AMERICANN, INC. Total Revenues
During the year ended
Advertising and Marketing Expenses
Advertising and marketing expenses were
Professional Fees
Professional fees were
General and Administrative Expenses
General and administrative expenses were
Provision for Doubtful Accounts
Provision for doubtful accounts was
Interest Income
Interest income was
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Interest Expense
Interest expense was
Loss on extinguishment of debt
On
Net Loss
We had a net loss of
LIQUIDITY AND CAPITAL RESOURCES
Loans
On
The note holder also received a warrant which allows the holder to purchase
600,000 shares of the Company's common stock at a price of
On
During the year ended
The note holders also received warrants which entitle the note holders to
purchase up to 1,940,000 shares of our common stock. The warrants are
exercisable at a price of
We borrowed a total of
Sale of Common Stock and Warrants
On
During
During the year ended
During the year ended
During the year ended
During the year ended
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Equity line agreement
On
The equity line agreement terminated in
During the year ended
During the year ended
Contractual obligations
The Company leases land under an operating lease commencing
AtSeptember 30, 2019 , the future rental payments required under operating lease are as follows: Fiscal year 2020$ 341,496 2021 341,496 2022 341,496 2023 341,496 2024 341,496 Thereafter 14,343,032 Total$ 16,050,512 Analysis of Cash Flows
During the year ended
Cash flows used in investing activities were
Cash flows provided by financing activities were
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Going concern
The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern, which contemplates, among other
things, the realization of assets and satisfaction of liabilities in the normal
course of business. The Company had an accumulated deficit of
Management believes that the actions presently being taken to further implement its business plan and generate additional revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to generate additional revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company's ability to further implement its business plan and generate additional revenues. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Trends
The factors that will most significantly affect our future operating results, liquidity and capital resources will be:
? Government regulation of the marijuana industry;
? Revision of Federal banking regulations for the marijuana industry; and
? Legalization of the use of marijuana for medical or recreational use in other
states.
Other than the foregoing, we do not know of any trends, events or uncertainties that have had, or are reasonably expected to have, a material impact on:
? revenues or expenses; ? any material increase or decrease in liquidity; or ? expected sources and uses of cash.
RECENT ACCOUNTING PRONOUNCEMENTS
Recent accounting pronouncements which may be applicable to us are described in Note 1 to the Consolidated Financial Statements included as part of this report.
SIGNIFICANT ACCOUNTING POLICIES
Our significant accounting policies are set forth below. We have consistently applied these policies in all material respects. We do not believe that our operations to date have involved uncertainty of accounting treatment, subjective judgment, or estimates, to any significant degree, except as it pertains to our provision for doubtful accounts associated with amounts due from WGP described in the Notes to the Consolidated Financial Statements.
Use of Estimates
The preparation of consolidated financial statements in conformity with
Cash and Cash Equivalents
Cash and cash equivalents includes cash on hand, demand deposit accounts and temporary cash investments with maturities of ninety days or less at the date of purchase.
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Income Taxes
In accordance with ASC Topic 740 - Income Taxes, the provision for income taxes is computed using the asset and liability method. The liability method measures deferred income taxes by applying enacted statutory rates in effect at the consolidated balance sheet date to the differences between the tax basis of assets and liabilities and their reported amounts on the consolidated financial statements. The resulting deferred tax assets or liabilities have been adjusted to reflect changes in tax laws as they occur. A valuation allowance is provided when it is more likely than not that a deferred tax asset will not be realized.
We expect to recognize the financial statement benefit of an uncertain tax
position only after considering the probability that a tax authority would
sustain the position in an examination. For tax positions meeting a
"more-likely-than-not" threshold, the amount to be recognized in the
consolidated financial statements will be the benefit expected to be realized
upon settlement with the tax authority. For tax positions not meeting the
threshold, no financial statement benefit is recognized. As of
For federal tax purposes, our 2017 through 2019 tax years remain open for examination by the tax authorities under the normal three-year statute of limitations.
Concentration of Credit Risks and Significant Customers
Financial instruments that potentially subject us to concentrations of credit
risk consist principally of cash, notes receivables, deposits, tenant
receivables and notes receivable. We place our cash with high credit quality
financial institutions. As of
Financial Instruments and Fair Value of Financial Instruments
We adopted ASC Topic 820, Fair Value Measurements and Disclosures, for assets and liabilities measured at fair value on a recurring basis. ASC Topic 820 establishes a common definition for fair value to be applied to existing US GAAP that requires the use of fair value measurements that establishes a framework for measuring fair value and expands disclosure about such fair value measurements.
ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC Topic 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:
Level 1: Observable inputs such as quoted market prices in active markets for
identical assets or liabilities
Level 2: Observable market-based inputs or unobservable inputs that are
corroborated by market data
Level 3: Unobservable inputs for which there is little or no market data, which
require the use of the reporting entity's own assumptions.
The carrying value of financial assets and liabilities recorded at fair value is measured on a recurring or nonrecurring basis. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. We had no financial assets or liabilities carried and measured on a nonrecurring basis during the reporting periods. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. We had no financial assets or liabilities carried and measured on a recurring basis during the reporting periods. The carrying value of short-term financial instruments, including cash, tenant and note receivable, accounts payable and accrued expenses, and short-term borrowings approximate fair value due to the relatively short period to maturity for these instruments. The long-term borrowings approximate fair value since the related rates of interest approximates current market rates.
Derivative Liabilities
We evaluate stock options, stock warrants or other contracts to determine if
those contracts or embedded components of those contracts qualify as derivatives
to be separately accounted for under the relevant sections of ASC Topic 815-40,
Derivative Instruments and Hedging: Contracts in Entity's Own Equity. The result
of this accounting treatment could be that the fair value of a financial
instrument is classified as a derivative instrument and is marked-to-market at
each consolidated balance sheet date and recorded as a liability. In the event
that the fair value is recorded as a liability, the change in fair value is
recorded in the consolidated statement of operations as other income or other
expense. Upon conversion or exercise of a derivative instrument, the instrument
is marked to fair value at the conversion date and then that fair value is
reclassified to equity. Financial instruments that are initially classified as
equity that become subject to reclassification under ASC Topic 815-40 are
reclassified to a liability account at the fair value of the instrument on the
reclassification date. We determined that none of our financial instruments meet
the criteria for derivative accounting as of
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Long-Lived Assets
Our long-lived assets consisted of property, equipment and real estate and are
reviewed for impairment in accordance with the guidance of the Topic ASC Topic
360, Property, Plant, and Equipment, and ASC Topic 205, Presentation of
Consolidated Financial Statements. We test for impairment losses on long-lived
assets used in operations whenever events or changes in circumstances indicate
that the carrying amount of the asset may not be recoverable. Recoverability of
an asset to be held and used is measured by a comparison of the carrying amount
of an asset to the future undiscounted cash flows expected to be generated by
the asset. If such asset is considered to be impaired, the impairment to be
recognized is measured by the amount by which the carrying amount of the asset
exceeds its fair value. Impairment evaluations involve management's estimates on
asset useful lives and future cash flows. Actual useful lives and cash flows
could be different from those estimated by management which could have a
material effect on our reporting results and financial positions. Fair value is
determined through various valuation techniques including discounted cash flow
models, quoted market values and third-party independent appraisals, as
considered necessary. There were no impairment losses recognized for the years
ended
Property and Equipment
Property and equipment are stated at cost. Depreciation of property and equipment begins in the month following the month when the asset is placed into service and is provided using the straight-line method for financial reporting purposes at rates based on the estimated useful lives of the assets. Estimated useful lives range from three to twenty years. Land is classified as held for sale when management has the ability and intent to sell, in accordance with ASC Topic 360-45.
Construction in progress (CIP)
CIP consists of initial costs associated with construction of manufacturing
facilities, including material, equipment and interest expenses. When CIP is
finished the assets are transferred to property and equipment. No provision for
depreciation is made on CIP until such time that the relevant assets are
available and ready to use. During the year ended
Capitalized Interest
The Company capitalizes interest to construction in progress made in connection
with facility construction that are not subject to current depreciation.
Interest is capitalized only for the period that activities are in progress to
bring the projects to their intended use. Capitalized interest was $$0 and
Equity Instruments Issued to Non-Employees for Acquiring Goods or Services
Issuances of our common stock or warrants for acquiring goods or services are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The measurement date for the fair value of the equity instruments issued to consultants or vendors is determined at the earlier of (i) the date at which a commitment for performance to earn the equity instruments is reached (a "performance commitment" which would include a penalty considered to be of a magnitude that is a sufficiently large disincentive for nonperformance) or (ii) the date at which performance is complete.
Although situations may arise in which counter performance may be required over a period of time, the equity award granted to the party performing the service is fully vested and non-forfeitable on the date of the agreement. As a result, in this situation in which vesting periods do not exist if the instrument is fully vested on the date of agreement, we determine such date to be the measurement date and will record the estimated fair market value of the instruments granted as a prepaid expense and amortize such amount to general and administrative expense in the accompanying consolidated statement of operations over the contract period. When it is appropriate for us to recognize the cost of a transaction during financial reporting periods prior to the measurement date, for purposes of recognition of costs during those periods, the equity instrument is measured at the then-current fair values at each of those interim financial reporting dates.
Non-Cash Equity Transactions
Shares of equity instruments issued for noncash consideration are recorded at the estimated fair market value of the consideration granted based on the estimated fair market value of the equity instrument, or at the estimated fair market value of the goods or services received, whichever is more readily determinable.
Stock-Based Compensation
We account for share-based awards to employees in accordance with ASC Topic 718, Stock Compensation. Under this guidance, stock compensation expense is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the estimated service period (generally the vesting period) on the straight-line attribute method. Share-based awards to non-employees are accounted for in accordance with ASC Topic 505-50, Equity, wherein such awards are expensed over the period in which the related services are rendered.
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Related Parties
A party is considered to be related to us if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with us. Related parties also include our principal owners, our management, members of the immediate families of our principal owners and our management and other parties with which we may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties, or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests, is also a related party.
Revenue Recognition
Effective
Property lease revenue is earned through annual leases for facilities used in
agricultural/manufacturing activities and the Company records revenues on a
straight-line basis over the term of these leases. Property lease revenues from
these sources are recurring on an annual basis. Unearned property lease
revenues were
Advertising Expense
Advertising, promotional and selling expenses consisted of sales and marketing expenses, and promotional activity expenses. Expenses are recognized when incurred.
General and Administrative Expense
General and administrative expenses consisted of professional service fees, rent and utility expenses, meals, travel and entertainment expenses, and other general and administrative overhead costs. Expenses are recognized when incurred.
Loss per Share
We compute net loss per share in accordance with the ASC Topic 260. The ASC specifies the computation, presentation and disclosure requirements for loss per share for entities with publicly held common stock.
Basic loss per share amounts is computed by dividing the net loss by the weighted average number of common shares outstanding. Shares issuable upon the exercise of equity instruments such as warrants and options were not included in the loss per share calculations because the inclusion would have been anti-dilutive.
OFF-BALANCE SHEET ARRANGEMENTS
As of
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