Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2020 | Aug. 12, 2020 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | GrowGeneration Corp. | |
Entity Central Index Key | 0001604868 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2020 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2020 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Current Reporting Status | Yes | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Filer Number | 333-207889 | |
Entity Incorporation State Country Code | CO | |
Entity Interactive Data Current | Yes | |
Entity Common Stock, Shares Outstanding | 47,677,772 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash | $ 14,823,541 | $ 12,979,444 |
Accounts receivable (net of allowance for credit losses of $465,420 and $291,372, respectively) | 3,608,966 | 4,455,209 |
Inventory, net | 30,429,958 | 22,659,357 |
Prepaid expenses and other current assets | 5,166,060 | 2,549,559 |
Total current assets | 54,028,525 | 42,643,569 |
Property and equipment, net | 4,015,982 | 3,340,616 |
Operating leases right-of-use assets, net | 7,630,644 | 7,628,591 |
Deferred income taxes | ||
Intangible assets, net | 820,507 | 233,280 |
Goodwill | 21,085,084 | 17,798,932 |
Other assets | 294,718 | 377,364 |
TOTAL ASSETS | 87,875,460 | 72,022,352 |
Current liabilities: | ||
Accounts payable | 11,933,154 | 6,024,750 |
Other accrued liabilities | 107,568 | |
Payroll and payroll tax liabilities | 1,343,696 | 1,072,142 |
Customer deposits | 2,334,861 | 2,503,785 |
Sales tax payable | 878,174 | 533,656 |
Income taxes payable | 156,000 | |
Current maturities of operating leases liability | 1,959,124 | 1,836,700 |
Current maturities of long-term debt | 91,128 | 110,231 |
Total current liabilities | 18,803,705 | 12,081,264 |
Operating leases liability, net of current maturities | 5,843,739 | 5,807,266 |
Long-term debt, net of current maturities | 213,930 | 242,079 |
Total liabilities | 24,861,374 | 18,130,609 |
Commitments and contingencies | ||
Stockholders' Equity: | ||
Common stock; $.001 par value; 100,000,000 shares authorized; 38,844,819 and 36,876,305 shares issued and outstanding, respectively | 38,845 | 36,876 |
Additional paid-in capital | 69,382,004 | 60,742,055 |
Accumulated deficit | (6,406,763) | (6,887,188) |
Total stockholders' equity | 63,014,086 | 53,891,743 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 87,875,460 | $ 72,022,352 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, net of allowance for doubtful accounts | $ 465,420 | $ 291,372 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 38,844,819 | 36,876,305 |
Common stock, shares outstanding | 38,844,819 | 36,876,305 |
Consolidated Statement of Opera
Consolidated Statement of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Income Statement [Abstract] | ||||
Sales | $ 43,451,840 | $ 19,483,383 | $ 76,433,345 | $ 32,570,605 |
Cost of sales | 31,866,503 | 13,663,173 | 55,901,760 | 23,063,764 |
Gross profit | 11,585,337 | 5,820,210 | 20,531,585 | 9,506,841 |
Operating expenses: | ||||
Store operations | 3,999,280 | 2,734,788 | 7,516,329 | 4,616,326 |
General and administrative | 1,150,435 | 549,129 | 2,424,647 | 1,124,313 |
Share based compensation | 1,186,905 | 390,898 | 5,301,972 | 522,243 |
Depreciation and amortization | 467,677 | 150,842 | 826,820 | 291,132 |
Salaries and related expenses | 1,971,391 | 820,842 | 3,769,151 | 1,429,106 |
Total operating expenses | 8,775,688 | 4,646,499 | 19,838,919 | 7,983,120 |
Income from operations | 2,809,649 | 1,173,711 | 692,666 | 1,523,721 |
Other income (expense): | ||||
Interest expense | (13,240) | (120,311) | (20,421) | (250,786) |
Interest income | 200 | 15,433 | 25,042 | 34,283 |
Other income (loss) | (66,666) | (6,833) | (60,862) | (15,797) |
Total non-operating income (expense), net | (79,706) | (111,711) | (56,241) | (232,300) |
Net income before taxes | 2,729,943 | 1,062,000 | 636,425 | 1,291,421 |
Provision for income taxes | (156,000) | (156,000) | ||
Net Income | $ 2,573,943 | $ 1,062,000 | $ 480,425 | $ 1,291,421 |
Net income per shares, basic | $ 0.07 | $ 0.04 | $ 0.01 | $ 0.04 |
Net income per shares, diluted | $ 0.06 | $ 0.03 | $ 0.01 | $ 0.04 |
Weighted average shares outstanding, basic | 38,616,610 | 30,326,304 | 38,224,109 | 29,389,636 |
Weighted average shares outstanding, diluted | 41,016,392 | 31,426,757 | 40,241,292 | 30,455,282 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders’ Equity (Unaudited) - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated (Deficit) | Total |
Balance at Dec. 31, 2018 | $ 27,949 | $ 38,796,562 | $ (8,765,992) | $ 30,058,519 |
Balance shares at Dec. 31, 2018 | 27,948,609 | |||
Share based compensation | (8,951) | (8,951) | ||
Common stock issued upon warrant exercise | $ 172 | 1,552 | 1,724 | |
Common stock issued upon warrant exercise, shares | 172,500 | |||
Common stock issued upon cashless exercise of options | $ 229 | (229) | ||
Common stock issued upon cashless exercise of options, shares | 228,890 | |||
Common stock issued in connection with business combinations | $ 345 | 998,406 | 998,751 | |
Common stock issued in connection with business combinations, shares | 344,553 | |||
Common stock issued for prepaid services | $ 50 | 95,950 | 96,000 | |
Common stock issued for prepaid services, Shares | 50,000 | |||
Common stock issued for accrued share-based compensation | $ 100 | 210,100 | 210,200 | |
Common stock issued for accrued share-based compensation, shares | 100,000 | |||
Net income/loss | 229,421 | 229,421 | ||
Balance at Mar. 31, 2019 | $ 28,845 | 40,093,390 | (8,536,571) | 31,585,664 |
Balance shares at Mar. 31, 2019 | 28,844,552 | |||
Balance at Dec. 31, 2018 | $ 27,949 | 38,796,562 | (8,765,992) | 30,058,519 |
Balance shares at Dec. 31, 2018 | 27,948,609 | |||
Net income/loss | 1,291,421 | |||
Balance at Jun. 30, 2019 | $ 34,834 | 54,330,413 | (7,474,571) | 46,890,676 |
Balance shares at Jun. 30, 2019 | 34,834,911 | |||
Balance at Mar. 31, 2019 | $ 28,845 | 40,093,390 | (8,536,571) | 31,585,664 |
Balance shares at Mar. 31, 2019 | 28,844,552 | |||
Share based compensation | 103,275 | 103,275 | ||
Common stock issued upon warrant exercise | $ 1,250 | 436,250 | 437,500 | |
Common stock issued upon warrant exercise, shares | 1,250,000 | |||
Common stock issued upon cashless exercise of options | $ 241 | (241) | ||
Common stock issued upon cashless exercise of options, shares | 241,154 | |||
Common stock issued in connection with business combinations | $ 250 | 810,630 | 810,880 | |
Common stock issued in connection with business combinations, shares | 250,000 | |||
Common stock issued for accrued share-based compensation | $ 42 | 35,758 | 35,800 | |
Common stock issued for accrued share-based compensation, shares | 42,500 | |||
Sales of common stock, net of fees | $ 4,123 | 12,661,866 | 12,665,989 | |
Sales of common stock, net of fees, shares | 4,123,254 | |||
Common stock issued for convertible debt | $ 83 | 189,485 | 189,568 | |
Common stock issued for convertible debt, Shares | 83,451 | |||
Net income/loss | 1,062,000 | 1,062,000 | ||
Balance at Jun. 30, 2019 | $ 34,834 | 54,330,413 | (7,474,571) | 46,890,676 |
Balance shares at Jun. 30, 2019 | 34,834,911 | |||
Balance at Dec. 31, 2019 | $ 36,876 | 60,742,055 | (6,887,188) | 53,891,743 |
Balance shares at Dec. 31, 2019 | 36,876,305 | |||
Share based compensation | 2,208,646 | 2,208,646 | ||
Common stock issued upon warrant exercise | $ 191 | 509,928 | 510,119 | |
Common stock issued upon warrant exercise, shares | 191,235 | |||
Common stock issued upon cashless warrant exercise | $ 19 | (19) | ||
Common stock issued upon cashless warrant exercise, Shares | 18,712 | |||
Common stock issued upon cashless exercise of options | $ 280 | (280) | ||
Common stock issued upon cashless exercise of options, shares | 279,823 | |||
Common stock issued in connection with business combinations | $ 250 | 1,102,250 | 1,102,500 | |
Common stock issued in connection with business combinations, shares | 250,000 | |||
Common stock issued for accrued share-based compensation | $ 519 | 1,759,913 | 1,760,432 | |
Common stock issued for accrued share-based compensation, shares | 519,333 | |||
Common stock issued for assets | $ 24 | 100,800 | 100,824 | |
Common stock issued for assets, Shares | 23,982 | |||
Common stock issued for services | $ 50 | (50) | ||
Common stock issued for services, shares | 50,000 | |||
Net income/loss | (2,093,518) | (2,093,518) | ||
Balance at Mar. 31, 2020 | $ 38,209 | 66,423,243 | (8,980,706) | 57,480,746 |
Balance shares at Mar. 31, 2020 | 38,209,300 | |||
Balance at Dec. 31, 2019 | $ 36,876 | 60,742,055 | (6,887,188) | 53,891,743 |
Balance shares at Dec. 31, 2019 | 36,876,305 | |||
Net income/loss | 480,425 | |||
Balance at Jun. 30, 2020 | $ 38,845 | 69,382,004 | (6,406,763) | 63,014,086 |
Balance shares at Jun. 30, 2020 | 38,844,819 | |||
Balance at Mar. 31, 2020 | $ 38,209 | 66,423,243 | (8,980,706) | 57,480,746 |
Balance shares at Mar. 31, 2020 | 38,209,300 | |||
Share based compensation | 1,162,055 | 1,162,055 | ||
Common stock issued upon warrant exercise | $ 81 | 282,180 | 282,261 | |
Common stock issued upon warrant exercise, shares | 80,646 | |||
Common stock issued upon cashless warrant exercise | $ 78 | (78) | ||
Common stock issued upon cashless warrant exercise, Shares | 77,907 | |||
Common stock issued upon cashless exercise of options | $ 30 | (30) | ||
Common stock issued upon cashless exercise of options, shares | 29,792 | |||
Common stock issued in connection with business combinations | $ 107 | 705,093 | 705,200 | |
Common stock issued in connection with business combinations, shares | 107,500 | |||
Common stock issued for accrued share-based compensation | $ 5 | 24,845 | 24,850 | |
Common stock issued for accrued share-based compensation, shares | 5,000 | |||
Common stock issued for assets | $ 10 | 67,490 | 67,500 | |
Common stock issued for assets, Shares | 10,000 | |||
Common stock issued for accrued compensation | $ 325 | 717,206 | 717,531 | |
Common stock issued for accrued compensation, shares | 324,674 | |||
Net income/loss | 2,573,943 | 2,573,943 | ||
Balance at Jun. 30, 2020 | $ 38,845 | $ 69,382,004 | $ (6,406,763) | $ 63,014,086 |
Balance shares at Jun. 30, 2020 | 38,844,819 |
Consolidated Statement of Cash
Consolidated Statement of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Cash flows from operating activities: | ||
Net income | $ 480,425 | $ 1,291,421 |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 826,820 | 291,132 |
Amortization of debt discount | 242,096 | |
Stock-based compensation expense | 5,301,972 | 522,243 |
Bad debt | 194,680 | |
(Increase) decrease in: | ||
Accounts receivable | 651,563 | (557,836) |
Inventory | (6,153,633) | (3,076,386) |
Prepaid expenses and other assets | (2,550,244) | (1,080,372) |
Increase (decrease) in: | ||
Accounts payable and accrued liabilities | 6,608,503 | 1,042,991 |
Operating leases | 156,844 | 82,556 |
Payroll and payroll tax liabilities | 271,554 | 227,893 |
Income taxes payable | 156,000 | |
Customer deposits | (168,924) | (79,723) |
Sales tax payable | 344,518 | 233,834 |
Net cash provided by (used in) operating activities | 6,120,078 | (860,151) |
Cash flows from investing activities: | ||
Assets acquired in business combinations | (3,031,696) | (7,631,775) |
Purchase of furniture and equipment | (1,280,666) | (1,052,892) |
Purchase of intangibles | (708,747) | (112,050) |
Net cash used in investing activities | (5,021,109) | (8,796,717) |
Cash flows from financing activities: | ||
Principal payments on long term debt | (47,252) | (228,855) |
Proceeds from the sale of common stock and exercise of warrants, net of expenses | 792,380 | 13,105,214 |
Net cash provided by (used in) financing activities | 745,128 | 12,876,359 |
Net increase in cash | 1,844,097 | 3,219,491 |
Cash at the beginning of period | 12,979,444 | 14,639,981 |
Cash at the end of period | 14,823,541 | 17,859,472 |
Supplemental disclosures of non-cash financing activities: | ||
Cash paid for interest | 20,421 | 8,690 |
Common stock issued for accrued payroll | 717,531 | 210,200 |
Common stock issued for prepaid services | 96,000 | |
Common stock issued for business combination | 1,807,700 | 1,809,631 |
Debt converted to equity | 189,217 | |
Assets acquired by issuance of common stock | 168,324 | 1,809,631 |
Right to use assets acquired under new operating leases | $ 1,094,595 | $ 6,210,395 |
Nature of Operations
Nature of Operations | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF OPERATIONS | 1. NATURE OF OPERATIONS GrowGeneration is the largest chain of hydroponic garden centers in North America and is a leading marketer and distributor of nutrients, growing media, advanced indoor and greenhouse lighting, ventilation systems and accessories for hydroponic gardening. Currently, the Company owns and operates a chain of twenty eight (28) retail hydroponic/gardening stores, with five (5) located in the state of Colorado, five (5) in the state of California, four (4) in the state of Michigan, two (2) in the state of Nevada, one (1) in the state of Washington, one (1) in the state of Oregon, four (4) in the State of Oklahoma, one (1) in the state of Rhode Island, three (3) in Maine, (1) in Florida, one (1) distribution center in California and an online e-commerce store, GrowGeneration.com. In addition, we operate a warehouse out of Sacramento, CA. Our plan is to acquire, open and operate hydroponic/gardening stores and related businesses throughout the United States and Canada. The Company engages in its business through its wholly-owned subsidiaries, GrowGeneration Pueblo Corp, GrowGeneration California Corp, GrowGeneration 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, GrowGeneration Florida Corp and GrowGeneration Management Corp. |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The accompanying unaudited condensed consolidated interim financial statements include our accounts and those of our wholly-owned subsidiaries, and reflect all adjustments which are necessary for a fair statement of the financial position, results of operations, and cash flows for the periods presented in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). Such unaudited condensed consolidated interim financial statements have been prepared in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. All significant intercompany balances and transactions are eliminated in consolidation. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. The year-end condensed balance sheet data was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. These unaudited condensed consolidated interim financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2019 ("Annual Report") filed on March 27, 2020, and have been prepared on a consistent basis with the accounting policies described in Note 1 of the Notes to the Audited Consolidated Financial Statements included in our Annual Report. Our accounting policies did not change during the six months ended June 30, 2020. Use of Estimates Management uses estimates and assumptions in preparing these financial statements in accordance with U.S. GAAP. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported revenues and expenses during the reporting period. Actual results could vary from the estimates that were used. Additionally, the full impact of COVID-19 is unknown and cannot be reasonably estimated. However, we have made appropriate accounting estimates based on the facts and circumstances available as of the reporting date. To the extent there are differences between these estimates and actual results, our consolidated financial statements may be materially affected. As we continue to monitor the COVID-19 situation, the Company is considered an "essential" supplier to the agricultural industry, suppling the nutrients and nourishment required to feed their plants. The Company has been opened during this difficult time. We have plans and procedures in place to ensure our customers and employees stay safe during this time of uncertainty. As a result of COVID-19 we reduced some hours of operations at the store level and some stores were closed on the weekends, primarily in the later part of the first quarter of 2020. There have been some minor delays in vendor shipments as their warehouses and supply chain were affected by staffing shortages. The Company successfully implemented a will call and curb side pick-up process that is working well. Other than what has been disclosed above, we have not experienced adverse effects from COVID-19. Leases We assess whether an arrangement is a lease at inception. Leases with an initial term of 12 months or less are not recorded on the balance sheet. We have elected the practical expedient to not separate lease and non-lease components for all assets. Operating lease assets and operating lease liabilities are calculated based on the present value of the future minimum lease payments over the lease term at the lease start date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease start date in determining the present value of future payments. The operating lease asset is increased by any lease payments made at or before the lease start date and reduced by lease incentives and initial direct costs incurred. The lease term includes options to renew or terminate the lease when it is reasonably certain that we will exercise that option. The exercise of lease renewal options is at our sole discretion. The depreciable life of lease assets and leasehold improvements are limited by the lease term. Lease expense for operating leases is recognized on a straight-line basis over the lease term. Income Taxes The Company accounts for income taxes in accordance with the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 740, Income Taxes, which requires the recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. In 2019 and as of June 20, 2020, a valuation allowance was provided for the amount of deferred tax assets that would otherwise be recorded for income tax benefits primarily relating to operating loss carryforwards as realization could not be determined to be more likely than not. 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 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 their respective statute of limitation. Currently, the 2019, 2018 and 2017 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 accrual for uncertain tax positions as of June 30, 2020. 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 at which point, the performance obligation is satisfied. Sales and other taxes collected concurrent with revenue producing activities are excluded from revenue. In the normal course of business, the Company does not accept product returns unless the item is defective as manufactured. The Company monitors provisions for estimated returns. Payment for goods and services sold by the Company is typically due upon satisfaction of the performance obligations. Under certain circumstances, the Company does provide goods and services to customers on a credit basis (see Accounts Receivable Accounts Receivable Accounts receivable are stated at the amount the Company expects to collect from balances outstanding at period-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 June 30, 2020 and December 31, 2019, the Company established an allowance for doubtful accounts of $465,420 and $291,372, respectively. Inventory Inventory consists primarily of gardening supplies and materials and is recorded at the lower of cost (first-in, first-out method) or net realizable value. 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 not to Goodwill Goodwill represents the excess of purchase price over the fair value of net assets. 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. 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. New Accounting Pronouncements As an emerging growth company, the Company is permitted to delay the adoption of new or revised accounting standards until such time as those standards apply to private companies. The Company has chosen to take advantage of the extended transition period for complying with new or revised accounting standards. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Changes and Error Corrections [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS | 3. RECENT ACCOUNTING PRONOUNCEMENTS Recently Adopted Accounting Pronouncements During the first quarter of 2019, the Company adopted the FASB ASU 2016-02, Leases Leases Leases On January 1, 2019, the Company also adopted ASU 2018-07, “Improvements to Nonemployee Share-Based Payment Accounting.” ASU 2018-07 more closely aligns the accounting for employee and nonemployee share-based payments. The amendment is effective commencing in 2019 with early adoption permitted. The adoption of this new guidance did not have a material impact on our Financial Statements. In August 2018, the SEC adopted amendments to certain disclosure requirements in Securities Act Release No. 33-10532, Disclosure Update and Simplification. These amendments eliminate, modify, or integrate into other SEC requirements certain disclosure rules. Among the amendments is the requirement to present an analysis of changes in stockholders’ equity in the interim financial statements included in Quarterly Reports on Form 10-Q. The analysis, which can be presented as a footnote or separate statement, is required for the current and comparative quarter and year-to-date interim periods. The amendments are effective for all filings made on or after November 5, 2018. The Company adopted these amendments in its Quarterly Report on Form 10-Q for the quarter ended March 31, 2019. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement Recently Issued Accounting Pronouncements – Pending Adoption In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments — Credit Losses (Topic 326),” changing the impairment model for most financial instruments by requiring companies to recognize an allowance for expected losses, rather than incurred losses as required currently by the other-than-temporary impairment model. The ASU will apply to most financial assets measured at amortized cost and certain other instruments, including trade and other receivables, loans, available-for-sale and held-to-maturity debt securities, net investments in leases, and off-balance-sheet credit exposures. In November 2019, the FASB issued ASU No. 2019-10, changing effective dates for the new standards to give implementation relief to certain types of entities. The Company is required to adopt the new standards no later than January 1, 2023 according to ASU 2019-10, with early adoption allowed. We are currently evaluating the impact of adopting this new accounting guidance on our condensed consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The guidance in ASU 2017-04 eliminates the requirement to determine the fair value of individual assets and liabilities of a reporting unit to measure goodwill impairment. Under the amendments in the new ASU, goodwill impairment testing will be performed by comparing the fair value of the reporting unit with its carrying amount and recognizing an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. ASU 2017-04 is effective for annual and interim goodwill impairment tests in fiscal years beginning after December 15, 2022 and should be applied on a prospective basis. The Company is currently evaluating the impact of adopting this guidance on the Company’s consolidated financial statements. In December 2019, the FASB issued new guidance to simplify the accounting for income taxes by removing certain exceptions to the general principles and also simplification of areas such as franchise taxes, step-up in tax basis goodwill, separate entity financial statements and interim recognition of enactment of tax laws or rate changes. The standard will be effective for annual reporting periods beginning after December 15, 2020, including interim reporting periods within those periods. We are currently evaluating the impact of adopting this new accounting guidance on our condensed consolidated financial statements. |
Revenue Recognition
Revenue Recognition | 6 Months Ended |
Jun. 30, 2020 | |
Revenue Recognition [Abstract] | |
REVENUE RECOGNITION | 4. REVENUE RECOGNITION Disaggregation of Revenues The following table disaggregates revenue by source: Three Months Three Months Sales at company owned stores $ 40,875,647 $ 18,447,050 E-commerce sales 2,576,193 1,036,333 Total Revenues $ 43,451,840 $ 19,483,383 Six Months Six Months Sales at company owned stores $ 71,912,313 $ 30,852,773 E-commerce sales 4,521,032 1,717,632 Total Revenues $ 76,433,345 $ 32,570,405 Contract Balances Depending on the timing of when a customer takes possession of product and when a customer make payments for such product, the Company recognizes a customer trade receivable (asset) or a customer deposit (liability). The difference between the opening and closing balances of the Company's customer trade receivables and the customer deposit liability results from timing differences between the Company's performance and the customer's payment. The opening and closing balances of the Company's customer trade receivables and customer deposit liability are as follows: Receivables Customer Deposit Liability Opening balance, 1/1/2020 $ 4,455,209 $ 2,503,785 Closing balance, 6/30/2020 3,608,966 2,334,861 Increase (decrease) $ (846,243 ) (168,924 ) Opening balance, 1/1/2019 $ 862,397 $ 516,038 Closing balance, 6/30/2019 1,420,233 436,315 Increase (decrease) $ 557,836 (79,723 ) |
Property and Equipment
Property and Equipment | 6 Months Ended |
Jun. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | 5. PROPERTY AND EQUIPMENT June 30, December 31, Vehicles $ 969,115 $ 702,447 Leasehold improvements 1,301,410 884,685 Furniture, fixtures and equipment 3,972,018 3,305,323 6,242,543 4,892,455 (Accumulated depreciation) (2,226,561 ) (1,551,839 ) Property and Equipment, net $ 4,015,982 $ 3,340,616 Depreciation expense for the three months ended June 30, 2020 and 2019 was $373,975 and $150,842, respectively. Depreciation expense for the six months ended June 30, 2020 and 2019 was $705,299 and $291,132, respectively. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS | 6. GOODWILL AND INTANGIBLE ASSETS Goodwill: The changes in goodwill are as follows: June 30, December 31, Balance, beginning of period $ 17,798,932 $ 8,752,909 Goodwill additions 3,286,152 9,046,023 Impairments - - Balance, end of period $ 21,085,084 $ 17,798,932 Intangible assets on the Company’s consolidated balance sheets consist of the following: June 30, December 31, Gross Accumulated Gross Accumulated Other Intangibles $ 100,000 $ - $ 100,000 $ - Capitalized software 843,802 123,295 135,030 1,750 $ 943,802 $ 123,295 $ 235,030 $ 1,750 Amortization expense for the three months ended June 30, 2020 and 2019 was $93,702 and $0, respectively. Amortization expense for the six months ended June 30, 2020 and 2019 was $121,520 and $0, respectively. |
Long-Term Debt
Long-Term Debt | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT | 7. LONG-TERM DEBT June 30, December 31, 2020 2019 Long term debt is as follows: 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 $ 4,098 $ 7,109 Notes payable issued in connection with seller financing of assets acquired, interest at 1%, payable in 24 installments of $24,996, due February 2020 - 24,997 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 300,960 320,204 $ 305,058 $ 352,310 Less Current Maturities (91,128 ) (110,231 ) Total Long-Term Debt $ 213,930 $ 242,079 Interest expense for the three months ended June30, 2020 and 2019 was $13,240 and $3,161, respectively. Interest expense for the six months ended June 30, 2020 and 2019 was $20,421 and $8,690, respectively. |
Leases
Leases | 6 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
LEASES | 8. LEASES We determine if a contract contains a lease at inception. Our material operating leases consist of retail and warehouse locations as well as office space. Our leases generally have remaining terms of 1- 5 years, most of which include options to extend the leases for additional 3 to 5 year periods. Generally, the lease term is the minimum of the noncancelable period of the lease or the lease term inclusive of reasonably certain renewal periods. Operating lease assets and liabilities are recognized at the lease commencement date. Operating lease liabilities represent the present value of lease payments not yet paid. Operating lease assets represent our right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets. To determine the present value of lease payments not yet paid, we estimate incremental secured borrowing rates corresponding to the maturities of the leases. Our leases typically contain rent escalations over the lease term. We recognize expense for these leases on a straight-line basis over the lease term. We elected this expedient to account for lease and non-lease components as a single component for our entire population of operating lease assets. We have elected the short-term lease recognition exemption for all applicable classes of underlying assets. Short-term disclosures include only those leases with a term greater than one month and 12 months or less, and expense is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less, that do not include an option to purchase the underlying asset that we are reasonably certain to exercise, are not recorded on the balance sheet. Lease expense is recorded within our consolidated statements of operations based upon the nature of the assets. Where assets are used to directly serve our customers, such as facilities dedicated to customer contracts, lease costs are recorded in "cost of sales." Facilities and assets which serve management and support functions are expensed through general and administrative expenses. June 30, December 31, Right to use assets, operating lease assets $ 7,630,644 $ 7,628,591 Current lease liability $ 1,959,124 $ 1,836,700 Non-current lease liability 5,843,739 5,807,266 $ 7,802,863 $ 7,643,966 June 30, June 30, Weighted average remaining lease term 3.44 years 3.75 years Weighted average discount rate 7.6 % 7.6 % June 30, June 30, Operating lease costs $ 1,713,505 $ 1,136,339 Short-term lease costs 31,932 19,114 Total operating lease costs $ 1,745,437 $ 1,155,453 The following table presents the maturity of the Company's operating lease liabilities as of June 30, 2020: 2020 (remainder of the year) $ 1,360,110 2021 2,721,296 2022 2,276,428 2023 1,737,060 2024 945,391 Thereafter 2,191,974 Total lease payments 11,232,259 Less: Imputed interest (3,429,396 ) Lease Liability at June 30, 2020 |
Convertible Debt
Convertible Debt | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE DEBT | 9. 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 under the Securities Act. 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 had 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. As of August 21, 2019, all remaining convertible debt and accrued interest had been converted to equity and no convertible debt remains outstanding. During the six months ended June 30, 2019, convertible debt and accrued interest of $250,356, net of unamortized debt discount of $60,783 was converted into 83,451 shares of common stock, at the conversion rate of $3.00 per share. During the six months ended June 30, 2019, 172,500 warrants issued in connection with the convertible debt were exercised, resulting in the issuance of 172,500 shares of common stock. During the six months ended June 30, 2020, 18,712 shares were issued upon cashless exercise of convertible debt warrants. |
Share Based Payments and Stock
Share Based Payments and Stock Options | 6 Months Ended |
Jun. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
SHARE BASED PAYMENTS AND STOCK OPTIONS | 10. SHARE BASED PAYMENTS AND STOCK OPTIONS The Company accounts for share-based payments through the measurement and recognition of compensation expense for share-based payment awards made to employees and directors of the Company, including stock options and restricted shares. During the three months ended June 30, 2020 the Company issued 10,000 shares of common stock (stock-based awards) to employees that vested immediately resulting in compensation expense of approximately $39,200. During the three months ended June 30, 2019 the Company issued 17,500 shares of common stock (stock-based awards) to employees that vested immediately resulting in compensation expense of approximately $35,800. During the six months ended June 30, 2020 the Company issued 528,333 shares of common stock (stock-based awards) to employees that vested immediately resulting in compensation expense of approximately $2,169,832. During the six months ended June 30, 2019 the Company issued 17,500 shares of common stock (stock-based awards) to employees that vested immediately resulting in compensation expense of approximately $35,800. During the three months and six months ended June 30, 2020, the Company recorded $125,000 of share-based compensation to executives that is included in payroll and payroll tax liabilities. During the three months and six months ended June 30, 2019, the Company recorded $69,500 and $245,000, respectively, of share-based compensation to executives that is included in payroll and payroll tax liabilities. The following table presents share-based payment expense and new shares issued for the three months ended June 30, 2020 and 2019. Three Months Ended 2020 2019 Total non-cash share-based compensation $ 1,186,905 $ 390,898 The following table presents share-based payment expense and new shares issued for the six months ended June 30, 2020 and 2019. Six Months Ended 2020 2019 Total non-cash share-based compensation $ 5,301,972 $ 522,243 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. On February 7, 2020, the Board approved the amendment and restatement of the 2018 Plan to increase the number of shares issuable thereunder from 2,500,000 to 5,000,000, which amendment was approved by shareholders on May 11, 2020. 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. 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 10% 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. As of June 30, 2020, there was approximately $4.1 million of unrecognized compensation costs related to non-vested share-based compensation granted under that share option plans, which is expected to be recognized over the next two years. Awards issued under the 2014 Plan as of June 30, 2020 are summarized below: 2020 Total shares available for issuance pursuant to the 2014 Plan 2,500,000 Options outstanding, June 30, 2020 (198,000 ) Total options exercised under 2014 Plan (1,915,833 ) Total shares issued pursuant to the 2014 Plan (375,000 ) Awards available for issuance under the 2014 Plan, June 30, 2020 11,167 Awards issued under the 2018 Plan as of June 30, 2020 are summarized below: 2020 Total shares available for issuance pursuant to the 2018 Plan, after amendment 5,000,000 Options outstanding, June 30, 2020 (1,837,500 ) Total options exercised under 2018 Plan (49,833 ) Total shares issued pursuant to the 2018 Plan (693,333 ) Awards available for issuance under the 2018 Plan, June 30, 2020 2,419,334 The table below summarizes all the options granted by the Company under all plans during the six months ended June 30, 2020: Options Shares Weight - Weighted - Weighted - Outstanding at December 31, 2019 1,916,333 $ 2.78 3.81 years $ 1.71 Granted 837,500 3.51 $ 2.22 Exercised (451,663 ) $ 1.80 $ .83 Forfeited or expired - Outstanding at June 30, 2020 2,302,170 $ 3.16 3.16 years $ 1.99 Options vested at June 30, 2020 1,373,174 $ 2.89 2.83 years $ 1.76 June 30, Options outstanding pursuant to 2014 Plan 198,000 Options outstanding pursuant to 2018 Plan 1,837,500 Options issued outside of 2014 and 2018 Plans 266,670 2,302,170 |
Stock Purchase Warrants
Stock Purchase Warrants | 6 Months Ended |
Jun. 30, 2020 | |
Warrants and Rights Note Disclosure [Abstract] | |
STOCK PURCHASE WARRANTS | 11. STOCK PURCHASE WARRANTS A summary of the status of the Company’s outstanding stock purchase warrants as of June 30, 2020 is as follows: Warrants Weighted - Outstanding at December 31, 2019 3,849,935 $ 3.14 Issued - Exercised (448,856 ) $ 3.16 Forfeited (250,000 ) 5.75 Outstanding at June 30, 2020 3,151,079 $ 2.94 |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | 12. EARNINGS PER SHARE The following table sets forth the composition of the weighted average shares (denominator) used in the basic and dilutive earnings per share computation for the three months and six months ended June 30, 2020 and 2019. Three months ended June 30, June 30, Net income $ 2,573,943 $ 1,062,000 Weighted average shares outstanding, basic 38,616,610 30,326,304 Effect of dilutive outstanding warrants and stock options 2,399,782 1,097,453 Adjusted weighted average shares outstanding, dilutive 41,016,392 31,426,757 Basic income per shares $ .07 $ .04 Dilutive income per share $ .06 $ .03 Six months ended June 30, June 30, Net income $ 480,425 $ 1,291,421 Weighted average shares outstanding, basic 38,224,109 29,389,636 Effect of dilutive outstanding warrants and stock options 2,017,183 1,065,646 Adjusted weighted average shares outstanding, dilutive 40,241,292 30,455,282 Basic income per shares $ .01 $ .04 Dilutive income per share $ .01 $ .04 |
Acquisitions
Acquisitions | 6 Months Ended |
Jun. 30, 2020 | |
Business Combinations [Abstract] | |
ACQUISITIONS | 13. ACQUISITIONS Our acquisition strategy is to acquire well established profitable hydroponic garden centers in markets where the Company does not have a market presence or in markets where it is increasing its market presence. 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. For all acquisitions, the preliminary allocation of the purchase price was based upon a preliminary valuation, and the Company’s estimates and assumptions are subject to change within the measurement period as valuations are finalized. The Company has not made any adjustments to the preliminary valuations. On February 26, 2020 we acquired certain assets of Health & Harvest LLC in a transaction valued at approximately $2.85 million. Acquired goodwill of approximately $1.75 million represents the value expected to rise from organic growth and an opportunity to expand into a well-established market for the Company. Cash consideration was funded from the Company’s existing working capital. Transaction costs incurred in connection with this acquisition were not significant. On June 16, 2020 we acquired certain assets of H2O Hydroponics, LLC in a transaction valued at approximately $1.99 million. Acquired goodwill of approximately $1.4 million represents the value expected to rise from organic growth and an opportunity to expand into a well-established market for the Company. Cash consideration was funded from the Company’s existing working capital. Transaction costs incurred in connection with this acquisition were not significant. The table below represents the allocation of the purchase price to the acquired net assets. H2O Health & Total Inventory $ 497,600 $ 1,051,900 $ 1,549,500 Prepaids and other current assets 4,600 - 4,600 Furniture and equipment 50,000 50,000 100,000 Right to use asset 902,000 192,600 1,094,600 Lease liability (902,000 ) (192,600 ) (1,094,600 ) Goodwill 1,434,700 1,750,600 3,185,300 Total 1,986,900 $ 2,852,500 $ 4,839,400 The table below represents the consideration paid for the net assets acquired in business combinations. H2O Health & Total Cash $ 1,281,700 $ 1,750,000 $ 3,031,700 Common stock 705,200 1,102,500 1,807,700 Total $ 1,986,900 $ 2,852,500 $ 4,839,400 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 June 30, 2020. H2O Health & Total Acquisition date 6/26/2020 2/26/2020 Revenue $ 227,100 $ 2,299,600 $ 2,526,700 Earnings $ 27,800 $ 461,500 $ 489,300 The following represents the pro forma consolidated income statement as if the acquisitions had been included in the consolidated results of the Company for the entire period for the three months and six months ended June 30, 2019. Three Months Six Months Revenue $ 2,275,700 $ 4,551,478 Earnings $ 87,200 $ 174,476 The table below represents the allocation of the preliminary purchase price to the acquired net assets during the six months ended June 30, 2019. Green Life Chlorophyll Reno Palm Total Inventory $ 1,038,600 $ 1,441,000 $ 238,000 $ 465,500 $ 3,183,100 Prepaids and other current assets 14,100 22,000 - 36,100 Furniture and equipment 100,000 100,000 25,000 25,000 250,000 Right to use asset 809,600 701,900 - 329,300 1,840,800 Lease liability (809,600 ) (701,900 ) - (329,300 ) (1,840,800 ) Goodwill 2,305,900 2,596,100 516,300 554,000 5,972,300 Total $ 3,458,600 $ 4,159,100 $ 779,300 $ 1,044,500 $ 9,441,500 The table below represents the consideration paid for the net assets acquired in business combinations for the period ended June 30, 2019. Green Life Chlorophyll Reno Palm Total Cash $ 2,647,700 $ 3,659,100 $ 525,000 $ 800,000 $ 7,631,800 Common stock 810,900 500,000 254,300 244,500 1,809,700 Total $ 3,458,600 $ 4,159,100 $ 779,300 $ 1,044,500 $ 9,441,500 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 June 30, 2019. Green Life Chlorophyll Reno Palm Total Acquisition date 5/14/2019 1/21/2019 2/11/2019 2/7/2019 Revenue $ 1,056,200 $ 3,450,600 $ 880,400 $ 1,326,400 $ 6,713,600 Earnings $ 234,700 $ 613,000 $ 151,100 $ 271,600 $ 1,270,400 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 three months and six months ended June 30, 2018. Three Months Six Months Ended Revenue $ 4,937,000 $ 9,873,500 Earnings $ 537,000 $ 1,073,800 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 14. SUBSEQUENT EVENTS The Company has evaluated events and transaction occurring subsequent to June 30, 2020 up to the date of this filing of these consolidated financial statements. These statements contain all necessary adjustments and disclosures resulting from that evaluation. On July 2, 2020 the Company consummated an underwritten public an additional 1,125,000 shares of common stock before deducting the underwriting discounts and commissions and other offering expenses On August 10, 2020 the Company purchased the assets of Emerald City Garden located in Concord, CA. for $1 million. Following this acquisition, the Company opened a new store in the state of California. |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The accompanying unaudited condensed consolidated interim financial statements include our accounts and those of our wholly-owned subsidiaries, and reflect all adjustments which are necessary for a fair statement of the financial position, results of operations, and cash flows for the periods presented in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). Such unaudited condensed consolidated interim financial statements have been prepared in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. All significant intercompany balances and transactions are eliminated in consolidation. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. The year-end condensed balance sheet data was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. These unaudited condensed consolidated interim financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2019 ("Annual Report") filed on March 27, 2020, and have been prepared on a consistent basis with the accounting policies described in Note 1 of the Notes to the Audited Consolidated Financial Statements included in our Annual Report. Our accounting policies did not change during the six months ended June 30, 2020. |
Use of Estimates | Use of Estimates Management uses estimates and assumptions in preparing these financial statements in accordance with U.S. GAAP. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported revenues and expenses during the reporting period. Actual results could vary from the estimates that were used. Additionally, the full impact of COVID-19 is unknown and cannot be reasonably estimated. However, we have made appropriate accounting estimates based on the facts and circumstances available as of the reporting date. To the extent there are differences between these estimates and actual results, our consolidated financial statements may be materially affected. As we continue to monitor the COVID-19 situation, the Company is considered an “essential” supplier to the agricultural industry, suppling the nutrients and nourishment required to feed their plants. The Company has been opened during this difficult time. We have plans and procedures in place to ensure our customers and employees stay safe during this time of uncertainty. As a result of COVID-19 we reduced some hours of operations at the store level and some stores were closed on the weekends, primarily in the later part of the first quarter of 2020. There have been some minor delays in vendor shipments as their warehouses and supply chain were affected by staffing shortages. The Company successfully implemented a will call and curb side pick-up process that is working well. Other than what has been disclosed above, we have not experienced adverse effects from COVID-19. |
Leases | Leases We assess whether an arrangement is a lease at inception. Leases with an initial term of 12 months or less are not recorded on the balance sheet. We have elected the practical expedient to not separate lease and non-lease components for all assets. Operating lease assets and operating lease liabilities are calculated based on the present value of the future minimum lease payments over the lease term at the lease start date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease start date in determining the present value of future payments. The operating lease asset is increased by any lease payments made at or before the lease start date and reduced by lease incentives and initial direct costs incurred. The lease term includes options to renew or terminate the lease when it is reasonably certain that we will exercise that option. The exercise of lease renewal options is at our sole discretion. The depreciable life of lease assets and leasehold improvements are limited by the lease term. Lease expense for operating leases is recognized on a straight-line basis over the lease term. |
Income Taxes | Income Taxes The Company accounts for income taxes in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740, Income Taxes, which requires the recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. In 2019 and as of June 20, 2020, a valuation allowance was provided for the amount of deferred tax assets that would otherwise be recorded for income tax benefits primarily relating to operating loss carryforwards as realization could not be determined to be more likely than not. 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 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 their respective statute of limitation. Currently, the 2019, 2018 and 2017 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 accrual for uncertain tax positions as of June 30, 2020. |
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 at which point, the performance obligation is satisfied. Sales and other taxes collected concurrent with revenue producing activities are excluded from revenue. In the normal course of business, the Company does not accept product returns unless the item is defective as manufactured. The Company monitors provisions for estimated returns. Payment for goods and services sold by the Company is typically due upon satisfaction of the performance obligations. Under certain circumstances, the Company does provide goods and services to customers on a credit basis (see Accounts Receivable |
Accounts Receivable | Accounts Receivable Accounts receivable are stated at the amount the Company expects to collect from balances outstanding at period-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 June 30, 2020 and December 31, 2019, the Company established an allowance for doubtful accounts of $465,420 and $291,372, 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 net realizable value. 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 not to |
Goodwill | Goodwill Goodwill represents the excess of purchase price over the fair value of net assets. 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. |
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. |
New Accounting Pronouncements | New Accounting Pronouncements As an emerging growth company, the Company is permitted to delay the adoption of new or revised accounting standards until such time as those standards apply to private companies. The Company has chosen to take advantage of the extended transition period for complying with new or revised accounting standards. |
Basis of Presentation and Sum_3
Basis of Presentation and Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
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 not to |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Revenue Recognition [Abstract] | |
Schedule of disaggregation of revenues | Three Months Three Months Sales at company owned stores $ 40,875,647 $ 18,447,050 E-commerce sales 2,576,193 1,036,333 Total Revenues $ 43,451,840 $ 19,483,383 Six Months Six Months Sales at company owned stores $ 71,912,313 $ 30,852,773 E-commerce sales 4,521,032 1,717,632 Total Revenues $ 76,433,345 $ 32,570,405 |
Schedule of customer trade receivables and customer deposit liability | Receivables Customer Deposit Liability Opening balance, 1/1/2020 $ 4,455,209 $ 2,503,785 Closing balance, 6/30/2020 3,608,966 2,334,861 Increase (decrease) $ (846,243 ) (168,924 ) Opening balance, 1/1/2019 $ 862,397 $ 516,038 Closing balance, 6/30/2019 1,420,233 436,315 Increase (decrease) $ 557,836 (79,723 ) |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | June 30, December 31, Vehicles $ 969,115 $ 702,447 Leasehold improvements 1,301,410 884,685 Furniture, fixtures and equipment 3,972,018 3,305,323 6,242,543 4,892,455 (Accumulated depreciation) (2,226,561 ) (1,551,839 ) Property and Equipment, net $ 4,015,982 $ 3,340,616 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets [Abstract] | |
Schedule of goodwill | June 30, December 31, Balance, beginning of period $ 17,798,932 $ 8,752,909 Goodwill additions 3,286,152 9,046,023 Impairments - - Balance, end of period $ 21,085,084 $ 17,798,932 |
Schedule of intangible assets | June 30, December 31, Gross Accumulated Gross Accumulated Other Intangibles $ 100,000 $ - $ 100,000 $ - Capitalized software 843,802 123,295 135,030 1,750 $ 943,802 $ 123,295 $ 235,030 $ 1,750 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | June 30, December 31, 2020 2019 Long term debt is as follows: 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 $ 4,098 $ 7,109 Notes payable issued in connection with seller financing of assets acquired, interest at 1%, payable in 24 installments of $24,996, due February 2020 - 24,997 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 300,960 320,204 $ 305,058 $ 352,310 Less Current Maturities (91,128 ) (110,231 ) Total Long-Term Debt $ 213,930 $ 242,079 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
Schedule of lease balances within our condensed consolidated balance sheet | June 30, December 31, Right to use assets, operating lease assets $ 7,630,644 $ 7,628,591 Current lease liability $ 1,959,124 $ 1,836,700 Non-current lease liability 5,843,739 5,807,266 $ 7,802,863 $ 7,643,966 |
Schedule of other information related to leases | June 30, June 30, Weighted average remaining lease term 3.44 years 3.75 years Weighted average discount rate 7.6 % 7.6 % |
Schedule of operating lease assets | June 30, June 30, Operating lease costs $ 1,713,505 $ 1,136,339 Short-term lease costs 31,932 19,114 Total operating lease costs $ 1,745,437 $ 1,155,453 |
Schedule of future minimum rental payments | The following table presents the maturity of the Company's operating lease liabilities as of June 30, 2020: 2020 (remainder of the year) $ 1,360,110 2021 2,721,296 2022 2,276,428 2023 1,737,060 2024 945,391 Thereafter 2,191,974 Total lease payments 11,232,259 Less: Imputed interest (3,429,396 ) Lease Liability at June 30, 2020 $ 7,802,863 |
Share Based Payments and Stoc_2
Share Based Payments and Stock Options (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of share-based payment expense and new shares issued | Three Months Ended 2020 2019 Total non-cash share-based compensation $ 1,186,905 $ 390,898 Six Months Ended 2020 2019 Total non-cash share-based compensation $ 5,301,972 $ 522,243 |
Schedule of stock options | 2020 Total shares available for issuance pursuant to the 2014 Plan 2,500,000 Options outstanding, June 30, 2020 (198,000 ) Total options exercised under 2014 Plan (1,915,833 ) Total shares issued pursuant to the 2014 Plan (375,000 ) Awards available for issuance under the 2014 Plan, June 30, 2020 11,167 2020 Total shares available for issuance pursuant to the 2018 Plan, after amendment 5,000,000 Options outstanding, June 30, 2020 (1,837,500 ) Total options exercised under 2018 Plan (49,833 ) Total shares issued pursuant to the 2018 Plan (693,333 ) Awards available for issuance under the 2018 Plan, June 30, 2020 2,419,334 |
Schedule of option outstanding | Options Shares Weight - Weighted - Weighted - Outstanding at December 31, 2019 1,916,333 $ 2.78 3.81 years $ 1.71 Granted 837,500 3.51 $ 2.22 Exercised (451,663 ) $ 1.80 $ .83 Forfeited or expired - Outstanding at June 30, 2020 2,302,170 $ 3.16 3.16 years $ 1.99 Options vested at June 30, 2020 1,373,174 $ 2.89 2.83 years $ 1.76 |
Schedule of options outstanding pursuant | June 30, Options outstanding pursuant to 2014 Plan 198,000 Options outstanding pursuant to 2018 Plan 1,837,500 Options issued outside of 2014 and 2018 Plans 266,670 2,302,170 |
Stock Purchase Warrants (Tables
Stock Purchase Warrants (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Warrants and Rights Note Disclosure [Abstract] | |
Schedule of outstanding stock warrants | Warrants Weighted - Outstanding at December 31, 2019 3,849,935 $ 3.14 Issued - Exercised (448,856 ) $ 3.16 Forfeited (250,000 ) 5.75 Outstanding at June 30, 2020 3,151,079 $ 2.94 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of weighted average shares basic and dilutive earnings per share | Three months ended June 30, June 30, Net income $ 2,573,943 $ 1,062,000 Weighted average shares outstanding, basic 38,616,610 30,326,304 Effect of dilutive outstanding warrants and stock options 2,399,782 1,097,453 Adjusted weighted average shares outstanding, dilutive 41,016,392 31,426,757 Basic income per shares $ .07 $ .04 Dilutive income per share $ .06 $ .03 Six months ended June 30, June 30, Net income $ 480,425 $ 1,291,421 Weighted average shares outstanding, basic 38,224,109 29,389,636 Effect of dilutive outstanding warrants and stock options 2,017,183 1,065,646 Adjusted weighted average shares outstanding, dilutive 40,241,292 30,455,282 Basic income per shares $ .01 $ .04 Dilutive income per share $ .01 $ .04 |
Acquisitions (Tables)
Acquisitions (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Business Combinations [Abstract] | |
Schedule of purchase price | H2O Health & Total Inventory $ 497,600 $ 1,051,900 $ 1,549,500 Prepaids and other current assets 4,600 - 4,600 Furniture and equipment 50,000 50,000 100,000 Right to use asset 902,000 192,600 1,094,600 Lease liability (902,000 ) (192,600 ) (1,094,600 ) Goodwill 1,434,700 1,750,600 3,185,300 Total 1,986,900 $ 2,852,500 $ 4,839,400 H2O Health & Total Cash $ 1,281,700 $ 1,750,000 $ 3,031,700 Common stock 705,200 1,102,500 1,807,700 Total $ 1,986,900 $ 2,852,500 $ 4,839,400 Green Life Chlorophyll Reno Palm Total Inventory $ 1,038,600 $ 1,441,000 $ 238,000 $ 465,500 $ 3,183,100 Prepaids and other current assets 14,100 22,000 - 36,100 Furniture and equipment 100,000 100,000 25,000 25,000 250,000 Right to use asset 809,600 701,900 - 329,300 1,840,800 Lease liability (809,600 ) (701,900 ) - (329,300 ) (1,840,800 ) Goodwill 2,305,900 2,596,100 516,300 554,000 5,972,300 Total $ 3,458,600 $ 4,159,100 $ 779,300 $ 1,044,500 $ 9,441,500 Green Life Chlorophyll Reno Palm Total Cash $ 2,647,700 $ 3,659,100 $ 525,000 $ 800,000 $ 7,631,800 Common stock 810,900 500,000 254,300 244,500 1,809,700 Total $ 3,458,600 $ 4,159,100 $ 779,300 $ 1,044,500 $ 9,441,500 |
Schedule of revenue and earnings included in consolidated income statement | H2O Health & Total Acquisition date 6/26/2020 2/26/2020 Revenue $ 227,100 $ 2,299,600 $ 2,526,700 Earnings $ 27,800 $ 461,500 $ 489,300 Green Life Chlorophyll Reno Palm Total Acquisition date 5/14/2019 1/21/2019 2/11/2019 2/7/2019 Revenue $ 1,056,200 $ 3,450,600 $ 880,400 $ 1,326,400 $ 6,713,600 Earnings $ 234,700 $ 613,000 $ 151,100 $ 271,600 $ 1,270,400 |
Schedule of proforma consolidated income statement | Three Months Six Months Revenue $ 2,275,700 $ 4,551,478 Earnings $ 87,200 $ 174,476 Three Months Six Months Ended Revenue $ 4,937,000 $ 9,873,500 Earnings $ 537,000 $ 1,073,800 |
Nature of Operations (Details)
Nature of Operations (Details) | 6 Months Ended |
Jun. 30, 2020Store | |
Nature of Operations (Textual) | |
Number of stores | 28 |
Retail outlets, description | GrowGeneration is the largest chain of hydroponic garden centers in North America and is a leading marketer and distributor of nutrients, growing media, advanced indoor and greenhouse lighting, ventilation systems and accessories for hydroponic gardening. Currently, the Company owns and operates a chain of twenty eight (28) retail hydroponic/gardening stores, with five (5) located in the state of Colorado, five (5) in the state of California, four (4) in the state of Michigan, two (2) in the state of Nevada, one (1) in the state of Washington, one (1) in the state of Oregon, four (4) in the State of Oklahoma, one (1) in the state of Rhode Island, three (3) in Maine, (1) in Florida, one (1) distribution center in California and an online e-commerce store, GrowGeneration.com. In addition, we operate a warehouse out of Sacramento, CA. Our plan is to acquire, open and operate hydroponic/gardening stores and related businesses throughout the United States and Canada. |
Basis of Presentation and Sum_4
Basis of Presentation and Summary of Significant Accounting Policies (Details) | 6 Months Ended |
Jun. 30, 2020 | |
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 not to exceed lease term |
Basis of Presentation and Sum_5
Basis of Presentation and Summary of Significant Accounting Policies (Details Textual) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2019 | |
Basis of Presentation and Summary of Significant Accounting Policies (Textual) | ||
Leases initial term | 12 months | |
Allowance for doubtful accounts | $ 465,420 | $ 291,372 |
Valuation allowance for the deferred tax assets and state income taxes | 100.00% |
Recent Accounting Pronounceme_2
Recent Accounting Pronouncements (Details) | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Recent Accounting Pronouncements (Textual) | |
Leases initial term | 12 months |
Operating lease assets and liabilities | $ 3,200,000 |
Revenue Recognition (Details)
Revenue Recognition (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Total Revenues | $ 43,451,840 | $ 19,483,383 | $ 76,433,345 | $ 32,570,605 |
E-commerce sales [Member] | ||||
Total Revenues | 2,576,193 | 1,036,333 | 4,521,032 | 1,717,632 |
Sales at company owned stores [Member] | ||||
Total Revenues | $ 40,875,647 | $ 18,447,050 | $ 71,912,313 | $ 30,852,773 |
Revenue Recognition (Details 1)
Revenue Recognition (Details 1) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Increase (decrease) | $ (168,924) | $ (79,723) |
Customer Deposit Liability [Member] | ||
Opening balance | 2,503,785 | 516,038 |
Closing balance | 2,334,861 | 436,315 |
Increase (decrease) | (168,924) | (79,723) |
Trade Accounts Receivable [Member] | ||
Opening balance | 4,455,209 | 862,397 |
Closing balance | 3,608,966 | 1,420,233 |
Increase (decrease) | $ (846,243) | $ 557,836 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 6,242,543 | $ 4,892,455 |
(Accumulated depreciation) | (2,226,561) | (1,551,839) |
Property and equipment, net | 4,015,982 | 3,340,616 |
Vehicle [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 969,115 | 702,447 |
Leasehold improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 1,301,410 | 884,685 |
Furniture, fixtures and equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 3,972,018 | $ 3,305,323 |
Property and Equipment (Detai_2
Property and Equipment (Details Textual) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Property and Equipment (Textual) | ||||
Depreciation expense | $ 373,975 | $ 150,842 | $ 705,299 | $ 291,132 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Goodwill and Intangible Assets [Abstract] | ||
Balance, beginning of year | $ 17,798,932 | $ 8,752,909 |
Goodwill additions | 3,286,152 | 9,046,023 |
Impairments | ||
Balance, end of year | $ 21,085,084 | $ 17,798,932 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets (Details 1) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Gross Carrying Amount | $ 943,802 | $ 235,030 |
Accumulated Amortization | 123,295 | 1,750 |
Other Intangibles [Member] | ||
Gross Carrying Amount | 100,000 | 100,000 |
Accumulated Amortization | ||
Capitalized software [Member] | ||
Gross Carrying Amount | 843,802 | 135,030 |
Accumulated Amortization | $ 123,295 | $ 1,750 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets (Details Textual) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Goodwill and Intangible Assets (Textual) | ||||
Amortization expense | $ 93,702 | $ 0 | $ 121,520 | $ 0 |
Long-Term Debt (Details)
Long-Term Debt (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
Long-Term Debt | $ 305,058 | $ 352,310 |
Less Current Maturities | (91,128) | (110,231) |
Total Long-Term Debt | 213,930 | 242,079 |
Wells Fargo Equipment Finance [Member] | ||
Debt Instrument [Line Items] | ||
Long-Term Debt | 4,098 | 7,109 |
Notes payable issued in connection with seller financing [Member] | ||
Debt Instrument [Line Items] | ||
Long-Term Debt | 24,997 | |
Notes payable issued in connection with seller financing one [Member] | ||
Debt Instrument [Line Items] | ||
Long-Term Debt | $ 300,960 | $ 320,204 |
Long-Term Debt (Details Textual
Long-Term Debt (Details Textual) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)Installments | Jun. 30, 2019USD ($) | |
Long-Term Debt (Textual) | ||||
Interest expense | $ 13,240 | $ 3,161 | $ 20,421 | $ 8,690 |
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 | $ 25,437 | ||
Interest rate per annum | 3.50% | 3.50% | ||
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% | 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 | $ 8,440 | |||
Long term debt maturity date, description | Due August 2023. | |||
Interest rate per annum | 8.125% | 8.125% | ||
Number of installments | Installments | 60 |
Leases (Details)
Leases (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
Right to use assets, operating lease assets | $ 7,630,644 | $ 7,628,591 |
Current lease liability | 1,959,124 | 1,836,700 |
Non-current lease liability | 5,843,739 | 5,807,266 |
Total | $ 7,802,863 | $ 7,643,966 |
Leases (Details 1)
Leases (Details 1) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Leases [Abstract] | ||
Weighted average remaining lease term | 3 years 5 months 9 days | 3 years 9 months |
Weighted average discount rate | 7.60% | 7.60% |
Leases (Details 2)
Leases (Details 2) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Leases [Abstract] | ||
Operating lease costs | $ 1,713,505 | $ 1,136,339 |
Short-term lease costs | 31,932 | 19,114 |
Total operating lease costs | $ 1,745,437 | $ 1,155,453 |
Leases (Details 3)
Leases (Details 3) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
2020 (remainder of the year) | $ 1,360,110 | |
2021 | 2,721,296 | |
2022 | 2,276,428 | |
2023 | 1,737,060 | |
2024 | 945,391 | |
Thereafter | 2,191,974 | |
Total lease payments | 11,232,259 | |
Less: Imputed interest | (3,429,396) | |
Lease Liability at June 30, 2020 | $ 7,802,863 | $ 7,643,966 |
Leases (Details Textual)
Leases (Details Textual) | 6 Months Ended |
Jun. 30, 2020 | |
Leases (Textual) | |
Lease term, Description | Short-term disclosures include only those leases with a term greater than one month and 12 months or less, and expense is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less, that do not include an option to purchase the underlying asset that we are reasonably certain to exercise, are not recorded on the balance sheet. |
Minimum [Member] | |
Leases (Textual) | |
Remaining leases terms | 1 year |
Extend the leases for additional terms | 3 years |
Maximum [Member] | |
Leases (Textual) | |
Remaining leases terms | 5 years |
Extend the leases for additional terms | 5 years |
Convertible Debt (Details)
Convertible Debt (Details) - USD ($) | Jan. 12, 2018 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 |
Convertible Debt (Textual) | ||||
Common stock, par value | $ 0.001 | $ 0.001 | ||
Amortization of debt discount | $ 242,096 | |||
Warrants outstanding converted shares of common stock | 83,451 | |||
Conversion rate per shares | $ 3 | |||
Issue of warrants | 172,500 | |||
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 | $ 250,356 | |||
Net of unamortized debt discount | $ 60,783 | |||
Warrants outstanding converted shares of common stock | 172,500 | |||
Cashless exercise of convertible debt warrants | 18,712 | |||
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 | |||
Description of convertible debt | Each Unit consisted of (i) a .1% unsecured convertible promissory note. | |||
Warrant holder to purchase shares | 37,500 |
Share Based Payments and Stoc_3
Share Based Payments and Stock Options (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | ||||
Total non-cash share-based compensation | $ 1,186,905 | $ 390,898 | $ 5,301,972 | $ 522,243 |
Share Based Payments and Stoc_4
Share Based Payments and Stock Options (Details 1) | 6 Months Ended |
Jun. 30, 2020shares | |
2014 Plan [Member] | |
Total shares available for issuance pursuant to the 2014 Plan | 2,500,000 |
Options outstanding, June 30, 2020 | (198,000) |
Total options exercised under 2014 Plan | (1,915,833) |
Total shares issued pursuant to the 2014 Plan | (375,000) |
Awards available for issuance under the 2014 Plan, June 30, 2020 | 11,167 |
2018 Plan [Member] | |
Total shares available for issuance pursuant to the 2014 Plan | 5,000,000 |
Options outstanding, June 30, 2020 | (1,837,500) |
Total options exercised under 2014 Plan | (49,833) |
Total shares issued pursuant to the 2014 Plan | (693,333) |
Awards available for issuance under the 2014 Plan, June 30, 2020 | 2,419,334 |
Share Based Payments and Stoc_5
Share Based Payments and Stock Options (Details 2) - Options [Member] | 6 Months Ended |
Jun. 30, 2020$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Outstanding, Shares | shares | 1,916,333 |
Granted, Shares | shares | 837,500 |
Exercised, Shares | shares | (451,663) |
Forfeited or expired, Shares | shares | |
Outstanding, Shares | shares | 2,302,170 |
Vested and exercisable, Shares | shares | 1,373,174 |
Weighted - Average Exercise Price, Outstanding beginning balance | $ 2.78 |
Weighted - Average Exercise Price, Granted | 3.51 |
Weighted - Average Exercise Price, Exercised | 1.80 |
Weighted - Average Exercise Price, Outstanding ending balance | 3.16 |
Weighted - Average Exercise Price, Vested and exercisable | $ 2.89 |
Weighted - Average Remaining Contractual Term, Outstanding | 3 years 9 months 22 days |
Weighted - Average Remaining Contractual Term, Vested and exercisable | 3 years 1 month 27 days |
Weighted - Average Remaining Contractual Term, Outstanding Ending | 2 years 9 months 29 days |
Weighted - Average Grant Date Fair Value, Outstanding beginning balance | $ 1.71 |
Weighted - Average Grant Date Fair Value, Granted | 2.22 |
Weighted - Average Grant Date Fair Value, Exercised | .83 |
Weighted - Average Grant Date Fair Value Outstanding ending balance | 1.99 |
Weighted - Average Grant Date Fair Value, Vested and exercisable | $ 1.76 |
Share Based Payments and Stoc_6
Share Based Payments and Stock Options (Details 3) - Options [Member] | Jun. 30, 2020shares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options outstanding pursuant to 2014 Plan | 198,000 |
Options outstanding pursuant to 2014 Plan | 1,837,500 |
Options issued outside of 2014 and 2018 Plans | 266,670 |
Share based payments and stock options | 2,302,170 |
Share Based Payments and Stoc_7
Share Based Payments and Stock Options (Details Textual) - USD ($) | Mar. 06, 2014 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Jan. 07, 2018 |
Share Based Payments and Stock Options (Textual) | ||||||
Description of stock options | 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. | 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. 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 10% 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 | |||||
Expense related to issuance of shares, options and warrants | $ 69,500 | $ 245,000 | ||||
Share-based compensation to executives | $ 245,000 | $ 245,000 | ||||
Unrecognized compensation costs | $ 4,100,000 | $ 4,100,000 | ||||
Stock options [Member] | ||||||
Share Based Payments and Stock Options (Textual) | ||||||
Description of stock options | The Company issued 10,000 shares of common stock (stock-based awards) to employees that vested immediately resulting in compensation expense of approximately $39,200. During the three months ended June 30, 2019 the Company issued 17,500 shares of common stock (stock-based awards) to employees that vested immediately resulting in compensation expense of approximately $35,800. | |||||
Stock options [Member] | ||||||
Share Based Payments and Stock Options (Textual) | ||||||
Description of stock options | The Company issued 528,333 shares of common stock (stock-based awards) to employees that vested immediately resulting in compensation expense of approximately $2,169,832. During the six months ended June 30, 2019 the Company issued 17,500 shares of common stock (stock-based awards) to employees that vested immediately resulting in compensation expense of approximately $35,800. | |||||
Maximum [Member] | ||||||
Share Based Payments and Stock Options (Textual) | ||||||
Stock issued over the term of the plan | 5,000,000 | |||||
Minimum [Member] | ||||||
Share Based Payments and Stock Options (Textual) | ||||||
Stock issued over the term of the plan | 2,500,000 |
Stock Purchase Warrants (Detail
Stock Purchase Warrants (Details) - Warrants [Member] | 6 Months Ended |
Jun. 30, 2020$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Warrants, Outstanding begining balance shares | shares | 3,849,935 |
Warrants, Issued | shares | |
Warrants, Exercised | shares | (448,856) |
Warrants, Forfeited | shares | (250,000) |
Warrants, Outstanding ending balance shares | shares | 3,151,079 |
Weighted Average Exercise Price, Outstanding beginning balance | $ / shares | $ 3.14 |
Weighted Average Exercise Price, Issued | $ / shares | |
Weighted Average Exercise Price, Exercised | $ / shares | 3.16 |
Weighted Average Exercise Price, Forfeited | $ / shares | 5.75 |
Weighted Average Exercise Price, Outstanding ending balance | $ / shares | $ 2.94 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Earnings Per Share [Abstract] | ||||||
Net income | $ 2,573,943 | $ (2,093,518) | $ 1,062,000 | $ 229,421 | $ 480,425 | $ 1,291,421 |
Weighted average shares outstanding, basic | 38,616,610 | 30,326,304 | 38,224,109 | 29,389,636 | ||
Effect of dilutive common stock equivalents | 2,399,782 | 1,097,453 | 2,017,183 | 1,065,646 | ||
Adjusted weighted average shares outstanding, dilutive | 41,016,392 | 31,426,757 | 40,241,292 | 30,455,282 | ||
Basic income (loss) per shares | $ 0.07 | $ 0.04 | $ 0.01 | $ 0.04 | ||
Dilutive income (loss) per share | $ 0.06 | $ 0.03 | $ 0.01 | $ 0.04 |
Acquisitions (Details)
Acquisitions (Details) - USD ($) | Jun. 30, 2020 | Jun. 30, 2019 |
Business Acquisition [Line Items] | ||
Inventory | $ 1,549,500 | $ 3,183,100 |
Prepaids and other current assets | 4,600 | 36,100 |
Furniture and equipment | 100,000 | 250,000 |
Right to use asset | 1,094,600 | 1,840,800 |
Lease liability | (1,094,600) | (1,840,800) |
Goodwill | 3,185,300 | 5,972,300 |
Total | 4,839,400 | 9,441,500 |
Cash | 3,031,700 | 7,631,800 |
Common stock | 1,807,700 | 1,809,700 |
Total | 4,839,400 | 9,441,500 |
H2O Hydroponics LLC [Member] | ||
Business Acquisition [Line Items] | ||
Inventory | 497,600 | |
Prepaids and other current assets | 4,600 | |
Furniture and equipment | 50,000 | |
Right to use asset | 902,000 | |
Lease liability | (902,000) | |
Goodwill | 1,434,700 | |
Total | 1,986,900 | |
Cash | 1,281,700 | |
Common stock | 705,200 | |
Total | 1,986,900 | |
Health & Harvest LLC [Member] | ||
Business Acquisition [Line Items] | ||
Inventory | 1,051,900 | |
Prepaids and other current assets | ||
Furniture and equipment | 50,000 | |
Right to use asset | 192,600 | |
Lease liability | (192,600) | |
Goodwill | 1,750,600 | |
Total | 2,852,500 | |
Cash | 1,750,000 | |
Common stock | 1,102,500 | |
Total | $ 2,852,500 | |
Green Life Garden [Member] | ||
Business Acquisition [Line Items] | ||
Inventory | 1,038,600 | |
Prepaids and other current assets | 14,100 | |
Furniture and equipment | 100,000 | |
Right to use asset | 809,600 | |
Lease liability | (809,600) | |
Goodwill | 2,305,900 | |
Total | 3,458,600 | |
Cash | 2,647,700 | |
Common stock | 810,900 | |
Total | 3,458,600 | |
Chlorophyll [Member] | ||
Business Acquisition [Line Items] | ||
Inventory | 1,441,000 | |
Prepaids and other current assets | 22,000 | |
Furniture and equipment | 100,000 | |
Right to use asset | 701,900 | |
Lease liability | (701,900) | |
Goodwill | 2,596,100 | |
Total | 4,159,100 | |
Cash | 3,659,100 | |
Common stock | 500,000 | |
Total | 4,159,100 | |
Reno Hydroponics [Member] | ||
Business Acquisition [Line Items] | ||
Inventory | 238,000 | |
Prepaids and other current assets | ||
Furniture and equipment | 25,000 | |
Right to use asset | ||
Lease liability | ||
Goodwill | 516,300 | |
Total | 779,300 | |
Cash | 525,000 | |
Common stock | 254,300 | |
Total | 779,300 | |
Palm Springs Hydroponics [Member] | ||
Business Acquisition [Line Items] | ||
Inventory | 465,500 | |
Furniture and equipment | 25,000 | |
Right to use asset | 329,300 | |
Lease liability | (329,300) | |
Goodwill | 554,000 | |
Total | 1,044,500 | |
Cash | 800,000 | |
Common stock | 244,500 | |
Total | $ 1,044,500 |
Acquisitions (Details 1)
Acquisitions (Details 1) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Business Acquisition [Line Items] | ||
Revenue | $ 2,526,700 | $ 6,713,600 |
Earnings | $ 489,300 | $ 1,270,400 |
H2O Hydroponics LLC [Member] | ||
Business Acquisition [Line Items] | ||
Acquisition date | Jun. 26, 2020 | |
Revenue | $ 227,100 | |
Earnings | $ 27,800 | |
Health & Harvest LLC [Member] | ||
Business Acquisition [Line Items] | ||
Acquisition date | Feb. 26, 2020 | |
Revenue | $ 2,299,600 | |
Earnings | $ 461,500 | |
Green Life Garden Member [Member] | ||
Business Acquisition [Line Items] | ||
Acquisition date | May 14, 2019 | |
Revenue | $ 1,056,200 | |
Earnings | $ 234,700 | |
Chlorophyll [Member] | ||
Business Acquisition [Line Items] | ||
Acquisition date | Jan. 21, 2019 | |
Revenue | $ 3,450,600 | |
Earnings | $ 613,000 | |
Reno Hydroponics [Member] | ||
Business Acquisition [Line Items] | ||
Acquisition date | Feb. 11, 2019 | |
Revenue | $ 880,400 | |
Earnings | $ 151,100 | |
Palm Springs Hydroponics [Member] | ||
Business Acquisition [Line Items] | ||
Acquisition date | Feb. 7, 2019 | |
Revenue | $ 1,326,400 | |
Earnings | $ 271,600 |
Acquisitions (Details 2)
Acquisitions (Details 2) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Business Combinations [Abstract] | ||||
Revenue | $ 2,275,700 | $ 4,937,000 | $ 4,551,478 | $ 9,873,500 |
Earnings | $ 87,200 | $ 537,000 | $ 174,476 | $ 1,073,800 |
Acquisitions (Details Textual)
Acquisitions (Details Textual) - USD ($) | Jun. 16, 2020 | Feb. 26, 2020 | Jun. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Acquisitions (Textual) | |||||
Acquired assets of health & harvest llc | $ 1,990,000 | $ 2,850,000 | |||
Acquired goodwill | $ 1,400,000 | $ 1,750,000 | $ 21,085,084 | $ 17,798,932 | $ 8,752,909 |
Subsequent Events (Details)
Subsequent Events (Details) | Aug. 10, 2020 | Jul. 02, 2020 | Jun. 29, 2020 |
Subsequent Events (Textual) | |||
Subsequent events, description | The Registration Statement to upsize the Offering pursuant to Rule 462(b) under the Securities Act of 1933, as amended. The Shares were sold at a public offering price of $5.60 per share, generating gross proceeds of $48.3 million, before deducting the underwriting discounts and commissions and other offering expenses. Net proceeds from the sales of common stock, net of all offering costs and expenses was approximately $44.6 million. | ||
Subsequent Event [Member] | |||
Subsequent Events (Textual) | |||
Subsequent events, description | The Company purchased the assets of Emerald City Garden located in Concord, CA. for $1 million. Following this acquisition, the Company opened a new store in the state of California. | The Company consummated an underwritten public offering (the “Offering”) of 8,625,000 shares of its common stock (the “Shares”), which included the exercise in full of the underwriters’ option to purchase an additional 1,125,000 shares of common stock to cover over-allotments |