Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Mar. 29, 2019 | Jun. 30, 2018 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | GrowGeneration Corp. | ||
Entity Central Index Key | 0001604868 | ||
Amendment Flag | false | ||
Trading Symbol | GRWG | ||
Current Fiscal Year End Date | --12-31 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Current Reporting Status | Yes | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | Yes | ||
Entity Shell Company | false | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | false | ||
Entity Public Float | $ 73,391,900 | ||
Entity Common Stock, Shares Outstanding | 28,844,552 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash | $ 14,639,981 | $ 1,215,265 |
Accounts receivable, net of allowance for doubtful accounts of $133,288 and $97,829 at December 31, 2018 and 2017 | 862,397 | 653,568 |
Inventory | 8,869,469 | 4,585,341 |
Prepaid expenses and other current assets | 606,037 | 711,852 |
Total current assets | 24,977,884 | 7,166,026 |
Property and equipment, net | 1,820,821 | 1,259,483 |
Intangible assets, net | 114,155 | 53,286 |
Goodwill | 8,752,909 | 592,500 |
Other assets | 227,205 | 183,113 |
TOTAL ASSETS | 35,892,974 | 9,254,408 |
Current liabilities: | ||
Accounts payable | 1,819,411 | 1,067,857 |
Other accrued liabilities | 40,151 | 70,029 |
Payroll and payroll tax liabilities | 410,345 | 247,887 |
Customer deposits | 516,038 | 92,350 |
Sales tax payable | 191,958 | 73,220 |
Current portion of long-term debt | 436,813 | 41,707 |
Total current liabilities | 3,414,716 | 1,593,050 |
Long-term convertible debt, net of debt discount and debt issuance costs | 2,044,113 | |
Long-term debt, net of current portion | 375,626 | 82,537 |
Total liabilities | 5,834,455 | 1,675,587 |
Commitments and contingencies | ||
Stockholders' Equity: | ||
Common stock; $.001 par value; 100,000,000 shares authorized; 27,948,609 and 16,846,835 shares issued and outstanding as of December 31, 2018 and 2017, respectively | 27,949 | 16,846 |
Additional paid-in capital | 38,796,562 | 11,254,212 |
Accumulated deficit | (8,765,992) | (3,692,237) |
Total stockholders' equity | 30,058,519 | 7,578,821 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 35,892,974 | $ 9,254,408 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, net of allowance for doubtful accounts | $ 133,288 | $ 97,829 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 27,948,609 | 16,846,835 |
Common stock, shares outstanding | 27,948,609 | 16,846,835 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Statement [Abstract] | ||
Sales | $ 29,000,730 | $ 14,363,886 |
Cost of sales | 22,556,172 | 11,094,331 |
Gross profit | 6,444,558 | 3,269,555 |
Operating expenses: | ||
Store operations | 5,202,330 | 2,963,306 |
General and administrative | 1,603,421 | 1,022,401 |
Share based compensation | 1,895,219 | 1,077,932 |
Depreciation and amortization | 351,070 | 151,561 |
Salaries and related expenses | 1,648,166 | 904,868 |
Total operating expenses | 10,700,206 | 6,120,068 |
Net loss from operations | (4,255,648) | (2,850,513) |
Other income (expense): | ||
Gain on settlements | 322,058 | |
Other income | 115,875 | 1,633 |
Other expense | (421) | |
Interest income | 79,184 | |
Interest expense | (23,565) | (15,339) |
Amortization of debt discount | (989,601) | |
Total non-operating income (expense), net | (818,107) | 307,931 |
Net loss | $ (5,073,755) | $ (2,542,582) |
Net loss per shares, basic and diluted | $ (0.22) | $ (0.18) |
Weighted average shares outstanding, basic and diluted | 23,492,650 | 14,510,582 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders’ Equity - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated (Deficit) | Total |
Beginning Balances at Dec. 31, 2016 | $ 11,743 | $ 4,696,221 | $ (1,149,655) | $ 3,558,309 |
Beginning Balance, shares at Dec. 31, 2016 | 11,742,834 | |||
Sale of Common stock and warrants, net of fees | $ 1,825 | 3,289,740 | 3,291,565 | |
Sale of Common stock and warrants, net of fees, shares | 1,825,000 | |||
Warrants issued for services | 263,986 | 263,986 | ||
Stock option expense | 188,666 | 188,666 | ||
Common stock issued upon warrant exercise | $ 2,754 | 1,925,747 | 1,928,501 | |
Common stock issued upon warrant exercise, shares | 2,755,001 | |||
Common stock issued upon exercise of options | $ 50 | 29,950 | 30,000 | |
Common stock issued upon exercise of options, shares | 50,000 | |||
Common stock issued for services | $ 474 | 859,902 | 860,376 | |
Common stock issued for services, shares | 474,000 | |||
Net loss | (2,542,582) | (2,542,582) | ||
Ending Balance at Dec. 31, 2017 | $ 16,846 | 11,254,212 | (3,692,237) | 7,578,821 |
Ending Balance, shares at Dec. 31, 2017 | 16,846,835 | |||
Sale of Common stock and warrants, net of fees | $ 3,333 | 9,956,544 | 9,959,877 | |
Sale of Common stock and warrants, net of fees, shares | 3,333,333 | |||
Warrants issued for services | 456,807 | 456,807 | ||
Stock option expense | 546,370 | 546,370 | ||
Common stock issued upon warrant exercise | $ 3,077 | 2,590,617 | 2,593,694 | |
Common stock issued upon warrant exercise, shares | 3,076,461 | |||
Common stock issued upon exercise of options | $ 995 | 320,706 | 321,701 | |
Common stock issued upon exercise of options, shares | 995,186 | |||
Common stock issued in connection with business combinations | $ 1,550 | 5,303,600 | 5,305,150 | |
Common stock issued in connection with business combinations, shares | 1,550,000 | |||
Common stock issued upon conversion of convertible debt | $ 2,014 | 3,619,917 | 3,621,931 | |
Common stock issued upon conversion of convertible debt, shares | 2,013,294 | |||
Warrants issued with convertible debt | 4,239,000 | 4,239,000 | ||
Common stock issued for services | $ 108 | 400,395 | 400,503 | |
Common stock issued for services, shares | 107,500 | |||
Common stock issued for accrued share-based compensation | $ 26 | 108,394 | 108,420 | |
Common stock issued for accrued share-based compensation, shares | 26,000 | |||
Net loss | (5,073,755) | (5,073,755) | ||
Ending Balance at Dec. 31, 2018 | $ 27,949 | $ 38,796,562 | $ (8,765,992) | $ 30,058,519 |
Ending Balance, shares at Dec. 31, 2018 | 27,948,609 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Cash Flows from Operating Activities: | ||
Net loss | $ (5,073,755) | $ (2,542,582) |
Adjustments to reconcile net (loss) to net cash used in operating activities: | ||
Depreciation and amortization | 351,069 | 151,561 |
Provision for doubtful accounts receivable | 35,459 | 50,000 |
Inventory valuation reserve | 153,397 | 73,648 |
Amortization of debt discount | 989,601 | |
Stock based compensation | 1,895,219 | 1,077,932 |
(Increase) decrease in: | ||
Accounts receivable | (244,288) | (312,333) |
Inventory | (792,575) | (2,084,551) |
Prepaid expenses and other assets | (182,616) | (551,718) |
Increase (decrease) in: | ||
Accounts payable and accrued liabilities | 514,154 | 494,093 |
Customer deposits | 423,688 | 40,678 |
Payroll and payroll tax liabilities | 270,878 | 170,819 |
Sales taxes payable | 118,738 | 26,278 |
Net Cash (Used In) Operating Activities | (1,541,031) | (3,406,175) |
Cash Flows from Investing Activities: | ||
Assets acquired in business combinations | (5,680,409) | |
Purchase of furniture and equipment | (625,379) | (775,101) |
Purchase of goodwill and other intangibles | (61,523) | (403,907) |
Net Cash (Used In) Investing Activities | (6,367,311) | (1,179,008) |
Cash Flows from Financing Activities: | ||
Principal payments on long term debt | (454,979) | (56,259) |
Proceeds from issuance of convertible debt, net of expenses | 8,912,765 | |
Proceeds from the sales of common stock and exercise of warrants and options, net of expenses | 12,875,272 | 5,250,063 |
Net Cash Provided by Financing Activities | 21,333,058 | 5,193,804 |
Net Increase in Cash and Cash Equivalents | 13,424,716 | 608,621 |
Cash and Cash Equivalents at Beginning of Period | 1,215,265 | 606,644 |
Cash and Cash Equivalents at End of Period | 14,639,981 | 1,215,265 |
Supplemental Information: | ||
Common stock and warrants issued for prepaid services | 45,000 | 416,886 |
Acquisition of vehicles with debt financing | 56,174 | 84,968 |
Insurance premium financing | 30,366 | |
Interest paid during the period | 23,565 | 15,339 |
Acquisition of assets with seller financing | $ 1,087,000 |
Nature of Operations
Nature of Operations | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [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, GrowGeneration Washington Corp, GrowGeneration Rhode Island Corp, GrowGeneration Oklahoma Corp, GrowGeneration Canada, GrowGeneration HG Corp, GrowGeneration Hemp Corp, GGen Distribution Corp, GrowGeneration Michigan Corp, GrowGeneration New England Corp and GrowGeneration Management Corp. Incorporated in Colorado in 2014, the Company has grown to currently own and operate, as of the date of this filing, a chain of 21 retail hydroponic/gardening stores, with 5 locations in Colorado, 6 locations in California, 2 location in Nevada, 1 location in Washington, 3 locations in Michigan, 1 location in Rhode Island, 2 locations in Oklahoma, and 1 location in Maine. Our primary strategic plan is to grow by acquisition of hydroponic/garden stores throughout the United States and rely on organic growth. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Consolidation The financial statements are prepared under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 105-10, Generally Accepted Accounting Principles The consolidated financial statements include the Company and its wholly-owned subsidiaries. All intercompany balances and transactions are eliminated in consolidation. Reclassifications Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported consolidated net loss. Use of Estimates Management uses estimates and assumptions in preparing these consolidated 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 consolidated financial statements, and the reported revenues and expenses during the reporting period. Actual results could vary from the estimates that were used. Segment Reporting 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. Revenue Recognition The Company recognizes revenue, net of estimated returns and sales tax, at the time the customer takes possession of merchandise or receives services. When the Company receives payment from customers before the customer has taken possession of the merchandise or the service has been performed, the amount received is recorded as Deferred Revenue in the accompanying Consolidated Balance Sheets until the sale or service is complete. Vendor Allowances Vendor allowances primarily consist of volume rebates that are earned as a result of attaining certain purchase levels. These vendor allowances are accrued as earned, with those allowances received as a result of attaining certain purchase levels accrued over the incentive period based on estimates of purchases. Volume rebates earned are initially recorded as a reduction in Merchandise Inventories and a subsequent reduction in Cost of Sales when the related product is sold. Cash Equivalents The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. The Company’s cash equivalents are carried at fair market value and consist primarily of money market funds. 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, 2018 and 2017, the Company established an allowance for doubtful accounts of $133,288 and $97,829, respectively. Inventory Inventory consists primarily of gardening supplies and materials and is recorded at the lower of cost (first-in, first-out method) or market. The company periodically reviews the value of items in inventory and provides write-downs or write-offs of inventory based on its assessment of market conditions. Write-downs and write-offs are charged to cost of goods sold. Property and Equipment Property and equipment are carried at cost. Leasehold Improvements are amortized using the straight-line method over the original term of the lease or the useful life of the improvement, whichever is shorter. Renewals and betterment that materially extend the life of the asset are capitalized. Expenditures for maintenance and repairs are charged against operations. 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 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 2017, 2016, and 2015 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, 2018. It is not anticipated that unrecognized tax benefits would significantly increase or decrease within 12 months of the reporting date. Advertising The Company expenses advertising and promotional costs when incurred. Advertising and promotional expenses for the years ended December 31, 2018 and 2017 amounted to $269,550 and $264,632, respectively. 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, 2018 and 2017, the Company had $12,962,958 and $750,141, 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. Goodwill Goodwill represents the excess of purchase price over the fair value of net assets. 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, 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. 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 records stock-based compensation in accordance with FASB ASC Topic 718, Compensation-Stock Compensation The Black-Scholes option pricing model requires subjective assumptions, including future stock price volatility and expected time to exercise, which greatly affect the calculated values. The expected term of options granted is derived from historical data on employee exercises and post-vesting employment termination behavior. The risk-free rate selected to value any particular grant is based on the U.S. Treasury rate that corresponds to the expected life of the grant effective as of the date of the grant. The expected volatility is based on the historical volatility of the Company’s stock price. These factors could change in the future, affecting the determination of stock-based compensation expense in future periods. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Changes and Error Corrections [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS | 3. RECENT ACCOUNTING PRONOUNCEMENTS Recently Adopted Accounting Pronouncements In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows Classification of Certain Cash Receipts and Cash Payments In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows Restricted Cash In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation Scope of Modification Accounting Recently Issued Accounting Pronouncements – Pending Adoption In January 2016, the FASB issued ASU 2016-01, Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities In January 2017, the FASB issued ASU 2017-04 simplifying the accounting for goodwill impairment for all entities. The new guidance eliminates the requirement to calculate the implied fair value of goodwill (Step 2 of the current two-step goodwill impairment test under ASC 350). Instead, entities will record an impairment charge based on the excess of a reporting unit's carrying amount over its fair value (Step 1 of the current two-step goodwill impairment test). The ASU is effective prospectively for reporting periods beginning after December 15, 2019, with early adoption permitted for annual and interim goodwill impairment testing dates after January 1, 2017. We are currently evaluating the impact of the new guidance on our goodwill impairment testing process and consolidated financial statements. On August 28, 2017, the FASB issued ASU 2017-12, "Derivatives and Hedging," which better aligns risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The amendments expand and refine hedge accounting for both nonfinancial and financial risk components and in some situations better align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The new standard will be effective for the Company as of January 1, 2019. Early adoption is permitted. We do not believe the adoption of this new standard will have any impact on our consolidated financial statements and footnote disclosures. In February 2016, the FASB issued ASU 2016-02, Leases ("ASU 2016-02") |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | 4. PROPERTY AND EQUIPMENT Property and equipment at December 31, 2018 and 2017 consists of the following: December 31, 2018 2017 Vehicle $ 535,857 $ 243,264 Leasehold improvements 441,725 181,724 Furniture, fixtures and equipment 1,417,061 1,057,902 2,394,643 1,482,890 Accumulated depreciation (573,822 ) (223,407 Property and equipment, net $ 1,820,821 $ 1,259,483 Depreciation expense was $350,415 and $150,440 for the years ended December 31, 2018 and 2017, respectively. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | 5. 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, 2018 and 2017 consists of the following: Year Ended Year Ended December 31, December 31, 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- A summary of deferred tax assets and liabilities as of December 31, 2018 and 2017 is as follows: Year Ended Year Ended December 31, December 31, Deferred tax assets: Net operating losses 2,165,100 1,259,000 Share based compensation 663,300 273,500 Amortization of debt discount 346,400 - Reserve for inventory obsolescence $ 53,700 $ 41,700 Reserve for bad debt 12,400 34,200 Less valuation allowance (2,882,900 ) (1,398,400 ) Total Deferred Tax Asset $ 358,000 $ 210,000 Year Ended Year Ended December 31, December 31, Deferred tax liabilities: Accumulated depreciation and amortization $ (358,000 ) $ (210,000 ) Total deferred tax liabilities (358,000 ) (210,000 ) NET DEFERRED TAX $ -0- $ -0- As of December 31, 2018, the Company had approximately $6.2 million of operating loss carryforwards, which results in a Federal and State deferred tax asset of approximately $2.2 million, expiring in 2035 through 2039. 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, 2018, a valuation allowance of approximately $2.9 million 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, 2018 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT | 6. LONG-TERM DEBT December 31, 2018 2017 Long term debt is as follows: Chrysler Capital, interest ranging from 9.8% and 10.9% per annum, payable in monthly installments of $3,070 beginning May 2017 through May 2023, secured by vehicles with a book value of $205,000 $ - $ 79,479 Hitachi Capital, interest at 8.0% per annum, payable in monthly installments of $631.13 beginning September 2015 through August 2019, secured by delivery equipment with a book value of $24,910 3,211 11,781 Wells Fargo Equipment Finance, interest at 3.5% per annum, payable in monthly installments of $518.96 beginning April 2016 through March 2021, secured by warehouse equipment with a book value of $25,437 12,976 18,641 RMT Equipment, interest at 10.9% per annum, payable in monthly installments of $1,154.79 beginning June 2016 through October 2018, secured by delivery equipment with a book value of $31,130 - 10,916 Note payable insurance premium financing, interest at 4.74% per annum, payable in 10 installments of $3,441, due January 2018 - 3,427 Notes payable issued in connection with seller financing of assets acquired, interest at 1%, payable in 24 installments of $24,996, due February 2020 350,000 - Notes payable issued in connection with seller financing of assets acquired, interest at 1%, payable in 12 installments of $6,003, due September 2019 54,000 - Notes payable issued in connection with seller financing of assets acquired, interest at 8.125%, payable in 60 installments of $8,440, due August 2023 392,252 $ 812,439 $ 124,244 Less Current Maturities (436,813 ) (41,707 ) Total Long-Term Debt $ 375,626 $ 82,537 Debt maturities as of December 31, 2018 are as follows: 2019 436,816 2020 134,200 2021 85,748 2022 91,860 2023 63,816 $ 812,439 Interest expense for the years ended December 31, 2018 and 2017 was $23,565 and $15,339, respectively. |
Convertible Debt
Convertible Debt | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE DEBT | 7. CONVERTIBLE DEBT On January 12, 2018, the Company completed a private placement of a total of 36 units of the Company’s securities at the price of $250,000 per unit pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”) and Rule 506 of Regulation D promulgated thereunder. Each unit consisted of (i) a .1% unsecured convertible promissory note of the principal amount of $250,000, and (ii) a 3-year warrant entitling the holder to purchase 37,500 shares of the Company’s common stock, par value $.001 per share, at a price of $.01 per share or through cashless exercise. The convertible debt has a maturity date of January 12, 2021 and the principal balance and any accrued interest is convertible by the holder at any time into Common Stock of the Company at conversion price of $3.00 a share. Principal due and interest accrued on the notes will automatically convert into shares of Common Stock, at the conversion price, if at any time during the term of the notes, commencing twelve (12) months from the date of issuance, the Common Stock trades minimum daily volume of at least 50,000 shares for twenty (20) consecutive days with a volume weighted average price of at least $4.00 per share. In relation to this transaction, the Company recorded a debt discount of $4,239,000 related to the fair market value of warrants issued as noted above. The debt discount, which was based on an imputed interest rate, is being amortized on a straight-line basis over the life of the convertible debt. During the year ended December 31, 2018, convertible debt and accrued interest of $5,927,677, net of unamortized debt discount of $2,305,746, was converted into 2,013,294 shares of common stock at the conversion rate of $3.00 per share. December 31, 2018 2017 Convertible debt $ 3,075,000 - Remaining unamortized debt discount and debt issue costs (1,030,887 ) - Convertible debt, net of debt discount and debt issue costs $ 2,044,113 - Amortization of debt discount for the year ended December 31, 2018 was $998,601. There was no amortization of debt discount in 2017. At December 31, 2018 there were 536,250 warrants outstanding related to the issuance of convertible debt. |
Share Based Payments and Stock
Share Based Payments and Stock Options | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
SHARE BASED PAYMENTS AND STOCK OPTIONS | 8. SHARE BASED PAYMENTS AND STOCK OPTIONS On March 6, 2014, the Company’s Board of Directors (the “Board”) approved the 2014 Equity Incentive Plan (“2014 Plan) pursuant to which the Company may grant incentive, non-statutory options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units and other stock or cash awards to employees, nonemployee members of our Board, consultants and other independent advisors who provide services to the Company. 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 designated by 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. No option may be exercisable for more than ten years (five years in the case of an incentive stock option granted to a 10% stockholder) from the date of grant. On January 7, 2018, the Board adopted the 2018 Equity Compensation Plan (the “2018 Plan”) and on April 20, 2018, the shareholders approved the 2018 Plan. The 2018 Plan will be administered by the Board. The Board may grant options to purchase shares of Common Stock, stock appreciation rights, restricted stock units, restricted or unrestricted shares of Common Stock, performance shares, performance units, other cash-based awards and other stock-based awards. The Board also has broad authority to determine the terms and conditions of each option or other kind of equity award, adopt, amend and rescind rules and regulations for the administration of the 2018 Plan and amend or modify outstanding options, grants and awards. No options, stock purchase rights or awards may be made under the 2018 Plan on or after the ten-year anniversary of the adoption of the 2018 Plan by the Board, but the 2018 Plan will continue thereafter while previously granted options, stock appreciation rights or awards remain subject to the 2018 Plan. The maximum shares of Common Stock which may be issued over the term of the plan shall not exceed 2,500,000 shares. Options granted under the 2018 Plan may be either “incentive stock options” that are intended to meet the requirements of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”) or “nonstatutory stock options” that do not meet the requirements of Section 422 of the Code. The Board will determine the exercise price of options granted under the 2018 Plan. The exercise price of stock options may not be less than the fair market value, on the date of grant, per share of our Common Stock issuable upon exercise of the option (or 110% of fair market value in the case of incentive options granted to a ten-percent stockholder). No option may be exercisable for more than ten years (five years in the case of an incentive stock option granted to a 10% stockholder) from the date of grant. Awards issued under the 2014 Plan as of December 31, 2018 are summarized below: 2018 Total Shares available for issuance pursuant to the 2014 Plan 2,500,000 Options outstanding, December 31 2018 (995,500 ) Total options exercised under 2014 Plan (1,118,333 ) Total shares issued pursuant to the 2014 Plan (375,000 ) Awards available for issuance under the 2014 Plan, December 31, 2018 11,167 Awards issued under the 2018 Plan as of December 31, 2018 are summarized below: 2018 Total Shares available for issuance pursuant to the 2018 Plan 2,500,000 Options outstanding, December 31 2018 (281,500 ) Total options exercised under 2018 Plan - Total shares issued pursuant to the 2018 Plan (9,500 ) Awards available for issuance under the 2018 Plan, December 31, 2018 2,209,000 2018 2017 Expected volatility 72.91%-90.81 % 73.28% -96.92 % Expected dividends None None Expected term 2.5 years 2.5 years Risk-free rate 1.64 % 1.64%-1.70 % The table below summarizes all the options granted by the Company during years ended December 31, 2017 and 2018: Options Shares Weighted-Average Weighted- Weighted- Outstanding at January 1, 2017 1,862,000 $ .62 Granted 845,000 $ 1.80 $ .83 Exercised (50,000 ) $ .60 $ .07 Forfeited or expired (35,000 ) $ .60 $ .07 Outstanding at December 31, 2017 2,622,000 $ .99 2.35 years $ .32 Vested and exercisable at December 31 2017 2,057,332 $ .77 1.73 years Outstanding at January 1, 2018 2,622,000 $ .99 $ .32 Granted 386,500 $ 3.21 $ 1.91 Exercised (1,068,333 ) $ .67 $ .12 Forfeited or expired (124,667 ) $ .76 $ .16 Outstanding at December 31, 2018 1,815,500 $ 1.66 2.65 years $ .78 Vested and exercisable at December 31, 2018 1,393,831 $ 1.39 2.22 years Share-based payment expense to officers, directors and employees and the years ended December 31, 2018 and 2017 was approximately $901,900 and $730,500, respectively. Expense related to issuance of shares, options and warrants to consultants for the years ended December 31, 2018 and 2017 was approximately $501,800 and $347,500, respectively. |
Stock Purchase Warrants
Stock Purchase Warrants | 12 Months Ended |
Dec. 31, 2018 | |
Warrants and Rights Note Disclosure [Abstract] | |
STOCK PURCHASE WARRANTS | 9. STOCK PURCHASE WARRANTS A summary of the status of the Company's outstanding stock warrants as of December 31, 2018 is as follows: Weighted Exercise Outstanding January 1, 2017 3,885,729 $ .70 Granted/issued 2,475,000 2.55 Exercised (2,755,001 ) .70 Forfeited - Outstanding December 31, 2017 3,605,728 $ 1.84 Granted/issued 1,916,500 $ 1.01 Exercised (2,242,728 ) $ 1.16 Forfeited - Outstanding December 31, 2018 3,279,500 $ 1.94 |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY | 10. 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, 2018, and 2017, there were 27,948,609 and 16,846,835 shares of common stock issued and outstanding, respectively. 2018 During the year ended December 31, 2018, the Company sold 3,333,333 shares of common stock for net proceeds of $9,959,877. During the year ended December 31, 2018, the Company issued 3,076,461 shares of common stock upon exercise of 3,056,478 warrants resulting in proceeds to the Company of $2,593,694. During the year ended December 31, 2018, the Company issued 995,186 shares of common stock upon exercise of 1,068,333 options resulting in proceeds to the Company of $321,701. During the year ended December 31, 2018, the Company issued 2,013,294 shares of common stock upon conversion of convertible debt and accrued interest. (See Note 7) During the year ended December 31, 2018, the Company issued 1,550,000 shares of common stock in connection with business combinations. (See Note 14) During the year ended December 31, 2018, the Company issued 123,500 shares of common stock to employees valued at $463,922 and issued 10,000 shares of common stock to consultants valued at $45,001. 2017 During the year ended December 31, 2017, the Company sold 1,825,000 shares of common stock for net proceeds of $3,291,565. During the year ended December 31, 2017, the Company issued 2,755,001 shares of common stock upon exercise of 2,755,001 warrants resulting in proceeds to the Company of $1,928,501. During the year ended December 31, 2017, the Company issued 50,000 shares of common stock upon exercise of 50,000 options resulting in proceeds of $30,000 During the year ended December 31, 2017, the Company issued 194,000 shares of common stock to employees valued at $433,376 and issued 280,000 shares of common stock to consultants valued at $427,000. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | 11. EARNINGS PER SHARE Basic net loss per share is computed by dividing net loss attributable to common shareholders by the weighted average number of common shares outstanding. Diluted net loss per share is computed by dividing net loss attributable to common shareholders by the weighted average number of common shares outstanding plus the number of common shares that would be issued assuming exercise or conversion of all potentially dilutive common shares. Potentially dilutive securities are excluded from the calculation when their effect would be antidilutive. For all years presented in the consolidated financial statements, all potentially dilutive securities have been excluded from the diluted share calculations as they were anti-dilutive as a result of the net losses incurred for the respective years. Accordingly, basic shares equal diluted shares for all years presented. Potentially dilutive securities were comprised of the following: December 31, December 31, Warrants 3,279,500 3,605,728 Convertible debt warrants 536,250 - Options 1,815,500 2,083,500 Total 5,631,250 5,689,228 The following table sets forth the composition of the weighted average shares (denominator) used in the basic and dilutive earnings per share computation for the years ended December 31, 2018 and 2017. December 31, December 31, Net loss $ (5,073,755 ) $ (2,542,582 ) Weighted average shares outstanding, basic 23,492,650 14,510,582 Effect of dilutive common stock equivalents - - Adjusted weighted average shares outstanding, dilutive 23,492,650 23,492,650 Basic loss per shares $ (.22 ) $ (.18 ) Dilutive loss per share $ (.22 ) $ (.18 ) |
Lease Commitments
Lease Commitments | 12 Months Ended |
Dec. 31, 2018 | |
Leases [Abstract] | |
LEASE COMMITMENTS | 12. LEASE COMMITMENTS The Company leases its store facilities under operating leases ranging from $900 to $8,000 per month. The following is a schedule of future minimum rental payments required under the terms of the operating leases as of December 31, 2018: Year Ending December 31 Amount 2019 $ 1,251,800 2020 1,207,900 2021 1,085,400 2022 781,600 Thereafter 357,700 $ 4,684,400 Rent expense under all operating leases for the year ended December 31, 2018 and 2017 was $1,145,837 and $641,408, respectively. |
Vendor Concentrations
Vendor Concentrations | 12 Months Ended |
Dec. 31, 2018 | |
Risks and Uncertainties [Abstract] | |
VENDOR CONCENTRATIONS | 13. VENDOR CONCENTRATIONS As of December 31, 2018, and 2017, two suppliers represent 56% and 61% of our purchases, respectively. Although the Company expects to maintain relationships with these vendors, the loss of either supplier would not have a material adverse impact on our business, because both suppliers provide the same products. |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
ACQUISITIONS | 14. ACQUISITIONS The Company accounts for acquisitions in accordance with ASC 805 “Business Combinations.” Assets acquired and liabilities assumed are recorded in the accompanying consolidated balance sheets at their estimated fair values, as of the acquisition date. Results of operations are included in the Company’s financial statements from the date of acquisition. For the acquisitions noted below, the Company used the income approach to determine the fair value of the customer relationships, the relief from royalty method to determine the fair value of trademarks and the comparison of economic income using the with/without approach to determine the fair value of non-compete agreements. The Company used Level 3 inputs to determine the fair value of all these intangible assets. East Coast Humboldt Superior Central Santa Rosa Heavy Total Inventory $ 1,002,300 $ 389,800 $ 517,950 $ 254,900 $ 1,500,000 $ - $ 3,664,950 Prepaids and other current assets 30,200 6,800 - - - - 37,000 Furniture and equipment 45,600 30,000 50,000 4,600 100,000 - 230,200 Goodwill 1,341,400 654,000 540,250 136,400 4,884,500 433,000 7,989,550 Total $ 2,419,500 $ 1,080,600 $ 1,108,200 $ 395,900 $ 6,484,500 $ 433,000 $ 11,921,700 The table below represents the consideration paid for the net assets acquired in business combinations. East Coast Humboldt Superior Central Santa Rosa Heavy Total Cash $ 1,201,200 $ 896,600 $ 817,950 $ 257,000 $ 2,425,000 $ 150,000 $ 5,747,750 Assumption of payables 66,300 - - - - - 66,300 Seller financing 600,000 - - - 415,000 72,000 1,087,000 Common stock 552,000 184,000 290,250 138,900 3,644,500 211,000 5,020,650 Total $ 2,419,500 $ 1,080,600 $ 1,108,200 $ 395,900 $ 6,484,500 $ 433,000 $ 11,921,700 The following table discloses the date of the acquisitions noted above and the revenue and earnings included in the consolidated income statement from the date of acquisition to the period ended September 30, 2018 East Coast Humboldt Superior Central Santa Rosa Heavy Total Acquisition date 1/23/2018 1/30/2018 4/12/2018 6/8/2018 7/13/2018 9/14/2018 Revenue $ 3,450,600 $ 2,030,200 $ 1,926,400 $ 498,000 $ 1,594,900 $ 121,500 $ 9,621,600 Earnings $ 613,000 $ 147,600 $ 178,200 $ 56,000 $ 165,300 $ 5,800 $ 1,165,900 The following represents the proforma consolidated income statement as if the acquisitions had been included in the consolidated results of the Company for the entire period for the year ended December 31, 2017. Pro forma consolidated income statement December 31, Revenue $ 40,887,900 Earnings $ (1,547,300 ) |
Gain on Settlements
Gain on Settlements | 12 Months Ended |
Dec. 31, 2018 | |
Gain on Settlements [Abstract] | |
GAIN ON SETTLEMENTS | 15. GAIN ON SETTLEMENTS For the year ended December 31, 2017, the Company recorded $322,058 in settlements which were comprised of two events. In 2017, a fire in northern California resulted in our Santa Rosa store being closed for approximately 10 days. In addition to the loss of revenue, the contents of the store were damaged due to smoke from the fire. The Company had insurance coverage for both the contents of the store and business interruption. The settlement with our insurance carrier was $126,278. In 2017, the Company entered into an asset purchase agreement to acquire the assets of an entity in California. One of the non-executing shareholders of the seller had various objections to the acquisition and asserted certain rights, claims and demands. The Company became aware that a third party was also interested in acquiring the target entity. The Company entered into an agreement to assign all its rights, title and interest in its asset purchase agreement to the third party in exchange for a payment of $75,000 and inventory from the third party valued at approximately $140,000, resulting in a gain on the settlement of approximately $195,000 after deducting costs of approximately $20,000. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 16. SUBSEQUENT EVENTS On November 28, 2018, the Company entered into an asset purchase agreement to purchase all of the assets of a retail hydroponic store, Chlorophyll Inc, located in Denver, CO. The closing of the asset purchase took place on January 22, 2019. The assets subject to the sale under the asset purchase agreement included inventories, fixed assets, tangible personal property, intangible personal property and contracts. The Company paid the sellers a total of $3.7 million in cash and 194,553 shares of common stock of the Company, valued at approximately $500,000, as consideration for the assets acquired. On January 26, 2019, the Company entered into two asset purchase agreements to purchase all of the assets of two retail hydroponic stores, located in Reno, NV and Palm Springs, CA. The closing of the asset purchases took place on February 7 and February 11, 2019, respectively. The assets subject to the sale under the asset purchase agreements included inventories, fixed assets, tangible personal property, intangible personal property and contracts. The Company paid the two sellers a total of $1,325,000 in cash and 150,000 shares of common stock of the Company, valued at approximately $489,000, as consideration for the assets acquired. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Consolidation | Basis of Presentation and Consolidation The financial statements are prepared under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 105-10, Generally Accepted Accounting Principles The consolidated financial statements include the Company and its wholly-owned subsidiaries. All intercompany balances and transactions are eliminated in consolidation. |
Reclassifications | Reclassifications Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported consolidated net loss. |
Use of Estimates | Use of Estimates Management uses estimates and assumptions in preparing these consolidated 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 consolidated financial statements, and the reported revenues and expenses during the reporting period. Actual results could vary from the estimates that were used. |
Segment Reporting | Segment Reporting 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. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue, net of estimated returns and sales tax, at the time the customer takes possession of merchandise or receives services. When the Company receives payment from customers before the customer has taken possession of the merchandise or the service has been performed, the amount received is recorded as Deferred Revenue in the accompanying Consolidated Balance Sheets until the sale or service is complete. |
Vendor Allowances | Vendor Allowances Vendor allowances primarily consist of volume rebates that are earned as a result of attaining certain purchase levels. These vendor allowances are accrued as earned, with those allowances received as a result of attaining certain purchase levels accrued over the incentive period based on estimates of purchases. Volume rebates earned are initially recorded as a reduction in Merchandise Inventories and a subsequent reduction in Cost of Sales when the related product is sold. |
Cash Equivalents | Cash Equivalents The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. The Company's cash equivalents are carried at fair market value and consist primarily of money market funds. |
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, 2018 and 2017, the Company established an allowance for doubtful accounts of $133,288 and $97,829, respectively. |
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. The company periodically reviews the value of items in inventory and provides write-downs or write-offs of inventory based on its assessment of market conditions. Write-downs and write-offs are charged to cost of goods sold. |
Property and Equipment | Property and Equipment Property and equipment are carried at cost. Leasehold Improvements are amortized using the straight-line method over the original term of the lease or the useful life of the improvement, whichever is shorter. Renewals and betterment that materially extend the life of the asset are capitalized. Expenditures for maintenance and repairs are charged against operations. 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 |
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 2017, 2016, and 2015 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, 2018. It is not anticipated that unrecognized tax benefits would significantly increase or decrease within 12 months of the reporting date. |
Advertising | Advertising The Company expenses advertising and promotional costs when incurred. Advertising and promotional expenses for the years ended December 31, 2018 and 2017 amounted to $269,550 and $264,632, respectively. |
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, 2018 and 2017, the Company had $12,962,958 and $750,141, 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. |
Goodwill | Goodwill Goodwill represents the excess of purchase price over the fair value of net assets. 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, 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. |
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 records stock-based compensation in accordance with FASB ASC Topic 718, Compensation-Stock Compensation The Black-Scholes option pricing model requires subjective assumptions, including future stock price volatility and expected time to exercise, which greatly affect the calculated values. The expected term of options granted is derived from historical data on employee exercises and post-vesting employment termination behavior. The risk-free rate selected to value any particular grant is based on the U.S. Treasury rate that corresponds to the expected life of the grant effective as of the date of the grant. The expected volatility is based on the historical volatility of the Company’s stock price. These factors could change in the future, affecting the determination of stock-based compensation expense in future periods. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Schedule of useful lives for property and equipment | Estimated Lives Vehicle 5 years Furniture and fixtures 5-7 years Computers and equipment 3-5 years Leasehold improvements 10 years |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | December 31, 2018 2017 Vehicle $ 535,857 $ 243,264 Leasehold improvements 441,725 181,724 Furniture, fixtures and equipment 1,417,061 1,057,902 2,394,643 1,482,890 Accumulated depreciation (573,822 ) (223,407 Property and equipment, net $ 1,820,821 $ 1,259,483 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of consolidated provision for income taxes | Year Ended Year Ended December 31, December 31, 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 deferred tax assets and liabilities | Year Ended Year Ended December 31, December 31, Deferred tax assets: Net operating losses 2,165,100 1,259,000 Share based compensation 663,300 273,500 Amortization of debt discount 346,400 - Reserve for inventory obsolescence $ 53,700 $ 41,700 Reserve for bad debt 12,400 34,200 Less valuation allowance (2,882,900 ) (1,398,400 ) Total Deferred Tax Asset $ 358,000 $ 210,000 Year Ended Year Ended December 31, December 31, Deferred tax liabilities: Accumulated depreciation and amortization $ (358,000 ) $ (210,000 ) Total deferred tax liabilities (358,000 ) (210,000 ) NET DEFERRED TAX $ -0- $ -0- |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | December 31, 2018 2017 Long term debt is as follows: Chrysler Capital, interest ranging from 9.8% and 10.9% per annum, payable in monthly installments of $3,070 beginning May 2017 through May 2023, secured by vehicles with a book value of $205,000 $ - $ 79,479 Hitachi Capital, interest at 8.0% per annum, payable in monthly installments of $631.13 beginning September 2015 through August 2019, secured by delivery equipment with a book value of $24,910 3,211 11,781 Wells Fargo Equipment Finance, interest at 3.5% per annum, payable in monthly installments of $518.96 beginning April 2016 through March 2021, secured by warehouse equipment with a book value of $25,437 12,976 18,641 RMT Equipment, interest at 10.9% per annum, payable in monthly installments of $1,154.79 beginning June 2016 through October 2018, secured by delivery equipment with a book value of $31,130 - 10,916 Note payable insurance premium financing, interest at 4.74% per annum, payable in 10 installments of $3,441, due January 2018 - 3,427 Notes payable issued in connection with seller financing of assets acquired, interest at 1%, payable in 24 installments of $24,996, due February 2020 350,000 - Notes payable issued in connection with seller financing of assets acquired, interest at 1%, payable in 12 installments of $6,003, due September 2019 54,000 - Notes payable issued in connection with seller financing of assets acquired, interest at 8.125%, payable in 60 installments of $8,440, due August 2023 392,252 $ 812,439 $ 124,244 Less Current Maturities (436,813 ) (41,707 ) Total Long-Term Debt $ 375,626 $ 82,537 |
Schedule of expected debt maturities | Debt maturities as of December 31, 2018 are as follows: 2019 436,816 2020 134,200 2021 85,748 2022 91,860 2023 63,816 $ 812,439 |
Convertible Debt (Tables)
Convertible Debt (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of convertible debt | December 31, 2018 2017 Convertible debt $ 3,075,000 - Remaining unamortized debt discount and debt issue costs (1,030,887 ) - Convertible debt, net of debt discount and debt issue costs $ 2,044,113 - |
Share Based Payments and Stoc_2
Share Based Payments and Stock Options (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of stock options | 2018 Total Shares available for issuance pursuant to the 2014 Plan 2,500,000 Options outstanding, December 31 2018 (995,500 ) Total options exercised under 2014 Plan (1,118,333 ) Total shares issued pursuant to the 2014 Plan (375,000 ) Awards available for issuance under the 2014 Plan, December 31, 2018 11,167 2018 Total Shares available for issuance pursuant to the 2018 Plan 2,500,000 Options outstanding, December 31 2018 (281,500 ) Total options exercised under 2018 Plan - Total shares issued pursuant to the 2018 Plan (9,500 ) Awards available for issuance under the 2018 Plan, December 31, 2018 2,209,000 |
Schedule of share-based payment expense and new shares issued | 2018 2017 Expected volatility 72.91%-90.81 % 73.28% -96.92 % Expected dividends None None Expected term 2.5 years 2.5 years Risk-free rate 1.64 % 1.64%-1.70 % |
Schedule of option outstanding | Options Shares Weighted-Average Weighted- Weighted- Outstanding at January 1, 2017 1,862,000 $ .62 Granted 845,000 $ 1.80 $ .83 Exercised (50,000 ) $ .60 $ .07 Forfeited or expired (35,000 ) $ .60 $ .07 Outstanding at December 31, 2017 2,622,000 $ .99 2.35 years $ .32 Vested and exercisable at December 31 2017 2,057,332 $ .77 1.73 years Outstanding at January 1, 2018 2,622,000 $ .99 $ .32 Granted 386,500 $ 3.21 $ 1.91 Exercised (1,068,333 ) $ .67 $ .12 Forfeited or expired (124,667 ) $ .76 $ .16 Outstanding at December 31, 2018 1,815,500 $ 1.66 2.65 years $ .78 Vested and exercisable at December 31, 2018 1,393,831 $ 1.39 2.22 years |
Stock Purchase Warrants (Tables
Stock Purchase Warrants (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Warrants and Rights Note Disclosure [Abstract] | |
Schedule of outstanding stock warrants | Weighted Exercise Outstanding January 1, 2017 3,885,729 $ .70 Granted/issued 2,475,000 2.55 Exercised (2,755,001 ) .70 Forfeited - Outstanding December 31, 2017 3,605,728 $ 1.84 Granted/issued 1,916,500 $ 1.01 Exercised (2,242,728 ) $ 1.16 Forfeited - Outstanding December 31, 2018 3,279,500 $ 1.94 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of potentially dilutive securities | December 31, December 31, Warrants 3,279,500 3,605,728 Convertible debt warrants 536,250 - Options 1,815,500 2,083,500 Total 5,631,250 5,689,228 |
Schedule of weighted average shares basic and dilutive earnings per share | December 31, December 31, Net loss $ (5,073,755 ) $ (2,542,582 ) Weighted average shares outstanding, basic 23,492,650 14,510,582 Effect of dilutive common stock equivalents - - Adjusted weighted average shares outstanding, dilutive 23,492,650 23,492,650 Basic loss per shares $ (.22 ) $ (.18 ) Dilutive loss per share $ (.22 ) $ (.18 ) |
Lease Commitments (Tables)
Lease Commitments (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Leases [Abstract] | |
Schedule of future minimum rental payments | Year Ending December 31 Amount 2019 $ 1,251,800 2020 1,207,900 2021 1,085,400 2022 781,600 Thereafter 357,700 $ 4,684,400 |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
Schedule of fair value of intangible assets | East Coast Hydro Humboldt Depot Superior Growers Supply Central Coast Garden Santa Rosa Hydro Heavy Gardens Total Inventory $ 1,002,300 $ 389,800 $ 517,950 $ 254,900 $ 1,500,000 $ - $ 3,664,950 Prepaids and other current assets 30,200 6,800 - - - - 37,000 Furniture and equipment 45,600 30,000 50,000 4,600 100,000 - 230,200 Goodwill 1,341,400 654,000 540,250 136,400 4,884,500 433,000 7,989,550 Total $ 2,419,500 $ 1,080,600 $ 1,108,200 $ 395,900 $ 6,484,500 $ 433,000 $ 11,921,700 East Coast Hydro Humboldt Depot Superior Growers Supply Central Coast Garden Santa Rosa Hydro Heavy Gardens Total Cash $ 1,201,200 $ 896,600 $ 817,950 $ 257,000 $ 2,425,000 $ 150,000 $ 5,747,750 Assumption of payables 66,300 - - - - - 66,300 Seller financing 600,000 - - - 415,000 72,000 1,087,000 Common stock 552,000 184,000 290,250 138,900 3,644,500 211,000 5,020,650 Total $ 2,419,500 $ 1,080,600 $ 1,108,200 $ 395,900 $ 6,484,500 $ 433,000 $ 11,921,700 |
Schedule of revenue and earnings included in consolidated income statement | East Coast Hydro Humboldt Depot Superior Growers Supply Central Coast Garden Santa Rosa Hydro Heavy Gardens Total Acquisition date 1/23/2018 1/30/2018 4/12/2018 6/8/2018 7/13/2018 9/14/2018 Revenue $ 3,450,600 $ 2,030,200 $ 1,926,400 $ 498,000 $ 1,594,900 $ 121,500 $ 9,621,600 Earnings $ 613,000 $ 147,600 $ 178,200 $ 56,000 $ 165,300 $ 5,800 $ 1,165,900 |
Schedule of proforma consolidated income statement | December 31, 2017 Revenue $ 40,887,900 Earnings $ (1,547,300 ) |
Nature of Operations (Details)
Nature of Operations (Details) | Dec. 31, 2018Store |
Nature of Operations (Textual) | |
Number of stores | 21 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Vehicle [Member] | |
Property and Equipment, Estimated Lives | 5 years |
Furniture and Fixtures [Member] | Minimum [Member] | |
Property and Equipment, Estimated Lives | 5 years |
Furniture and Fixtures [Member] | Maximum [Member] | |
Property and Equipment, Estimated Lives | 7 years |
Computers and equipment [Member] | Minimum [Member] | |
Property and Equipment, Estimated Lives | 3 years |
Computers and equipment [Member] | Maximum [Member] | |
Property and Equipment, Estimated Lives | 5 years |
Leasehold Improvements [Member] | |
Property and Equipment, Estimated Lives | 10 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Summary of Significant Accounting Policies (Textual) | ||
Unrecognized tax benefits period | 12 months | |
Allowance for doubtful accounts | $ 133,288 | $ 97,829 |
Sales tax description | Accounts at each institution are insured by the Federal Deposit Insurance Corporation (FDIC), up to $250,000. | |
Advertising and promotional expense | $ 269,550 | 264,632 |
Amount excess of FDIC insurance limit | $ 12,962,958 | $ 750,141 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 2,394,643 | $ 1,482,890 |
Accumulated depreciation | (573,822) | (223,407) |
Property and equipment, net | 1,820,821 | 1,259,483 |
Vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 535,857 | 243,264 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 441,725 | 181,724 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 1,417,061 | $ 1,057,902 |
Property and Equipment (Detai_2
Property and Equipment (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Property and Equipment (Textual) | ||
Depreciation expense | $ 350,415 | $ 150,440 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Current federal tax expense | ||
Federal | $ 0 | $ 0 |
State | 0 | 0 |
Deferred tax (benefit) | ||
Federal | 0 | 0 |
State | 0 | 0 |
Total | $ 0 | $ 0 |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred tax assets: | ||
Net operating losses | $ 2,165,100 | $ 1,259,000 |
Share based compensation | 663,300 | 273,500 |
Amortization of debt discount | 346,400 | |
Reserve for inventory obsolescence | 53,700 | 41,700 |
Reserve for bad debt | 12,400 | 34,200 |
Less valuation allowance | (2,882,900) | (1,398,400) |
Total Deferred Tax Asset | 358,000 | 210,000 |
Deferred tax liabilities: | ||
Accumulated depreciation and amortization | (358,000) | (210,000) |
Total deferred tax liabilities | (358,000) | (210,000) |
NET DEFERRED TAX | $ 0 | $ 0 |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Taxes (Textual) | ||
Operating loss carryforwards | $ 6,200,000 | |
Federal and state deferred tax asset | $ 2,200,000 | |
Description of net operating loss carryforwards dates | Expiring in 2035 through 2039 | |
Valuation allowance | $ 2,882,900 | $ 1,398,400 |
Long-Term Debt (Details)
Long-Term Debt (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | ||
Long term debt | $ 812,439 | $ 124,244 |
Less Current Maturities | (436,813) | (41,707) |
Total Long-Term Debt | 375,626 | 82,537 |
Chrysler Capital [Member] | ||
Debt Instrument [Line Items] | ||
Long term debt | 79,479 | |
Hitachi Capital [Member] | ||
Debt Instrument [Line Items] | ||
Long term debt | 3,211 | 11,781 |
Wells Fargo Equipment Finance [Member] | ||
Debt Instrument [Line Items] | ||
Long term debt | 12,976 | 18,641 |
RMT Equipment [Member] | ||
Debt Instrument [Line Items] | ||
Long term debt | 10,916 | |
Note payable insurance premium financing [Member] | ||
Debt Instrument [Line Items] | ||
Long term debt | 3,427 | |
Notes payable issued in connection with seller financing [Member] | ||
Debt Instrument [Line Items] | ||
Long term debt | 350,000 | |
Notes payable issued in connection with seller financing one [Member] | ||
Debt Instrument [Line Items] | ||
Long term debt | 54,000 | |
Notes payable issued in connection with seller financing two [Member] | ||
Debt Instrument [Line Items] | ||
Long term debt | $ 392,252 |
Long-Term Debt (Details 1)
Long-Term Debt (Details 1) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Debt Disclosure [Abstract] | ||
2019 | $ 436,816 | |
2020 | 134,200 | |
2021 | 85,748 | |
2022 | 91,860 | |
2023 | 63,816 | |
Total | $ 812,439 | $ 124,244 |
Long-Term Debt (Details Textual
Long-Term Debt (Details Textual) | 12 Months Ended | |
Dec. 31, 2018USD ($)Installments | Dec. 31, 2017USD ($) | |
Long-Term Debt (Textual) | ||
Interest expense | $ 23,565 | $ 15,339 |
Chrysler Capital [Member] | ||
Long-Term Debt (Textual) | ||
Long term debt, monthly payment | $ 3,070 | |
Long term debt maturity date, description | Beginning May 2017 through May 2023. | |
Long-term debt, book value | $ 205,000 | |
Hitachi Capital [Member] | ||
Long-Term Debt (Textual) | ||
Long term debt, monthly payment | $ 631 | |
Long term debt maturity date, description | Beginning September 2015 through August 2019. | |
Long-term debt, book value | $ 24,910 | |
Interest rate per annum | 8.00% | |
Wells Fargo Equipment Finance [Member] | ||
Long-Term Debt (Textual) | ||
Long term debt, monthly payment | $ 519 | |
Long term debt maturity date, description | Beginning April 2016 through March 2021. | |
Long-term debt, book value | $ 25,437 | |
Interest rate per annum | 3.50% | |
RMT Equipment [Member] | ||
Long-Term Debt (Textual) | ||
Long term debt, monthly payment | $ 1,155 | |
Long term debt maturity date, description | Beginning June 2016 through October 2018. | |
Long-term debt, book value | $ 31,130 | |
Interest rate per annum | 10.90% | |
Note payable insurance premium financing [Member] | ||
Long-Term Debt (Textual) | ||
Long term debt, monthly payment | $ 3,441 | |
Long term debt maturity date, description | Due January 2018. | |
Interest rate per annum | 4.74% | |
Number of installments | Installments | 10 | |
Notes payable issued in connection with seller financing [Member] | ||
Long-Term Debt (Textual) | ||
Long term debt, monthly payment | $ 24,996 | |
Long term debt maturity date, description | Due February 2020. | |
Interest rate per annum | 1.00% | |
Number of installments | Installments | 24 | |
Notes payable issued in connection with seller financing one [Member] | ||
Long-Term Debt (Textual) | ||
Long term debt, monthly payment | $ 6,003 | |
Long term debt maturity date, description | Due September 2019. | |
Interest rate per annum | 1.00% | |
Number of installments | Installments | 12 | |
Notes payable issued in connection with seller financing two [Member] | ||
Long-Term Debt (Textual) | ||
Long term debt, monthly payment | $ 8,440 | |
Long term debt maturity date, description | Due August 2023. | |
Interest rate per annum | 8.125% | |
Number of installments | Installments | 60 | |
Maximum [Member] | Chrysler Capital [Member] | ||
Long-Term Debt (Textual) | ||
Interest rate per annum | 10.90% | |
Minimum [Member] | Chrysler Capital [Member] | ||
Long-Term Debt (Textual) | ||
Interest rate per annum | 9.80% |
Convertible Debt (Details)
Convertible Debt (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Debt Disclosure [Abstract] | ||
Convertible debt | $ 3,075,000 | |
Remaining unamortized debt discount and debt issue costs | (1,030,887) | |
Convertible debt, net of debt discount and debt issue costs | $ 2,044,113 |
Convertible Debt (Details Textu
Convertible Debt (Details Textual) - USD ($) | Jan. 12, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Convertible Debt (Textual) | |||
Offering units of shares | 123,500 | 194,000 | |
Common stock, par value | $ 0.001 | $ 0.001 | |
Debt discount related to fair value of warrants | $ 4,239,000 | ||
Amortization of debt discount | 989,601 | ||
Warrants outstanding | $ 536,250 | ||
Convertible Debt [Member] | |||
Convertible Debt (Textual) | |||
Maturity date | Jan. 12, 2021 | ||
Conversion price | $ 3 | ||
Description of convertible debt | Principal due and interest accrued on the notes will automatically convert into shares of Common Stock, at the conversion price, if at any time during the term of the notes, commencing twelve (12) months from the date of issuance, the Common Stock trades minimum daily volume of at least 50,000 shares for twenty (20) consecutive days with a volume weighted average price of at least $4.00 per share. | ||
Convertible debt and accrued interest | $ 5,927,677 | ||
Net of unamortized debt discount | $ 2,305,746 | ||
Converted shares of common stock | 2,013,294 | ||
Private Placement [Member] | |||
Convertible Debt (Textual) | |||
Offering units of shares | 36 | ||
Securities unit price | $ 250,000 | ||
Principal amount | $ 250,000 | ||
Warrant term | 3 years | ||
Common stock, par value | $ 0.001 | ||
Warrants exercise price | $ 0.01 | ||
Warrant holder to purchase shares | 37,500 | ||
Percentage of unsecured convertible promissory note | 1.00% |
Share Based Payments and Stoc_3
Share Based Payments and Stock Options (Details) | 12 Months Ended |
Dec. 31, 2018shares | |
2014 Plan [Member] | |
Total Shares available for issuance pursuant to the Plan | 2,500,000 |
Options outstanding, December 31 2018 | (995,500) |
Total options exercised under Plan | (1,118,333) |
Total shares issued pursuant to the Plan | (375,000) |
Awards available for issuance under the Plan, December 31, 2018 | 11,167 |
2018 Plan [Member] | |
Total Shares available for issuance pursuant to the Plan | 2,500,000 |
Options outstanding, December 31 2018 | (281,500) |
Total options exercised under Plan | |
Total shares issued pursuant to the Plan | (9,500) |
Awards available for issuance under the Plan, December 31, 2018 | 2,209,000 |
Share Based Payments and Stoc_4
Share Based Payments and Stock Options (Details 1) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Expected dividends | ||
Expected term | 2 years 6 months | 2 years 6 months |
Risk-free rate | 1.64% | |
Minimum [Member] | ||
Expected volatility | 72.91% | 73.28% |
Risk-free rate | 1.64% | |
Maximum [Member] | ||
Expected volatility | 90.81% | 96.92% |
Risk-free rate | 1.70% |
Share Based Payments and Stoc_5
Share Based Payments and Stock Options (Details 2) - Options [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Outstanding, Shares | 2,622,000 | 1,862,000 |
Grants, Shares | 386,500 | 845,000 |
Exercised, Shares | (1,068,333) | (50,000) |
Forfeited or expired, Shares | (124,667) | (35,000) |
Outstanding, Shares | 1,815,500 | 2,622,000 |
Vested and exercisable, Shares | 1,393,831 | 2,057,332 |
Weighted - Average Exercise Price, Outstanding beginning balance | $ .99 | $ 0.62 |
Weighted - Average Exercise Price, Granted | 3.21 | 1.80 |
Weighted - Average Exercise Price, Exercised | .67 | .60 |
Weighted - Average Exercise Price, Forfeited or expired | .76 | .60 |
Weighted - Average Exercise Price, Outstanding ending balance | 1.66 | .99 |
Weighted - Average Exercise Price, Vested and exercisable | $ 1.39 | $ .77 |
Weighted - Average Remaining Contractual Term, Outstanding | 2 years 7 months 24 days | 2 years 4 months 6 days |
Weighted - Average Remaining Contractual Term, Vested and exercisable | 2 years 2 months 19 days | 1 year 8 months 23 days |
Weighted - Average Grant Date Fair Value, Outstanding beginning balance | $ 0.32 | |
Weighted - Average Grant Date Fair Value, Granted | 1.91 | $ 0.83 |
Weighted - Average Grant Date Fair Value, Exercised | .12 | 0.07 |
Weighted - Average Grant Date Fair Value, Forfeited or expired | .16 | 0.07 |
Weighted - Average Grant Date Fair Value Outstanding ending balance | $ .78 | $ 0.32 |
Share Based Payments and Stoc_6
Share Based Payments and Stock Options (Details Textual) - USD ($) | Mar. 06, 2014 | Dec. 31, 2018 | Dec. 31, 2017 |
Share Based Payments and Stock Options (Textual) | |||
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. No option may be exercisable for more than ten years (five years in the case of an incentive stock option granted to a 10% stockholder) from the date of grant. | The maximum shares of Common Stock which may be issued over the term of the plan shall not exceed 2,500,000 shares. Options granted under the 2018 Plan may be either “incentive stock options” that are intended to meet the requirements of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”) or “nonstatutory stock options” that do not meet the requirements of Section 422 of the Code. The Board will determine the exercise price of options granted under the 2018 Plan. The exercise price of stock options may not be less than the fair market value, on the date of grant, per share of our Common Stock issuable upon exercise of the option (or 110% of fair market value in the case of incentive options granted to a ten-percent stockholder). No option may be exercisable for more than ten years (five years in the case of an incentive stock option granted to a 10% stockholder) from the date of grant. | |
Stock issued over the term of the plan | 2,500,000 | ||
Share-based payment expense | $ 1,895,219 | $ 1,077,932 | |
Expense related to issuance of shares, options and warrants | 501,800 | 347,500 | |
Officers, directors and employees [Member] | |||
Share Based Payments and Stock Options (Textual) | |||
Share-based payment expense | $ 901,900 | $ 730,500 |
Stock Purchase Warrants (Detail
Stock Purchase Warrants (Details) - Warrant [Member] - $ / shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Outstanding, Shares | 3,605,728 | 3,885,729 | |
Granted/issued, Shares | 1,916,500 | 2,475,000 | |
Exercised, Shares | (2,242,728) | (2,755,001) | |
Forfeited, Shares | |||
Outstanding, Shares | 3,279,500 | 3,605,728 | |
Weighted Average Exercise Price, Outstanding beginning balance | $ 1.94 | $ 1.84 | $ .70 |
Weighted Average Exercise Price, Granted/issued | 1.01 | 2.55 | |
Weighted Average Exercise Price, Exercised | 1.16 | .70 | |
Weighted Average Exercise Price, Forfeited | |||
Weighted Average Exercise Price, Outstanding ending balance | $ 1.94 | $ 1.84 | $ .70 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Stockholders' Equity (Textual) | ||
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares outstanding | 27,948,609 | 16,846,835 |
Issued shares of common stock | 123,500 | 194,000 |
Sale of stock common shares | 1,825,000 | |
Proceeds from offering costs | $ 3,291,565 | |
Issuance of common stock in connection with business combinations | 1,550,000 | |
Common stock to employees | $ 463,922 | $ 433,376 |
Common Stock [Member] | ||
Stockholders' Equity (Textual) | ||
Sale of stock common shares | 3,333,333 | |
Net Proceeds | $ 9,959,877 | |
Convertible Debt [Member] | ||
Stockholders' Equity (Textual) | ||
Common stock upon conversion of convertible debt shares | 2,013,294 | |
Options [Member] | ||
Stockholders' Equity (Textual) | ||
Issued shares of common stock | 995,186 | 50,000 |
Common stock upon the exercise of common stock options | 1,068,333 | 50,000 |
Net Proceeds | $ 321,701 | |
Common stock exercised proceeds | $ 30,000 | |
Common stock of employee consultants | $ 10,000 | $ 280,000 |
Common stock of employee consultants, shares | 45,001 | 427,000 |
Warrant [Member] | Common Stock [Member] | ||
Stockholders' Equity (Textual) | ||
Issued shares of common stock | 3,076,461 | 2,755,001 |
Common stock upon exercise of common stock warrants | 2,755,001 | |
Common stock upon the exercise of common stock options | 3,056,478 | |
Warrants receiving net proceeds amount | $ 2,593,646 | $ 1,928,501 |
Earnings Per Share (Details)
Earnings Per Share (Details) - shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Potentially dilutive securities warrants and options | 5,631,250 | 5,689,228 |
Convertible debt warrant [warrants] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Potentially dilutive securities warrants and options | 536,250 | |
Warrants [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Potentially dilutive securities warrants and options | 3,279,500 | 3,605,728 |
Options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Potentially dilutive securities warrants and options | 1,815,500 | 2,083,500 |
Earnings Per Share (Details 1)
Earnings Per Share (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Earnings Per Share | ||
Net loss | $ (5,073,755) | $ (2,542,582) |
Weighted average shares outstanding, basic | 23,492,650 | 14,510,582 |
Effect of dilutive common stock equivalents | ||
Adjusted weighted average shares outstanding, dilutive | 23,492,650 | 23,492,650 |
Basic loss per shares | $ (0.22) | $ (.18) |
Dilutive loss per share | $ (.22) | $ (.18) |
Lease Commitments (Details)
Lease Commitments (Details) | Dec. 31, 2018USD ($) |
Leases [Abstract] | |
2019 | $ 1,251,800 |
2020 | 1,207,900 |
2021 | 1,085,400 |
2022 | 781,600 |
Thereafter | 357,700 |
Total | $ 4,684,400 |
Lease Commitments (Details Text
Lease Commitments (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Lease Commitments (Textual) | ||
Rent expense under operating leases | $ 1,145,837 | $ 641,408 |
Maximum [Member] | ||
Lease Commitments (Textual) | ||
Rent expense under operating leases | 8,000 | |
Minimum [Member] | ||
Lease Commitments (Textual) | ||
Rent expense under operating leases | $ 900 |
Vendor Concentrations (Details)
Vendor Concentrations (Details) - Suppliers | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Vendor Concentrations (Textual) | ||
Concentration risk, percentage | 56.00% | 61.00% |
Number of suppliers | 2 |
Acquisitions (Details)
Acquisitions (Details) | Dec. 31, 2018USD ($) |
Business Acquisition [Line Items] | |
Inventory | $ 3,664,950 |
Prepaids and other current assets | 37,000 |
Furniture and equipment | 230,200 |
Goodwill | 7,989,550 |
Cash | 5,747,750 |
Assumption of payables | 66,300 |
Seller financing | 1,087,000 |
Common stock | 5,020,650 |
Total | 11,921,700 |
East Coast Hydro [Member] | |
Business Acquisition [Line Items] | |
Inventory | 1,002,300 |
Prepaids and other current assets | 30,200 |
Furniture and equipment | 45,600 |
Goodwill | 1,341,400 |
Cash | 1,201,200 |
Assumption of payables | 66,300 |
Seller financing | 600,000 |
Common stock | 552,000 |
Total | 2,419,500 |
Humboldt Depot [Member] | |
Business Acquisition [Line Items] | |
Inventory | 389,800 |
Prepaids and other current assets | 6,800 |
Furniture and equipment | 30,000 |
Goodwill | 654,000 |
Cash | 896,600 |
Assumption of payables | |
Seller financing | |
Common stock | 184,000 |
Total | 1,080,600 |
Superior Growers Supply [Member] | |
Business Acquisition [Line Items] | |
Inventory | 517,950 |
Prepaids and other current assets | |
Furniture and equipment | 50,000 |
Goodwill | 540,250 |
Cash | 817,950 |
Assumption of payables | |
Seller financing | |
Common stock | 290,250 |
Total | 1,108,200 |
Central Coast Garden [Member] | |
Business Acquisition [Line Items] | |
Inventory | 254,900 |
Prepaids and other current assets | |
Furniture and equipment | 4,600 |
Goodwill | 136,400 |
Cash | 257,000 |
Assumption of payables | |
Seller financing | |
Common stock | 138,900 |
Total | 395,900 |
Santa Rosa Hydro [Member] | |
Business Acquisition [Line Items] | |
Inventory | 1,500,000 |
Prepaids and other current assets | |
Furniture and equipment | 100,000 |
Goodwill | 4,884,500 |
Cash | 2,425,000 |
Assumption of payables | |
Seller financing | 415,000 |
Common stock | 3,644,500 |
Total | 6,484,500 |
Heavy Gardens [Member] | |
Business Acquisition [Line Items] | |
Inventory | |
Prepaids and other current assets | |
Furniture and equipment | |
Goodwill | 433,000 |
Cash | 150,000 |
Assumption of payables | |
Seller financing | 72,000 |
Common stock | 211,000 |
Total | $ 433,000 |
Acquisitions (Details 1)
Acquisitions (Details 1) | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Business Acquisition [Line Items] | |
Revenue | $ 9,621,600 |
Earnings | $ 1,165,900 |
Humboldt Depot [Member] | |
Business Acquisition [Line Items] | |
Acquisition date | Jan. 30, 2018 |
Revenue | $ 2,030,200 |
Earnings | $ 147,600 |
Superior Growers Supply [Member] | |
Business Acquisition [Line Items] | |
Acquisition date | Apr. 12, 2018 |
Revenue | $ 1,926,400 |
Earnings | $ 178,200 |
Central Coast Garden [Member] | |
Business Acquisition [Line Items] | |
Acquisition date | Jun. 8, 2018 |
Revenue | $ 498,000 |
Earnings | $ 56,000 |
Santa Rosa Hydro [Member] | |
Business Acquisition [Line Items] | |
Acquisition date | Jul. 13, 2018 |
Revenue | $ 1,594,900 |
Earnings | $ 165,300 |
Heavy Gardens [Member] | |
Business Acquisition [Line Items] | |
Acquisition date | Sep. 14, 2018 |
Revenue | $ 121,500 |
Earnings | $ 5,800 |
East Coast Hydro [Member] | |
Business Acquisition [Line Items] | |
Acquisition date | Jan. 23, 2018 |
Revenue | $ 3,450,600 |
Earnings | $ 613,000 |
Acquisitions (Details 2)
Acquisitions (Details 2) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Business Combinations [Abstract] | |
Revenue | $ 40,887,900 |
Earnings | $ (1,547,300) |
Gain on Settlements (Details)
Gain on Settlements (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Gain On Settlements (Textual) | ||
Gain on settlement | $ 322,058 | |
Asset Purchase Agreement [Member] | ||
Gain On Settlements (Textual) | ||
Gain on settlement | 195,000 | |
Interest in settlement | 75,000 | |
Inventory from third party | 140,000 | |
Settlement costs | 20,000 | |
Insurance Settlement [Member] | ||
Gain On Settlements (Textual) | ||
Gain on settlement | $ 126,278 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | 1 Months Ended | |
Jan. 26, 2019 | Nov. 28, 2018 | |
Subsequent Events (Textual) | ||
Total amount paid to seller | $ 3,700,000 | |
Cash paid for purchase of assets | $ 500,000 | |
Issue of common stock, shares | 194,553 | |
Subsequent Event [Member] | ||
Subsequent Events (Textual) | ||
Total amount paid to seller | $ 1,325,000 | |
Cash paid for purchase of assets | $ 150,000 | |
Issue of common stock, shares | 489,000 |