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, 2016
Dec. 31, 2015
OPERATING ACTIVITIES    
Net loss $ (14,141,298) $ (12,233,128)
Adjustments to reconcile net loss to net cash flows used in operating activities:    
Depreciation and amortization 1,052,567 1,012,335
Amortization of debt issuance costs 289,014 264,699
Amortization of beneficial conversion feature of convertible debts 0 574,108
Amortization of derivative liability discount 408,392 0
Common stock issued for professional services 541,126 328,402
Stock-based compensation 2,732,908 5,719,791
Note receivable issued on litigation settlement 0 (600,000)
Bad debt expense 59,143 2,654,836
Accrued interest payable 128,311 0
Loss on sale of fixed assets 8,554 0
Gain on collection of related party notes receivable (379,486) 0
Gain on change in derivative liability (147,200) 0
Impairment of inventory 3,562,459 0
Impairment of PhytoSPHERE goodwill and intangible assets 2,746,512 0
Change in operating assets and liabilities:    
Accounts receivable 70,429 (588,145)
Prepaid inventory 0 519,620
Inventory 1,309,074 (2,467,669)
Prepaid expenses and other current assets 61,083 75,977
Accounts payable and accrued expenses (355,328) 530,907
Net cash used in operating activities (2,053,740) (4,208,267)
INVESTING ACTIVITIES    
Proceeds from collection of related party notes receivable 859,486 0
Proceeds from sale of fixed assets 10,399 0
Cash paid on CanX acquisition 0 (250,000)
Purchase of equipment (17,207) (113,527)
Issuance of note receivable 0 (2,002,910)
Repayment of notes receivable 0 623,677
Net cash flows provided by (used in) investing activities 852,678 (1,742,760)
FINANCING ACTIVITIES    
Common stock issued for cash 0 2,520,000
Issuance of note payable from vendor 0 178,054
Borrowing from issuance of unsecured note payable, net of costs 801,430 0
Borrowing from convertible debt, net of costs 1,975,000 1,508,096
Payment of contingent consideration (250,000) 0
Repayment of convertible debt (612,000) 0
Repayment of unsecured notes payable (174,362) (39,079)
Net cash flows provided by financing activities 1,740,068 4,167,071
Net increase (decrease) in cash and restricted cash 539,006 (1,783,956)
Cash and restricted cash, beginning of period 518,462 2,302,418
Cash and restricted cash, end of period 1,057,468 518,462
Supplemental disclosures of non-cash transactions:    
Conversion of convertible promissory notes and accrued interest to common stock 583,000 765,000
Value of warrants issued with unsecured promissory note 266,800 0
Value of embedded derivative at inception 370,000 0
Beneficial conversion feature on convertible debts 0 (612,500)
Inventory returned in satisfaction of note receivable 68,112 0
Contingent equity consideration issued to CanX 450 0
Shares cancelled upon foreclosure of notes receivable 60,351 0
Accrual for required stock redemption 75,000 0
Purchase of insurance through issuance of note payable 161,351 0
Goodwill acquired in CanX acquisition 0 2,538,300
Intangible asset acquired in CanX acquisition 0 3,907,000
Contingent consideration on CanX acquisition 0 (3,739,000)
Common shares issued on CanX acquisition 0 (1,150,000)
Deferred tax liability on CanX acquisition 0 (1,556,300)
Common stock received in exchange for payment on notes receivable 0 241,889
Common stock issued for accrued interest 0 (13,373)
Common stock issued for services 0 (87,600)
Supplemental cash flow disclosures:    
Interest paid 338,003 0
Income taxes paid $ 21,583 $ 0