Annual report pursuant to Section 13 and 15(d)

CONSOLIDATED STATEMENTS OF CASH FLOWS

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
 12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
OPERATING ACTIVITIES    
Net loss $ (4,897,139) $ (14,141,298)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:    
Depreciation and amortization 182,795 1,052,567
Amortization of debt issuance costs 220,497 289,014
Amortization of derivative liability discount 29,301 408,392
Common stock issued for professional services 0 541,126
Stock-based compensation 3,419,799 2,732,908
Stock-based royalty buy-out 2,432,000 0
Bad debt expense 483,407 59,143
Deferred tax liability (481,500) 0
Change in accrued interest payable included in convertible note payable 189,173 128,311
Fair value of warrant expense incurred on extinguishment of note payable 136,650 0
Loss on sale of fixed assets 12,269 8,554
Gain on collection of related party notes receivable 0 (379,486)
Gain on change in derivative liability (248,875) (147,200)
Impairment of inventory 0 3,562,459
Impairment of PhytoSPHERE goodwill and intangible assets 0 2,746,512
Change in operating assets and liabilities:    
Accounts receivable (1,241,033) 70,429
Note receivable (25,000) 0
Inventory 1,042,813 1,309,074
Prepaid expenses and other current assets (400,961) 61,083
Accounts payable and accrued expenses 1,780,167 (355,328)
Deferred rent 980,641 0
Net cash provided by (used in) operating activities 3,615,004 (2,053,740)
INVESTING ACTIVITIES    
Proceeds from collection of related party notes receivable 0 859,486
Proceeds from sale of fixed assets 0 10,399
Purchase of equipment (454,510) (17,207)
Tenant improvements to leasehold real estate (1,545,885) 0
Net cash flows provided by (used in) investing activities (2,000,395) 852,678
FINANCING ACTIVITIES    
Borrowing from issuance of unsecured note payable, net of costs 0 801,430
Borrowing from convertible debt, net of costs 750,000 1,975,000
Payment of contingent consideration 0 (250,000)
Repayment of convertible debt in cash (471,895) 0
Repayment of convertible debt 0 (612,000)
Repayment of unsecured notes payable (158,638) (174,362)
Net cash flows provided by financing activities 119,467 1,740,068
Net increase in cash and restricted cash 1,734,076 539,006
Cash and restricted cash, beginning of period 1,057,468 518,462
Cash and restricted cash, end of period 2,791,544 1,057,468
Supplements disclosure of non-cash transactions:    
Conversion of convertible promissory notes and accrued interest to common stock 1,805,000 583,000
Value of warrants issued with unsecured promissory note 0 266,800
Value of embedded derivative at inception 29,300 370,000
Equity consideration for royalty buy-out 1,500 0
Accrual for required stock redemptions 75,000 75,000
Issuance of common stock to settle restricted stock units 200 0
Shares issued in exchange for purchase of inventory 202,000 0
Purchase of insurance through issuance of note payable 149,044 161,351
Inventory returned in satisfaction of note receivable 0 68,112
Contingent equity consideration issued to CanX 0 450
Shares cancelled upon foreclosure of notes receivable 0 60,351
Supplemental cash flow disclosures:    
Interest paid 182,722 338,003
Taxes paid $ 44,134 $ 21,583