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RELATED PARTY TRANSACTIONS | 9 Months Ended
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Sep. 30, 2021
Related Party Transactions [Abstract] |
RELATED PARTY TRANSACTIONS | NOTE 3 – RELATED PARTY TRANSACTIONS Cloud 9 Support, LLC (“Cloud 9”), a company owned by James Lowe, a director and shareholder, purchases materials from the Company. Total sales to Cloud 9 from the Company were $99,556 and $359,562 for the nine months ended September 30, 2021, and 2020, respectively, and $5,349 and $112,405 during the three months ended September 30, 2021 and 2020, respectively. Outstanding receivables from Cloud 9 as of September 30, 2021 and December 31, 2020 totaled $10,975 and $61,678, respectively. In October 2018, we issued a $1,000,000 unsecured note payable to Cloud 9, which originally became due April 30, 2019 (the “Cloud 9 Note”). The Cloud 9 Note was personally guaranteed by Bradley Nattrass, our Chief Executive Officer, and Octavio Gutierrez, a co-founder of the Company. The Cloud 9 Note had a one-time origination fee of $12,500. Interest accrued at the rate of 12% per annum and was paid monthly. As additional consideration for the Cloud 9 Note, we granted Mr. Lowe (as designee of Cloud 9) an option to purchase 5,000 shares of our common stock at an exercise price of $7.20 per share, which option is exercisable for a period of five years. The due date for the Cloud 9 Note was extended in May 2019 to December 31, 2019 and the interest rate was decreased to 9% per year. In consideration for Cloud 9 extending the maturity date of the note and reducing the interest rate, we issued 1,667 shares of our common stock to Mr. Lowe (as designee of Cloud 9). On February 21, 2020, we entered into an agreement to amend the Cloud 9 Note to extend the maturity date therein from December 31, 2019 to the date which is the earlier of 60 days following the date: (a) on which demand for repayment is made by the lenders under the Credit Agreement, as described in Note 9; or (b) the maturity date under the Credit Agreement. In addition, on February 25, 2020, the Company entered into a subordination, postponement and standstill agreement with Cloud 9 (the “Subordination Agreement”) pursuant to which Cloud 9 agreed to postpone and subordinate all payments due under the promissory note until the facilities under the Credit Agreement have been fully and finally repaid. The term for the Subordination Agreement continued in force as long as the Company was indebted to the agent or lenders under the Credit Agreement. In consideration for Cloud 9’s agreement to extend the maturity date of the promissory note and to enter into the Subordination Agreement, we issued 16,667 shares of common stock to Mr. Lowe (as designee of Cloud 9). On December 15, 2020, Mr. Lowe agreed to convert the $1,000,000 Cloud 9 Note plus $4,500 of accrued interest into a convertible note bridge financing (the “James Lowe Note”) (see “Bridge Financing” in Note 8 – Notes Payable). The James Lowe Note carried interest at the rate of 12% and a maturity date of December 31, 2021. The James Lowe Note plus accrued interest was mandatorily converted into 137,940 shares of our common stock on February 17, 2021 in connection with the other Bridge Financing notes. The Company follows ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions. In accordance with ASC 850, the Company’s combined financial statements include disclosures of material related party transactions, other than compensation arrangements, expense reimbursements, and other similar items in the ordinary course of business, as well as transactions that are eliminated in the preparation of the combined financial statements.

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- Definition The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 1 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 1 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 1 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -URI http://asc.fasb.org/topic&trid=2122745 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39691-107864 + Details
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