10-Q 1 form10-q.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2017

 

Commission File Number: 333-189731

 

DIEGO PELLICER WORLDWIDE, INC.

(Name of registrant as specified in its charter)

 

Delaware   33-1223037
(State or other jurisdiction of   (I.R.S. Employer
incorporation or organization)   Identification No.)

 

9030 Seward Park Ave, S, #501, Seattle, WA 98118

(Address of principal executive offices) (Zip Code)

 

(516) 900-3799

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [  ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

  Large accelerated Filer [  ] Accelerated Filer [  ]
  Non-accelerated Filer [  ] Small Reporting Company [X]
  (Do not check if smaller reporting company) Emerging Growth Company [  ]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

 

As of November 6, 2017 there were 60,737,336 shares of common stock issued and outstanding.

 

 

 

   

 

 

TABLE OF CONTENTS

 

    Page
     
  PART I – FINANCIAL INFORMATION  
     
Item 1. Financial Statements 4
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 17
Item 3. Quantitative and Qualitative Disclosures About Market Risk 21
Item 4. Controls and Procedures 21
     
  PART II – OTHER INFORMATION  
     
Item 1. Legal Proceedings 22
Item 1A. Risk Factors 22
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 22
Item 3. Defaults Upon Senior Securities 22
Item 4. Mine Safety Disclosures 22
Item 5. Other Information 22
Item 6. Exhibits 22

 

 2 

 

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q (this “Report”) contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “expect,” “predict,” “project,” “forecast,” “potential,” “continue” negatives thereof or similar expressions. Forward-looking statements speak only as of the date they are made, are based on various underlying assumptions and current expectations about the future and are not guarantees. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievement to be materially different from the results of operations or plans expressed or implied by such forward-looking statements.

 

We cannot predict all of the risks and uncertainties. Accordingly, such information should not be regarded as representations that the results or conditions described in such statements or that our objectives and plans will be achieved and we do not assume any responsibility for the accuracy or completeness of any of these forward-looking statements. These forward-looking statements are found at various places throughout this Report and include information concerning possible or assumed future results of our operations, including statements about potential acquisition or merger targets; business strategies; future cash flows; financing plans; plans and objectives of management; any other statements regarding future acquisitions, future cash needs, future operations, business plans and future financial results, and any other statements that are not historical facts.

 

These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Report. All subsequent written and oral forward-looking statements concerning other matters addressed in this Report and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Report.

 

Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.

 

 3 

 

 


PART I – FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS.

 

DIEGO PELLICER WORLDWIDE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

   September 30, 2017   December 31, 2016 
    (Unaudited)      
Assets          
           
Current assets:          
Cash and cash equivalents  $107,462   $51,333 
Accounts receivable   25,355    - 
Prepaid expenses   78,746    482,765 
Inventory   29,975    47,025 
Deferred rent receivable   20,867    - 
Total current assets   262,405    581,123 
Property and equipment net   517,838    758,112 
Investments at cost   -    43,333 
Security deposits   320,000    320,000 
           
Total assets  $1,100,243   $1,702,568 
           
Liabilities and deficiency in stockholders’ equity          
           
Current liabilities:          
Accounts payable  $495,619   $823,797 
Accrued payable - related party   743,166    509,294 
Accrued expenses   186,499    1,207,803 
Notes payable - related party   307,312    307,312 
Notes payable   126,000    1,310,678 
Convertible notes, net of discount   369,162    334,156 
Deferred rent   77,182    107,957 
Deferred revenue   53,000    53,000 
Derivative liabilities   4,767,377    338,282 
Warrant liabilities   379,084    - 
           
Total current liabilities   7,504,401    4,992,279 
           
Deferred revenue   275,500    316,000 
           
Total liabilities   7,779,901    5,308,279 
           
Deficiency in stockholders’ equity:          
           
Preferred stock, Series A and B, par value $.0001 per share; 5,000,000 shares authorized, none issued and outstanding   -    - 
Common stock, par value $.000001 per share; 95,000,000 shares authorized, 57,008,298 and 49,081,878 shares outstanding as of September 30, 2017 and December 31, 2016, respectively,    57    49 
Additional paid-in capital   26,791,545    24,508,365 
Stock to be issued   6,986,424    - 
Accumulated deficit   (40,457,684)   (28,114,125)
           
Total deficiency in stockholders’ equity   (6,679,658)   (3,605,711)
           
Total liabilities and deficiency in stockholders’ equity  $1,100,243   $1,702,568 

 

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

 

 4 

 

 

DIEGO PELLICER WORLDWIDE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

   Three Months Ended   Three Months Ended   Nine Months Ended   Nine Months Ended 
   September 30, 2017   September 30, 2016   September 30, 2017   September 30, 2016 
                 
REVENUES                    
Net Rental Revenue  $297,428   $90,334   $1,152,425   $313,202 
Rental Expense   (191,556)   (257,599)   (828,677)   (831,262)
Gross Profit   105,872    (167,265)   323,748    (518,060)
                     
Operating expenses:                    
General and administrative expenses   

871,217

    738,532    

3,439,038

    4,081,460 
Selling Expense   37,855    5,009    71,744    5,009 
Depreciation Expense   108,710    -    348,209    - 
Income (Loss) from Operations   

(911,910

)   (910,806)   

(3,535,243

)   (4,604,529)
                     
Other Income (Expense)                    
Licensing Revenue   13,500    13,500    40,500    40,500 
Other Income (Expense)   5,978         51,808      
Interest Expense   (1,230,865)   (111,254)   (1,965,863)   (216,910)
Impairment Loss   -    (727,224)   (82,478)   (727,224)
Extinguishment of Debt   1,450,856         (4,156,980)     
Change in Derivative Liabilities   (3,310,838)   (136,485)   (2,316,219)   (30,149)
Change in Value of Warrants   (67,868)        (379,084)     
Total Other Income (Loss)   (3,139,237)   (961,463)   (8,808,316)   (933,783)
                     
Provision for taxes                    
NET INCOME (LOSS)  $

(4,051,147

)  $(1,872,269)  $

(12,343,559

)  $(5,538,312)
                     
Loss per share - basic and diluted   

(0.07

)   $(0.04)   

(0.24

)   $(0.14)
                     
Weighted average common shares outstanding - basic and diluted   54,208,198     43,505,355    51,483,444    40,891,947 

 

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

 

 5 

 

 

DIEGO PELLICER WORLDWIDE, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW

(Unaudited)

 

   Nine Months Ended   Nine Months Ended 
   September 30, 2017   September 30, 2016 
Cash flows from operating activities:          
Net loss  $(12,343,559)  $(5,538,312)
Adjustments to reconcile net loss to net cash used in operating activities:                
Depreciation   348,208    - 
Impairment   82,478    727,224 
Change in fair value of derivative liability   2,316,219    30,149 
Change in value of warrants   379,084    - 
Amortization of discount   1,289,247    58,850 
Extinguishment of debt   4,156,980    - 
Stock based compensation   2,094,733    2,662,704 
Changes in operating assets and liabilities:          
Accounts receivable   (25,355)   (151,872)
Inventory   17,049    (8,096)
Other receivable   -    (33,302)
Prepaid expenses   404,019    108,191 
Deferred rent receivable   (20,867)   - 
Other assets   -    3,000 
Accounts payable   (350,256)   583,511 
Accrued liability - related parties   373,877    234,078 
Accrued expenses   381,097    440,835 
Liabilities for equity shares to be issued   -    350,000 
Deferred rent   (30,775)   (71,018)
Deferred revenue   (40,500)   (40,500)
           
Cash used in operating activities   (968,321)   (644,558)
           
Cash flows from investing activities:          
Purchase of property and equipment   (125,000)   (412,090)
           
Cash used in investing activities   (125,000)   (412,090)
           
Cash flows from financing activities:          
Proceeds from note payable   -    470,000 
Proceeds from convertible notes payable   1,278,500    50,000 
Repayments of notes payable   (129,050)   - 
Proceeds from sale of common stock   -    530,491 
           
Cash provided by financing activities   1,149,450    1,050,491 
           
Net increase (decrease) in cash   56,129    (6,157)
Cash, beginning of period   51,333    36,001 
Cash, end of period  $107,462   $29,844 
           
Cash paid for interest  $-   $- 
Cash paid for taxes  $-   $- 
           
Supplemental schedule of noncash financial activities:          
Stock issued for debt settlement  $50,000   $- 
Notes converted to stock   3,031,843    - 
Accrued interest converted to stock   122,311    - 
Value of common stock to be issued for conversion of notes and accrued interest   6,655,028    - 
Value of derivative liability extinguished upon conversion of notes and accrued interest   5,509,516    - 

 

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

 

 6 

 

 

Diego Pellicer Worldwide, Inc.

September 30, 2017 and 2016

Notes to the Consolidated Financial Statements

 

Note 1 – Organization and Operations

 

The Company leases real estate to licensed marijuana operators providing complete turnkey growing space, processing space, recreational and medical retail sales space and related facilities to licensed marijuana growers, processors, dispensary and recreational store operators. Additionally, the Company plans to explore ancillary opportunities in the regulated marijuana industry as well as offering for wholesale distribution branded non-marijuana clothing and accessories.

 

Until Federal law allows, the Company will not grow, harvest, process, distribute or sell marijuana or any other substances that violate the laws of the United States of America or any other country.

 

Note 2 – Significant Accounting Policies and Practices

 

The management of the Company is responsible for the selection and use of appropriate accounting policies and the appropriateness of accounting policies and their application. Critical accounting policies and practices are those that are both most important to the portrayal of the Company’s financial condition and results and require management’s most difficult, subjective, or complex judgments, often because of the need to make estimates about the effects of matters that are inherently uncertain. The Company’s significant and critical accounting policies and practices are disclosed below as required by generally accepted accounting principles.

 

Basis of Presentation

 

The accompanying condensed consolidated financial statements of Diego Pellicer Worldwide, Inc. were prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all disclosures required for financial statements prepared in conformity with U.S. GAAP.

 

This Form 10-Q relates to the three months and nine months ended September 30, 2017 (the “Current Quarter”) and the three months and nine months ended September 30, 2016 (the “Prior Quarter”). The Company’s annual report on Form 10-K for the year ended December 31, 2016 (“2016 Form 10-K”) includes certain definitions and a summary of significant accounting policies and should be read in conjunction with this Form 10-Q. All material adjustments which, in the opinion of management, are necessary for a fair statement of the results for the interim periods have been reflected. The results for the current quarter are not necessarily indicative of the results to be expected for the full year.

 

 7 

 

 

New accounting pronouncements

 

In February 2016, the FASB issued guidance that requires a lessee to recognize assets and liabilities arising from leases on the balance sheet. Previous GAAP did not require lease assets and liabilities to be recognized for most leases. Additionally, companies are permitted to make an accounting policy election not to recognize lease assets and liabilities for leases with a term of 12 months or less. For both finance leases and operating leases, the lease liability should be initially measured at the present value of the remaining contractual lease payments. The recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee will not significantly change under this new guidance. This new guidance is effective for the company as of the first quarter of fiscal year 2020. The Company is evaluating the effect that this ASU will have on its financial statements and related disclosures.

 

 8 

 

 

In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 clarifies the presentation and classification of certain cash receipts and cash payments in the statement of cash flows. This ASU is effective for public business entities for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted. The Company is currently assessing the potential impact of ASU 2016-15 on its financial statements and related disclosures.

 

In April 2016 the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606). The core principle of Topic 606 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services This ASU is effective for public business entities for fiscal years, and interim periods within those years, beginning after January 1. 2018. The Company is currently assessing the potential impact of ASU 2016-10 on its financial statements and related disclosures.

 

The Company believes that other recently issued accounting pronouncements and other authoritative guidance for which the effective date is in the future either will not have an impact on its accounting or reporting or that such impact will not be material to its financial position, results of operations and cash flows when implemented.

 

Reclassifications

 

Certain prior year amounts were reclassified to conform to the manner of presentation in the current period. These reclassifications had no effect on the Company’s balance sheet, net loss or stockholders’ equity.

 

Use of Estimates

 

The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. These estimates and assumptions include valuing equity securities and derivative financial instruments issued in financing transactions and share based payment arrangements, determining the fair value of the warrants received for the licensing agreement, the collectability of accounts receivable and deferred taxes and related valuation allowances.

 

Certain estimates, including evaluating the collectability of accounts receivable, could be affected by external conditions, including those unique to our industry, and general economic conditions. It is possible that these external factors could influence our estimates that could cause actual results to differ from our estimates. The Company intends to re-evaluate all its accounting estimates at least quarterly based on these conditions and record adjustments when necessary.

 

Fair Value Measurements

 

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the condensed consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

 

 9 

 

 

Fair Value of Financial Instruments

 

As required by the Fair Value Measurements and Disclosures Topic of the FASB ASC, fair value is measured based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

 

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

 

Level 2: Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and

 

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

 

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of September 30, 2017 and December 31, 2016. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, prepaid expenses and accounts payable. Fair values were assumed to approximate carrying values for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand.

 

Cash

 

The Company maintains cash balances at various financial institutions. Accounts at each institution are insured by the Federal Deposit Insurance Corporation, and the National Credit Union Share Insurance Fund, up to $250,000. The Company’s accounts at these institutions may, at times, exceed the federal insured limits. The Company has not experienced any losses in such accounts.

 

Property and Equipment, and Depreciation Policy

 

Property and equipment are stated at cost less accumulated depreciation. Depreciation is provided for on a straight-line basis over the useful lives of the assets. Leasehold improvements are amortized over the term of the lease. Expenditures for additions and improvements are capitalized; repairs and maintenance are expensed as incurred.

 

The Company intends to take depreciation or amortization on a straight-line basis for all properties, beginning when they are put into service, using the following life expectancy:

 

Equipment – 5 years

Leasehold Improvements – 10 years, or the term of the lease, whichever is shorter

Buildings – 20 years

 

Inventory

 

The company conforms to the FASB issued Accounting Standards Update (“ASU”) No. 2015-11, Inventory, which requires an entity to measure inventory within the scope at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The Company’s inventory is stated at the lower of cost or estimated realizable value, with cost primarily determined on a cost basis on the first-in, first-out (“FIFO”) method.

 

Accounts Receivable and Allowance for Doubtful Accounts

 

Accounts receivable are presented at their face amount, less an allowance for doubtful accounts, on the balance sheets. Accounts receivable consist of revenue earned and currently due from sub lessee. We evaluate the collectability of accounts receivable based on a combination of factors. We recognize reserves for bad debts based on estimates developed using standard quantitative measures that incorporate historical write-offs and current economic conditions. As of September 30, 2017, the outstanding balance allowance for doubtful accounts is $9,908.

 

The policy for determining past due status is based on the contractual payment terms of each customer. Once collection efforts by the Company and its collection agency are exhausted, the determination for charging off uncollectible receivables is made.

 

 10 

 

 

Revenue recognition

 

The Company recognizes revenue from rent, tenant reimbursements, and other revenue sources once all the following criteria are met in accordance with SEC Staff Accounting Bulletin 104, Revenue Recognition: (a) the agreement has been fully executed and delivered; (b) services have been rendered; (c) the amount is fixed or determinable; and (d) the collectability of the amount is reasonably assured. Thus, during the initial term of the lease, management has a policy of partial rent forbearance when the tenant first opens the facility to assure that the tenant has the opportunity for success.

 

When the collectability is reasonably assured, in accordance with ASC Topic 840 “Leases” as amended and interpreted, minimum annual rental revenue is recognized for rental revenues on a straight-line basis over the term of the related lease.

 

When management concludes that the Company is the owner of tenant improvements, management records the cost to construct the tenant improvements as a capital asset. In addition, management records the cost of certain tenant improvements paid for or reimbursed by tenants as capital assets when management concludes that the Company is the owner of such tenant improvements. For these tenant improvements, management records the amount funded or reimbursed by tenants as deferred revenue, which is amortized as additional rental income over the term of the related lease. When management concludes that the tenant is the owner of tenant improvements for accounting purposes, management records the Company’s contribution towards those improvements as a lease incentive, which is amortized as a reduction to rental revenue on a straight-line basis over the term of the lease.

 

In January 2014, the Company entered into an agreement to license certain intellectual property to an unrelated company. In consideration, the Company received warrants to purchase shares of the licensee’s common stock, the value of the warrants was recorded as an investment and the deferred revenue is being amortized over the ten year term of the licensing agreement.

 

Leases as Lessor

 

The Company currently leases properties to licensed cannabis operators for locations that meet the regulatory criteria applicable by the respective regulatory jurisdiction for the sale, production, and development of cannabis products. The Company evaluates the lease to determine its appropriate classification as an operating or capital lease for financial reporting purposes. The Company leases are currently all classified as operating leases.

 

Minimum base rent is recorded on a straight-line basis over the lease term after an initial period during which the tenant is establishing the business and during which the Company may forbear some or all of the rent. The Company is more likely than not to forbear some or all of the rental income which it considers uncollectable during the tenant’s initial ramp-up period (see Revenue Recognition above). The tenant is still liable for the full rent, although the collectability may be unlikely and the Company may not expect to collect it.

 

Leases as Lessee

 

The Company recognizes rent expense on a straight-line basis over the non-cancelable lease term and certain option renewal periods where failure to exercise such options would result in an economic penalty in such amount that renewal appears, at the inception of the lease, to be reasonably assured. Deferred rent is presented on current liabilities section on the consolidated balance sheets.

 

Income Taxes

 

Income taxes are provided for using the liability method of accounting in accordance with the Income Taxes Topic of the FASB ASC. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized and when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The computation of limitations relating to the amount of such tax assets, and the determination of appropriate valuation allowances relating to the realizing of such assets, are inherently complex and require the exercise of judgment. As additional information becomes available, the Company continually assesses the carrying value of their net deferred tax assets.

 

 11 

 

 

Preferred Stock

 

The Company applies the guidance enumerated in ASC Topic 480 “Distinguishing Liabilities from Equity” when determining the classification and measurement of preferred stock. Preferred shares subject to mandatory redemption are classified as liability instruments and are measured at fair value. The Company classifies conditionally redeemable preferred shares which includes preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control, as temporary equity. At all other times, it classifies its preferred shares in stockholders’ equity. Preferred shares do not feature any redemption rights within the holders’ control or conditional redemption features not within our control. Accordingly, all issuances of preferred stock are presented as a component of consolidated stockholders’ equity.

 

Common Stock Purchase Warrants and Other Derivative Financial Instruments

 

The Company classifies as equity any contracts that require physical settlement or net-share settlement or provide us a choice of net cash settlement or settlement in our own shares (physical settlement or net-share settlement) provided that such contracts are indexed to our own stock as defined in ASC Topic 815-40 “Contracts in Entity’s Own Equity.” The Company classifies as assets or liabilities any contracts that require net-cash settlement including a requirement to net cash settle the contract if an event occurs and if that event is outside our control or give the counterparty a choice of net-cash settlement or settlement in shares. The Company assesses classification of its common stock purchase warrants and other free-standing derivatives at each reporting date to determine whether a change in classification between assets and liabilities is required.

 

Stock-Based Compensation

 

The Company recognizes compensation expense for stock-based compensation in accordance with ASC Topic 718. The Company calculates the fair value of the award on the date of grant using the Black-Scholes method for stock options and the quoted price of our common stock for unrestricted shares; the expense is recognized over the service period for awards expected to vest. The estimation of stock-based awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from original estimates, such amounts are recorded as a cumulative adjustment in the period estimates are revised. The Company considers many factors when estimating expected forfeitures, including types of awards, employee class, and historical experience.

 

Earnings (loss) per common share

 

Earnings (loss) per share is provided in accordance with ASC Subtopic 260-10. The Company presents basic loss per share (“EPS”) and diluted EPS on the face of statements of operations. Basic EPS is computed by dividing reported earnings (loss) by the weighted average shares outstanding. Loss per common share has been computed using the weighted average number of common shares outstanding during the year.

 

Note 3 – Going Concern

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company believes that it has sufficient cash on hand and cash generated by real estate leases to sustain operations provided that management and board members continue to agree to be paid company stock in exchange for accrued compensation. Through September 30, 2017, management and board members have accepted stock for accrued compensation at the same discount that has been extended to the convertible noteholders of fifty percent. There are other future noncash charges in connection with financing such as a change in derivative liability that will affect income but have no effect on cash flow.

 

Although the Company has been successful raising additional capital, there is no assurance that the company will sell additional shares of stock or borrow additional funds. The Company’s ability to raise additional cash could have a material adverse effect on its financial position, results of operations, and its ability to continue in existence. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

 12 

 

 

Note 4 – Investment

 

In January 2014, the Company entered into an agreement with Plandai Biotechnology, Inc. (a publicly traded company) to license to them certain intellectual property rights in exchange for warrants to purchase 1,666,667 shares of Plandai Biotechnology, Inc. common stock. This licensing agreement carries a 10-year term with an exercise price of $0.01 per share. The Company was to obtain certain trademark rights certified by the government. The warrant has a restriction on them requiring that the sale of such shares must reach a certain traded price of $0.50 per share. In 2014, the Company used a third-party appraisal firm to ascertain the fair value of warrants held by the Company, which was determined to be $525,567 at the date of issuance. During the year ended December 31, 2016, the Company recorded an impairment loss of $73,334. The Company recorded an additional impairment loss for the nine months ended September 30, 2017 of $43,333.

 

Note 5– Property and Equipment

 

As of September 30, 2017, and December 31, 2016, fixed assets and the estimated lives used in the computation of depreciation are as follows:

 

    Estimated            
    Useful Lives   September 30, 2017     December 31, 2016  
Machinery and equipment   5 years     -     $ 39,145  
Leasehold improvements   10 years     853,413       728,413  
Less: Accumulated depreciation and amortization        

(335,575

)    

(9,446

)
                     
Property and equipment, net       $ 517,838     $ 758,112  

 

Note 6 – Other Assets

 

Security deposits: Security deposits reflect the deposits on various property leases, most of which require for two months’ rental expense in the form of a deposit. These have remained unchanged, and are reported as $170,000 for December 31, 2016, and for September 30, 2017.

 

Deposits – end of lease: These deposits represent an additional two months of rent on various property leases that apply to the “end-of- lease” period. These have remained unchanged, and are reported as $150,000 for December 31, 2016, and for September 30, 2017.

 

Note 7– Notes Payable

 

On April 11, 2017, the Company issued two convertible notes (see Note 8). These were issued to refinance the following notes:

 

On May 20, 2015, the Company issued a note in total amount of $450,000 with third parties for use as operating capital. As of December 31, 2016, the outstanding principle balance of the note was $450,000.

 

On July 8, 2015, the Company issued a note in total amount of $135,628 with third parties for use as operating capital. As of December 31, 2016, the outstanding principle balance of the note is $135,628.

 

 13 

 

 

On February 8, 2016, the Company issued notes in total amount of $470,000 with third parties, bearing interest at 12% per annum with a maturity date of February 7, 2017. As of December 31, 2016, the outstanding principle balance of the note is $470,000.

 

In accordance with in accordance with FASB Codification- Liabilities, 470-50-40-10, these liabilities were considered extinguished and the cost of the new financing of $5,607,836 was expensed in the quarter ended June 30, 2017.

 

On August 31, 2015, the Company issued a note in total amount of $126,000 with third parties for use as operating capital. The note was amended to include accrued interest on October 31, 2016 and extended the maturity date to October 31, 2018. As of September 30, 2017, the outstanding principal balance of the note was $126,000.

 

Note 8 – Convertible Note Payable

 

In addition to the two notes issued on April 11, 2017 referred to in Footnote 7, the Company issued several convertible notes in the nine months ending September 30, 2017. The note holder shall have the right to convert the amount outstanding into shares of common stock at a discounted price. The conversion feature was recognized as an embedded derivative and was valued using a Black Scholes model that resulted in a derivative liability of $4,767,377 for the quarter ended September 30, 2017. In connection with the issuance of certain of these notes, the Company also issued warrants to purchase its common stock. The Company allocated the proceeds of the notes and warrants based on the relative fair value at inception for these notes.

 

Several convertible note holders elected to convert their notes to stock during the nine months ended September 30, 2017. The table below provides a reconciliation of the beginning and ending balances for the liabilities measured using fair significant unobservable inputs (Level 3):

 

   Convertible notes   Discount   Convertible Note Net of Discount   Derivative Liabilities 
Balance, December 31, 2016   370,500    36,344    334,156    338,282 
Issuance of convertible notes   3,762,342    1,278,500    2,483,842    7,622,392 
Conversion of convertible notes   (3,031,843)   (116,180)   (2,915,663)   (5,509,516)
Change in fair value of derivatives               2,316,219 
Amortization       (466,827)   466,827     
Balance September 30, 2017  $1,100,999   $731,837   $369,162   $4,767,377 

 

The following assumptions were used in calculations of the Black Scholes model for the period ended September 30, 2017 and 2016.

 

    September 30, 2017     September 30, 2016  
Risk-free interest rates     1.06-1.39 %     0.29-0.59 %
Expected life     0.24-1.53 year       0.25-1 year  
Expected dividends     0 %     0 %
Expected volatility     174-230 %     142-356  
Diego Pellicer Worldwide, Inc. Common Stock fair value   $ 0.18     $ 0.20 -0.77  

 

 14 

 

 

Note 9 – Stockholders’ Equity

 

The following table presents the company’s warrants and option features which have no observable market data and are derived using Black-Scholes measured at fair value on a recurring basis, using Level 3 inputs, as of December 31, 2016 and September 30, 2017:

 

   

For the Nine
Months Ended

September 30, 2017

   

For the Year Ended

December 31, 2016

 
Annual dividend yield     0 %     0 %
Expected life (years)     3-10       5  
Risk-free interest rate     1.10 – 2.34 %     0.90 %
Expected volatility     232 - 234       266  

 

The following represents a summary of all common stock warrant activity:

 

  

Number of

Warrants

  

Weighted Average Exercise

Price

  

Weighted Average Remaining

Contractual Term

 
Balance outstanding, December 31, 2016   2,027,313   $1.18    3.43 

Exercisable, December 31, 2016

   

2,027,313

   $

1.18

    

3.43

 
Granted   2,900,000    -    - 
Balance outstanding, September 30, 2017   4,927,313   $0.65    5.07 
Exercisable, September 30, 2017   4,927,313   $0.65    5.07 

 

The Company maintains an Equity Incentive Plan pursuant to which 2,480,000 shares of Common Stock are reserved for issuance thereunder. This Plan was established to award certain founding members, who were instrumental in the development of the Company, as well as key employees, directors and consultants, and to promote the success of the Company’s business. The terms allow for each option to vest immediately, with a term no greater than 10 years from the date of grant, at an exercise price equal to par value at date of the grant. As of September 30, 2017, no shares had been granted under the plan.

 

As a condition of their employment, the Board of Directors approved employment agreements with three key executives. This agreement provided that additional shares will be granted each year over the term of the agreement should their shares as a percentage of the total shares outstanding fall below prescribed ownership percentages. The CEO received an annual grant of additional shares each year to maintain his ownership percentage at 10% of the outstanding stock. The other two executives received a similar grant each to maintain his ownership percentage at 7.5% of the outstanding stock.

 

Options have been granted to several executives and consultants as contractual incentives as shown below:

 

   Number of Options   Weighted Average Exercise Price   Weighted Average Remaining Contractual Term 
Balance outstanding, December 31, 2016   1,000,000   $0.30    4.50
Exercisable, December 31, 2016   200,000   $0.30    4.50 
Granted   4,899,180    0.25    5.00 
Exercised   -    -    - 
Forfeited   -    -    - 
Expired   -    -    - 
Balance outstanding, September 30, 2017   5,899,180   $0.26    8.40 
Exercisable, September 30, 2017   2,849,590   $0.26    8.56 

 

During the nine months ended September 30, 2017 3,609,990 common shares valued at $513,585 were issued as security for the payment of convertible notes. Among these shares issued for security deposits, 1,899,990 shares valued at $257,259 is refundable and were recorded in a contra equity account.

 

During the nine months ended September 30, 2017, 4,918,965 shares of common stock valued at $1,119,403 were issued as share-based compensation. 1,205,128 shares were authorized but not issued as of September 30, 2017.

 

During the nine months ended September 30, 2017, the Company incurred total option expense of $975,330.

 

During the nine months ended September 30, 2017, 1,000,000 shares of common stock valued at $245,600 were issued for a debt settlement.

 

During the nine months ended September 30, 2017, owners of convertible notes have converted their notes in exchange for 67,435,366  shares of common stock valued at $6,672,953. Among these shares issued for notes conversion, 66,966,106 were authorized but not issued as of September 30, 2017.

 

 15 

 

 

Note 10 – COMMITMENTS AND CONTINGENCIES

 

The Company’s business is to lease property in appropriate and desirable locations, and to make available such property for sub-lease to specifically assigned businesses that grow, process, and sell certain products to the public. Currently the Company has four separate properties under lease in the states of Colorado and Washington.

 

In Colorado, there are three properties leased in 2017 and 2016. Properties were leased for a three to five year period with an option for an additional five years, and carry terms requiring triple net payments. Each of the properties have fixed monthly rentals with periodic increases in the monthly rental rate. In Washington, there is one property which was leased in 2014. The property was leased for a five (5) year period with an option for an additional five (5) years, and carry terms requiring triple net (NNN) conditions. The property has an escalating annual rental. As of September 30, 2017, the aggregate remaining minimal annual lease payments under these operating leases were as follows:

 

2017   $ 541,110  
2018     1,131,078  
2019     746,039  
2020     594,444  
2021     431,227  
2022     240,000  
2023     240,000  
2024     240,000  
2025     40,000  
Total   $ 4,203,898  

 

Rent expense for the Company’s operating leases for the three months ended September 30, 2017 and 2016 was $191,556 and $257,599 respectively and for the nine months ending September 30, 2017 and 2016 was $828,677 and $831,262 respectively.

 

Note 11 – Subsequent Events

 

In November 2017, the Company notified its shareholders of its intention to amend its Certificate of Incorporation to increase the number of authorized shares of Common Stock from 95,000,000 shares to 195,000,000 shares. A majority of shareholders of record as of September 17, 2017 approved this increase.

 

Subsequent to September 30, 2017, the Company has issued 3,729,038  shares of common stock to convertible notes holders who converted their notes during nine months ended September 30, 2017, resulting in the increase in shares of common stock authorized and issued from 57,008,298 at September 30, 2017 to 60,737,336 as of November 20, 2017.

 

 16 

 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF OPERATIONS

 

The following discussion and analysis of the results of operations and financial condition of Diego Pellicer Worldwide, Inc. (the “Company”, “we”, “us” or “our”) should be read in conjunction with the financial statements of Diego Pellicer Worldwide, Inc. and the notes to those financial statements that are included elsewhere in this Form 10-Q. This discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Risk Factors and Business sections in the financial statements and footnotes included in the Company’s Form 10-K filed on May 31, 2017 for the year ended December 31, 2016. Words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions are used to identify forward-looking statements.

 

Overview

 

Diego Pellicer Worldwide, Inc. was established on August 26, 2013 to take advantage of growing market for legalized cannabis being made possible by the escalating legislation allowing for the legalization of cannabis operations in the majority of states:

 

 

 

The industry is operating under stringent regulations within the various state jurisdictions. The company’s primary business plan is to lease various properties to licensed operators in these jurisdictions to grow, process and sell cannabis and related products. The Company will also provide educational training, compliance consultation, branding, and related accessories to their tenants. These leases are expected provide a substantial stream of income. We believe that as laws evolve, it is possible that we will have the opportunity to participate directly in these operations. Accordingly, the Company will selectively negotiate an option on our tenants’ operating company.

 

 17 

 

 

The company has already established four facilities in markets that have experienced high growth, Washington and Colorado. This growth is illustrated in the tables below:

 

 

 

Source: Washington State Liquor and Cannabis Board and Colorado Department of Revenue

 

The legalization taking place in other states such as California and Florida present opportunities many time that of Washington and Colorado. The Company is exploring opportunities in Oregon, California and Florida and is getting inquiries from other potential operators in other jurisdictions.

 

 18 

 

 

This market is projected to grow rapidly in the future as this chart below illustrates:

 

 

Source: Marijuana Business Daily

 

2017 A YEAR OF TRANSITION

 

This past nine months has been a time of great transition for the Company. An effective and experienced team had to be assembled to complement the current executives with knowledge and experience in real estate operations, banking, site selection, branding, facility design, corporate finance, investor relations, Additional capital needed to be raised in order to have sufficient cash to finish construction of the four facilities, build more facilities, and achieve a positive cash flow. Much of the Company’s debt was delinquent and needed to be repaid or renegotiated. New markets had to be explored, new alliances forged, and opportunities prioritized.

 

Two experienced executives joined the management team in the first quarter 2017 after having served in a consulting capacity since the summer of 2016. One executive had been the CEO of a publicly traded company for 15 years and the other had founded and operated several financial institutions and served on the boards of several public companies. The Company also engaged an advisor with extensive experience in national brand retail site selection, a consultant for branding and design that had been instrumental in the design of Apple stores and other facilities, and a world-renowned architect to design and standardize our retail facilities.

 

$1,278,500 in new capital was raised. New markets were explored. Four facilities were opened and began generating rents. All delinquent notes were renegotiated.

 

 19 

 

 

RESULTS OF OPERATIONS

 

After rental expense, the gross margins on the lease were as follows:

  

    Three Months Ended     Three Months Ended     Increase (Decrease)  
    September 30, 2017     September 30, 2016     $     %  
Total revenues                                
Rental Income   $ 297,428     $ 90,334     $ 207,094       230 %
Rent expense     (191,556 )     (257,599 )     66,043       26 %
Gross Profit   $ 105,872     $ (167,265 )   $ 273,137       164 %
General and administrative expense    

871,217

      738,532      

132,685

      18 %
Selling expense     37,855       5,009       32,846       656 %
Depreciation expense     108,710       -       108,710       * %
Loss from operations   $

(911,910

)   $ (910,806 )   $

(1,104

    * %

  

   Nine Months Ended   Nine Months Ended   Increase (Decrease) 
   September 30, 2017   September 30, 2016   $   % 
Total revenues                    
Rental Income  $1,152,425   $313,202   $839,223    268%
Rent expense   (828,677)   (831,262)   2,585    -%
Gross Profit  $323,748   $(518,060)  $841,808    163%
General and administrative expense   3,439,038    4,081,460    (642,422)   (16)%
Selling expense   71,744    5,009    66,735    1,333%
Depreciation expense   348,209    -    348,209    *
Loss from operations  $(3,535,243)  $(4,604,529)  $(1,069,286)   (23)%

 

* Not divisible by zero

 

Gross profit. Rent revenue exceeded rental expense by $105,872 and $323,748 for the three and nine months ended September 30, 2017 respectively, compared to a loss of $167,265 and $518,060 for the for the three and nine months ended September 30, 2016 respectively. The increase in gross profit was primarily attributable to rental income from the completion of construction and the commencement of operations in the Company’s four facilities.

 

General and administrative. Our general and administrative expenses for the three and nine months ended September 30, 2017 were $871,217, and $3,439,038 respectively, compared to $738,532 and $4,081,460 for the three and nine months ended September 30, 2016 respectively. The decrease of $642,422 for the 9 months was mostly attributable to a reduction in salaries during the nine months ended September 30, 2017. The increase of $132,685 for the three months ended September 30, 2017 was relatively consistent with previous periods.

 

   Three Months Ended   Three Months Ended   Increase (Decrease) 
   September 30, 2017   September 30, 2016   $   % 
Other income (expense):                    
Interest expense  $(1,230,865)  $(111,254)  $(1,119,611)   1,007%
Other income and expense   1,470,334    (713,724)   2,184,058    306%
Change in fair value of derivative and warrant liabilities   (3,378,706)   (136,485)   (3,242,221)   (2,376)%
Net other income  $(3,139,237)  $(961,463)  $(2,177,774)   (227)%

  

* Not divisible by zero

 

    Nine Months Ended     Nine Months Ended     Increase (Decrease)  
    September 30, 2017     September 30, 2016     $     %  
Other income (expense):                                
Interest expense   $ (1,965,863 )   $ (216,910 )   $ (1,748,953 )     (807 )%
Other income and expense     (4,147,150 )     (686,724     (3,460,426 )     504 %
Change in fair value of derivative and warrant liabilities     (2,695,303     (30,149)       (2,665,154     (8,840 )%
Net other income   $ (8,808,316 )   $ (933,783)     $ (7,874,533 )     (844 )%

 

* Not divisible by zero

 

The increase in other expense of $7,874,533 and $2,177,774 respectively for the nine months and three months ended September 30, 2017 September 30, 2016 was largely the result of the noncash financing costs, change in derivative liabilities and interest for the convertible notes issued in connection with the refinancing of notes that had come due and the subsequent conversion of a portion of those notes.

 

LIQUIDITY AND CAPITAL RESOURCES

 

    Nine Months Ended     Nine Months Ended     Increase (Decrease)  
    September 30, 2017     September 30, 2016     $     %  
Net Cash used in operating activities   $ (968,321 )   $ (644,558 )     (323,763 )   $ (50 )%
Net Cash used in investing activities     (125,000 )     (412,090 )   $ 287,090       69 %
Net Cash used by financing activities     1,149,450       1,050,491       98,959       9 %
Net Increase in Cash     56,129       (6,157 )     62,286       1,012 %
Cash - beginning of period     51,333       36,001       15,332       43 %
Cash - end of period   $ 107,462     $ 29,844     $ 77,618       260 %

 

Net Cash used in Operating Activities. For the nine months ended September 30, 2017, the operations used net cash of $968,321.

 

 20 

 

 

Investing Activities. The cash used in investing activities for the nine months ended September 30, 2017 of $125,000 for acquisition of property and equipment for facility construction.

 

Financing Activities. During the nine months ended September 30, 2017, $1,149,450 in net proceeds were from notes payable issued less notes paid. During the nine months ended September 30, 2016, the company received $1,050,491 from financing proceeds.

 

Non-Cash Investing and Financing Activities. Non-cash activities for the nine months ended September 30, 2017 was the conversion of a convertible note for $50,000 in principal and $3,303 in interest. 469,260 shares of common stock were issued for this conversion

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

 

ITEM 4. CONTROLS AND PROCEDURES.

 

We carried out an evaluation required by Rule 13a-15 of the Exchange Act under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” and “internal control over financial reporting” as of the end of the period covered by this Report.

 

Evaluation of Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act that are designed to ensure that information required to be disclosed in our reports filed or submitted to the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms, and that information is accumulated and communicated to management, including the principal executive and financial officer as appropriate, to allow timely decisions regarding required disclosures. Our principal executive officer and principal financial officer evaluated the effectiveness of disclosure controls and procedures as of the end of the period covered by this Annual Report (the “Evaluation Date”), pursuant to Rule 13a-15(b) under the Exchange Act.

 

Based on that evaluation, our principal executive officer and principal financial officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure, due to material weaknesses in our control environment and financial reporting process.

 

Limitations on the Effectiveness of Controls

 

Our management, including our principal executive officer and principal financial officer, does not expect that our Disclosure Controls and internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management or board override of the control.

 

The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

 

Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting during the three months ended September 30, 2017 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

 21 

 

 

PART II – OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

 

ITEM 1A. RISK FACTORS

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

None.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5. OTHER INFORMATION

 

None.

 

ITEM 6. EXHIBITS

 

Exhibits    
31.1   Certification of Principal Executive Officer of the Registrant pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
31.2   Certification of Principal Financial Officer of the Registrant pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
32.1*   Certification of Principal Executive Officer pursuant to 18U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
32.2*   Certification of Principal Financial Officer of the Registrant pursuant to 18U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
101.INS   XBRL Instance Document
     
101.SCH   XBRL Taxonomy Schema
     
101.CAL   XBRL Taxonomy Calculation Linkbase
     
101.DEF   XBRL Taxonomy Definition Linkbase
     
101.LAB   XBRL Taxonomy Label Linkbase
     
101.PRE   XBRL Taxonomy Presentation Linkbase

 

*In accordance with SEC Release 33-8238, Exhibit 32.1 and 32.2 are being furnished and not filed.

 

 22 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

  DIEGO PELLICER WORLDWIDE, INC.
     
Date: November 20, 2017 By: /s/ Ron Throgmartin
    Ron Throgmartin, Chief Executive Officer
    (Principal Executive Officer)

 

 23