(loss) attributable to EVIO, Inc. shareholders |
|
$ |
(2,952,543 |
) |
|
$ |
(3,713,725 |
) |
|
$ |
(5,267,351 |
) |
|
$ |
(6,328,384 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted earnings (loss) per common share |
|
$ |
(0.06 |
) |
|
$ |
(0.15 |
) |
|
$ |
(0.10 |
) |
|
$ |
(0.25 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of common
shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted |
|
|
49,561,707 |
|
|
|
25,366,021 |
|
|
|
51,581,428 |
|
|
|
25,366,021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss) |
|
$ |
(2,982,686 |
) |
|
$ |
(3,820,370 |
) |
|
$ |
(5,287,015 |
) |
|
$ |
(6,489,767 |
) |
Foreign curreny translation adjustment |
|
|
6,151 |
|
|
|
64,261 |
|
|
|
4,923 |
|
|
|
(115,561 |
) |
Comprehensive income (loss) |
|
$ |
(2,976,535 |
) |
|
$ |
(3,756,109 |
) |
|
$ |
(5,282,092 |
) |
|
$ |
(6,605,328 |
) |
The
accompanying notes are an integral part of the consolidated
financial statements.
EVIO, INC.
Consolidated
Statements of Cash Flows (Unaudited)
|
|
Six
Months Ended March 31, |
|
|
Six
Months Ended March 31, |
|
|
|
2020 |
|
|
2019 |
|
Cash
flows from operating activities of continuing
operations: |
|
|
|
|
|
|
|
|
Net
income (loss) |
|
$ |
(5,287,015 |
) |
|
$ |
(6,489,767 |
) |
Adjustments
to reconcile net loss to cash used in operating
activities: |
|
|
|
|
|
|
|
|
Amortization
of debt discount |
|
|
2,077,153 |
|
|
|
1,951,983 |
|
Common
stock issued in exchange for fees and services |
|
|
328,830 |
|
|
|
240,501 |
|
Default
penalties and other covenant adjustments on convertible
debentures |
|
|
62,500 |
|
|
|
- |
|
Depreciation
and amortization |
|
|
511,597 |
|
|
|
720,739 |
|
Loss
on disposal of assets |
|
|
2,979 |
|
|
|
64,095 |
|
Provision
for doubtful accounts |
|
|
25,253 |
|
|
|
35,333 |
|
Stock
based compensation |
|
|
890,510 |
|
|
|
395,850 |
|
Unrealized
(gain) loss on derivative liability |
|
|
(225,797 |
) |
|
|
556,647 |
|
Changes
in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts
receivable |
|
|
(71,177 |
) |
|
|
74,625 |
|
Prepaid
expenses |
|
|
52,919 |
|
|
|
(142,911 |
) |
Other
current assets |
|
|
(34,075 |
) |
|
|
33,122 |
|
Security
deposits |
|
|
1,775 |
|
|
|
(722 |
) |
Operating
lease right of use assets |
|
|
(2,950 |
) |
|
|
48,332 |
|
Accounts
payable and accrued liabilities |
|
|
675,496 |
|
|
|
1,179,775 |
|
Customer
deposits and deferred revenues |
|
|
(55,409 |
) |
|
|
(156,363 |
) |
Interest
payable |
|
|
339,380 |
|
|
|
410,712 |
|
Net
cash provided by (used in) operating activities |
|
|
(698,031 |
) |
|
|
(1,078,049 |
) |
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities: |
|
|
|
|
|
|
|
|
Purchase
of fixed assets |
|
|
(44,674 |
) |
|
|
(580,075 |
) |
Net
cash provided by (used in) financing activities |
|
|
(44,674 |
) |
|
|
(580,075 |
) |
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities: |
|
|
|
|
|
|
|
|
Proceeds
from issuance of common stock, net of issuance costs |
|
|
- |
|
|
|
186,000 |
|
Proceeds
from issuance of convertible debentures |
|
|
-
|
|
|
|
414,183 |
|
Proceeds
from issuance of convertible notes, net of issuance
costs |
|
|
846,791
|
|
|
|
971,014 |
|
Proceeds
from related party advances |
|
|
64,069 |
|
|
|
199,040 |
|
Repayments
of capital leases |
|
|
(181,931 |
) |
|
|
(93,050 |
) |
Repayments
of convertible debentures |
|
|
- |
|
|
|
- |
|
Repayments
of loans payable |
|
|
(28,993 |
) |
|
|
(18,617 |
) |
Repayments
of related party loans payable |
|
|
(51,459 |
) |
|
|
(27,151 |
) |
Net
cash provided by (used in) financing activities |
|
|
648,477 |
|
|
|
1,631,419 |
|
|
|
|
|
|
|
|
|
|
Effect
of exchange rates on cash and cash equivalents |
|
|
360 |
|
|
|
(7,769 |
) |
Net
increase (decrease) in cash and cash equivalents |
|
|
(93,868 |
) |
|
|
(34,474 |
) |
Cash
and cash equivalents at beginning of period |
|
|
110,325 |
|
|
|
81,735 |
|
Cash
and cash equivalents at end of period |
|
$ |
16,457 |
|
|
$ |
47,261 |
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information: |
|
|
|
|
|
|
|
|
Cash
paid for interest |
|
$ |
- |
|
|
$ |
- |
|
Cash
paid for income taxes |
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of non-cash investing and financing
activities: |
|
|
|
|
|
|
|
|
Conversion
of convertible note and accrued interest into common
stock |
|
$ |
1,728,842 |
|
|
$ |
708,089 |
|
Settlement
of account payable for common stock |
|
$ |
6,000 |
|
|
$ |
- |
|
Debt
discount recorded on convertible notes and debentures payable upon
initial measurement of derivative liability |
|
$ |
- |
|
|
$ |
350,039 |
|
Debt
discounts recorded for beneficial conversion features on
convertible debentures and notes payable |
|
$ |
175,320 |
|
|
$ |
- |
|
Debt
discounts recorded for original issue discounts on convertible
debentures |
|
$ |
- |
|
|
$ |
280,144 |
|
Vehicles
financed through notes payable |
|
$ |
105,424 |
|
|
$ |
- |
|
Equipment
financed through capital leases |
|
$ |
- |
|
|
$ |
308,613 |
|
The
accompanying notes are an integral part of the consolidated
financial statements.
EVIO, INC.
Consolidated
Statements of Changes in Stockholders’ Equity
(Unaudited)
|
|
Series B
Preferred Stock |
|
|
Series C
Preferred Stock |
|
|
Series D
Preferred Stock |
|
|
Common Stock |
|
|
Stock
Subscriptions
|
|
|
Additional
Paid-in
|
|
|
Retained |
|
|
Accumulated
Other
Comprehensive
|
|
|
Total
Stockholders’
|
|
|
Noncontrolling |
|
|
Total |
|
|
|
Shares |
|
|
Value |
|
|
Shares |
|
|
Value |
|
|
Shares |
|
|
Value |
|
|
Shares |
|
|
Value |
|
|
Receivable |
|
|
Capital |
|
|
Earnings |
|
|
Income |
|
|
Equity |
|
|
Interest |
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2018 |
|
|
5,000,000 |
|
|
$ |
500 |
|
|
|
500,000 |
|
|
$ |
50 |
|
|
|
552,500 |
|
|
$ |
55 |
|
|
|
23,255,411 |
|
|
$ |
2,326 |
|
|
$ |
- |
|
|
$ |
21,495,621 |
|
|
$ |
(19,226,462 |
) |
|
$ |
(263,985 |
) |
|
$ |
2,008,105 |
|
|
$ |
1,934,634 |
|
|
$ |
3,942,739 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(2,596,659 |
) |
|
|
- |
|
|
|
(2,596,659 |
) |
|
|
(54,738 |
) |
|
|
(2,651,397 |
) |
Change in
foreign currency translation |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(179,822 |
) |
|
|
(179,822 |
) |
|
|
- |
|
|
|
(179,822 |
) |
Issuance
of common stock in connection with the conversion of Series D
preferred stock |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(38,000 |
) |
|
|
(4 |
) |
|
|
95,000 |
|
|
|
10 |
|
|
|
- |
|
|
|
(6 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Issuance
of common stock in connection with sales made under private
offerings |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
200,000 |
|
|
|
20 |
|
|
|
- |
|
|
|
105,980 |
|
|
|
- |
|
|
|
- |
|
|
|
106,000 |
|
|
|
- |
|
|
|
106,000 |
|
Issuance
of common stock as compensation to employees, officers and/or
directors |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
50,000 |
|
|
|
5 |
|
|
|
- |
|
|
|
35,870 |
|
|
|
- |
|
|
|
- |
|
|
|
35,875 |
|
|
|
- |
|
|
|
35,875 |
|
Issuance
of common stock in exchange for consulting, professional and other
services provided |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
250,000 |
|
|
|
25 |
|
|
|
- |
|
|
|
128,375 |
|
|
|
- |
|
|
|
- |
|
|
|
128,400 |
|
|
|
- |
|
|
|
128,400 |
|
Issuance
of common stock in connection with the conversion of loans
payable |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
779,808 |
|
|
|
78 |
|
|
|
- |
|
|
|
317,022 |
|
|
|
- |
|
|
|
- |
|
|
|
317,100 |
|
|
|
- |
|
|
|
317,100 |
|
Issuance
of common stock in connection with the conversion of
debentures |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
669,362 |
|
|
|
66 |
|
|
|
- |
|
|
|
387,934 |
|
|
|
- |
|
|
|
- |
|
|
|
388,000 |
|
|
|
- |
|
|
|
388,000 |
|
Issuance
of common stock in connection with the conversion of interest
payable |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
10,163 |
|
|
|
1 |
|
|
|
- |
|
|
|
2,987 |
|
|
|
- |
|
|
|
- |
|
|
|
2,988 |
|
|
|
- |
|
|
|
2,988 |
|
Issuance
of common stock in connection with the conversion of interest
payable |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
12,423 |
|
|
|
- |
|
|
|
- |
|
|
|
12,423 |
|
|
|
- |
|
|
|
12,423 |
|
Common
stock options issued under employee equity incentive
plan |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
169,922 |
|
|
|
- |
|
|
|
- |
|
|
|
169,922 |
|
|
|
- |
|
|
|
169,922 |
|
Recognition of beneficial conversion features
related to convertible debt instruments |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
280,144 |
|
|
|
- |
|
|
|
- |
|
|
|
280,144 |
|
|
|
- |
|
|
|
280,144 |
|
Acquisition of equity interests in
subsidiaries |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2018 |
|
|
5,000,000 |
|
|
$ |
500 |
|
|
|
500,000 |
|
|
$ |
50 |
|
|
|
514,500 |
|
|
$ |
51 |
|
|
|
25,309,744 |
|
|
$ |
2,531 |
|
|
$ |
- |
|
|
$ |
22,936,272 |
|
|
$ |
(21,823,121 |
) |
|
$ |
(443,807 |
) |
|
$ |
672,476 |
|
|
$ |
1,879,896 |
|
|
$ |
2,552,372 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(3,731,725 |
) |
|
|
- |
|
|
|
(3,731,725 |
) |
|
|
(106,645 |
) |
|
|
(3,838,370 |
) |
Change in
foreign currency translation |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
64,261 |
|
|
|
64,261 |
|
|
|
- |
|
|
|
64,261 |
|
Issuance
of common stock in connection with the conversion of Series D
preferred stock |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(165,000 |
) |
|
|
(16 |
) |
|
|
412,500 |
|
|
|
41 |
|
|
|
- |
|
|
|
(24 |
) |
|
|
- |
|
|
|
- |
|
|
|
1 |
|
|
|
- |
|
|
|
1 |
|
Issuance
of common stock in connection with sales made under private
offerings |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
200,000 |
|
|
|
20 |
|
|
|
- |
|
|
|
79,980 |
|
|
|
- |
|
|
|
- |
|
|
|
80,000 |
|
|
|
- |
|
|
|
80,000 |
|
Issuance
of common stock in connection with stock subscriptions received
under private offerings |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,015,000 |
|
|
|
101 |
|
|
|
(406,000 |
) |
|
|
405,899 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Issuance
of common stock as compensation to employees, officers and/or
directors |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
37,500 |
|
|
|
4 |
|
|
|
- |
|
|
|
19,496 |
|
|
|
- |
|
|
|
- |
|
|
|
19,500 |
|
|
|
- |
|
|
|
19,500 |
|
Issuance
of common stock in exchange for consulting, professional and other
services provided |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
100,000 |
|
|
|
10 |
|
|
|
- |
|
|
|
52,990 |
|
|
|
- |
|
|
|
- |
|
|
|
53,000 |
|
|
|
- |
|
|
|
53,000 |
|
Issuance
of common stock and common stock purchase warrants in satisfaction
of debt issuances costs |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
20,000 |
|
|
|
2 |
|
|
|
- |
|
|
|
46,675 |
|
|
|
- |
|
|
|
- |
|
|
|
46,677 |
|
|
|
- |
|
|
|
46,677 |
|
Recognition of beneficial conversion features
related to convertible debt instruments |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
566,841 |
|
|
|
- |
|
|
|
- |
|
|
|
566,841 |
|
|
|
- |
|
|
|
566,841 |
|
Stock
based compensation related to employee stock options |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
170,553 |
|
|
|
- |
|
|
|
- |
|
|
|
170,553 |
|
|
|
- |
|
|
|
170,553 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2019 |
|
|
5,000,000 |
|
|
$ |
500 |
|
|
|
500,000 |
|
|
$ |
50 |
|
|
|
349,500 |
|
|
$ |
35 |
|
|
|
27,094,744 |
|
|
$ |
2,709 |
|
|
$ |
(406,000 |
) |
|
$ |
24,278,682 |
|
|
$ |
(25,554,846 |
) |
|
$ |
(379,546 |
) |
|
$ |
(2,058,416 |
) |
|
$ |
1,773,251 |
|
|
$ |
(285,165 |
) |
The
accompanying notes are an integral part of the consolidated
financial statements.
EVIO,
INC.
Consolidated
Statements of Changes in Stockholders’ Equity
(Unaudited)
|
|
Preferred Stock |
|
|
Preferred Stock |
|
|
Preferred Stock |
|
|
Common Stock |
|
|
Additional
Paid-in
|
|
|
Additional
Paid-in
|
|
|
Retained |
|
|
Accumulated
Other
Comprehensive
|
|
|
Total
Stockholders’
|
|
|
Noncontrolling |
|
|
Total |
|
|
|
Shares |
|
|
Value |
|
|
Shares |
|
|
Value |
|
|
Shares |
|
|
Value |
|
|
Shares |
|
|
Value |
|
|
Capital |
|
|
Capital |
|
|
Earnings |
|
|
Income |
|
|
Equity |
|
|
Interest |
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2019 |
|
|
5,000,000 |
|
|
$ |
500 |
|
|
|
500,000 |
|
|
$ |
50 |
|
|
|
339,500 |
|
|
$ |
34 |
|
|
|
29,314,419 |
|
|
$ |
2,931 |
|
|
$ |
- |
|
|
$ |
26,498,076 |
|
|
$ |
(37,775,183 |
) |
|
$ |
(353,090 |
) |
|
$ |
(11,626,682 |
) |
|
$ |
(185,678 |
) |
|
$ |
(11,812,360 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(2,314,808 |
) |
|
|
- |
|
|
|
(2,314,808 |
) |
|
|
10,479 |
|
|
|
(2,304,329 |
) |
Change in
foreign currency translation |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,230 |
) |
|
|
(1,230 |
) |
|
|
- |
|
|
|
(1,230 |
) |
Issuance
of common stock as compensation to employees, officers and/or
directors |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
422,500 |
|
|
|
42 |
|
|
|
- |
|
|
|
234,335 |
|
|
|
- |
|
|
|
- |
|
|
|
234,377 |
|
|
|
- |
|
|
|
234,377 |
|
Issuance
of common stock in exchange for consulting, professional and other
services provided |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
359,212 |
|
|
|
36 |
|
|
|
- |
|
|
|
16,694 |
|
|
|
- |
|
|
|
- |
|
|
|
16,730 |
|
|
|
- |
|
|
|
16,730 |
|
Issuance
of common stock in satisfaction of debt issuances costs |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,285,449 |
|
|
|
229 |
|
|
|
- |
|
|
|
62,271 |
|
|
|
- |
|
|
|
- |
|
|
|
62,500 |
|
|
|
- |
|
|
|
62,500 |
|
Issuance
of common stock in connection with the settlement of accounts
payable |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
26,666 |
|
|
|
3 |
|
|
|
- |
|
|
|
5,997 |
|
|
|
- |
|
|
|
- |
|
|
|
6,000 |
|
|
|
- |
|
|
|
6,000 |
|
Issuance
of common stock in connection with the conversion of
debentures |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
18,317,481 |
|
|
|
1,832 |
|
|
|
- |
|
|
|
1,239,950 |
|
|
|
- |
|
|
|
- |
|
|
|
1,241,782 |
|
|
|
- |
|
|
|
1,241,782 |
|
Issuance
of common stock in connection with the conversion of interest
payable |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
3,466,353 |
|
|
|
346 |
|
|
|
- |
|
|
|
171,876 |
|
|
|
- |
|
|
|
- |
|
|
|
172,222 |
|
|
|
- |
|
|
|
172,222 |
|
Recognition of beneficial conversion features
related to convertible debt instruments |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
175,320 |
|
|
|
- |
|
|
|
- |
|
|
|
175,320 |
|
|
|
- |
|
|
|
175,320 |
|
Stock
based compensation related to employee stock options |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
126,581 |
|
|
|
- |
|
|
|
- |
|
|
|
126,581 |
|
|
|
- |
|
|
|
126,581 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2019 |
|
|
5,000,000 |
|
|
$ |
500 |
|
|
|
500,000 |
|
|
$ |
50 |
|
|
|
339,500 |
|
|
$ |
34 |
|
|
|
54,192,080 |
|
|
$ |
5,419 |
|
|
$ |
- |
|
|
$ |
28,531,100 |
|
|
$ |
(40,089,991 |
) |
|
$ |
(354,320 |
) |
|
$ |
(11,907,208 |
) |
|
$ |
(175,199 |
) |
|
$ |
(12,082,407 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(2,952,543 |
) |
|
|
- |
|
|
|
(2,952,543 |
) |
|
|
(30,143 |
) |
|
|
(2,982,686 |
) |
Change in
foreign currency translation |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
6,153 |
|
|
|
6,153 |
|
|
|
- |
|
|
|
6,153 |
|
Issuance
of common stock as compensation to employees, officers and/or
directors |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
7,031,038 |
|
|
|
703 |
|
|
|
- |
|
|
|
508,032 |
|
|
|
- |
|
|
|
- |
|
|
|
508,735 |
|
|
|
- |
|
|
|
508,735 |
|
Issuance
of common stock in exchange for consulting, professional and other
services provided |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4,916,458 |
|
|
|
492 |
|
|
|
- |
|
|
|
311,608 |
|
|
|
- |
|
|
|
- |
|
|
|
312,100 |
|
|
|
- |
|
|
|
312,100 |
|
Issuance
of common stock in connection with the settlement of a legal
matter |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
144,928 |
|
|
|
14 |
|
|
|
- |
|
|
|
9,986 |
|
|
|
- |
|
|
|
- |
|
|
|
10,000 |
|
|
|
- |
|
|
|
10,000 |
|
Issuance
of common stock in connection with the conversion of
debentures |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
11,288,957 |
|
|
|
1,129 |
|
|
|
- |
|
|
|
276,474 |
|
|
|
- |
|
|
|
- |
|
|
|
277,603 |
|
|
|
- |
|
|
|
277,603 |
|
Issuance
of common stock in connection with the conversion of interest
payable |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,144,012 |
|
|
|
115 |
|
|
|
- |
|
|
|
37,120 |
|
|
|
- |
|
|
|
- |
|
|
|
37,235 |
|
|
|
- |
|
|
|
37,235 |
|
Stock based compensation related to employee stock
options |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
20,817 |
|
|
|
- |
|
|
|
- |
|
|
|
20,817 |
|
|
|
- |
|
|
|
20,817 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2020 |
|
|
5,000,000 |
|
|
$ |
500 |
|
|
|
500,000 |
|
|
$ |
50 |
|
|
|
339,500 |
|
|
$ |
34 |
|
|
|
78,717,473 |
|
|
$ |
7,872 |
|
|
$ |
- |
|
|
$ |
29,695,137 |
|
|
$ |
(43,042,534 |
) |
|
$ |
(348,167 |
) |
|
$ |
(13,687,108 |
) |
|
$ |
(205,342 |
) |
|
$ |
(13,892,450 |
) |
The
accompanying notes are an integral part of the consolidated
financial statements.
EVIO,
INC.
Consolidated
Statements of Changes in Stockholders’ Equity
(Unaudited)
|
|
Series B
Preferred Stock |
|
|
Series C
Preferred Stock |
|
|
Series D
Preferred Stock |
|
|
Common Stock |
|
|
Additional
Paid-in
|
|
|
Retained |
|
|
Accumulated
Other
Comprehensive
|
|
|
Total
Stockholders’
|
|
|
Noncontrolling |
|
|
Total |
|
|
|
Shares |
|
|
Value |
|
|
Shares |
|
|
Value |
|
|
Shares |
|
|
Value |
|
|
Shares |
|
|
Value |
|
|
Capital |
|
|
Earnings |
|
|
Income |
|
|
Equity |
|
|
Interest |
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2018 |
|
|
5,000,000 |
|
|
$ |
500 |
|
|
|
500,000 |
|
|
$ |
50 |
|
|
|
552,500 |
|
|
$ |
55 |
|
|
|
23,255,411 |
|
|
$ |
2,326 |
|
|
$ |
21,495,621 |
|
|
$ |
(19,226,462 |
) |
|
$ |
(263,985 |
) |
|
$ |
2,008,105 |
|
|
$ |
1,934,634 |
|
|
$ |
3,942,739 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(18,548,721 |
) |
|
|
- |
|
|
|
(18,548,721 |
) |
|
|
(2,120,312 |
) |
|
|
(20,669,033 |
) |
Change in
foreign currency translation |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(89,105 |
) |
|
|
(89,105 |
) |
|
|
- |
|
|
|
(89,105 |
) |
Issuance
of common stock in connection with the conversion of Series D
preferred stock |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(213,000 |
) |
|
|
(21 |
) |
|
|
532,500 |
|
|
|
53 |
|
|
|
(32 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Issuance
of common stock in connection with sales made under private
offerings |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,415,000 |
|
|
|
141 |
|
|
|
591,859 |
|
|
|
- |
|
|
|
- |
|
|
|
592,000 |
|
|
|
- |
|
|
|
592,000 |
|
Issuance
of common stock in connection with stock subscriptions received
under private offerings |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Issuance
of common stock in connection with the exercise of common stock
purchase warrants |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Issuance
of common stock as compensation to employees, officers and/or
directors |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
287,500 |
|
|
|
29 |
|
|
|
397,691 |
|
|
|
- |
|
|
|
- |
|
|
|
397,720 |
|
|
|
- |
|
|
|
397,720 |
|
Issuance
of common stock in exchange for consulting, professional and other
services provided |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,038,017 |
|
|
|
104 |
|
|
|
331,047 |
|
|
|
- |
|
|
|
- |
|
|
|
331,151 |
|
|
|
- |
|
|
|
331,151 |
|
Issuance
of common stock in satisfaction of debt issuances costs |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Issuance
of common stock in connection with the settlement of accounts
payable |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
31,579 |
|
|
|
3 |
|
|
|
14,997 |
|
|
|
- |
|
|
|
- |
|
|
|
15,000 |
|
|
|
- |
|
|
|
15,000 |
|
Issuance
of common stock in connection with the settlement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of notes payable |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Issuance
of common stock in connection with the conversion of loans
payable |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,054,887 |
|
|
|
205 |
|
|
|
686,995 |
|
|
|
- |
|
|
|
- |
|
|
|
687,200 |
|
|
|
- |
|
|
|
687,200 |
|
Issuance
of common stock in connection with the conversion of
debentures |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
669,362 |
|
|
|
67 |
|
|
|
387,933 |
|
|
|
- |
|
|
|
- |
|
|
|
388,000 |
|
|
|
- |
|
|
|
388,000 |
|
Issuance
of common stock in connection with the conversion of related party
notes payable |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Issuance
of common stock in connection with the conversion of interest
payable |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
10,163 |
|
|
|
1 |
|
|
|
25,109 |
|
|
|
- |
|
|
|
- |
|
|
|
25,110 |
|
|
|
- |
|
|
|
25,110 |
|
Issuance
of common stock purchase warrants in satisfaction of debt issuances
costs |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
20,000 |
|
|
|
2 |
|
|
|
11,758 |
|
|
|
- |
|
|
|
- |
|
|
|
11,760 |
|
|
|
- |
|
|
|
11,760 |
|
Reclassification of derivative liability to
additional paid-in capital |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Recognition of beneficial conversion features
related to convertible debt instruments |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,844,834 |
|
|
|
- |
|
|
|
- |
|
|
|
1,844,834 |
|
|
|
- |
|
|
|
1,844,834 |
|
Stock
based compensation related to employee stock options |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
710,264 |
|
|
|
- |
|
|
|
- |
|
|
|
710,264 |
|
|
|
- |
|
|
|
710,264 |
|
Acquisition of equity interests in
subsidiaries |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2019 |
|
|
5,000,000 |
|
|
$ |
500 |
|
|
|
500,000 |
|
|
$ |
50 |
|
|
|
339,500 |
|
|
$ |
34 |
|
|
|
29,314,419 |
|
|
$ |
2,931 |
|
|
$ |
26,498,076 |
|
|
$ |
(37,775,183 |
) |
|
$ |
(353,090 |
) |
|
$ |
(11,626,682 |
) |
|
$ |
(185,678 |
) |
|
$ |
(11,812,360 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(5,267,351 |
) |
|
|
- |
|
|
|
(5,267,351 |
) |
|
|
(19,664 |
) |
|
|
(5,287,015 |
) |
Change in
foreign currency translation |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4,923 |
|
|
|
4,923 |
|
|
|
- |
|
|
|
4,923 |
|
Issuance
of common stock in connection with the conversion of Series D
preferred stock |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Issuance
of common stock in connection with sales made under private
offerings |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Issuance
of common stock in connection with stock subscriptions received
under private offerings |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Issuance
of common stock in connection with the exercise of common stock
purchase warrants |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Issuance
of common stock as compensation to employees, officers and/or
directors |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
7,453,538 |
|
|
|
745 |
|
|
|
742,367 |
|
|
|
- |
|
|
|
- |
|
|
|
743,112 |
|
|
|
- |
|
|
|
743,112 |
|
Issuance
of common stock in exchange for consulting, professional and other
services provided |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
5,275,670 |
|
|
|
528 |
|
|
|
328,302 |
|
|
|
- |
|
|
|
- |
|
|
|
328,830 |
|
|
|
- |
|
|
|
328,830 |
|
Issuance
of common stock in satisfaction of debt default
penalties |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,285,449 |
|
|
|
229 |
|
|
|
62,271 |
|
|
|
- |
|
|
|
- |
|
|
|
62,500 |
|
|
|
- |
|
|
|
62,500 |
|
Issuance
of common stock in connection with the settlement of accounts
payable |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
26,666 |
|
|
|
3 |
|
|
|
5,997 |
|
|
|
- |
|
|
|
- |
|
|
|
6,000 |
|
|
|
- |
|
|
|
6,000 |
|
Issuance
of common stock in connection with the settlement of a legal
matter |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
144,928 |
|
|
|
14 |
|
|
|
9,986 |
|
|
|
- |
|
|
|
- |
|
|
|
10,000 |
|
|
|
- |
|
|
|
10,000 |
|
Issuance
of common stock in connection with the settlement of notes
payable |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Issuance
of common stock in connection with the conversion of loans
payable |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Issuance
of common stock in connection with the conversion of
debentures |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
29,606,438 |
|
|
|
2,961 |
|
|
|
1,516,424 |
|
|
|
- |
|
|
|
- |
|
|
|
1,519,385 |
|
|
|
- |
|
|
|
1,519,385 |
|
Issuance
of common stock in connection with the conversion of related party
notes payable |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Issuance
of common stock in connection with the conversion of interest
payable |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4,610,365 |
|
|
|
461 |
|
|
|
208,996 |
|
|
|
- |
|
|
|
- |
|
|
|
209,457 |
|
|
|
- |
|
|
|
209,457 |
|
Issuance
of common stock purchase warrants in satisfaction of debt issuances
costs |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Reclassification of derivative liability to
additional paid-in capital |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Recognition of beneficial conversion features
related to convertible debt instruments |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
175,320 |
|
|
|
- |
|
|
|
- |
|
|
|
175,320 |
|
|
|
- |
|
|
|
175,320 |
|
Stock
based compensation related to employee stock options |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
147,398 |
|
|
|
- |
|
|
|
- |
|
|
|
147,398 |
|
|
|
- |
|
|
|
147,398 |
|
Acquisition of equity interests in
subsidiaries |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2020 |
|
|
5,000,000 |
|
|
$ |
500 |
|
|
|
500,000 |
|
|
$ |
50 |
|
|
|
339,500 |
|
|
$ |
34 |
|
|
|
78,717,473 |
|
|
$ |
7,872 |
|
|
$ |
29,695,137 |
|
|
$ |
(43,042,534 |
) |
|
$ |
(348,167 |
) |
|
$ |
(13,687,108 |
) |
|
$ |
(205,342 |
) |
|
$ |
(13,892,450 |
) |
The
accompanying notes are an integral part of the consolidated
financial statements.
EVIO, INC.
Notes
To Unaudited Consolidated Financial Statements
For
The Three Month Periods Ended March 31, 2020, and
2019
NOTE 1 – ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT
ACCOUNTING POLICIES
EVIO,
Inc., a Colorado corporation and its subsidiaries provide
analytical testing and advisory services to the emerging legalized
cannabis industry. EVIO, Inc. was originally incorporated in the
State of New York, December 12, 1977, under the name 3171 Holding
Corporation. On February 22, 1979, the name was changed to
Electronomic Industries Corp. and on February 23, 1983, the name
was changed to Quantech Electronics Corp. The Company was
reincorporated in the State of Colorado on December 15, 2003. On
August 29, 2014, the Company completed a reverse merger with Signal
Bay Research, Inc., a Nevada Corporation, and assumed its
operations. In September 2014, the Company changed its name from
Quantech Electronics Corp. to Signal Bay, Inc. then to EVIO, INC.
in August 2018. The Company has selected September 30 as its fiscal
year-end. The Company is domiciled in the State of Colorado, and
its corporate headquarters are located in Henderson,
Nevada.
As a
part of and prior to the consummation of the reverse merger,
William Waldrop and Lori Glauser, principals of Signal Bay
Research, Inc., purchased 80% of the issued and outstanding common
stock from WB Partners. The merger between the Company and Signal
Bay Research was finalized and closed contemporaneously with the
share purchase. As part of this share purchase, Mr. Waldrop and Ms.
Glauser became the officers and directors of the Company.
Immediately after the reverse, WB Partners owned less than 5% of
the common stock. The company filed a Form 10-12G on November 25,
2014, and was determined to be a shell company by the SEC as per
the Form 10-12G/A which went effective on January 24, 2015. On
January 29, 2015, the company filed an 8-K stating it entered into
a material agreement and was no longer a shell company.
After
the reverse merger, Signal Bay Research, Inc. continues to operate
as a wholly-owned subsidiary providing compliance, research, and
advisory services for Signal Bay, Inc.
Signal
Bay Services was formed on January 25, 2015, as the management
services division of EVIO.
On
September 17, 2015, EVIO entered into a share exchange agreement
with CR Labs, Inc., an Oregon Corporation, pursuant to which the
Company acquired 80% of the outstanding common stock of CR Labs,
Inc.
EVIO
Inc. was formed on April 4, 2016, to become the holding company for
all laboratory operations.
EVIO
Labs Eugene was formed on May 23, 2016, as a wholly-owned
subsidiary of EVIO Inc. Subsequently, on May 24, 2016, EVIO Labs
Eugene acquired all of the assets of Oregon Analytical Services,
LLC, inclusive of client lists, equipment, trade names, and
personnel.
On
June 1, 2016, EVIO Inc. entered into a share purchase agreement to
purchase 80% of the outstanding common stock of Smith Scientific
Industries, Inc. d/b/a Kenevir Research in Medford, OR.
On
October 19, 2016, the Company entered into a Membership Interest
Purchase Agreement to purchase 100% of the ownership of GreenHaus
Analytical Labs, LLC.
On
October 26, 2016, the Company entered into an Asset Purchase
Agreement with Green Style Consulting, LLC which was closed on
November 1, 2016.
The
Company entered into a Membership Interest Purchase Agreement with
Viridis Analytics MA, LLC which was closed on August 1,
2018.
On
December 29, 2018, the Company entered into a Membership Purchase
Agreement to purchase 60% of the outstanding shares of C3 Labs, LLC
which closed On January 1, 2019.
On
June 27, 2018, Greenhaus Analytical Labs LLC, a wholly-owned
subsidiary of EVIO, Inc. entered into a Purchase and Sale Agreement
with Michael G. Myers for the property located at 14775 SW
74th Ave., Tigard, OR 97224.
On
June 27, 2018, Greenhaus Analytical Labs, LLC, a wholly-owned
subsidiary of EVIO, Inc., entered into an Asset Purchase Agreement
with MRX Labs LLC which closed on July 5, 2019.
On
April 29, 2018, the Company entered into an Asset Purchase
Agreement with Leaf Detective, LLC which was closed on the same
date.
On
May 2, 2018, the Company entered into a Stock Purchase Agreement
with Keystone, Labs, Inc. to purchase 50% of the outstanding shares
of Keystone Labs which was closed on the same date.
Management’s
Representation of Interim Financial Statements
The
accompanying unaudited interim consolidated financial statements of
the Company have been prepared in accordance with accounting
principles generally accepted in the United States of America and
the rules of the Securities and Exchange Commission and should be
read in conjunction with the audited consolidated financial
statements and notes thereto contained in the Company’s most recent
Annual Financial Statements filed with the SEC on Form 10-K. In the
opinion of management, all adjustments, consisting of normal
recurring adjustments, necessary for a fair presentation of
financial position and the results of operations for the interim
period presented have been reflected herein. The results of
operations for the interim period are not necessarily indicative of
the results to be expected for the full year. Notes to the
financial statements which would substantially duplicate the
disclosures contained in the audited consolidated financial
statements for the most recent fiscal period, as reported in the
Form 10-K, have been omitted.
Basis
of Presentation
The
consolidated financial statements of the Company have been prepared
in accordance with GAAP and are expressed in United States dollars.
For the three months ended March 31, 2020, and 2019, and the year
ended September 30, 2019, the consolidated financial statements
include the accounts of the Company and its wholly-owned
subsidiaries.
The
subsidiaries of EVIO, Inc. are as follows:
Trade Name (dba) |
|
Company Name |
|
State of
Incorporation |
|
Ownership
% |
|
|
Acquisition
Month |
|
EVIO Labs Medford |
|
Smith Scientific
Industries, LLC |
|
Oregon |
|
|
80 |
% |
|
|
June
2016 |
|
EVIO Labs Portland |
|
Greenhaus Analytical Labs |
|
Oregon |
|
|
100 |
% |
|
|
October
2016 |
|
EVIO Labs MA |
|
Viridis Analytics |
|
Massachusetts |
|
|
100 |
% |
|
|
August
2017 |
|
EVIO Labs Berkeley |
|
C3 Labs, LLC |
|
California |
|
|
90 |
% |
|
|
January
2018 |
|
Keystone Labs |
|
Keystone Labs, Inc. |
|
Ontario, Canada |
|
|
50 |
% |
|
|
May
2018 |
|
Revenue
Recognition
The
Company recognizes revenue in accordance with ASC 606, Revenue from
Contracts with Customers. The core principle of the new revenue
standard is that a company should recognize revenue to depict the
transfer of promised goods or services to customers in an amount
that reflects the consideration to which the company expects to be
entitled in exchange for those goods or services. The following
five steps are applied to achieve that core principle:
|
● |
Step
1: Identify the contract with the customer |
|
● |
Step
2: Identify the performance obligations in the contract |
|
● |
Step
3: Determine the transaction price |
|
● |
Step
4: Allocate the transaction price to the performance obligations in
the contract |
|
● |
Step
5: Recognize revenue when the company satisfies a performance
obligation |
The
Company generates revenue from consulting services, licensing
agreements, and testing of cannabis and hemp products for medicinal
and adult-use consumption.
The
Company accounts for a contract after it has been approved by all
parties to the arrangement, the rights of the parties are
identified, payment terms are identified, the contract has
commercial substance, and collectability of consideration is
probable.
The
Company evaluates the services promised in each contract at
inception to determine whether the contract should be accounted for
as having one or more performance obligations. The Company’s
services included in its contracts are distinct from one
another.
The
Company determines the transaction price for each contract based on
the consideration it expects to receive for the distinct services
being provided under the contract.
The
Company recognizes revenue as performance obligations are satisfied
and the customer obtains control of the services provided. In
determining when performance obligations are satisfied, the Company
considers factors such as contract terms, payment terms, and
whether there is an alternative future use of the
service.
The
Company recognizes revenue from testing services upon delivery of
its testing results to the client. Customer orders for testing
services are generally completed within two weeks of receiving the
order.
Consulting
engagements may vary in length and scope, but will generally
include the review and/or preparation of regulatory filings,
business plans, and financial models, operating plans, and
technology support to customers within the same industry. Revenue
from consulting services is recognized upon completion of
deliverables as outlined in the consulting agreement.
The
Company recognizes revenue from the right of use license agreements
upon transfer of control of the functional intellectual property.
In certain licensing agreements, the Company may receive royalty
revenues based upon performance metrics which are recognized as
earned over time.
Stock-Based
Compensation
In
accordance with ASC No. 718, Compensation-Stock Compensation (“ASC
718”), the Company measures the cost of stock-based compensation
arrangements based on the grant date fair value and recognizes the
cost in the financial statements over the period during which
employees are required to provide services. Stock-based
compensation arrangements may include stock options, restricted
stock plans, performance-based awards, stock appreciation rights,
and employee stock purchase plans.
The
Company utilizes the Black Scholes option pricing model, which was
developed for use in estimating the fair value of options. Option
pricing models require the input of highly complex and subjective
variables including the expected life of options granted and the
expected volatility of the Company’s stock price over a period
equal to or greater than the expected life of the
options.
Accounts
Receivable and Allowance for Doubtful Accounts
Accounts
receivable are recorded at their original invoice amounts. We
regularly review collectability and establish an allowance for
uncollectible amounts as necessary based on our experience with
historical collectability. Management recognized an allowance for
uncollectible amounts, of $171,443 and $215,593 for the periods
ended March 31, 2020, and September 30, 2019,
respectively.
Foreign
Currency Translation
The
functional currency of the Company’s subsidiary in Canada is the
Canadian Dollar. The subsidiary’s assets and liabilities have been
translated to U.S. Dollars using the exchange rates in effect at
the balance sheet dates. Statements of operations amounts have been
translated using the average exchange rate for each period.
Resulting gains or losses from translating foreign currency
financial statements are recorded as other comprehensive income
(loss).
Fair
Value of Financial Instruments
The
Company has adopted the guidance under ASC Topic 820 for financial
instruments measured on fair value on a recurring basis. Fair value
is defined as the exchange price that would be received for an
asset or paid to transfer a liability (an exit price) in the
principal or most advantageous market for the asset or liability,
in an orderly transaction between market participants on the
measurement date. Valuation techniques used to measure fair value
must maximize the use of observable inputs and minimize the use of
unobservable inputs.
Net
Income (Loss) Per Share
Basic
loss per share is computed by dividing net income, or loss, by the
weighted average number of shares of common stock outstanding for
the period. Diluted earnings (loss) per share is computed by
dividing net income, or loss, by the weighted average number of
shares of common stock outstanding for the period. There were
49,561,707 and 26,160,911 potentially dilutive common shares
outstanding as of March 31, 2020 and 2019, respectively. Because of
the net losses incurred during the three months ended March 31,
2020, and 2019, the impacts of dilutive instruments would have been
anti-dilutive for the period presented and have been excluded from
the diluted loss per share calculations.
Recently
Issued Accounting Pronouncements
In
January 2017, the FASB issued ASU 2017-04, “Intangibles—Goodwill
and Other (Topic 350), Simplifying the Test for Goodwill
Impairment”. The amendments in this update simplify how an
entity is required to test goodwill for impairment by eliminating
Step 2 from the goodwill impairment test. This update is effective
for annual or interim goodwill impairment tests in fiscal years
beginning after December 31, 2019. Early adoption is permitted for
interim or annual goodwill impairment tests performed on testing
after January 1, 2017. The Company notes that this guidance applies
to its reporting requirements and will implement the new guidance
accordingly in performing goodwill impairment testing; however, the
Company does not believe this update will have a material impact on
the consolidated financial statements.
In
January 2017, the FASB issued ASU 2017-01, “Business
Combinations (Topic 805): Clarifying the Definition of a
Business,” which revises the definition of a business. This
update is effective for annual periods beginning after December 15,
2017, including interim periods within those years. Early adoption
is permitted. The Company notes that this guidance will impact its
acquisitions beginning January 1, 2018. Management believes
recently issued accounting pronouncements will have no impact on
the financial statements of the Company.
In
June 2018, the FASB issued ASU 2018-07, Compensation-Stock
Compensation (Topic 718) which simplifies certain aspects of
the accounting for nonemployee share-based payment transactions
resulting from expanding the scope of Topic 718,
Compensation-Stock Compensation, to include share-based
payment transactions for acquiring goods and services from
nonemployees. Certain areas of the simplification apply only to
nonpublic entities. The amendments specify that Topic 718 applies
to all share-based payment transactions in which a grantor acquires
goods or services to be used or consumed in a grantor’s own
operations by issuing share-based payment awards. The amendments
also clarify that Topic 718 does not apply to share-based payments
used to effectively provide (1) financing to the issuer or (2)
awards granted in conjunction with selling goods or services to
customers as part of a contract accounted for under Topic 606,
Revenue from Contracts with Customers. The amendments of the
ASU are effective for public business entities for fiscal years
beginning after December 15, 2018, including interim periods within
that fiscal year. Early adoption is permitted. The Company is
currently evaluating the impact of the adoption of this standard on
our consolidated financial statements.
In
August 2018, the SEC issued Final Rule Release No. 33-10532,
Disclosure Update, and Simplification. Under the final rule
Company’s must now analyze changes in stockholders’ equity in the
form of a reconciliation, for the current and comparative
year-to-date, with subtotals for each interim period.
Other
accounting standards that have been issued or proposed by the FASB
or other standards-setting bodies that do not require adoption
until a future date are not expected to have a material impact on
our financial statements upon adoption.
Note 2 – Going concern
The
Company’s financial statements are prepared using accounting
principles generally accepted in the United States of America
applicable to a going concern, which contemplates the realization
of assets and liquidation of liabilities in the normal course of
business. However, the Company has negative working capital,
recurring losses, and does not have an established source of
revenues sufficient to cover its operating costs. These factors
raise substantial doubt about the Company’s ability to continue as
a going concern.
The
ability of the Company to continue as a going concern is dependent
upon its ability to successfully accomplish the plan described in
the preceding paragraph and eventually attain profitable
operations. The accompanying financial statements do not include
any adjustments that may be necessary if the Company is unable to
continue as a going concern.
In
the coming year, the Company’s foreseeable cash requirements will
relate to the continual development of the operations of its
business, maintaining its good standing and making the requisite
filings with the Securities and Exchange Commission, and the
payment of expenses associated with operations and business
developments. The Company may experience a cash shortfall and be
required to raise additional capital.
Historically,
it has mostly relied upon convertible debentures, convertible
promissory notes, internally generated funds such as shareholder
loans and advances to finance its operations and growth. Management
may raise additional capital by retaining net earnings or through
future public or private offerings of the Company’s stock or loans
from private investors, although there can be no assurance that it
will be able to obtain such financing. Additionally, due to the
onset of COVID-19 obtaining financing may be more difficult to
obtain currently compared to historic levels. The Company’s failure
to do so could have a material and adverse effect upon it and its
shareholders.
Note 3 – FAIR VALUE OF FINANCIAL
INSTRUMENTS
The
Company has adopted the guidance under ASC Topic 820 for financial
instruments measured on a fair value on a recurring basis. Fair
value is defined as the exchange price that would be received for
an asset or paid to transfer a liability (an exit price) in the
principal or most advantageous market for the asset or liability,
in an orderly transaction between market participants on the
measurement date. Valuation techniques used to measure fair value
must maximize the use of observable inputs and minimize the use of
unobservable inputs.
ASC
Topic 820 establishes a fair value hierarchy, giving the highest
priority to quoted prices in active markets and the lowest priority
to unobservable data and requires disclosures for assets and
liabilities measured at fair value based on their level in the
hierarchy. The fair value hierarchy is based on three levels of
inputs, of which the first two are considered observable and the
last unobservable, as follows:
● |
Level
1 applies to assets or liabilities for which there are quoted
prices in active markets for identical assets or
liabilities. |
|
|
● |
Level
2 applies to assets or liabilities for which there are inputs other
than quoted prices that are observable for the asset or liability
such as quoted prices for similar assets or liabilities in active
markets; quoted prices for identical assets or liabilities in
markets with insufficient volume or infrequent transactions (less
active markets); or model-derived valuations in which significant
inputs are observable or can be derived principally from, or
corroborated by, observable market data. |
|
|
● |
Level
3 applies to assets or liabilities for which there are unobservable
inputs to the valuation methodology that are significant to the
measurement of the fair value of the assets or
liabilities. |
The
Company’s financial instruments consist principally cash, accounts
payable, and accrued liabilities. The carrying values of these
financial instruments approximate their fair value due to their
short maturities. The carrying amount of the Company’s debt
approximates fair value because the interest rates on these
instruments approximate the interest rate on debt with similar
terms available to the Company.
The
Company analyzes all financial instruments with features of both
liabilities and equity under ASC 480, “Distinguishing Liabilities
from Equity” and ASC 815, “Derivatives and Hedging”. Derivative
liabilities are adjusted to reflect fair value at each period end,
with any increase or decrease in the fair value being recorded in
results of operations as adjustments to fair value of derivatives.
The effects of interactions between embedded derivatives are
calculated and accounted for in arriving at the overall fair value
of the financial instruments. Also, the fair value of freestanding
derivative instruments such as warrant and option derivatives are
valued using the Black-Scholes simulation model.
The
Company’s derivative liabilities were adjusted to fair market value
at the end of each reporting period, using Level 3
inputs.
The
following table sets forth by level with the fair value hierarchy
the Company’s financial assets and liabilities measured at fair
value on March 31, 2020:
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial
instruments |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
2,319,938 |
|
|
$ |
2,319,938 |
|
The
following table sets forth by level with the fair value hierarchy
the Company’s financial assets and liabilities measured at fair
value on September 30, 2019:
|
|
Level
1 |
|
|
Level
2 |
|
|
Level
3 |
|
|
Total |
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative
financial instruments |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
2,545,735 |
|
|
$ |
2,545,735 |
|
Note 4 –leases
The
Company determines if an arrangement is a lease at inception and
has lease agreements for warehouses, office facilities, and
equipment. These commitments have remaining non-cancelable lease
terms, with lease expirations that range from 2020 to
2024.
As a
result of the adoption of ASC 842, certain real estate and
equipment operating leases have been recorded on the balance sheet
with a lease liability and right-of-use asset (“ROU”). Application
of this standard resulted in the recognition of ROU assets of
$2,069,538, net of accumulated amortization, and a corresponding
lease liability of $2,117,338. Accounting for finance leases is
substantially unchanged.
Operating
leases are included in operating lease ROU assets, operating lease
obligations, current, and operating lease obligations, long term on
the condensed consolidated balance sheets. Finance leases are
included in property and equipment, finance lease obligations,
short term, and finance lease obligations, long term, on the
condensed consolidated balance sheets. ROU assets represent the
Company’s right to use an underlying asset for the lease term, and
lease liabilities represent the obligation to make scheduled lease
payments. ROU assets and liabilities are recognized on the lease
commencement date based on the present value of lease payments over
the lease term. The present value of lease payments is calculated
using the incremental borrowing rate at lease commencement, which
takes into consideration recent debt issuances as well as other
applicable market data available.
Amortization
of lease assets is included in general and administrative expenses.
The future minimum lease payments of lease liabilities as of March
31, 2020, are as follows:
For
the years ended September 30, |
|
Operating Leases |
|
|
Financing Leases |
|
2020 |
|
|
972,244 |
|
|
|
430,591 |
|
2021 |
|
|
697,436 |
|
|
|
514,152 |
|
2022 |
|
|
549,390 |
|
|
|
183,020 |
|
2023 |
|
|
347,745 |
|
|
|
206,674 |
|
2024 and
thereafter |
|
|
27,911 |
|
|
|
5,022 |
|
Total lease payments |
|
|
2,594,726 |
|
|
|
1,339,450 |
|
Less: Payments
Made |
|
|
(477,388 |
) |
|
|
(222,236 |
) |
Total Lease
Liabilities |
|
$ |
2,117,338 |
|
|
|
1,117,214 |
|
Note 5 – INTANGIBLE ASSETS
The
Company’s intangible assets consist of customer lists, testing
licenses, favorable leases, and websites. The components of
intangible assets as of March 31, 2020, and September 30, 2019
consist of:
|
|
March
31,
2020
|
|
|
September 30, 2019 |
|
Customer list |
|
$ |
- |
|
|
$ |
854,014 |
|
License |
|
|
- |
|
|
|
503,000 |
|
Favorable lease |
|
|
- |
|
|
|
3,100 |
|
Domains & Websites |
|
|
- |
|
|
|
49,516 |
|
Non-compete agreements |
|
|
- |
|
|
|
182,388 |
|
Assembled Workforce |
|
|
- |
|
|
|
50,750 |
|
Intellectual Property |
|
|
- |
|
|
|
342,610 |
|
Total |
|
|
- |
|
|
|
1,977,661 |
|
Accumulated
amortization |
|
|
- |
|
|
|
(1,977,661 |
) |
Net value |
|
$ |
- |
|
|
$ |
- |
|
The
Company had fully amortized all intangible assets during the fiscal
year ended September 30, 2019.
Note 6 – Concentration of Credit Risk
Instruments
that potentially subject the Company to concentration of credit
risk consist principally of cash deposits, notes receivable and
accounts receivable. As of March 31, 2020, the Company did not hold
cash at any financial institution in excess of the amount insured
by the Federal Deposit Insurance Corporation (“FDIC”) of up to
$250,000.
As of
March 31, 2020, the Company had total accounts receivable net of
allowances of $153,383. Five clients comprised a total of 29% of
this balance as follows:
|
|
Balance |
|
|
Percent
of Total |
|
Customer
1 |
|
$ |
26,181 |
|
|
|
8 |
% |
Customer
2 |
|
|
20,336 |
|
|
|
6 |
% |
Customer
3 |
|
|
18,065 |
|
|
|
6 |
% |
Customer
4 |
|
|
14,651 |
|
|
|
5 |
% |
Customer
5 |
|
|
14,330 |
|
|
|
4 |
% |
All
others |
|
|
231,263 |
|
|
|
71 |
% |
Total |
|
|
324,826 |
|
|
|
100 |
% |
Allowance
for doubtful accounts |
|
|
(171,443 |
) |
|
|
|
|
Net
accounts receivable |
|
$ |
153,383 |
|
|
|
|
|
As of
September 30, 2019, the Company had total accounts receivable, net
of allowances, of $133,022. Five separate clients comprised a total
of 41% of this balance as follows:
|
|
Balance |
|
|
Percent
of Total |
|
Customer
1 |
|
$ |
48,606 |
|
|
|
14 |
% |
Customer
2 |
|
|
33,572 |
|
|
|
10 |
% |
Customer
3 |
|
|
20,336 |
|
|
|
6 |
% |
Customer
4 |
|
|
20,321 |
|
|
|
6 |
% |
Customer
5 |
|
|
20,208 |
|
|
|
6 |
% |
All
others |
|
|
246,456 |
|
|
|
59 |
% |
Total |
|
|
348,955 |
|
|
|
100 |
% |
Allowance
for doubtful accounts |
|
|
(215,933 |
) |
|
|
|
|
Net
accounts receivable |
|
$ |
133,022 |
|
|
|
|
|
Note 7 – Property and Equipment
Property
and equipment are carried at cost. Expenditures for maintenance and
repairs are expensed in the period incurred. Renewals and
betterments that materially extend the life of the assets are
capitalized. When assets are retired or otherwise disposed of, the
cost and related accumulated depreciation are removed from the
accounts, and any resulting gain or loss is reflected in income for
the period.
Depreciation
is computed for financial statement purposes on a straight-line
basis over estimated useful lives of the related assets and the
modified accelerated cost recovery system for federal income tax
purposes. The estimated useful lives of depreciable assets
are:
|
|
Estimated |
|
|
Useful
Lives |
Building |
|
39
years |
Laboratory
and Computer Equipment |
|
5
years |
Furniture
and Fixtures |
|
7
years |
Software |
|
3
years |
Domains |
|
15
years |
The
Company’s property and equipment consisted of the following as of
March 31, 2020, and September 30, 2019:
|
|
March 31, 2020 |
|
|
September 30, 2019 |
|
Assets
Not-In-Service |
|
$ |
|
|
|
$ |
- |
|
Capital Assets |
|
|
1,850,093 |
|
|
|
1,800,347 |
|
Land |
|
|
212,550 |
|
|
|
212,550 |
|
Buildings & Real Estate |
|
|
941,857 |
|
|
|
941,857 |
|
Furniture and Equipment |
|
|
157,614 |
|
|
|
152,933 |
|
Laboratory Equipment |
|
|
2,054,901 |
|
|
|
2,188,828 |
|
Software |
|
|
77,865 |
|
|
|
78,996 |
|
Computers |
|
|
27,597 |
|
|
|
|
|
Leasehold Improvements |
|
|
696,756 |
|
|
|
697,333 |
|
Vehicles |
|
|
129,790 |
|
|
|
83,915 |
|
Total |
|
|
6,149,825 |
|
|
|
6,188,777 |
|
Accumulated
depreciation |
|
|
(1,553,052 |
) |
|
|
(1,511,973 |
) |
Net
value |
|
$ |
4,596,772 |
|
|
$ |
4,676,804 |
|
Note 8 – Related Party Transactions
During
the periods ended March 31, 2020 and September 30, 2019 the Company
received loans from its Chief Operating Officer totaling $17,014
and $194,820, respectively, and made repayments totaling $0 and
$1,040, respectively. There was $158,676 and $143,780 due as of
March 31, 2020, and September 30, 2019, respectively, and are
included in the accompanying consolidated balance sheets as a
current portion of notes payable to related parties. The loans
carry a 0% interest rate and are due on demand.
During
the periods ended March 31, 2020 and September 30, 2019 the Company
received loans from its Chief Executive Officer totaling $14,000
and $75,000, respectively, and made repayments totaling $0 and
$19,200, respectively. There was $69,800 and $55,800 due as of
March 31, 2020, and September 30 2019, respectively, and are
included in the accompanying consolidated balance sheets as a
current portion of notes payable to related parties. The loans
carry a 0% interest rate and are due on demand.
During
the periods ended March 31, 2020, and September 30, 2019, the
Company made payments to Sara Lausmann, associated with the asset
purchase of Oregon Analytical Services, LLC, totaling $2,000 and
$0, respectively. There was $566,289 and $568,299 of principal due
as of March 31, 2020 and September 30, 2019, respectively. The note
carries interest at a rate of 5% per annum and had accrued interest
totaling $122,095 and $107,899 due as of March 31, 2020, and
September 30, 2019, respectively.
During
the periods ended March 31, 2020, and September 30, 2019, the
Company made payments to Anthony Smith, our Chief Science Officer,
associated with the purchase of 80% of Smith Scientific Industries,
totaling $44,059 and $55,090, respectively. There was $136,851 and
$180,910 of principal due as of March 31, 2020 and September 31,
2019, respectively. The note carries interest at a rate of 5% per
annum and had accrued interest totaling $41,828 and $41,600 due as
of March 31, 2020, and September 30, 2019, respectively.
During
the periods ended March 31, 2020, and September 30, 2019, the
Company made repayments to Henry Grimmett, prior Company Director
(retired April 2018), on an outstanding loan from member assumed by
the Company, totaling a note payable of Greenhaus Analytical
Services, LLC, totaling $0 and $3,859, respectively. There was
$113,554 and $113,554 of principal due as of March 31, 2020 and
September 30, 2019, respectively. The note bears interest at 0% per
annum and requires repayments of $25,000 quarterly.
During
the periods ended March 31, 2020, and September 30, 2019, the
Company made no payments to Henry Grimmett, prior Company Director
(retired April 2018), associated with the acquisition of Greenhaus
Analytical Services, LLC. The Company entered into a $340,000 note
payable as part of its acquisition of Greenhaus Analytical
Services, LLC. The note carries interest at a rate of 6% per annum
and matures on October 16, 2020. During the quarter ended March 31,
2020, a third party purchased the remaining balance of the $170,000
note. During the year ended September 30, 2019, a third party
purchased $170,000 of the note from Henry Grimmett, refer to Note
10, Convertible Notes; Noteholder 14. There was $0 and $170,000 of
principal due as of March 31, 2020 and September 30, 2019,
respectively. Unamortized debt discount of $0 and $25,563 as of
March 31, 2020 and September 30, 2019, respectively and $0 and
$59,412 of accrued interest due as of March 31, 2020 and September
30, 2019, respectively.
During
the periods ended March 31, 2020 and September 30, 2019, the
Company received loans from a related party associate with Keystone
Labs totaling $30,796 and $191,515, respectively, and made
repayments totaling $19,248 and $9,034, respectively. There was
$372,538 and $354,050 due as of March 31, 2020 and September 30,
2019, respectively. Amounts have been adjusted for USD. The
advances are non-interest bearing and due on demand and is included
in the accompanying consolidated balance sheets as a current
portion of notes payable to related parties.
Note 9 – STOCKHOLDERS’ EQUITY
Series A Convertible Preferred Stock
The
Company has -0- shares of Series A Convertible Stock issued and
outstanding as of March 31, 2020, and September 30,
2019.
Series B Convertible Preferred Stock
The
Company designated 5,000,000 shares of Series B Convertible
Preferred Stock (“Series B Preferred Stock”) with a par value of
$0.0001 per share. The Company has 5,000,000 shares of Series B
Convertible Stock issued and outstanding as of March 31, 2020, and
September 30, 2019. These shares converted to common stock at a
rate of 1 common share per each share of Series B Convertible
Preferred Stock.
Series C Convertible Preferred Stock
The
Company designated 500,000 shares of Series C Convertible Preferred
Stock (“Series C Preferred Stock”) with a par value of $0.0001 per
share. There were 500,000 shares of Series C Convertible Stock
issued and outstanding as of March 31, 2020, and September 30,
2019. These shares converted to common stock at a rate of 5 common
shares per each share of Series C Convertible Preferred
Stock.
Series D Convertible Preferred Stock
The
Company designated 1,000,000 shares of Series D Convertible
Preferred Stock (“Series D Preferred Stock”) with a par value of
$0.0001 per share. These shares converted to common stock at a rate
of 2.5 common shares per each share of Series D Convertible
Preferred Stock.
During
the Year Ended September 30, 2019, the Company received conversion
notices from Series D Preferred Stockholders resulting in a total
of 532,500 shares of common stock being issued for the conversion
of 213,000 shares of Series D Preferred Stock.
There
were 349,500 shares of Series D Convertible Stock issued and
outstanding as of December 30, 2019, and September 30, 2019,
respectively.
Common Stock
During
the three months ended March 31, 2020, the Company issued the
following common shares:
Number
of
Shares
issued
|
|
|
Description |
|
$ Value |
|
7,353,538 |
|
|
Issuance of shares as
compensation to employees, officers/directors |
|
|
525,778 |
|
3,750,000 |
|
|
Issuance of shares in exchange for
consulting, professional and services |
|
|
262,500 |
|
501,972 |
|
|
Shares issued in satisfaction of
debt issuance costs |
|
|
15,500 |
|
144,928 |
|
|
Shares issued in settlement of
litigation |
|
|
10,000 |
|
7,209,271 |
|
|
Issuance of shares in connection
with the conversion of debentures |
|
|
207,603 |
|
1,144,012 |
|
|
Issuance of shares in connection
with the conversion of interest payable |
|
|
37,121 |
|
|
|
|
|
|
|
|
|
Total
20,103,721 |
|
|
|
|
$ |
1,056,106 |
|
During
the year ended September 30, 2019, the Company issued 1,038,017
common shares valued at $336,891 for services; 1,415,000 common
shares for cash proceeds of $586,000; 287,500 common shares valued
at $397,980 as compensation to employees; 31,579 common shares for
the settlement of $15,000 of accounts payable; 2,054,887 common
shares for the settlement of $687,200 of convertible notes payable;
10,163 for the conversion of $25,110 of convertible accrued
interest; 20,000 common shares for issuance of a stock purchase
agreement valued at $11,760; 669,362 common shares for the
settlement of $388,000 debenture conversions, and 532,500 common
shares for the conversion of Preferred Series D stock. All
conversions of outstanding principal and accrued interest on
convertible notes payable were done so at contractual
terms.
There
were 78,642,473 and 29,314,419 shares of common stock issued and
outstanding at March 31, 2020, and September 30, 2019
Note 10 – LOANS PAYABLE
The
Company had the following loans payable outstanding as of March 31,
2020, and September 30, 2019:
|
|
March
31, 2020 |
|
|
September
30, 2019 |
|
|
|
|
|
|
|
|
On
March 16, 2018, the Company executed notes payable for the purchase
of three vehicles. The notes carry interest at 6.637% annually and
mature on March 31, 2023. |
|
|
43,575 |
|
|
|
47,551 |
|
|
|
|
|
|
|
|
|
|
On
June 28, 2018, the Company executed a note payable for $650,000 for
the purchase of the building at 14775 SW 74th Ave,
Tigard, OR. The note carries interest at 8% annually and is due on
June 28, 2021. |
|
|
609,907 |
|
|
|
622,523 |
|
|
|
|
|
|
|
|
|
|
On
July 5, 2018, the Company executed a note payable for $750,000 for
the asset purchase of MRX Labs. The note carries interest at 8%
annually and is due on January 5, 2019. (This note is in default as
of 7/5/2019, which resulted in a 5% penalty on outstanding
amount.) |
|
|
750,000 |
|
|
|
750,000 |
|
|
|
|
|
|
|
|
|
|
On
October 20, 2019, the Company executed notes payable for the
purchase of four vehicles. The notes carry interest at 5.990%
annually and mature on December 31, 2023. |
|
|
93,028 |
|
|
|
- |
|
Total
loans payable |
|
|
1,496,510 |
|
|
|
1,420,079 |
|
Less:
current portion of loans payable |
|
|
785,960 |
|
|
|
762,476 |
|
|
|
|
|
|
|
|
|
|
Long-term
portion of loans payable |
|
$ |
708,550 |
|
|
$ |
657,603 |
|
As of
March 31, 2020 and September 30, 2019, the Company accrued interest
of $104,384 and $74,301 respectively
Note 11 – Convertible NOTES PAYABLE
The
Company has entered into convertible notes payable that convert to
common stock of the Company at variable conversion prices. As
further discussed in Note 13 – Derivative Liability, the
Company analyzed the conversion features of the agreements for
derivative accounting consideration under ASC 815-15 “Derivatives
and Hedging” and determined that the embedded conversion features
should be classified as a derivative because the exercise price of
these convertible notes are subject to a variable conversion rate.
In accordance with AC 815, the Company has bifurcated the
conversion feature of the note and recorded a derivative
liability.
The
following table summarizes all convertible notes outstanding as of
March 31, 2020:
Holder |
|
Issue Date |
|
Due Date |
|
Principal |
|
|
Unamortized
Debt Discount |
|
|
Carrying Value |
|
|
Accrued Interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31Noteholder #1 |
|
04/24/18 |
|
04/24/19 |
|
|
500,000 |
|
|
|
- |
|
|
|
500,000 |
|
|
|
- |
|
Noteholder
#2 |
|
07/01/19 |
|
09/30/19 |
|
|
675,930 |
|
|
|
- |
|
|
|
675,930 |
|
|
|
47,672 |
|
Noteholder
#3 |
|
08/01/18 |
|
01/01/19 |
|
|
396,000 |
|
|
|
- |
|
|
|
396,000 |
|
|
|
92,355 |
|
Noteholder
#3 |
|
10/02/18 |
|
01/01/19 |
|
|
264,000 |
|
|
|
- |
|
|
|
264,000 |
|
|
|
49,458 |
|
Noteholder
#5 |
|
09/17/18 |
|
09/17/19 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
10,260 |
|
Noteholder
#6 |
|
11/15/18 |
|
11/15/19 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
15,564 |
|
Noteholder
#6 |
|
02/04/19 |
|
02/04/20 |
|
|
230,000 |
|
|
|
- |
|
|
|
230,000 |
|
|
|
23,048 |
|
Noteholder #6 |
|
08/08/19 |
|
08/08/20 |
|
|
33,092 |
|
|
|
(4,274 |
) |
|
|
28,818 |
|
|
|
1,712 |
|
Noteholder
#6 |
|
11/04/19 |
|
11/04/20 |
|
|
33,516 |
|
|
|
(11,301 |
) |
|
|
22,215 |
|
|
|
1,087 |
|
Noteholder
#6 |
|
12/23/19 |
|
12/23/20 |
|
|
137,375 |
|
|
|
(100,216 |
) |
|
|
37,159 |
|
|
|
2,981 |
|
Noteholder
#6 |
|
01/21/20 |
|
02/21/21 |
|
|
52,500 |
|
|
|
|
|
|
|
52,500 |
|
|
|
805 |
|
Noteholder
#6 |
|
02/04/20 |
|
02/04/20 |
|
|
265,637 |
|
|
|
- |
|
|
|
265,637 |
|
|
|
4,076 |
|
Noteholder
#7 |
|
12/27/18 |
|
12/27/19 |
|
|
20,000 |
|
|
|
- |
|
|
|
20,000 |
|
|
|
3,297 |
|
Noteholder
#7 |
|
02/05/19 |
|
02/05/20 |
|
|
131,250 |
|
|
|
- |
|
|
|
131,250 |
|
|
|
11,995 |
|
Noteholder
#7 |
|
02/11/19 |
|
02/11/20 |
|
|
131,250 |
|
|
|
- |
|
|
|
131,250 |
|
|
|
11,708 |
|
Noteholder
#7 |
|
03/15/19 |
|
03/15/20 |
|
|
70,913 |
|
|
|
- |
|
|
|
70,913 |
|
|
|
5,937 |
|
Noteholder #7 |
|
08/08/19 |
|
08/08/20 |
|
|
33,092 |
|
|
|
(4,274 |
) |
|
|
28,818 |
|
|
|
1,712 |
|
Noteholder #7 |
|
11/04/19 |
|
11/04/20 |
|
|
33,516 |
|
|
|
(11,301 |
) |
|
|
22,215 |
|
|
|
1,087 |
|
Noteholder
#7 |
|
01/03/20 |
|
01/03/21 |
|
|
137,375 |
|
|
|
|
|
|
|
137,375 |
|
|
|
2,740 |
|
Noteholder
#7 |
|
01/21/20 |
|
02/22/21 |
|
|
52,500 |
|
|
|
- |
|
|
|
52,500 |
|
|
|
805 |
|
Noteholder
#7 |
|
02/04/20 |
|
02/04/20 |
|
|
265,637 |
|
|
|
- |
|
|
|
265,637 |
|
|
|
4,076 |
|
Noteholder
#10 |
|
03/15/19 |
|
03/15/20 |
|
|
70,913 |
|
|
|
- |
|
|
|
70,913 |
|
|
|
5,937 |
|
Noteholder #11 |
|
08/30/19 |
|
05/30/20 |
|
|
110,000 |
|
|
|
(24,088 |
) |
|
|
85,912 |
|
|
|
5,159 |
|
Noteholder #11 |
|
08/29/19 |
|
08/29/20 |
|
|
100,000 |
|
|
|
0 |
|
|
|
100,000 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
3,744,496 |
|
|
$ |
(155,453 |
) |
|
$ |
3,589,042 |
|
|
$ |
303,472 |
|
The
following table summarizes all convertible notes outstanding as of
September 30, 2019:
Holder |
|
Issue
Date |
|
Due
Date |
|
Principal |
|
|
Unamortized
Debt Discount |
|
|
Carrying
Value |
|
|
Accrued
Interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noteholder
#1 |
|
04/24/18 |
|
04/24/19 |
|
|
500,000 |
|
|
|
- |
|
|
|
500,000 |
|
|
|
- |
|
Noteholder
#2 |
|
07/01/19 |
|
09/30/19 |
|
|
825,930 |
|
|
|
- |
|
|
|
825,930 |
|
|
|
18,983 |
|
Noteholder
#3 |
|
08/01/18 |
|
01/01/19 |
|
|
396,000 |
|
|
|
- |
|
|
|
396,000 |
|
|
|
76,471 |
|
Noteholder
#3 |
|
10/02/18 |
|
01/01/19 |
|
|
264,000 |
|
|
|
- |
|
|
|
264,000 |
|
|
|
40,634 |
|
Noteholder
#4 |
|
09/06/18 |
|
09/06/19 |
|
|
145,000 |
|
|
|
- |
|
|
|
145,000 |
|
|
|
15,575 |
|
Noteholder
#5 |
|
09/17/18 |
|
09/17/19 |
|
|
82,500 |
|
|
|
- |
|
|
|
82,500 |
|
|
|
8,586 |
|
Noteholder
#6 |
|
11/15/18 |
|
11/15/19 |
|
|
222,600 |
|
|
|
(28,054 |
) |
|
|
194,546 |
|
|
|
15,564 |
|
Noteholder
#6 |
|
01/14/19 |
|
01/14/20 |
|
|
131,250 |
|
|
|
(46,027 |
) |
|
|
85,223 |
|
|
|
7,364 |
|
Noteholder
#6 |
|
02/04/19 |
|
02/04/20 |
|
|
265,000 |
|
|
|
(92,205 |
) |
|
|
172,795 |
|
|
|
13,824 |
|
Noteholder
#6 |
|
03/15/19 |
|
03/15/20 |
|
|
70,913 |
|
|
|
- |
|
|
|
70,913 |
|
|
|
3,093 |
|
Noteholder
#6 |
|
08/08/19 |
|
08/08/20 |
|
|
33,092 |
|
|
|
(10,291 |
) |
|
|
22,801 |
|
|
|
384 |
|
Noteholder
#7 |
|
12/27/18 |
|
12/27/19 |
|
|
105,000 |
|
|
|
(25,603 |
) |
|
|
79,397 |
|
|
|
18,204 |
|
Noteholder
#7 |
|
02/05/19 |
|
02/05/20 |
|
|
131,250 |
|
|
|
(48,185 |
) |
|
|
83,065 |
|
|
|
6,616 |
|
Noteholder
#7 |
|
03/15/19 |
|
03/15/20 |
|
|
70,913 |
|
|
|
- |
|
|
|
70,913 |
|
|
|
3,093 |
|
Noteholder
#7 |
|
08/08/19 |
|
08/08/20 |
|
|
33,092 |
|
|
|
(10,291 |
) |
|
|
22,801 |
|
|
|
384 |
|
Noteholder
#8 |
|
02/08/19 |
|
02/08/20 |
|
|
783,724 |
|
|
|
(208,357 |
) |
|
|
575,367 |
|
|
|
89,627 |
|
Noteholder
#9 |
|
03/15/19 |
|
03/15/20 |
|
|
70,913 |
|
|
|
- |
|
|
|
70,913 |
|
|
|
3,093 |
|
Noteholder
#10 |
|
03/15/19 |
|
03/15/20 |
|
|
70,913 |
|
|
|
- |
|
|
|
70,913 |
|
|
|
3,093 |
|
Noteholder
#11 |
|
08/29/19 |
|
05/29/20 |
|
|
100,000 |
|
|
|
(150,146 |
) |
|
|
(50,146 |
) |
|
|
964 |
|
Noteholder
#11 |
|
08/30/19 |
|
05/30/20 |
|
|
110,000 |
|
|
|
(97,555 |
) |
|
|
12,445 |
|
|
|
747 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
4,412,090 |
|
|
$ |
(716,714 |
) |
|
$ |
3,695,376 |
|
|
$ |
326,145 |
|
Noteholder #1
On
April 24, 2018, the Company entered into a convertible note payable
totaling $500,000 in exchange for 100% of the assets of Leaf
Detective LLC. The note bears no interest, matures on April 24,
2019, and automatically converted to common stock at $1.25 per
share on the maturity date. In the event the average lowest trading
price of the Company’s common stock during the five days prior to
maturity is less than $1.25 per share, the Company will pay the
noteholder the difference between $1.25 and the average lowest
trading price during the preceding five days per share converted in
cash. On or about April 30, 2020, Michele Malaret and Gordon
Griswold filed, filed a breach of contract in the original
principal amount of $500,000, with the Superior Court of
California, County of Humboldt. The Company currently recognizes
the full liability on its balance sheet. There is no interest due
associated with the note.
Noteholder #2
On
July 2, 2018, the Company sold and issued a convertible promissory
note to an unrelated party for the principal amount of $220,000 of
which $20,000 was an original issue discount resulting in cash
proceeds to the Company of $200,000 pursuant to the terms of a
securities purchase agreement. The note, together with accrued
interest at the annual rate of 8%, was due on October 1, 2018. The
principal amount of the note and any accrued interest thereon are
convertible at the option of the holder into common shares of the
Company at any time at a conversion price of $0.60 per share. This
note was replaced on July 1, 2019.
On
September 13, 2018, the Company entered into an exchange agreement
with an unrelated party for the principal amount $585,000, of which
the loan payable to Palliatech, dated August 1, 2017, outstanding
and principal of $549,652 would be assumed by the new note holder,
with the difference of $35,348 to be treated as an original issue
discount. The new convertible note payable carries an interest rate
of 0% per annum is convertible into common stock of the Company at
the option of the noteholder immediately at 80% of the lowest
volume-weighted average price of the Company’s common stock in the
preceding 20 trading days. This note was replaced on July 1,
2019.
On
July 1, 2019, the two previous notes were replaced for the
aggregate principal amount of $825,890. This included a default
penalty of $150,000 for non-payment of the prior two notes. The
note, together with accrued interest at the annual rate of 8%, is
due on September 30, 2019. The note is convertible into common
stock of the Company at the option of the noteholder at a rate
equal to a 35% discount from the lowest trading price of the
Company’s common stock in the preceding 15 trading days. There was
$675,930 of principal and $47,672 of accrued interest on March 31,
2020.
Noteholder #3
On
August 1, 2018, the Company sold and issued a convertible
promissory note to an unrelated party for the principal amount of
$330,000 of which $30,000 was an original issue discount resulting
in cash proceeds to the Company of $300,000 pursuant to the terms
of a securities purchase agreement. The note, together with accrued
interest at the annual rate of 8%, was due on October 1, 2018. The
principal amount of the note and any accrued interest thereon are
convertible at the option of the holder into common shares of the
Company at any time the lower of a conversion price of $0.50 per
share or at a rate equal to a 35% discount from the lowest trading
price of the Company’s common stock in the preceding 15 trading
days. On September 30, 2019, a fee for payment default of $66,000
was added to the principal. There was $396,000 of principal and
$92,355 of accrued interest due on March 31, 2020.