|9 Months Ended|
Sep. 30, 2018
|Debt Disclosure [Abstract]|
NOTE 7 – DEBT
During the nine months ended September 30, 2018, the Company received additional capital of approximately $1,998,000 from the existing mortgage on the cannabis cultivation and processing facility it is currently developing in the state of Massachusetts.
In September 2018, the Company raised $3,000,000 from the issuance of a secured promissory note bearing interest at the rate of 10% per annum, with interest payable monthly. The note is due and payable in September 2019, however the Company may elect to prepay the note in whole or part at any time after December 17, 2018 without premium or penalty. In addition, the Company issued three-year warrants to lender designees to purchase 750,000 shares of common stock at an exercise price of $1.80 per share.
During the nine months ended September 30, 2017, the Company raised $3,650,000 from the issuance of promissory notes, each with an interest rate of 10% per annum and an initial term of 6 months with the ability to extend.
In August 2018, the holder of previously issued promissory notes with principal balances of $3,250,000 converted such promissory notes into subscriptions on 1,231,060 shares of common stock at a conversion price equal to the market value of the stock on the conversion date of $2.64 per share.
During the nine months ended September 30, 2018, holders of previously issued promissory notes with principal balances of $5,175,000 and accrued and unpaid interest of approximately $93,000 converted such promissory notes into 4,018,534 shares of common stock at conversion prices ranging from $0.65 to $1.75 per share. The conversions resulted in the recording of non-cash losses of approximately $3,210,000 in the aggregate, based on the market value of the common stock on the conversion dates.
During the nine months ended September 30, 2017, the Company issued 4,385,823 shares of common stock to retire promissory notes with principal balances of $2,050,000 plus approximately $262,000 of accrued and unpaid interest. The Company recorded a non-cash loss of approximately $451,000 based on the fair value of the common stock on the transaction date. These former noteholders also received warrants to purchase 863,898 shares of common stock. The fair value of these warrants recorded by the Company on the grant date approximated $257,000.
During the nine months ended September 30, 2018, the Company repaid $700,000 of promissory notes. No repayments debt occurred during the same period in 2017.
The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef