Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Mar. 31, 2017 | Jun. 30, 2016 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | GrowGeneration Corp. | ||
Entity Central Index Key | 1,604,868 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 3,289,000 | ||
Entity Common Stock, Shares Outstanding | 12,546,406 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Current Assets | ||
Cash and cash equivalents | $ 606,644 | $ 699,417 |
Accounts receivable, net of allowance for doubtful accounts of $47,829 and $6,500, respectively | 391,235 | 37,554 |
Employee advances | 10,678 | 2,950 |
Inventory | 2,574,438 | 1,311,639 |
Prepaid expenses | 24,578 | 17,036 |
Total Current Assets | 3,607,573 | 2,068,596 |
Property and Equipment, Net | 549,854 | 271,236 |
Other Assets | ||
Security deposits | 42,526 | 27,230 |
Goodwill | 243,000 | 243,000 |
Total Other Assets | 285,526 | 270,230 |
Total Assets | 4,442,953 | 2,610,062 |
Current Liabilities | ||
Current maturities of long-term debt | 23,443 | 5,866 |
Accounts payable | 535,913 | 292,078 |
Short term borrowings | 107,880 | 56,184 |
Customer deposits | 51,672 | 18,410 |
Payroll and payroll tax liabilities | 77,068 | 43,925 |
Sales taxes payable | 46,942 | 22,093 |
Total Current Liabilities | 842,918 | 438,556 |
Long-Term Debt - net of current portion | 41,726 | 18,133 |
Total Liabilities | 884,644 | 456,689 |
Stockholders' Equity | ||
Common stock $.001 par value, 100,000,000 shares authorized: 11,742,834 shares issued and outstanding at December 31, 2016 and 8,967,834 shares issued and outstanding at December 31, 2015 | 11,743 | 8,968 |
Additional paid in capital | 4,696,221 | 2,862,816 |
Accumulated (deficit) | (1,149,655) | (718,411) |
Total Stockholders' Equity | 3,558,309 | 2,153,373 |
Total Liabilities and Stockholders' Equity | $ 4,442,953 | $ 2,610,062 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Allowance for accounts receivable | $ 47,829 | $ 6,500 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 11,742,834 | 8,967,834 |
Common stock, shares outstanding | 11,742,834 | 8,967,834 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Revenues | ||
Sales | $ 7,980,471 | $ 3,455,146 |
Cost of sales | (5,776,194) | (2,351,836) |
Gross profit | 2,204,277 | 1,103,310 |
Expenses | ||
Advertising and promotion | 107,744 | 51,332 |
Alarm and security | 4,677 | 3,087 |
Automobile expenses | 32,466 | 14,915 |
Bad debt | 66,828 | 9,791 |
Bank service charges | 25,167 | 8,004 |
Credit card fees | 47,286 | 27,819 |
Computer and internet expenses | 19,452 | 7,417 |
Depreciation expense | 52,962 | 16,436 |
Insurance expense | 23,441 | 10,715 |
Investor and public relations | 8,773 | |
Licenses ang permits | 8,053 | 904 |
Meals and entertainment | 42,771 | 20,839 |
Office supplies | 33,838 | 15,154 |
Officers salaries | 344,050 | 252,500 |
Payroll, payroll tax and benefits | 993,024 | 491,372 |
Postage and delivery | 9,790 | 1,782 |
Professional fees | 76,226 | 233,769 |
Rent expense | 306,115 | 105,269 |
Repairs and maintenance | 16,079 | 4,520 |
Stock compensation | 98,000 | 141,983 |
Stock option compensation | 86,333 | 87,967 |
Supplies | 24,210 | 10,747 |
Telephone expense | 31,278 | 13,498 |
Travel expense | 114,512 | 54,676 |
Utilities | 57,195 | 33,434 |
Total Expense | 2,630,270 | 1,617,930 |
Net (loss) from operations | (425,993) | (514,620) |
Other (Expenses) | ||
Start up costs | (11,220) | |
Interest | (5,251) | (2,916) |
Total other (expenses) | (5,251) | (14,136) |
Net (Loss) before income tax | (431,244) | (528,756) |
Income Tax | 0 | 0 |
Net Loss | $ (431,244) | $ (528,756) |
Loss per common share | ||
Basic | $ (0.05) | $ (0.08) |
Diluted | $ (0.05) | $ (0.08) |
Average shares outstanding | ||
Basic | 9,153,053 | 6,563,271 |
Diluted | 9,153,053 | 6,563,271 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) | Total | Common Stock | Additional Paid-In Capital | Accumulated (Deficit) |
Beginning Balances at Dec. 31, 2014 | $ 546,678 | $ 6,000 | $ 730,333 | $ (189,655) |
Beginning Balance, shares at Dec. 31, 2014 | 6,000,000 | |||
Issuance of common stock at $.60 per share | 180,000 | $ 300 | 179,700 | |
Issuance of common stock at $.60 per share, shares | 300,000 | |||
Issuance of common stock at $.70 per share | 1,552,951 | $ 2,465 | 1,550,486 | |
Issuance of common stock at $.70 per share, shares | 2,465,001 | |||
Warrants issued at $.70 per share | 172,550 | 172,550 | ||
Stock option expense | 87,967 | 87,967 | ||
Stock compensation at $.70 per share | 141,983 | $ 203 | 141,780 | |
Stock compensation at $.70 per share, shares | 202,833 | |||
Net (loss) | (528,756) | (528,756) | ||
Ending Balance at Dec. 31, 2015 | 2,153,373 | $ 8,968 | 2,862,816 | (718,411) |
Ending Balance, shares at Dec. 31, 2015 | 8,967,834 | |||
Issuance of common stock at $.70 per share | 998,497 | $ 1,891 | 996,606 | |
Issuance of common stock at $.70 per share, shares | 1,890,714 | |||
Warrants issued at $.70 per share | 132,350 | 132,350 | ||
Stock option expense | 86,333 | 86,333 | ||
Stock compensation at $.70 per share | 98,000 | $ 140 | 97,860 | |
Stock compensation at $.70 per share, shares | 140,000 | |||
Warrants converted at $.70 per share | 486,000 | $ 694 | 485,306 | |
Warrants converted at $.70 per share, shares | 694,286 | |||
Stock issued for services | 35,000 | $ 50 | 34,950 | |
Stock issued for services, shares | 50,000 | |||
Net (loss) | (431,244) | (431,244) | ||
Ending Balance at Dec. 31, 2016 | $ 3,558,309 | $ 11,743 | $ 4,696,221 | $ (1,149,655) |
Ending Balance, shares at Dec. 31, 2016 | 11,742,834 |
Consolidated Statements of Sto6
Consolidated Statements of Stockholders' Equity (Parenthetical) - $ / shares | Dec. 31, 2016 | Dec. 31, 2015 |
Statement of Stockholders' Equity [Abstract] | ||
Issuance of common stock per share one | $ 0.60 | |
Issuance of common stock per share | $ 0.70 | 0.70 |
Warrant issued per share | 0.70 | 0.07 |
Stock compensation per share | 0.70 | $ 0.70 |
Warrants issued conversion price | $ 0.70 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Cash Flows from Operating Activities: | ||
Net (loss) | $ (431,244) | $ (528,756) |
Adjustments to reconcile net (loss) to net cash (used in) operating activities: | ||
Depreciation | 52,962 | 16,436 |
Bad debt expense | 66,828 | 9,791 |
Inventory market value reserve | (6,000) | 38,500 |
Stock issued for services | 35,000 | |
Stock compensation | 184,333 | 229,950 |
(Increase) decrease in: | ||
Accounts receivable | (395,208) | (38,647) |
Employee advances | (7,728) | (2,950) |
Inventory | (1,256,799) | (1,003,855) |
Prepaid expenses | (7,542) | (11,166) |
Security deposits | (15,296) | (19,140) |
Increase (decrease) in: | ||
Accounts payable | 243,835 | 124,313 |
Customer deposits | 33,262 | 10,160 |
Payroll and payroll tax liabilities | 33,143 | 26,918 |
Sales taxes payable | 24,849 | 12,807 |
Net Cash (Used In) Operating Activities | (1,470,907) | (1,135,639) |
Cash Flows from Investing Activities: | ||
Acquisition of furniture and equipment | (331,580) | (253,717) |
Net Cash (Used In) Investing Activities | (331,580) | (253,717) |
Cash Flows from Financing Activities: | ||
Net proceeds on short term borrowing | 51,696 | 48,714 |
Net proceeds from long-term debt, net | 41,171 | 23,999 |
Issuance of common stock | 1,616,847 | 1,905,501 |
Net Cash Provided by Financing Activities | 1,709,714 | 1,978,214 |
Net Increase (Decrease) in Cash and Cash Equivalents | (92,773) | 588,858 |
Cash and Cash Equivalents at Beginning of Period | 699,417 | 110,559 |
Cash and Cash Equivalents at End of Period | 606,644 | 699,417 |
Supplemental Information: | ||
Interest paid during the period | 5,251 | 2,916 |
Taxes paid during the period | $ 0 | $ 0 |
Nature of Operations
Nature of Operations | 12 Months Ended |
Dec. 31, 2016 | |
Nature of Operations [Abstract] | |
NATURE OF OPERATIONS | 1. NATURE OF OPERATIONS GrowGeneration Corp (the “Company”) was incorporated on March 6, 2014 in Colorado under the name of Easylife Corp and changed its name to GrowGeneration Corp. It maintains its principal office in Denver, Colorado. GrowGeneration Corp is engaged in the business of operating retail hydroponic stores through its wholly owned subsidiaries, GrowGeneration Pueblo Corp, GrowGeneration California Corp, Grow Generation Nevada Corp and Ggen Distribution Corp. The company commenced operations with the purchase of 4 retail hydroponic stores in Pueblo and Canon City, Colorado on May 30, 2014. The Company, currently owns and operates a total of 12 stores and is actively engaged in seeking to acquire additional hydroponic retail stores. Subsequent Events The Company has evaluated events and transactions occurring subsequent to December 31, 2016, for items that should potentially be recognized or disclosed in these consolidated financial statements. The evaluation was conducted through March 27, 2017, the date these consolidated financial statements were issued. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2016 | |
Summary of Significant Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Consolidation The Company’s financial statements are prepared on the accrual method of accounting. The accounting and reporting policies of the Company conform with generally accepted accounting principles (GAAP). The consolidated financial statements of the Company include the accounts of GrowGeneration Pueblo Corp, Grow Generation California Corp, Grow Generation Nevada Corp, and Ggen Distribution Corp. Intercompany balances and transactions are eliminated in consolidation. Management makes significant operating decisions based upon the analysis of the entire Company and financial performance is evaluated on a company-wide basis. Accordingly, the various products sold are aggregated into one reportable operating segment as under guidance in the Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC or codification”) Topic 280 for segment reporting. Use of Estimates Management uses estimates and assumptions in preparing these financial statements in accordance with generally accepted accounting principles. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported revenues and expenses during the reporting period. Actual results could vary from the estimates that were used. Revenue Recognition Revenue on product sales is recognized upon delivery or shipment. Customer deposits/layaway sales are not reported as income unit final payment is received and the merchandise is delivered. Accounts Receivable Accounts receivable are stated at the amount the Company expects to collect from balances outstanding at year-end. Based on the Company's assessment of the credit history with customers having outstanding balances and current relationships with them. A reserve for uncollectable receivables is established when collection of amounts due is deemed improbable. Indicators of improbable collection include client bankruptcy, client litigation, client cash flow difficulties or ongoing service or billing disputes. Credit is generally extended on a short-term basis thus receivables do not bear interest. At December 31, 2016 and 2015, the Company established an allowance for doubtful accounts of $47,829 and $6,500, respectively. Property and Equipment Expenditures for maintenance and repairs are charged against operations. Renewals and betterment that materially extend the life of the asset are capitalized. Depreciation of property and equipment is provided on the straight-line method for financial reporting purposes at rates based on the following estimated useful lives: Estimated Lives Vehicle 5 years Furniture and fixtures 5-7 years Computers and equipment 3-5 years Leasehold improvements 10 years For federal income tax purposes, depreciation is computed using the accelerated cost recovery system and the modified accelerated cost recovery system. Fair Value of Financial Instruments The fair value of certain of our financial instruments including cash and cash equivalents, accounts receivable, prepaid assets, employee advances, accounts payable, customer deposits, payroll and payroll tax liabilities, sales tax payable and notes payable approximate their carrying amounts because of the short-term maturity of these instruments. Income Taxes The Company accounts for income taxes in accordance with FASB ASC 740, Income Taxes, which requires the recognition of deferred income taxes for differences between the basis of assets and liabilities for financial statement and income tax purposes. The differences relate principally to depreciation of property and equipment, reserve for obsolete inventory and bad debt. Deferred tax assets and liabilities represent the future tax consequence for those differences, which will either be deductible or taxable when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for operating losses that are available to offset future taxable income. Valuation allowances are established to reduce deferred tax assets to the amount expected to be realized. The Company adopted the provisions of FASB ASC 740-10-25, which prescribes a recognition threshold and measurement attribute for the recognition and measurement of tax positions taken or expected to be taken in income tax returns. FASB ASC 740-10-25 also provides guidance on de-recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, and accounting for interest and penalties associated with tax positions. The Company’s tax returns are subject to tax examinations by U.S. federal and state authorities until respective statute of limitation. Currently, the 2016, 2015, and 2014 tax years are open and subject to examination by taxing authorities. However, the Company is not currently under audit nor has the Company been contacted by any of the taxing authorities. The Company does not have any accruals for uncertain tax positions as of December 31, 2016. It is not anticipated that unrecognized tax benefits would significantly increase or decrease within 12 months of the reporting date. Presentation of Sales Taxes The Company is required to collect sales tax for the State of Colorado, State of California, City of Pueblo, City of Canon City, City of Colorado Springs, Pueblo County, Fremont County, Jefferson County, El Paso County, City & County of Denver, and City of Santa Rosa; ranging from 3.9% to 8.25% on the Company's sales to nonexempt customers. The Company collects that sales tax from customers and remits the entire amount to the corresponding taxing authorities. The Company's accounting policy is to exclude the tax collected and remitted from revenue and cost of sales. Advertising The Company expenses all advertising and promotional costs when incurred. Advertising and promotional expenses for the years ended December 31, 2016 and 2015 amounted to $107,744 and $51,332, respectively. Freight and Shipping It is the Company's policy to classify freight and shipping costs as part of cost of sales. Total freight and shipping costs for the years ended December 31, 2016 and 2015 was $66,856 and $35,836, respectively. Cash and Cash Equivalents For purposes of the statement of cash flows, the Company considers all unrestricted highly liquid investments with an original maturity of three months or less to be cash equivalents. Concentration of Risk Financial instruments that potentially expose us to concentrations of risk consist primarily of cash and cash equivalents and accounts receivable, which are generally not collateralized. Our policy is to place our cash and cash equivalents with high quality financial institutions, in order to limit the amount of credit exposure. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (FDIC), up to $250,000. At December 31, 2016 and 2015, the Company had $8,332 and $-0-, respectively, in excess of the FDIC insurance limit. The Company generally does not require collateral from its customers, but its credit extension and collection policies include analyzing the financial condition of potential customers, establishing credit limits, monitoring payments, and aggressively pursuing delinquent accounts. The Company maintains allowance for potential credit losses. A significant portion of the Company’s revenues are derived from the sales of products to the purveyors of cannabis products and services. Goodwill Goodwill represents the excess of acquisition costs over the fair value of net tangible and intangible assets acquired in connection with an acquisition. The Company accounts for goodwill in accordance with the provisions of FASB Accounting Standards Update (ASU) 2014-02, Intangibles – Goodwill and Other (Topic 350) Accounting for Goodwill. In accordance with FASB ASC Topic 350 for Intangibles – Goodwill and Other, goodwill is not amortized but is reviewed for potential impairment on an annual basis, or if events or circumstances indicate a potential impairment, at the reporting unit level. The Company’s review for impairment includes an assessment of qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value, including goodwill. If it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value, including goodwill, the first step of the two-step quantitative goodwill impairment test is performed, which compares the fair value of the reporting unit with its carrying amounts, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired. However, if the carrying amount of the reporting unit exceeds its fair value, an additional procedures must be performed. That additional procedure compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. An impairment loss is recorded to the extent that the carrying amount of goodwill exceeds its implied fair value. The carrying value of goodwill is tested for impairment annually or more frequently if circumstances indicate that impairment may have occurred. Inventory Inventory consists primarily of gardening supplies and materials and is recorded at the lower of cost (first-in, first-out method) or market. Earnings (Loss) Per Share The Company computes net earnings (loss) per share under Accounting Standards Codification subtopic 260-10, “Earnings Per Share” (“ASC 260-10”). Basic earnings or loss per share (“EPS”) is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS is computed by dividing net income (loss) by the weighted-average of all potentially dilutive shares of common stock that were outstanding during the periods presented. The treasury stock method is used in calculating diluted EPS for potentially dilutive stock options and share purchase warrants, which assumes that any proceeds received from the exercise of in-the-money stock options and share purchase warrants, would be used to purchase common shares at the average market price for the period. Stock Based Compensation The Company accounts for stock-based compensation issued to employees, and where appropriate, non-employees, at fair value. Under fair value provisions, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the appropriate vesting period using the straight-line method. The amount of stock-based compensation recognized at any date must at least equal the portion of the grant date fair value of the award that is vested at that date and as a result it may be necessary to recognize the expense using a ratable method. Determining the fair value of stock-based awards at the date of grant requires judgment, including estimating the expected term of the stock options and the expected volatility of the Company’s stock. In addition, judgment is required in estimating the amount of stock-based awards that are expected to be forfeited. If actual results differ significantly from these estimates or different key assumptions were used, it could have a material effect on the Company’s consolidated financial statements. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 12 Months Ended |
Dec. 31, 2016 | |
Recent Accounting Pronouncements [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS | 3. RECENT ACCOUNTING PRONOUNCEMENTS In May 2016, accounting guidance was issued to clarify the not yet effective revenue recognition guidance issued in May 2014. This additional guidance does not change the core principle of the revenue recognition guidance issued in May 2014, rather, it provides clarification of accounting for collections of sales taxes as well as recognition of revenue (i) associated with contract modifications, (ii) for noncash consideration, and (iii) based on the collectability of the consideration from the customer. The guidance also specifies when a contract should be considered “completed” for purposes of applying the transition guidance. The effective date and transition requirements for this guidance are the same as the effective date and transition requirements for the guidance previously issued in 2014, which is effective for interim and annual periods beginning on or after December 15, 2017. The Company has not yet determined the impact that this new guidance will have on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The amendments in this update change existing guidance related to accounting for employee share-based payments affecting the income tax consequences of awards, classification of awards as equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within those annual periods, with early adoption permitted. The Company is currently evaluating the potential impact of the adoption of this standard. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the consolidated balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the consolidated income statement. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods, with early adoption permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the potential impact of the adoption of this standard. In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. The amendments in this update revise the accounting related to the classification and measurement of investments in equity securities and the presentation of certain fair value changes for financial liabilities measured at fair value. The amendments are effective for annual reporting periods after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the potential impact of the adoption of this standard. In April 2015, the FASB issued ASU 2015-03, Interest- Imputation of Interest (Subtopic 835-30). This guidance is to simplify the presentation of debt issuance costs by recognizing a debt liability in the balance sheet as a direct deduction from that debt liability consistent with the presentation of a debt discount. The amendments in this update are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The Company has adopted this standard and the adoption did not have a material impact on the Company’s financial position. In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable) and to provide related footnote disclosures. The ASU provides guidance to an organization’s management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations today in the financial statement footnotes. The ASU is effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016, which for the Company is April 1, 2017. Early adoption is permitted. The adoption of this standard will not have a material impact on the Company’s financial position or results of operations. The amendments also clarify that the guidance in Topic 275, Risks and Uncertainties, is applicable to entities that have not commenced planned principal operations. The central feature of the guidance on disclosure requirements is that required disclosures are limited to matters significant to a particular entity. The disclosures focus primarily on risks and uncertainties that could significantly affect the amounts reported in the financial statements in the near term or the near-term functioning of the reporting entity. Other Accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures. |
Premises and Equipment
Premises and Equipment | 12 Months Ended |
Dec. 31, 2016 | |
Premises and Equipment [Abstract] | |
PREMISES AND EQUIPMENT | 4. PREMISES AND EQUIPMENT Premises and equipment at December 31, 2016 and 2015 consists of the following: December 31, 2016 2015 Vehicle $ 102,014 $ 32,191 Leasehold improvements 131,411 55,297 Furniture, fixtures and equipment 389.396 203,753 622,821 291,241 Accumulated depreciation (72,967 ) (20,005) $ 549,854 $ 271,236 Depreciation expense amounted to $52,962 and $16,436 for the years ended December 31, 2016 and 2015. respectively. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2016 | |
Income Taxes [Abstract] | |
INCOME TAXES | 5. INCOME TAXES The Company is subject to federal and state income taxes. The Company and subsidiaries file a consolidated federal income tax return. The Company’s consolidated provision for income taxes for the years ended December 31, 2016 and 2015 consists of the following: Year Ended Year Ended December 31, 2016 December 31, 2015 Income Tax Expense (benefit) Current federal tax expense Federal $ -0- $ -0- State -0- -0- Deferred tax (benefit) Federal $ -0- $ -0- State -0- -0- Total $ -0- $ -0- The consolidated provision for income taxes for the years ended December 31, 2016 and 2015 differs from that computed by applying federal statutory rates to income before federal income tax expense, as indicated in the following analysis: Year Ended Year December 31, December 31, Expected federal tax provision (benefit) at 35% rate $ (150,935 ) $ (185,065 ) Surtax exemption 21,562 26,438 Meals and entertainment 6,416 2,724 Valuation allowance (19,967 ) 171,493 State income tax 142,924 (15,590 ) Total income tax $ -0- $ -0- Effective tax rate 0.0 % 0.0 % A summary of deferred tax assets and liabilities as of December 31, 2016 and 2015 is as follows: Year Ended Year Ended December 31, 2016 December 31, 2015 Deferred tax assets: Reserve for inventory obsolescence $ 15,930 $ 18,008 Reserve for bad debt 16,563 2,251 Stock option compensation 172,797 108,963 Federal tax loss carryforward 258,219 135,562 State tax loss carryforward 39,852 20,923 Less valuation allowance (398,676 ) (235,543 ) Total Deferred Tax Asset 104,685 50,164 Year Ended Year Ended December 31, December 31, Deferred tax liabilities: Accumulated depreciation and amortization (104,685 ) (50,164 ) Total deferred tax liabilities (104,685 ) (50,164 ) NET DEFERRED TAX $ -0- $ -0- As of December 31, 2016, the Company had $860,730 federal and state net operating loss carryforwards, which results in a Federal and State deferred tax asset of $298,071, expiring in 2034, 2035 and 2036. Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred since inception. Such objective evidence limits the ability to consider other subjective evidence such as our projections for future growth. On the basis of this evaluation, as of December 31, 2016, a valuation allowance of $398,676 has been recorded to record only the portion of the deferred tax asset that is more likely than not to be realized. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence such as our projections for growth. |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
Dec. 31, 2016 | |
Long-Term Debt [Abstract] | |
LONG-TERM DEBT | 6. LONG-TERM DEBT Long-term debt is as follows: December 31, 8.0%, Hitachi Capital, payable $631.13 monthly beginning September 2015 through August 2019, secured by delivery equipment with a book value of $26,059 $ 18,133 3.5%, Wells Fargo Equipment Finance, payable $518.96 monthly beginning April 2016 through March 2021, secured by warehouse equipment with a book value of $26,150 24,559 10.926%, RMT Equipment, payable $1,154.79 monthly beginning June 2016 through October 2018, secured by delivery equipment with a book value of $33,076 22,477 $ 65,169 Less Current Maturities (23,443 ) Total Long-Term Debt $ 41,726 Future Debt Maturities – A schedule of expected debt payments and the portion allocated to principal follows: Total Allocated to Year Ending December 31 Payment Principal 2017 $ 27,779 $ 23,443 2018 24,634 23,369 2019 11,277 10,750 2020 6,228 6,058 2021 1,558 1,549 $ 71,476 $ 65,169 Interest expense for the years ended December 31, 2016 and 2015 was $5,251 and $2,916, respectively. |
Stock Options
Stock Options | 12 Months Ended |
Dec. 31, 2016 | |
Stock Options [Abstract] | |
STOCK OPTIONS | 7. STOCK OPTIONS On March 6, 2014, the Company’s Board of Directors (the “Board”) approved the 2014 Equity Incentive stock plan pursuant to which the Company may grant incentive and non-statutory options to employees, nonemployee members of the Board, consultants and other independent advisors who provide services to the Corporation. The maximum shares of common stock which may be issued over the term of the plan shall not exceed 2,500,000 shares. Awards under this plan are made by the Board or a committee of the Board. Options under the plan are to be issued at the market price of the stock on the day of the grant except to those issued to holders of 10% or more of the Company’s common stock which is required to be issued at a price not less than 110% of the fair market value on the day of the grant. Each option is exercisable at such time or times, during such period and for such numbers of shares shall be determined by the Plan Administrator. However, no option shall have a term in excess of 5 years from the date of grant. On March 6, 2014, the Company issued 650,000 options to its CEO, Darren Lampert, issued 400,000 options to its CFO, Irwin Lampert, issued 400,000 options to its President, Michael Salaman and issued 200,000 options to its COO, Jason Dawson exercisable at prices between $.60 and $.66 per share. On May 12, 2014, the Company issued 50,000 options to its director, Jody Kane and on May 14, 2014, the Company issued 50,000 options to its director, Steve Aiello, exercisable at prices between $.60 and $.66 per share. On July 7, 2014, the Company issued 100,000 options to 8 of its employees, exercisable at prices between $.60 and $.66 per share. On April 15, 2015 the Company issued 10,000 options to sales consultant, Duane Nunez and on October 8, 2015 it issued 25,000 options to sales consultant Troy Sower. The options vest 1/3 immediately, 1/3 one year after date of issuance and 1/3 two years after date of issuance. The options vest over a three year period. Compensation expense recorded for the year ended December 31, 2016 was $86,333. Each stock option award is estimated as of the date of grant using a Black-Scholes Merton option valuation model that uses the assumptions noted in the table below. To address the lack of historical volatility data for the Company, expected volatility is based on the volatilities of peer companies. The risk-free rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant. As of December 31, 2016, there were 1,872,000 options issued and outstanding under the plan. Expected volatility 141.26 % Expected dividends -0- Expected term 3 years Risk-free rate 2.0 % A summary of option activity as of December 31, 2016: Options Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term Outstanding at January 1, 2016 1,885,000 $ .62 3 years Granted -0- -0- Exercised -0- -0- Forfeited or expired (13,000 ) -0- Outstanding at December 31, 2016 1,872,000 .62 3 years A summary of the status of the Company’s nonvested shares as of December 31, 2016 and changes during the period then ended is presented below: Weighted-Average Grant Date Nonvested shares Shares Fair Value Nonvested at January 1, 2015 1,233,333 0.14 Granted 35,000 0.14 Vested (628,334 ) 0.14 Forfeited -0- -0- Nonvested at January 1, 2016 639,999 0.14 Granted -0- -0- Vested (626,999 ) 0.14 Forfeited (13,000 ) -0- Nonvested at December 31, 2016 -0- 0.14 |
Stock Purchase Warrants
Stock Purchase Warrants | 12 Months Ended |
Dec. 31, 2016 | |
Stock Purchase Warrants [Abstract] | |
STOCK PURCHASE WARRANTS | 8. STOCK PURCHASE WARRANTS As of December 31, 2016, the Company granted 2,585,000 warrants to investors in a private placement of common shares. 50,000 warrants were issued to “Placement Agents” for private placement of common stock. These warrants are exercisable for a period of five years with an exercise price of $.70. A summary of the status of the Company’s outstanding stock warrants as of December 31, 2016 is as follows: Weighted Shares Exercise Average Price Outstanding January 1, 2016 2,607,801 $ .70 Granted 2,635,000 .70 Exercised (1,357,072 ) .70 Forfeited -0- -0- Outstanding December 31, 2016 3,885,729 $ .70 As of March 27, 2017, there were a total of 3,167,157 warrants issued and outstanding. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2016 | |
Stockholders' Equity [Abstract] | |
STOCKHOLDERS' EQUITY | 9. STOCKHOLDERS’ EQUITY Common Stock The Company’s current Certificate of Incorporation authorizes it to issue 100,000,000 shares of common stock, par value $0.001 per share. As of December 31, 2016, there were 11,742,834 shares of common stock outstanding. The number of shares of common stock outstanding as of December 31, 2016 does not include (i) 3,885,729 shares of common stock issuable upon the exercise of warrants; (ii) shares of our common stock issuable upon the exercise of 1,872,000 outstanding stock options. As of March 27, 2017, there were a total of 12,561,406 shares of common stock issued and outstanding. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2016 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | 10. EARNINGS PER SHARE The following table sets forth the composition of the weighted average shares (denominator) used in the basic and dilutive earnings per share computation for years ended December 31, 2016 and 2015. Year Ended Year Ended December 31, December 31, 2015 Net (Loss) $ (431,244 ) $ (528,756 ) Weighted average share outstanding basic 9,153,053 6,563,271 Effect of dilutive common stock equivalents 9,153,053 6,563,271 Basic (loss) per share $ (.05 ) $ (.08 ) Dilutive (loss) per share $ (.05 ) $ (.08 ) The effect of 1,872,000 stock options and 3,885,729 of warrants outstanding as of December 31, 2016 is antidilutive and therefore not presented in the above table. |
Lease Commitments
Lease Commitments | 12 Months Ended |
Dec. 31, 2016 | |
Lease Commitments [Abstract] | |
LEASE COMMITMENTS | 11. LEASE COMMITMENTS The Company leases its store facilities under operating leases ranging from $900 to $5,600 per month. The following is a schedule of future minimum rental payments required under the terms of the operating leases as of December 31, 2016: Year Ending December 31 Amount 2017 $ 476,182 2018 479,089 2019 437,745 2020 369,841 2021 332,937 Thereafter 81,162 $ 2,176,956 Rent expense under all operating leases for the year ended December 31, 2016 and 2015 was $306,115 and $105,269, respectively. |
Other Commitments
Other Commitments | 12 Months Ended |
Dec. 31, 2016 | |
Other Commitments [Abstract] | |
OTHER COMMITMENTS | 12. OTHER COMMITMENTS In May 2014, the Company entered into employment agreements with its CEO and President of the Company. The agreements require payment of monthly wages and benefits. These agreements expire May 2017. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2016 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 13. SUBSEQUENT EVENTS On January 30, 2017, the Company entered into a commercial lease to rent certain premises located in Trinidad, Colorado, to be effective from March 1, 2017 to February 28, 2022. This 7,383 square feet premises is used by the Company to open a new store to replace and consolidate its existing 3,000 square feet store in Trinidad as part of the Company’s expansion plan. On February 1, 2017, the Company entered into a commercial lease to rent certain 12,837 square feet premises located in Denver, Colorado, to be effective from February 1, 2017 to February 1, 2022. The premises is used by the Company to open a new store and as the Company’s principal offices. On February 1, 2017, the Company’s wholly-owned subsidiary, GrowGeneration California Corp. (“GrowGeneration California”) entered into an asset purchase agreement (“Asset Purchase Agreement”) with an individual to purchase certain assets from the seller in connection with a retail hydroponic and garden supply business located in Santa Rosa, CA. The assets subject to the sale under the Asset Purchase Agreement included inventories, fixed assets, tangible personal property, intangible personal property, receivables and a custom list. In addition to the cash consideration for the purchase of such assets, GrowGeneration California also agreed to make certain cash payments and 25,000 shares of common stock of the Company to the seller contingent on the achievement of revenue goals by the business in 2017, 2018 and 2019. The closing of the asset purchase took place on February 8, 2017. In connection with the purchase of the assets, GrowGeneration California also entered into a commercial lease, to be effective from March 1, 2017 to February 28, 2022, to rent the premises where the business is located. We closed our existing store in Santa Rosa and consolidated it with a new store we opened in the new location. On March 10, 2017, the Company closed a private placement of a total of 825,000 units of its securities to 4 accredited investors. Each unit consists of (i) one share of the Company’s common stock and (ii) one 5 year warrant to purchase one share of common stock at an exercise price of $2.75 per share. The Company raised an aggregate of $1,650,000 gross proceeds in the offering. |
Summary of Significant Accoun21
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Summary of Significant Accounting Policies [Abstract] | |
Basis of Presentation and Consolidation | Basis of Presentation and Consolidation The Company’s financial statements are prepared on the accrual method of accounting. The accounting and reporting policies of the Company conform with generally accepted accounting principles (GAAP). The consolidated financial statements of the Company include the accounts of GrowGeneration Pueblo Corp, Grow Generation California Corp, Grow Generation Nevada Corp, and Ggen Distribution Corp. Intercompany balances and transactions are eliminated in consolidation. Management makes significant operating decisions based upon the analysis of the entire Company and financial performance is evaluated on a company-wide basis. Accordingly, the various products sold are aggregated into one reportable operating segment as under guidance in the Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC or codification”) Topic 280 for segment reporting. |
Use of Estimates | Use of Estimates Management uses estimates and assumptions in preparing these financial statements in accordance with generally accepted accounting principles. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported revenues and expenses during the reporting period. Actual results could vary from the estimates that were used. |
Revenue Recognition | Revenue Recognition Revenue on product sales is recognized upon delivery or shipment. Customer deposits/layaway sales are not reported as income unit final payment is received and the merchandise is delivered. |
Accounts receivable | Accounts Receivable Accounts receivable are stated at the amount the Company expects to collect from balances outstanding at year-end. Based on the Company's assessment of the credit history with customers having outstanding balances and current relationships with them. A reserve for uncollectable receivables is established when collection of amounts due is deemed improbable. Indicators of improbable collection include client bankruptcy, client litigation, client cash flow difficulties or ongoing service or billing disputes. Credit is generally extended on a short-term basis thus receivables do not bear interest. At December 31, 2016 and 2015, the Company established an allowance for doubtful accounts of $47,829 and $6,500, respectively. |
Property and Equipment | Property and Equipment Expenditures for maintenance and repairs are charged against operations. Renewals and betterment that materially extend the life of the asset are capitalized. Depreciation of property and equipment is provided on the straight-line method for financial reporting purposes at rates based on the following estimated useful lives: Estimated Lives Vehicle 5 years Furniture and fixtures 5-7 years Computers and equipment 3-5 years Leasehold improvements 10 years For federal income tax purposes, depreciation is computed using the accelerated cost recovery system and the modified accelerated cost recovery system. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The fair value of certain of our financial instruments including cash and cash equivalents, accounts receivable, prepaid assets, employee advances, accounts payable, customer deposits, payroll and payroll tax liabilities, sales tax payable and notes payable approximate their carrying amounts because of the short-term maturity of these instruments. |
Income Taxes | Income Taxes The Company accounts for income taxes in accordance with FASB ASC 740, Income Taxes, which requires the recognition of deferred income taxes for differences between the basis of assets and liabilities for financial statement and income tax purposes. The differences relate principally to depreciation of property and equipment, reserve for obsolete inventory and bad debt. Deferred tax assets and liabilities represent the future tax consequence for those differences, which will either be deductible or taxable when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for operating losses that are available to offset future taxable income. Valuation allowances are established to reduce deferred tax assets to the amount expected to be realized. The Company adopted the provisions of FASB ASC 740-10-25, which prescribes a recognition threshold and measurement attribute for the recognition and measurement of tax positions taken or expected to be taken in income tax returns. FASB ASC 740-10-25 also provides guidance on de-recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, and accounting for interest and penalties associated with tax positions. The Company’s tax returns are subject to tax examinations by U.S. federal and state authorities until respective statute of limitation. Currently, the 2016, 2015, and 2014 tax years are open and subject to examination by taxing authorities. However, the Company is not currently under audit nor has the Company been contacted by any of the taxing authorities. The Company does not have any accruals for uncertain tax positions as of December 31, 2016. It is not anticipated that unrecognized tax benefits would significantly increase or decrease within 12 months of the reporting date. |
Presentation of Sales Taxes | Presentation of Sales Taxes The Company is required to collect sales tax for the State of Colorado, State of California, City of Pueblo, City of Canon City, City of Colorado Springs, Pueblo County, Fremont County, Jefferson County, El Paso County, City & County of Denver, and City of Santa Rosa; ranging from 3.9% to 8.25% on the Company's sales to nonexempt customers. The Company collects that sales tax from customers and remits the entire amount to the corresponding taxing authorities. The Company's accounting policy is to exclude the tax collected and remitted from revenue and cost of sales. |
Advertising | Advertising The Company expenses all advertising and promotional costs when incurred. Advertising and promotional expenses for the years ended December 31, 2016 and 2015 amounted to $107,744 and $51,332, respectively. |
Freight and Shipping | Freight and Shipping It is the Company's policy to classify freight and shipping costs as part of cost of sales. Total freight and shipping costs for the years ended December 31, 2016 and 2015 was $66,856 and $35,836, respectively. |
Cash and Cash Equivalents | Cash and Cash Equivalents For purposes of the statement of cash flows, the Company considers all unrestricted highly liquid investments with an original maturity of three months or less to be cash equivalents. |
Concentration of Risk | Concentration of Risk Financial instruments that potentially expose us to concentrations of risk consist primarily of cash and cash equivalents and accounts receivable, which are generally not collateralized. Our policy is to place our cash and cash equivalents with high quality financial institutions, in order to limit the amount of credit exposure. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (FDIC), up to $250,000. At December 31, 2016 and 2015, the Company had $8,332 and $-0-, respectively, in excess of the FDIC insurance limit. The Company generally does not require collateral from its customers, but its credit extension and collection policies include analyzing the financial condition of potential customers, establishing credit limits, monitoring payments, and aggressively pursuing delinquent accounts. The Company maintains allowance for potential credit losses. A significant portion of the Company’s revenues are derived from the sales of products to the purveyors of cannabis products and services. |
Goodwill | Goodwill Goodwill represents the excess of acquisition costs over the fair value of net tangible and intangible assets acquired in connection with an acquisition. The Company accounts for goodwill in accordance with the provisions of FASB Accounting Standards Update (ASU) 2014-02, Intangibles – Goodwill and Other (Topic 350) Accounting for Goodwill. In accordance with FASB ASC Topic 350 for Intangibles – Goodwill and Other, goodwill is not amortized but is reviewed for potential impairment on an annual basis, or if events or circumstances indicate a potential impairment, at the reporting unit level. The Company’s review for impairment includes an assessment of qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value, including goodwill. If it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value, including goodwill, the first step of the two-step quantitative goodwill impairment test is performed, which compares the fair value of the reporting unit with its carrying amounts, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired. However, if the carrying amount of the reporting unit exceeds its fair value, an additional procedures must be performed. That additional procedure compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. An impairment loss is recorded to the extent that the carrying amount of goodwill exceeds its implied fair value. The carrying value of goodwill is tested for impairment annually or more frequently if circumstances indicate that impairment may have occurred. |
Inventory | Inventory Inventory consists primarily of gardening supplies and materials and is recorded at the lower of cost (first-in, first-out method) or market. |
Earnings (Loss) Per Share | Earnings (Loss) Per Share The Company computes net earnings (loss) per share under Accounting Standards Codification subtopic 260-10, “Earnings Per Share” (“ASC 260-10”). Basic earnings or loss per share (“EPS”) is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS is computed by dividing net income (loss) by the weighted-average of all potentially dilutive shares of common stock that were outstanding during the periods presented. The treasury stock method is used in calculating diluted EPS for potentially dilutive stock options and share purchase warrants, which assumes that any proceeds received from the exercise of in-the-money stock options and share purchase warrants, would be used to purchase common shares at the average market price for the period. |
Stock Based Compensation | Stock Based Compensation The Company accounts for stock-based compensation issued to employees, and where appropriate, non-employees, at fair value. Under fair value provisions, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the appropriate vesting period using the straight-line method. The amount of stock-based compensation recognized at any date must at least equal the portion of the grant date fair value of the award that is vested at that date and as a result it may be necessary to recognize the expense using a ratable method. Determining the fair value of stock-based awards at the date of grant requires judgment, including estimating the expected term of the stock options and the expected volatility of the Company’s stock. In addition, judgment is required in estimating the amount of stock-based awards that are expected to be forfeited. If actual results differ significantly from these estimates or different key assumptions were used, it could have a material effect on the Company’s consolidated financial statements. |
Summary of Significant Accoun22
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Summary of Significant Accounting Policies [Abstract] | |
Property and Equipment estimated useful lives | Estimated Lives Vehicle 5 years Furniture and fixtures 5-7 years Computers and equipment 3-5 years Leasehold improvements 10 years |
Premises and Equipment (Tables)
Premises and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Premises and Equipment [Abstract] | |
Summary of net premises and equipment | December 31, 2016 2015 Vehicle $ 102,014 $ 32,191 Leasehold improvements 131,411 55,297 Furniture, fixtures and equipment 389.396 203,753 622,821 291,241 Accumulated depreciation (72,967 ) (20,005) $ 549,854 $ 271,236 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Taxes [Abstract] | |
Schedule of consolidated provision for income taxes | Year Ended Year Ended December 31, 2016 December 31, 2015 Income Tax Expense (benefit) Current federal tax expense Federal $ -0- $ -0- State -0- -0- Deferred tax (benefit) Federal $ -0- $ -0- State -0- -0- Total $ -0- $ -0- |
Schedule of federal statutory rates to income before federal income tax expense | Year Ended Year December 31, December 31, Expected federal tax provision (benefit) at 35% rate $ (150,935 ) $ (185,065 ) Surtax exemption 21,562 26,438 Meals and entertainment 6,416 2,724 Valuation allowance (19,967 ) 171,493 State income tax 142,924 (15,590 ) Total income tax $ -0- $ -0- Effective tax rate 0.0 % 0.0 % |
Schedule of deferred tax assets and liabilities | Year Ended Year Ended December 31, 2016 December 31, 2015 Deferred tax assets: Reserve for inventory obsolescence $ 15,930 $ 18,008 Reserve for bad debt 16,563 2,251 Stock option compensation 172,797 108,963 Federal tax loss carryforward 258,219 135,562 State tax loss carryforward 39,852 20,923 Less valuation allowance (398,676 ) (235,543 ) Total Deferred Tax Asset 104,685 50,164 Year Ended Year Ended December 31, December 31, Deferred tax liabilities: Accumulated depreciation and amortization (104,685 ) (50,164 ) Total deferred tax liabilities (104,685 ) (50,164 ) NET DEFERRED TAX $ -0- $ -0- |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Long-Term Debt [Abstract] | |
Schedule of long-term debt | December 31, 8.0%, Hitachi Capital, payable $631.13 monthly beginning September 2015 through August 2019, secured by delivery equipment with a book value of $26,059 $ 18,133 3.5%, Wells Fargo Equipment Finance, payable $518.96 monthly beginning April 2016 through March 2021, secured by warehouse equipment with a book value of $26,150 24,559 10.926%, RMT Equipment, payable $1,154.79 monthly beginning June 2016 through October 2018, secured by delivery equipment with a book value of $33,076 22,477 $ 65,169 Less Current Maturities (23,443 ) Total Long-Term Debt $ 41,726 |
Schedule of expected debt payments | Total Allocated to Year Ending December 31 Payment Principal 2017 $ 27,779 $ 23,443 2018 24,634 23,369 2019 11,277 10,750 2020 6,228 6,058 2021 1,558 1,549 $ 71,476 $ 65,169 |
Stock Options (Tables)
Stock Options (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Stock Options [Abstract] | |
Schedule of options issued and outstanding under the plan | Expected volatility 141.26 % Expected dividends -0- Expected term 3 years Risk-free rate 2.0 % |
Summary of option activity | Options Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term Outstanding at January 1, 2016 1,885,000 $ .62 3 years Granted -0- -0- Exercised -0- -0- Forfeited or expired (13,000 ) -0- Outstanding at December 31, 2016 1,872,000 .62 3 years |
Summary of company's nonvested shares | Weighted-Average Grant Date Nonvested shares Shares Fair Value Nonvested at January 1, 2015 1,233,333 0.14 Granted 35,000 0.14 Vested (628,334 ) 0.14 Forfeited -0- -0- Nonvested at January 1, 2016 639,999 0.14 Granted -0- -0- Vested (626,999 ) 0.14 Forfeited (13,000 ) -0- Nonvested at December 31, 2016 -0- 0.14 |
Stock Purchase Warrants (Tables
Stock Purchase Warrants (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Stock Purchase Warrants [Abstract] | |
Schedule of outstanding stock warrants | Weighted Shares Exercise Average Price Outstanding January 1, 2016 2,607,801 $ .70 Granted 2,635,000 .70 Exercised (1,357,072 ) .70 Forfeited -0- -0- Outstanding December 31, 2016 3,885,729 $ .70 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Earnings Per Share [Abstract] | |
Schedule of weighted average shares (denominator) used in the basic and dilutive earnings per share | Year Ended Year Ended December 31, December 31, 2015 Net (Loss) $ (431,244 ) $ (528,756 ) Weighted average share outstanding basic 9,153,053 6,563,271 Effect of dilutive common stock equivalents 9,153,053 6,563,271 Basic (loss) per share $ (.05 ) $ (.08 ) Dilutive (loss) per share $ (.05 ) $ (.08 ) |
Lease Commitments (Tables)
Lease Commitments (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Lease Commitments [Abstract] | |
Schedule of future minimum rental payments under the terms of operating leases | Year Ending December 31 Amount 2017 $ 476,182 2018 479,089 2019 437,745 2020 369,841 2021 332,937 Thereafter 81,162 $ 2,176,956 |
Nature of Operations (Details)
Nature of Operations (Details) - stores | Dec. 31, 2016 | May 30, 2014 |
Nature of Operations (Textual) | ||
Number of stores | 12 | 4 |
Summary of Significant Accoun31
Summary of Significant Accounting Policies (Details) | 12 Months Ended |
Dec. 31, 2016 | |
Vehicle [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, estimated lives | 5 years |
Furniture and fixtures [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, estimated lives | 5 years |
Furniture and fixtures [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, estimated lives | 7 years |
Computers and equipment [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, estimated lives | 3 years |
Computers and equipment [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, estimated lives | 5 years |
Leasehold improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, estimated lives | 10 years |
Summary of Significant Accoun32
Summary of Significant Accounting Policies (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Summary of Significant Accounting Policies (Textual) | ||
Allowance for doubtful accounts | $ 47,829 | $ 6,500 |
Sales tax description | The Company is required to collect sales tax for the State of Colorado, State of California, City of Pueblo, City of Canon City, City of Colorado Springs, Pueblo County, Fremont County, Jefferson County, El Paso County, City & County of Denver, and City of Santa Rosa; ranging from 3.9% to 8.25% on the Company's sales to nonexempt customers. | |
Freight and shipping cost | $ 66,856 | 35,836 |
Advertising and promotional expense | $ 107,744 | 51,332 |
Concentration risk uninsured deposits, description | Accounts at each institution are insured by the Federal Deposit Insurance Corporation (FDIC), up to $250,000. At December 31, 2016 and 2015, the Company had $8,332 and $-0-, respectively, in excess of the FDIC insurance limit. | |
Amount excess of FDIC insurance limit | $ 8,332 | $ 0 |
Premises and Equipment (Details
Premises and Equipment (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Property, Plant and Equipment [Line Items] | ||
Premises and equipment, gross | $ 622,821 | $ 291,241 |
Accumulated depreciation | (72,967) | (20,005) |
Premises and equipment, net | 549,854 | 271,236 |
Vehicle [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Premises and equipment, gross | 102,014 | 32,191 |
Leasehold improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Premises and equipment, gross | 131,411 | 55,297 |
Furniture, fixtures and equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Premises and equipment, gross | $ 389.396 | $ 203,753 |
Premises and Equipment (Detai34
Premises and Equipment (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Premises and Equipment (Textual) | ||
Depreciation expense | $ 52,962 | $ 16,436 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Expense (benefit) Current federal tax expense | ||
Federal | $ 0 | $ 0 |
State | 0 | 0 |
Deferred tax (benefit) | ||
Federal | 0 | 0 |
State | 0 | 0 |
Total income tax | $ 0 | $ 0 |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Taxes [Abstract] | ||
Expected federal tax provision (benefit) at 35% rate | $ (150,935) | $ (185,065) |
Surtax exemption | 21,562 | 26,438 |
Meals and entertainment | 6,416 | 2,724 |
Valuation allowance | (19,967) | 171,493 |
State income tax | 142,924 | (15,590) |
Total income tax | $ 0 | $ 0 |
Effective tax rate | 0.00% | 0.00% |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Deferred tax assets: | ||
Reserve for inventory obsolescence | $ 15,930 | $ 18,008 |
Reserve for bad debt | 16,563 | 2,251 |
Stock option compensation | 172,797 | 108,963 |
Federal tax loss carryforward | 258,219 | 135,562 |
State tax loss carryforward | 39,852 | 20,923 |
Less valuation allowance | (398,676) | (235,543) |
Total Deferred Tax Asset | 104,685 | 50,164 |
Deferred tax liabilities: | ||
Accumulated depreciation and amortization | (104,685) | (50,164) |
Total deferred tax liabilities | (104,685) | (50,164) |
NET DEFERRED TAX | $ 0 | $ 0 |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Taxes (Textuals) | ||
Federal and state net operating loss carryforwards | $ 860,730 | |
Federal and state deferred tax asset | $ 298,071 | |
Description of net operating loss carryforwards dates | Expiring in 2034, 2035 and 2036. | |
Valuation allowance | $ 398,676 | $ 235,543 |
Long-Term Debt (Details)
Long-Term Debt (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Debt Instrument [Line Items] | ||
Less Current Maturities | $ (23,443) | $ (5,866) |
Total Long-Term Debt | 41,726 | $ 18,133 |
Hitachi Capital [Member] | ||
Debt Instrument [Line Items] | ||
Long-Term Debt | 18,133 | |
Wells Fargo Equipment Finance [Member] | ||
Debt Instrument [Line Items] | ||
Long-Term Debt | 24,559 | |
RMT Equipment [Member] | ||
Debt Instrument [Line Items] | ||
Long-Term Debt | 22,477 | |
Debt [Member] | ||
Debt Instrument [Line Items] | ||
Long-Term Debt | $ 65,169 |
Long-Term Debt (Details 1)
Long-Term Debt (Details 1) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Debt Instrument [Line Items] | ||
Total | $ 23,443 | $ 5,866 |
Total Payment [Member] | ||
Debt Instrument [Line Items] | ||
2,017 | 27,779 | |
2,018 | 24,634 | |
2,019 | 11,277 | |
2,020 | 6,228 | |
2,021 | 1,558 | |
Total | 71,476 | |
Allocated to Principal [Member] | ||
Debt Instrument [Line Items] | ||
2,017 | 23,443 | |
2,018 | 23,369 | |
2,019 | 10,750 | |
2,020 | 6,058 | |
2,021 | 1,549 | |
Total | $ 65,169 |
Long-Term Debt (Details Textual
Long-Term Debt (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Debt Instrument [Line Items] | ||
Interest expense | $ 5,251 | $ 2,916 |
8.0%, Hitachi Capital [Member] | ||
Debt Instrument [Line Items] | ||
Long term debt, monthly payment | $ 631.13 | |
Long term debt maturity date, description | Beginning September 2015 through August 2019. | |
Long-term debt, book value | $ 26,059 | |
3.5%, Wells Fargo Equipment Finance [Member] | ||
Debt Instrument [Line Items] | ||
Long term debt, monthly payment | $ 518.96 | |
Long term debt maturity date, description | Beginning April 2016 through March 2021. | |
Long-term debt, book value | $ 26,150 | |
10.926%, RMT Equipment [Member] | ||
Debt Instrument [Line Items] | ||
Long term debt, monthly payment | $ 1,154.79 | |
Long term debt maturity date, description | Beginning June 2016 through October 2018. | |
Long-term debt, book value | $ 33,076 |
Stock Options (Details)
Stock Options (Details) | 12 Months Ended |
Dec. 31, 2016 | |
Stock Options [Abstract] | |
Expected volatility | 141.26% |
Expected dividends | 0.00% |
Expected term | 3 years |
Risk-free rate | 2.00% |
Stock Options (Details 1)
Stock Options (Details 1) - Options [Member] | 12 Months Ended |
Dec. 31, 2016$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Outstanding Shares - Beginning balance | shares | 1,885,000 |
Shares, Granted | shares | 0 |
Shares, Exercised | shares | 0 |
Shares, Forfeited or expired | shares | 13,000 |
Outstanding Shares - Ending balance | shares | 1,872,000 |
Outstanding Weighted-Average Exercise Price - Beginning Balance | $ / shares | $ 0.62 |
Weighted-Average Exercise Price, Granted | $ / shares | 0 |
Weighted-Average Exercise Price, Exercised | $ / shares | 0 |
Weighted Average Exercise Price - Option Forfeited or expired | $ / shares | 0 |
Outstanding Weighted Average Exercise Price - Ending Balance | $ / shares | $ 0.62 |
Outstanding Weighted-Average Remaining Contractual Term | 3 years |
Stock Options (Details 2)
Stock Options (Details 2) - Nonvested [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Nonvested shares - Beginning Balance | 639,999 | 1,233,333 |
Shares, Granted | 0 | 35,000 |
Shares, Vested | (626,999) | (628,334) |
Shares, Forfeited | (13,000) | 0 |
Nonvested shares - Ending Balance | 0 | 639,999 |
Weighted-Average Grant Date Fair Value - Nonvested Beginning Balance | $ 0.14 | $ 0.14 |
Weighted-Average Grant Date Fair Value, Granted | 0 | 0.14 |
Weighted-Average Grant Date Fair Value, Vested | 0.14 | 0.14 |
Weighted-Average Grant Date Fair Value, Forfeited | 0 | 0 |
Weighted-Average Grant Date Fair Value - Nonvested Ending Balance | $ 0.14 | $ 0.14 |
Stock Options (Details Textual)
Stock Options (Details Textual) | Jul. 07, 2014Employees$ / sharesshares | May 14, 2014$ / sharesshares | Mar. 06, 2014$ / sharesshares | Dec. 31, 2016USD ($)shares | Dec. 31, 2015USD ($) | Oct. 08, 2015shares | Apr. 15, 2015shares | May 12, 2014shares |
Stock Options (Textual) | ||||||||
Stock issued over the term of the plan | 2,500,000 | |||||||
Description of stock options | Options under the plan are to be issued at the market price of the stock on the day of the grant except to those issued to holders of 10% or more of the Company's common stock which is required to be issued at a price not less than 110% of the fair market value on the day of the grant. Each option is exercisable at such time or times, during such period and for such numbers of shares shall be determined by the Plan Administrator. However, no option shall have a term in excess of 5 years from the date of grant. | |||||||
Stock option compensation | $ | $ 86,333 | $ 87,967 | ||||||
Vesting period | The options vest 1/3 immediately, 1/3 one year after date of issuance and 1/3 two years after date of issuance. | |||||||
Stock options issued and outstanding under the plan | 1,872,000 | |||||||
Darren Lampert (CEO) [Member] | ||||||||
Stock Options (Textual) | ||||||||
Options issued | 650,000 | |||||||
Irwin Lampert (CFO) [Member] | ||||||||
Stock Options (Textual) | ||||||||
Options issued | 400,000 | |||||||
Michael Salaman (President) [Member] | ||||||||
Stock Options (Textual) | ||||||||
Options issued | 400,000 | |||||||
Jason Dawson (COO) [Member] | ||||||||
Stock Options (Textual) | ||||||||
Options issued | 200,000 | |||||||
Jason Dawson (COO) [Member] | Minimum [Member] | ||||||||
Stock Options (Textual) | ||||||||
Options exercise price | $ / shares | $ 0.60 | |||||||
Jason Dawson (COO) [Member] | Maximum [Member] | ||||||||
Stock Options (Textual) | ||||||||
Options exercise price | $ / shares | $ 0.66 | |||||||
Jody Kane (Director) [Member] | ||||||||
Stock Options (Textual) | ||||||||
Options issued | 50,000 | |||||||
Steve Aiello (Director) [Member] | ||||||||
Stock Options (Textual) | ||||||||
Options issued | 50,000 | |||||||
Steve Aiello (Director) [Member] | Minimum [Member] | ||||||||
Stock Options (Textual) | ||||||||
Options exercise price | $ / shares | $ 0.60 | |||||||
Steve Aiello (Director) [Member] | Maximum [Member] | ||||||||
Stock Options (Textual) | ||||||||
Options exercise price | $ / shares | $ 0.66 | |||||||
Employees [Member] | ||||||||
Stock Options (Textual) | ||||||||
Options issued | 100,000 | |||||||
Number of employees | Employees | 8 | |||||||
Employees [Member] | Minimum [Member] | ||||||||
Stock Options (Textual) | ||||||||
Options exercise price | $ / shares | $ 0.60 | |||||||
Employees [Member] | Maximum [Member] | ||||||||
Stock Options (Textual) | ||||||||
Options exercise price | $ / shares | $ 0.66 | |||||||
Duane Nunez (Sales consultant) [Member] | ||||||||
Stock Options (Textual) | ||||||||
Options issued | 10,000 | |||||||
Troy Sowers (Sales consultant) [Member] | ||||||||
Stock Options (Textual) | ||||||||
Options issued | 25,000 |
Stock Purchase Warrants (Detail
Stock Purchase Warrants (Details) - Stock Warrants [Member] | 12 Months Ended |
Dec. 31, 2016$ / sharesshares | |
Stock Purchase Warrants [Line Items] | |
Outstanding Shares - Beginning balance | shares | 2,607,801 |
Shares, Granted | shares | 2,635,000 |
Shares, Exercised | shares | (1,357,072) |
Shares, Forfeited | shares | 0 |
Outstanding Shares - Ending balance | shares | 3,885,729 |
Outstanding Weighted-Average Exercise Price - Beginning Balance | $ / shares | $ 0.70 |
Weighted-Average Exercise Price, Granted | $ / shares | 0.70 |
Weighted-Average Exercise Price, Exercised | $ / shares | 0.70 |
Weighted-Average Exercise Price, Forfeited | $ / shares | 0 |
Outstanding Weighted Average Exercise Price - Ending Balance | $ / shares | $ 0.70 |
Stock Purchase Warrants (Deta47
Stock Purchase Warrants (Details Textual) - $ / shares | 12 Months Ended | |
Dec. 31, 2016 | Mar. 27, 2017 | |
Subsequent Event [Member] | ||
Stock Purchase Warrants (Textual) | ||
Warrants issued | 3,167,157 | |
Warrants outstanding | 3,167,157 | |
Private Placement [Member] | ||
Stock Purchase Warrants (Textual) | ||
Granted warrants to investors | 2,585,000 | |
Warrants issued to "Selling Agents" | 50,000 | |
Warrants exercisable period | 5 years | |
Warrants exercise price | $ 0.70 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - $ / shares | Mar. 27, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Stockholders' Equity [Textual] | |||
Common stock, par value | $ 0.001 | $ 0.001 | |
Common stock, shares authorized | 100,000,000 | 100,000,000 | |
Common stock, shares issued | 11,742,834 | 8,967,834 | |
Common stock, shares outstanding | 11,742,834 | 8,967,834 | |
Outstanding stock warrants | 3,885,729 | ||
Stock options outstanding | 1,872,000 | ||
Subsequent Event [Member] | |||
Stockholders' Equity [Textual] | |||
Common stock, shares issued | 12,561,406 | ||
Common stock, shares outstanding | 12,561,406 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Earnings Per Share [Abstract] | ||
Net (Loss) | $ (431,244) | $ (528,756) |
Weighted average share outstanding basic | 9,153,053 | 6,563,271 |
Effect of dilutive common stock equivalents | ||
Adjusted weighted average shares outstanding-dilutive | 9,153,053 | 6,563,271 |
Basic (loss) per share | $ (0.05) | $ (0.08) |
Dilutive (loss) per share | $ (0.05) | $ (0.08) |
Earnings Per Share (Details Tex
Earnings Per Share (Details Textual) | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Earnings per share (Textual) | |
Stock options | $ 1,872,000 |
Warrants outstanding | $ 3,885,729 |
Lease Commitments (Details)
Lease Commitments (Details) | Dec. 31, 2016USD ($) |
Lease Commitments [Abstract] | |
2,017 | $ 476,182 |
2,018 | 479,089 |
2,019 | 437,745 |
2,020 | 369,841 |
2,021 | 332,937 |
Thereafter | 81,162 |
Total | $ 2,176,956 |
Lease Commitments (Details Text
Lease Commitments (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Lease Commitments (Textual) | ||
Rent expense under operating leases | $ 306,115 | $ 105,269 |
Minimum [Member] | ||
Lease Commitments (Textual) | ||
Rent expense under operating leases | 900 | |
Maximum [Member] | ||
Lease Commitments (Textual) | ||
Rent expense under operating leases | $ 5,600 |
Other Commitments (Details)
Other Commitments (Details) | 12 Months Ended |
Dec. 31, 2016 | |
Other Commitments (Textuals) | |
Employment agreements expire date | May 31, 2017 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event [Member] | Mar. 10, 2017USD ($)Investors$ / shares | Feb. 01, 2017ft²shares | Jan. 30, 2017ft² |
Subsequent Event [Line Items] | |||
Area of lease | ft² | 12,837 | 7,383 | |
Area of lease, description | This 7,383 square feet premises is used by the Company to open a new store to replace and consolidate its existing 3,000 square feet store in Trinidad as part of the Company's expansion plan. | ||
Sale of common stock | shares | 25,000 | ||
Private Placement [Member] | |||
Subsequent Event [Line Items] | |||
Exercise price | $ / shares | $ 2.75 | ||
Numbers of investors | Investors | 4 | ||
Warrants term | 5 years | ||
Gross proceeds from offering | $ | $ 1,650,000 | ||
Private placement units of securites, description | The Company closed a private placement of a total of 825,000 units of its securities to 4 accredited investors. Each unit consists of (i) one share of the Company's common stock and (ii) one 5 year warrant to purchase one share of common stock at an exercise price of $2.75 per share. The Company raised an aggregate of $1,650,000 gross proceeds in the offering. |