Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | May 17, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | urban-gro, Inc. | |
Entity Central Index Key | 0001706524 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 25,749,833 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2019 | |
Entity Small Business | true | |
Entity Emerging Growth | true | |
Entity Ex-transition period | false |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Current Assets | ||
Cash | $ 888,848 | $ 1,178,852 |
Accounts receivable, net | 997,225 | 501,191 |
Inventories | 1,049,876 | 1,214,224 |
Related party receivable | 68,229 | 122,356 |
Prepayments and advances | 1,939,470 | 928,682 |
Total current assets | 4,943,648 | 3,945,305 |
Non-current assets | ||
Property and equipment, net | 429,054 | 441,141 |
Operating Lease Right of Use Assets | 139,266 | 0 |
Investments | 1,509,650 | 1,261,649 |
Goodwill | 846,229 | 0 |
Other assets | 105,195 | 96,669 |
Total non-current assets | 3,029,394 | 1,799,459 |
Total assets | 7,973,042 | 5,744,764 |
Current liabilities | ||
Accounts payable | 3,358,498 | 1,630,893 |
Accrued expenses | 1,367,962 | 1,144,142 |
Related party payable | 17,069 | 18,802 |
Customer deposits | 2,972,168 | 3,298,609 |
Notes payable | 3,440,543 | 3,478,869 |
Operating lease liabilities | 81,859 | 0 |
Total current liabilities | 11,238,099 | 9,571,315 |
Non-current liabilities | ||
Convertible debentures | 178,547 | 0 |
Operating lease liabilities | 36,941 | 0 |
Total long-term liabilities | 215,488 | 0 |
Total liabilities | 11,453,587 | 9,571,315 |
Commitments and contingencies, note 11 | ||
Shareholders' Equity | ||
Preferred stock, $0.1 par value; 10,000,000 shares authorized; 0 shares issued and outstanding | 0 | 0 |
Common stock, $0.001 par value; 100,000,000 shares authorized; 25,749,833 and 25,229,833 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively | 25,750 | 25,230 |
Additional Paid in Capital | 6,515,229 | 4,688,272 |
Retained earnings / (accumulated deficit) | (10,021,524) | (8,540,053) |
Total shareholders' equity (deficit) | (3,480,545) | (3,826,551) |
Total liabilities and shareholders' equity | $ 7,973,042 | $ 5,744,764 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.1 | $ 0.1 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ .001 | $ .001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares outstanding | 25,749,833 | 25,229,833 |
Common stock, shares issued | 25,749,833 | 25,229,833 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Statement [Abstract] | ||
Revenue | $ 5,834,016 | $ 3,446,364 |
Cost of sales | 4,089,840 | 2,442,493 |
Gross profit | 1,744,176 | 1,003,871 |
Operating expenses | ||
Marketing | 319,100 | 122,437 |
General and administrative | 2,218,387 | 1,549,607 |
Stock compensation | 588,697 | 99,850 |
Total operating expenses | 3,126,184 | 1,771,894 |
Loss from operations | (1,382,008) | (768,023) |
Other Income (Expenses) | ||
Other income | 508 | 4,087 |
Interest expense | (99,971) | (18,713) |
Total other expenses, net | (99,463) | (14,626) |
Income tax expense (benefits) | 0 | 0 |
Net income (loss) | (1,481,471) | (782,649) |
Comprehensive income (loss) | $ (1,481,471) | $ (782,649) |
Earnings per share: | ||
Net loss per share - basic and diluted | $ (0.06) | $ (0.03) |
Weighted average shares used in computation | 25,368,944 | 25,041,833 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity (Deficit) (Unaudited) - USD ($) | Common Stock | Additional Paid-In Capital | Retained Earnings (accumulated deficits) | Total |
Beginning balance, shares at Dec. 31, 2017 | 25,046,000 | |||
Beginning balance, value at Dec. 31, 2017 | $ 25,036 | $ 3,258,116 | $ (4,644,180) | $ (1,361,028) |
Clawback of stock granted, shares | (375,000) | 0 | ||
Clawback of stock granted, value | $ (375) | 375 | ||
Payment of outstanding balance of PPM | 80,000 | $ 80,000 | ||
Stock Grant Program | 199,850 | 199,850 | ||
Net loss for period | (782,649) | (782,649) | ||
Ending balance, shares at Mar. 31, 2018 | 24,671,000 | |||
Ending balance, value at Mar. 31, 2018 | $ 24,661 | 3,538,341 | (5,426,829) | (1,863,827) |
Beginning balance, shares at Dec. 31, 2018 | 25,229,833 | |||
Beginning balance, value at Dec. 31, 2018 | $ 25,230 | 4,688,272 | (8,540,053) | (3,826,551) |
Stock Based Compensation | 588,697 | 588,697 | ||
Stock Options Issued for Loan Term Revisions | 17,827 | 17,827 | ||
Stock Grant Program Vesting, shares | 20,000 | |||
Stock Grant Program Vesting, value | $ 20 | (20) | 0 | |
Stock Issuance Related to Acquisition, shares | 500,000 | |||
Stock Issuance Related to Acquisition, value | $ 500 | 999,500 | 1,000,000 | |
Warrant Issuance Related to Convertible Debentures | 101,741 | 101,741 | ||
Equity value of exercise price associated with convertible debentures | 119,212 | 119,212 | ||
Net loss for period | (1,481,471) | (1,481,471) | ||
Ending balance, shares at Mar. 31, 2019 | 25,749,833 | |||
Ending balance, value at Mar. 31, 2019 | $ 25,750 | $ 6,515,229 | $ (10,021,524) | $ (3,480,545) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Cash Flows from Operating Activities | ||
Net Loss | $ (1,481,471) | $ (782,649) |
Adjustment to reconcile net loss from operations: | ||
Depreciation and amortization | 58,642 | 34,882 |
Inventory write-offs | 0 | 21,543 |
Bad debt expense | 11,615 | 16,864 |
Stock compensation expense | 588,697 | 99,850 |
Changes in Operating Assets and Liabilities (excluding effects of acquisitions): | ||
Accounts receivable | (303,874) | (261,107) |
Inventory | 164,348 | (57,071) |
Prepayments and advances | (1,010,788) | (154,147) |
Other assets | (8,527) | 0 |
Accounts payable | 1,725,872 | (499,719) |
Accrued expenses | 163,522 | (183,149) |
Customer deposits | (326,441) | 888,152 |
Net Cash Used in Operating Activities | (418,405) | (876,551) |
Cash Flows from Investing Activities | ||
Purchase of investment | (248,000) | (139,771) |
Purchases of property and equipment | (42,875) | (73,649) |
Purchases of intangible assets | 0 | (9,090) |
Cash acquired in acquisition | 49,742 | 0 |
Net Cash Used Used In Investing Activities | (241,133) | (222,510) |
Cash Flows from Financing Activities | ||
Issuance of convertible debentures | 425,000 | 0 |
Issuance of capital stock | 0 | 80,000 |
Repayment of notes payable | (55,466) | (4,000) |
Net Cash Provided by Financing Activities | 369,534 | 76,000 |
Net Decrease in Cash | (290,004) | (1,023,061) |
Cash at Beginning of Period | 1,178,852 | 1,656,791 |
Cash at End of Period | 888,848 | 633,730 |
Supplemental Cash Flow Information: | ||
Interest Paid | 99,971 | 18,713 |
Income Tax Paid | 0 | 0 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Operating lease right of use asset set-up effective January 1, 2019 | $ 139,266 | $ 0 |
1. Organization, Merger and Acq
1. Organization, Merger and Acquisitions; Business Plan; Liquidity | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization, Basis of Presentation and Liquidity | NOTE 1 – ORGANIZATION, MERGER AND ACQUISITIONS; BUSINESS PLAN; LIQUIDITY Organization, Merger and Acquisitions urban-gro, Inc. (the “Company”) is an end-to-end agricultural solutions firm focused on cannabis and traditional agricultural produce growers. It provides services that benefit commercial cannabis cultivation facilities needs to effectively manage investment in capital expenditures (CAPEX) and operating expenses (OPEX). OpEx-related product and services include recurring revenues realized in the Company’s Environmental Sciences and Ag-Technology divisions, while CapEx products and services include design, engineering, the sale of integrated, commissioning services. The types of integrated cultivation systems include environmental controls and automated fertigation and irrigation systems, commercial-grade light systems, including light-emitting diode (LED) and high-pressure sodium (HPS) grow light systems, a complete line of water treatment solutions, rolling and automated benching systems, air flow systems, and odor & microbial mitigation systems. In its Environmental Sciences division, the Company markets a line of Integrated Pest Management products. The Company markets its products and services throughout the United States and Canada. During 2018 the Company also made preliminary efforts on projects in other countries, including Latin America. In June 2018, the Company formed urban-gro Canada Technologies, Inc. as a wholly owned Canadian subsidiary which it intends to utilize for its Canadian sales operations. As of March 31, 2019, this subsidiary is still in the development stage in preparation for operations with our Canadian customers. Effective November 20, 2018, the Company entered into a letter of intent (“LOI”) with Hydrofarm Holdings Group, Inc. (“Hydrofarm”) whereby Hydrofarm agreed to acquire all of the Company’s issued and outstanding Common Stock (the “Merger”) utilizing a mutually agreed upon value of $65,000,000 for urban-gro. Pursuant to the terms of the LOI, Hydrofarm extended to the Company a secured, interest only note in the principal amount of $2,000,000. The note is secured by all of the Company’s currently existing and future assets. Although the Merger has not been abandoned and the LOI has not been terminated by either party, there are currently no discussions between the parties pertaining to the Merger. The Hydrofarm note requires the Company to obtain the permission of Hydrofarm to engage in various activities, including additional financing. In February 2019, the Company provided applicable notice to Hydrofarm of an agreement to raise additional debt and/or equity to which Hydrofarm consented. Effective March 7, 2019, the Company acquired 100% of the stock of Impact Engineering, Inc. (“Impact”) D/B/A Grow2Guys, a provider of mechanical, electrical, and plumbing (MEP) engineering services predominantly focused on the cannabis industry. Management believes the acquisition of Impact will improve the Company’s ability to better serve its current and future customer base by expanding on the fully integrated products and services offered by the Company. The Company issued 500,000 shares of Common Stock valued at $2.00 per share to effect the acquisition of Impact. The Company has initially accounted for the acquisition of Impact as follows: Purchase Price $ 1,000,000 Allocation of Purchase Price: Cash $ 49,742 Accounts receivable, net $ 149,648 Goodwill $ 846,229 Accrued expenses $ 45,619 Business Plan The Company’s diversification plans have led to the strategic decision to focus on brand as an ancillary national market leader delivering the value-added product solutions to cannabis cultivators. Management has implemented the following actions to increase profit margins and generate positive operating cash flow: 1) Establish strategic partnerships with our vendors to pool purchasing power to decrease costs; 2) Implement design fees associated with designing environmental controls and fertigation systems; 3) Create a commissioning team and charge commissioning fees for training staff and starting up new environmental controls and fertigation systems; 4) Sell engineered agricultural technology systems,; and 5) Design and implement integrated pest management plans, biological controls procedures and pesticide prescriptions to these customers. While no assurances can be provided, management believes these objectives will increase the Company’s gross profit and increase cash provided by operations. Liquidity Since inception the Company has incurred operating losses and has funded its operations primarily through issuance of equity securities, debt, and operating revenue. As of March 31, 2019, the Company had an accumulated deficit of $10,021,524, a working capital deficit of $6,294,451, and negative stockholders’ equity of $3,480,545. The Company has evaluated its projected cash flows for the next twelve months, which includes assumptions about future financings, and believes those projections along with its cash and cash equivalents of $888,848 as of March 31, 2019 will be sufficient to fund the Company’s operations through at least twelve months from the issuance date of these financial statements, or at least through May 17, 2020. These assumptions about future financings may not come to fruition or may not be available to the Company on acceptable terms. Should the Company need to sell additional equity securities to fund the Company, those sales would result in the dilution of equity interests of current shareholders. These facts and conditions raise substantial doubt about our ability to continue as a going concern, and our independent registered public accounting firm included an explanatory paragraph regarding going concern qualification in its annual audit report on the Company for the year ended December 31, 2018. |
2. Summary of Significant Accou
2. Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Unaudited Interim Financial Information The Company has prepared the accompanying interim consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. The interim consolidated financial statements are unaudited and, in the Company’s opinion, include all adjustments, consisting of normal recurring adjustments and accruals necessary for a fair presentation of the Company’s consolidated balance sheets, consolidated statements of operations and comprehensive income (loss), and consolidated cash flows and statement of shareholders equity for the periods presented. The results reported in these interim consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been omitted in accordance with regulations of the SEC. These interim consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. Prior Period Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation. Use of Estimates In preparing consolidated financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates. Significant estimates include estimated useful lives and potential impairment of property and equipment, inventory write offs, and allowance for bad debt. Basis of Presentation and Principles of Consolidation These consolidated financial statements are presented in United States dollars and they include the accounts of urban-gro, Inc. and its wholly-owned subsidiaries. The financial results of Impact have been included in the Company’s consolidated financial statements from the date of acquisition on March 7, 2019. Recently Issued Accounting Pronouncements From time to time, the Financial Accounting Standards Board (the “FASB”) or other standards setting bodies issue new accounting pronouncements. The FASB issues updates to new accounting pronouncements through the issuance of an Accounting Standards Update ("ASU"). Unless otherwise discussed, the Company believes that the impact of recently issued guidance, whether adopted or to be adopted in the future, is not expected to have a material impact on the Company’s financial statements upon adoption. Going Concern Assessment In August 2014, the FASB issued an ASU regarding disclosures of uncertainties when there are questions about an entity’s ability to continue as a going concern. With the implementation of the ASU, beginning with the year ended December 31, 2016 and all annual and interim periods thereafter, we assess going concern uncertainty for our consolidated financial statements to determine if we have sufficient cash and cash equivalents on hand and working capital to operate for a period of at least one year from the date the consolidated financial statements are issued or are available to be issued. As part of this assessment, based on conditions that are known and reasonably knowable to us, we will consider various scenarios, forecasts, projections, and estimates, and make certain key assumptions, including the timing and nature of projected cash expenditures or programs, and our ability to delay or curtail those expenditures or programs, among other factors, if necessary. Fair Value of Financial Instruments The Company’s financial instruments consist principally of cash and cash equivalents, accounts receivable, accounts payable, notes payable and other current assets and liabilities. We value our financial assets and liabilities using fair value measurements. Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are categorized based on whether the inputs are observable in the market and the degree that the inputs are observable. The categorization of financial instruments within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The hierarchy is prioritized into three levels defined as follows: Level 1: Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access. Level 2: Observable inputs other than prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated with observable market data. Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies, and similar techniques that use significant unobservable inputs. The carrying amount of our cash and cash equivalents, accounts receivable, accounts payable, and other current assets and liabilities in our consolidated financial statements approximates fair value because of the short-term nature of the instruments. Investments in non-marketable equity securities are carried at cost less other-than-temporary impairments. The carrying amount of our notes payable and convertible debt at March 31, 2019 and December 31, 2018 approximates their fair values based on our incremental borrowing rates. There have been no changes in Level 1, Level 2, and Level 3 categorizations and no changes in valuation techniques for these assets or liabilities for the three-month period ended March 31, 2019. Cash and Cash Equivalents The Company considers all highly liquid short-term cash investments with an original maturity of three months or less to be cash equivalents. As of March 31, 2019 and December 31, 2018, the Company did not maintain any cash equivalents. The Company maintains cash with financial institutions that may from time to time exceed federally-insured limits. The Company has not experienced any losses related to these balances and believes the risk to be minimal. Accounts Receivable, Net Trade accounts receivables are carried at the original invoiced amounts less an allowance for doubtful accounts. As of March 31, 2019 and December 31, 2018, the balance of allowance for doubtful accounts was $18,920. The allowances for doubtful accounts are calculated based on a detailed review of certain individual customer accounts and an estimation of the overall economic conditions affecting the Company's customer base. The Company reviews a customer's credit history before extending credit to the customer. If the financial condition of its customers were to deteriorate, resulting in an impairment of their ability to make payments, additions to the allowance would be required. A provision is made against accounts receivable to the extent they are considered unlikely to be collected. Occasionally the Company will write off bad debt directly to the bad debt expense account when the balance is determined to be uncollectable. Bad debt expense for the three months ended March 31, 2019 and 2018 was $11,615 and $16,864, respectively. Inventories Inventories, consisting entirely of finished goods inventories, are stated at the lower of cost or net realizable value, with cost determined using the average cost method. 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 at the realization of change in value. Once written down, inventories are carried at this lower basis until sold or scrapped. Property and Equipment, Net Property and equipment is stated at cost less accumulated depreciation, amortization and impairment. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. When property and equipment is retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes. The Company uses other depreciation methods (generally accelerated) for tax purposes where appropriate. No impairment charges were recorded for three months ended March 31, 2019 and 2018. The estimated useful lives for significant property and equipment categories are as follows: Computer and Technology Equipment 3 years Furniture and Equipment 5 years Operating Lease Right of Use Assets Lease term Leasehold Improvements Lease term Vehicles 3 years Software 3 years Other Equipment 3 or 5 years Equity Investments Equity investments without readily determinable fair values and for which the Company does not have the ability to exercise significant influence are accounted for at cost with adjustments for observable changes in prices or impairments. Equity investments for which the Company has the ability to exercise significant influence, but not control, are accounted for using the equity method of accounting. The Company’s share of the earnings or losses as reported by equity-method investees are classified as “Income (Loss) from equity investees, net of tax” on the Company’s consolidated statements of operations and comprehensive income (loss). Intangible Assets The Company’s intangible assets, consisting of legal fees for application of patents and trademarks and license fees paid for inspection services, are recorded at cost. Patents and trademarks, once approved, will be amortized using the straight-line method over an estimated life, generally 5 years for patents and 10 to 20 years for trademarks. License fees are amortized over 10 years. Intangible assets are included in “other assets” on the balance sheets. Customer Deposits The Company’s policy is to collect deposits from customers at the beginning of the project prior to the design phase. The customer payments received are recorded as a customer deposit liability on the balance sheet. When the project is complete and meets all the criteria for revenue recognition, the deposit is recorded against the customer’s receivable balance. In certain situations when the customer has paid the deposit and design work has been completed but the customer chooses not to proceed with the project, the Company may keep the deposit and recognize revenue. Revenue Recognition The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers, Revenue from Contracts with Customers Cost of Sales The Company’s policy is to recognize cost of sales the same manner as, and in conjunction with, revenue recognition. The Company’s cost of sales includes the costs directly attributable to revenue recognized and includes expenses related to the purchasing of our products, fees for third-party commissions and shipping costs. Total shipping costs included in the cost of goods sold was $128,867 and $76,200 for the three months ended March 31, 2019 and 2018, respectively. Advertising Costs The Company expenses advertisings costs in the periods the costs are incurred. Prepayments made under contracts are included in prepaid expenses and expensed when the advertisement is run. Total advertising expense incurred was $27,668 and $22,270 for the three months ended March 31, 2019 and 2018, respectively. Derivative Financial Instruments The Company accounts for its warrants by estimating the fair value of these warrants at the respective balance sheet dates using the Black-Scholes option pricing based on the estimated market value of the underlying common stock at the valuation measurement date, the remaining contractual term, risk-free interest rate, and expected volatility of the price of the underlying common stock. There is a moderate degree of subjectivity involved when using option pricing models to estimate the warrants and the assumptions used in the Black-Scholes option-pricing model are moderately judgmental. Share Based Compensation The Company periodically issues both options and shares of its Common Stock to employees and consultants in non-capital raising transactions for fees and services. The Company accounts for stock issued to non-employees with the value of the stock compensation based upon the measurement date as determined at the grant date of the award. Accounting for stock-based compensation to non-employees requires the measurement and recognition of compensation expense for all share-based payment awards made to non-employees based on estimated fair values. The Company accounts for stock grants issued and vesting to employees with the award being measured at its fair value at the date of grant and amortized ratably over the vesting period. Accounting for stock-based compensation to employees requires the measurement and recognition of compensation expense for all share-based payment awards made to employees based on estimated fair values. The Company also estimates forfeitures at the time of grant and revises those estimates in subsequent periods if actual forfeitures differ from its estimates Income Taxes The Company files a federal income tax return in the United States. In addition, it files tax returns in state and local jurisdictions as applicable. Provisions for current income tax liabilities, if any, would be calculated and accrued on income and expense amounts expected to be included in the income tax returns for the current year. Income taxes reported in earnings, if any, would also include deferred income tax provisions. Deferred income tax assets and liabilities, if any, would be computed on differences between the financial statement bases of assets and liabilities at the enacted tax rates. Changes in deferred income tax assets and liabilities would be included as a component of income tax expense. The effect on deferred income tax assets and liabilities attributable to changes in enacted tax rates would be charged or credited to income tax expense in the period of enactment. Valuation allowances would be established for certain deferred tax assets when realization is not likely. Assets and liabilities would be established for uncertain tax positions taken or positions expected to be taken in income tax returns when such positions, in the judgement of the Company, do not meet a more-likely-than-not threshold based on the technical merits of the positions. Valuation allowances would be established for certain deferred tax assets when realization is not likely. Earnings (Loss) Per Share The Company computes net earnings (loss) per share by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS is computed by dividing net income (loss) by the weighted-average of all potentially dilutive shares of common stock that were outstanding during the periods presented, unless that calculation would result in an anti-dilutive calculation of EPS. The treasury stock method is used in calculating diluted EPS for potentially dilutive stock options and share purchase warrants, which assumes that any proceeds received from the exercise of in-the-money stock options and share purchase warrants would be used to purchase common shares at the average market price for the period. Recently Adopted Accounting Pronouncements In February 2016, the FASB issued an ASU amending the accounting for leases. The new guidance requires the recognition of lease assets and liabilities for operating leases with terms of more than 12 months, in addition to those currently recorded, on our consolidated balance sheets. Presentation of leases within the consolidated statements of operations and comprehensive income (loss) and consolidated cash flows will be generally consistent with the prior lease accounting guidance. The ASU was effective for reporting periods beginning after December 13, 2018, with early adoption permitted. The Company adopted the ASU effective January 1, 2019 under the modified retrospective method with respect to lease contracts in effect as of the adoption date. The adoption of the ASU increased our assets and liabilities by $139,266 as of January 1, 2019 due to the recognition of right-of-use assets and lease liabilities with respect to operating leases. |
3. Related Party Transactions
3. Related Party Transactions | 3 Months Ended |
Mar. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 3 – RELATED PARTY TRANSACTIONS The Company purchases some cultivation products from Bravo Lighting d/b/a Bravo Enterprises (“Bravo”) and Enviro-Glo, manufacturers and a distributor of commercial building lighting and other product solutions with common control by the Company’s CEO, Bradley Nattrass and CDO, Octavio Gutierrez. Purchases from Bravo and Enviro-Glo for the three months ended March 31, 2019 and 2018 totaled $2,432 and $69,978, respectively. Outstanding receivables from Bravo and Enviro-Glo totaled $44,541 on March 31, 2019 and $43,121 on December 31, 2018. Net outstanding payables incurred for purchases of inventory and other services to Bravo and Enviro-Glo totaled $2,216 as of March 31, 2019 and $5,562 as of December 31, 2018. The Company also entered into a lease agreement with Bravo to sublease office space for 12 months commencing in September 2018. Minimum monthly lease payments are $15,000 for the remainder of the lease. The Company has consulted with Cloud 9 Support, LLC (“Cloud 9”), a company owned by James Lowe, a board member, shareholder, and debt holder. Cost of Services provided by Cloud 9 during the three months ended March 31, 2019 and 2018 were $14,853 and $84,746, respectively. Cloud 9 also purchases materials from the Company for use with their customers. Total sales to Cloud 9 from the Company during the three months ended March 31, 2019 and 2018 were $99,985 and $370,948, respectively. Outstanding receivables from Cloud 9 as of March 31, 2019 and 2018 totaled $23,688 and $79,235, respectively. Net outstanding payables incurred for purchases of inventory and other services to Cloud 9 as of March 31, 2019 and 2018 totaled $14,853 and $13,240, respectively. In October 2018, the Company received a $1,000,000 unsecured loan from James Lowe, a director, which became due April 30, 2019. The loan has a one-time origination fee of $12,500. Interest accrues at the rate of 12% per annum and is paid monthly. As additional consideration for the loan the Company granted Mr. Lowe an option to purchase 30,000 shares of its common stock at an exercise price of $1.20 per share, which option is exercisable for a period of five (5) years. The loan is guaranteed by Messrs. Nattrass and Gutierrez, two of the Company’s officers, directors and its principal shareholders. The due date for the note payable was extended in May 2019. In consideration for the Note holder extending the maturity date of the Note to December 31, 2019, the Company agreed to increase the interest rate to 9% per year and issue 10,000 shares of its Common Stock to the Note Holder. |
4. Prepayments and Advances
4. Prepayments and Advances | 3 Months Ended |
Mar. 31, 2019 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Prepayments and Advances | NOTE 4 – PREPAYMENTS AND ADVANCES Prepayments and advances is comprised of prepayments paid to vendors to initiate orders and prepaid services and fees. The prepaid balances are summarized as follows: March 31, December 31, 2019 2018 Vendor Prepayments $ 1,684,259 $ 776,478 Prepaid Services and Fees 255,211 152,204 Prepayments and Advances $ 1,939,470 $ 928,682 |
5. Property and Equipment
5. Property and Equipment | 3 Months Ended |
Mar. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property Plant and Equipment, net | NOTE 5 – PROPERTY AND EQUIPMENT Property and equipment balances are summarized as follows: March 31, December 31, 2019 2018 Computer and Technology Equipment $ 75,311 $ 61,910 Furniture and Equipment 30,162 30,162 Leasehold Improvements 143,215 143,215 Vehicles 132,875 132,875 Software 265,845 233,783 R&D Assets 84,031 84,031 Other Equipment 66,232 65,140 Accumulated depreciation and amortization (368,617 ) (309,975 ) Property and equipment, net $ 429,054 $ 441,141 Depreciation expense totaled $58,642 and $34,815 for the three months ended March 31, 2019 and 2018, respectively. |
6. Investments
6. Investments | 3 Months Ended |
Mar. 31, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | NOTE 6 – INVESTMENTS Investments are comprised of the Company’s investments in Edyza Sensors, Inc. (“Edyza”) and Total Grow Holdings, LLC (d/b/a Total Grow Control, LLC) (“TGH”). To date, the Company’s ownership interests in Edyza and TGH have not enabled it to exercise significant influence over either of these entities and the Company’s investment in Edyza and TGH are accounted for under the cost method. In January 2019, the Company agreed to acquire an additional ownership interest in TGH under a payment plan. When the payment plan is completed in May 2019, the Company will be issued the additional ownership interest in TGH and the Company will then have a sufficient ownership interest in TGH to enable it to exercise significant influence over TGH. Once that additional ownership interest in TGH is issued to the Company, the Company will begin to account for its investment in TGH under the equity method. The components of equity investments are summarized as follows: March 31, December 31, 2019 2018 Investment in Edyza, cost method $ 812,884 $ 812,883 Investment in TGH, cost method 696,766 448,766 $ 1,509,650 $ 1,261,649 |
7. Other Assets
7. Other Assets | 3 Months Ended |
Mar. 31, 2019 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Assets | NOTE 7 – OTHER ASSETS Included in other assets are the following intangible assets: · Patents, consisting of legal costs paid to third parties to establish a patent, which are capitalized until such time that the patents are approved and issued or rejected. If approved, capitalized costs are amortized using the straight-line method over the estimated lives of the patents, generally five years. There are no issued patents as of March 31, 2019 or December 31, 2018. · License fees, which consist of fees paid to have the Company’s products certified by a nationally recognized organization. License fees are amortized over ten years. The net balance of intangible assets as of March 31, 2019 and December 31, 2018 was $72,282 and $63,755, respectively. Amortization expense totaled $493 and $67 for the three months ended March 31, 2019 and 2018, respectively. |
8. Accrued Expenses
8. Accrued Expenses | 3 Months Ended |
Mar. 31, 2019 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | NOTE 8 – ACCRUED EXPENSES Accrued expenses are summarized as follows: March 31, December 31, 2019 2018 Accrued operating expenses $ 343,915 $ 240,941 Accrued wages and related expenses 600,160 490,961 Accrued interest expense 40,000 10,958 Accrued sales tax payable 383,887 401,282 $ 1,367,962 $ 1,144,142 |
9. Notes Payable and Operating
9. Notes Payable and Operating Lease Liabilities | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Notes Payable and Operating Lease Liabilities | NOTE 9 – NOTES PAYABLE AND OPERATING LEASE LIABILITIES The following is a summary of notes payable excluding related party notes payable: March 31, December 31, 2019 2018 Unsecured, interest only, note payable with Chris Parkes. Interest payments due monthly at an annual rate of 20.4%. Note payable revised in December 2018 amending principal due and extending maturity date to June 30, 2019. $ 80,000 80,000 Unsecured, interest only, note payable with David Parkes. Interest payments due monthly at an annual rate of 18%. Note payable revised in December 2018 amending principal due and extending maturity date to June 30, 2019. 100,000 100,000 Unsecured, interest only, note payable with Michael S. Bank. Interest at 19.8% per year is paid twice per month. The note contains a demand re-payment provision that can be executed by Mr. Bank at any time by providing a one-time notice. The Company may re-pay any part or the entire principal sum at any time with penalty and abatement of interest expense from date of early payment. The note includes six thousand warrants, each exercisable to purchase one share of the Company's common stock at a price of $1.00 per share. In March 2019, the Company repaid $35,000 of the principle and extended the maturity date to April 30, 2019. The note was repaid in full on April 30, 2019. 265,000 298,869 Unsecured, interest only, note payable with Cloud9 Support Inc. The note is personally guaranteed by the Company’s two majority shareholders who are also the Company’s CEO and Chief Development Officer. Interest at 12.0% per year is payable monthly. The note includes additional consideration of 30,000 options at an exercise price of $1.20. The note was extended in May 2019. In consideration for extending the due date of the Note to December 31, 2019 the interest rate increased to 9% per annum and the Company issued the Holder 10,000 shares of Common Stock. 995,543 1,000,000 Note payable with Hydrofarm, secured by all currently existing and future assets. Interest accrues at 8.0% per year and is paid quarterly. The note matures on the earlier of: (a) 90 days after the date that the Company and Hydrofarm abandon the Merger (see Note 1); (b) acceleration of the note payable due to the Company being in default; or (c) December 2023. As there are currently no discussions between the parties regarding the Merger, the Company believes the note payable should be classified as a current maturity. 2,000,000 2,000,000 Total 3,440,543 3,478,869 Less current maturities (3,440,543 ) (3,478,869 ) Long Term $ – $ – The following is a summary of operating lease liabilities: Operating lease of the Company’s headquarters. Monthly payments of $7,750 through August 31, 2020 at an imputed incremental borrowing rate of 8.0%. $ 118,800 $ – Less current portion (81,859 ) – Long Term $ 36,941 $ – |
10. Unit Offering
10. Unit Offering | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Unit Offering | NOTE 10 – UNIT OFFERING Effective January 9, 2019, the Company executed a letter agreement with 4Front Capital Partners, Inc., Toronto, Canada (“4Front”), whereby 4Front agreed to act as the Company’s exclusive placement agent in connection with a proposed private placement offering of up to $6,000,000 of either debt or equity securities, or a combination of the same, at a price to be determined, on a “best efforts” basis. Beginning in March 2019, 4Front, as the Company’s placement agent, initiated an offering (the “Offering”) of up to $6,000,000 from the sale of Units, with each Unit consisting of a $1,000 Convertible Debenture and Common Stock Purchase Warrants to purchase 207.46 shares of our Common Stock at $3.00 per share for a period of two years from the purchase date. The debentures are due May 31, 2021 and bear interest at 8%, compounded annually, with interest due at maturity. The debentures, plus any accrued but unpaid interest will automatically convert for no additional consideration, into shares of the Company’s Common Shares at a conversion price of $2.41 per share upon the occurrence of a liquidity event. A liquidity event means: (a) the date on which the Company’s Common Stock is listed for trading on a recognized stock exchange in either Canada or the United States; and (b) securities issued pursuant to the Offering, including the Common Stock underlying both the conversion right included in the Debentures and underlying the Warrants, have been duly qualified by a registration statement in the United States, allowing the securities to be freely tradeable pursuant to the U.S. securities laws, or a prospectus in Canada. The warrants contain a mandatory exercise provision if the weighted average share price of the Company’s Common Stock exceeds $5.00 per share for a period of five consecutive days. Under the terms of the letter agreement with 4Front, 4Front received a monthly fee of $10,000 for three months, and cash commissions and warrants associated with the private placement offering described above, as follows: · Debt securities – 3.0% cash commission and five-year warrants to purchase equity securities of 3.0% of the aggregate debt issued at a conversion price equivalent to the equity securities conversion price per the debt offering · Equity securities – 6.0% cash commission and five-year warrants to purchase equity securities of 6.0% of the aggregate number of equity securities to be issued at an issuance price associated with the equity securities issuance Because the Offering has automatic conversion features into equity in the event of a liquidity event, 4Front will be entitled to receive cash commissions and warrants pertaining to the issuance of equity securities as outlined above. The following is a summary of convertible debentures liabilities: March 31, December 31, 2019 2018 Convertible debentures maturing on May 31, 2021, net of remaining unamortized: (a) initial issuing costs of $60.00 per Unit; (b) initial value of $239.39 per Unit assigned to warrants associated with the debentures; and (c) equity value of $280.50 per Unit assigned to the exercise price associated with the conversion price of the debentures. Interest accrues at 8.0% per year, compounded annually, and is due at maturity. 425 and 0 debenture units issued as of March 31, 2019 and December 31, 2018, respectively $ 178,547 $ – Total 178,547 – Less current maturities – – Long Term $ 178,547 $ – As of March 31, 2019, the Company had sold an aggregate of $425,000 in Units in this Offering. |
11. Commitments and Contingenci
11. Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 11 – COMMITMENTS AND CONTINGENCIES From time to time, the Company is involved in routine litigation that arises in the ordinary course of business. There are no legal proceedings for which management believes the ultimate outcome would have a material adverse effect on the Company’s results of operations and cash flows. |
12. Risks and Uncertainties
12. Risks and Uncertainties | 3 Months Ended |
Mar. 31, 2019 | |
Risks and Uncertainties [Abstract] | |
Risks and Uncertainties | NOTE 12 – RISKS AND UNCERTAINTIES Concentration Risk During the three months ended March 31, 2019, one vendor composed 24% and during the three months ended March 31, 2018, one vendor composed 17% of total purchases. The Company’s primary suppliers of automated fertigation controls represented 8% and 19% of total accounts payable outstanding as of March 31, 2019 and December 31, 2018, respectively. During the three months ended March 31, 2019, one customer represented 27% of total revenue. During the three months ended March 31, 2018, one customer represented 15% of total revenue. |
13. Stock Compensation
13. Stock Compensation | 3 Months Ended |
Mar. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock Compensation | NOTE 13 – STOCK COMPENSATION In January 2017, the Company implemented a stock grant program to reward and attract employees with common stock. Stock grants are offered as part of the employment offer package, to insure continuity of employment or as a reward for performance. Each of these grants requires a specific tenure of employment before the grant vests with typical vesting periods of 1 to 3 years of employment. The following schedule shows stock grant activity for the three months March 31, 2019. Grants outstanding as of December 31, 2018 1,802,667 Grants awarded 20,000 Forfeiture/Cancelled (20,000 ) Grants vested (20,000 ) Grants outstanding as of March 31, 2019 1,782,667 The following table summarizes stock grant vesting periods. Number of Shares Period Ending December 31, 678,499 2019 – 9 Months 622,500 2020 – 12 Months 481,668 2021 – 12 Months 1,782,667 In January 2018, the Company implemented a stock options plan to reward and attract employees and compensate vendors for services when applicable. Stock options are sometimes offered as part of an employment offer package, to insure continuity of service or as a reward for performance. The stock option plan authorizes 3,000,000 shares of common stock. The following schedule shows stock option activity for the three months ended March 31, 2019. Number of Weighted Average Remaining Weighted Average Stock options outstanding as of December 31, 2018 1,184,000 9.68 $ 1.15 Issued 437,499 – $ 1.20 Exercised – – – Expired (15,000 ) – $ 1.20 Stock options outstanding at March 31, 2019 1,606,499 – $ 1.16 Stock options exercisable at March 31, 2019 100,000 – $ 1.10 The following table summarizes stock option vesting periods. Number of Shares Period Ending December 31, 494,996 2019 – 9 Months 521,664 2020 – 12 Months 433,174 2021 – 12 Months 56,665 2022 – 12 Months 1,506,499 |
14. Shareholder's Equity
14. Shareholder's Equity | 3 Months Ended |
Mar. 31, 2019 | |
Equity [Abstract] | |
Shareholder's Equity | NOTE 14 – SHAREHOLDERS’ EQUITY As of March 31, 2019, there were no shares of Preferred Stock issued or outstanding and 25,749,822 shares of Common Stock issued and outstanding. |
15. Income Taxes
15. Income Taxes | 3 Months Ended |
Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 15 - INCOME TAXES The Company has experienced substantial losses for both book and tax purposes since inception and to date has not provided for any income tax expense. The potential future recovery of any tax assets that the Company may be entitled to due to these accumulated losses is uncertain and these tax assets are fully reserved based on management’s current estimates. Realization of operating loss carryforwards to offset future operating income for tax purposes are subject to various limitations including change of ownership and current year taxable income percentage limitations. |
16. Derivative Financial Instru
16. Derivative Financial Instruments | 3 Months Ended |
Mar. 31, 2019 | |
Derivative Financial Instruments | |
Derivative Financial Instruments | NOTE 16 – DERIVATIVE FINANCIAL INSTRUMENTS Warrants are immediately exercisable upon issuance. The following table shows warrant activity for the three months ended March 31, 2019. Number of Shares Weighted Average Exercise Price Warrants outstanding as of December 31, 2018 6,000 $ 1.00 Warrants issued in connection with convertible debenture offering (see Note 10): Issued to convertible debenture holders 88,171 $ 3.00 Issued to 4Front as part of compensation – $ 2.41 Warrants exercised – – Warrants expired – – Warrants outstanding as of March 31, 2019 94,171 $ 2.87 |
17. Subsequent Events
17. Subsequent Events | 3 Months Ended |
Mar. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 17 – SUBSEQUENT EVENTS In October 2018, the Company received a $1,000,000 unsecured loan from James Lowe, a director, which became due April 30, 2019. The loan is guaranteed by Messrs. Nattrass and Gutierrez, two of the Company’s officers, directors and its principal shareholders. As disclosed above in Note 10, b As of May 20, 2019, the Company had accepted total subscriptions of $1,735,000 in Unit subscriptions. |
2. Summary of Significant Acc_2
2. Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Unaudited Interim Financial Information | Unaudited Interim Financial Information The Company has prepared the accompanying interim consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. The interim consolidated financial statements are unaudited and, in the Company’s opinion, include all adjustments, consisting of normal recurring adjustments and accruals necessary for a fair presentation of the Company’s consolidated balance sheets, consolidated statements of operations and comprehensive income (loss), and consolidated cash flows and statement of shareholders equity for the periods presented. The results reported in these interim consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been omitted in accordance with regulations of the SEC. These interim consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. |
Prior Period Reclassifications | Prior Period Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation. |
Use of Estimates | Use of Estimates In preparing consolidated financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates. Significant estimates include estimated useful lives and potential impairment of property and equipment, inventory write offs, and allowance for bad debt. |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation These consolidated financial statements are presented in United States dollars and they include the accounts of urban-gro, Inc. and its wholly-owned subsidiaries. The financial results of Impact have been included in the Company’s consolidated financial statements from the date of acquisition on March 7, 2019. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements From time to time, the Financial Accounting Standards Board (the “FASB”) or other standards setting bodies issue new accounting pronouncements. The FASB issues updates to new accounting pronouncements through the issuance of an Accounting Standards Update ("ASU"). Unless otherwise discussed, the Company believes that the impact of recently issued guidance, whether adopted or to be adopted in the future, is not expected to have a material impact on the Company’s financial statements upon adoption. |
Going Concern Assessment | Going Concern Assessment In August 2014, the FASB issued an ASU regarding disclosures of uncertainties when there are questions about an entity’s ability to continue as a going concern. With the implementation of the ASU, beginning with the year ended December 31, 2016 and all annual and interim periods thereafter, we assess going concern uncertainty for our consolidated financial statements to determine if we have sufficient cash and cash equivalents on hand and working capital to operate for a period of at least one year from the date the consolidated financial statements are issued or are available to be issued. As part of this assessment, based on conditions that are known and reasonably knowable to us, we will consider various scenarios, forecasts, projections, and estimates, and make certain key assumptions, including the timing and nature of projected cash expenditures or programs, and our ability to delay or curtail those expenditures or programs, among other factors, if necessary. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company’s financial instruments consist principally of cash and cash equivalents, accounts receivable, accounts payable, notes payable and other current assets and liabilities. We value our financial assets and liabilities using fair value measurements. Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are categorized based on whether the inputs are observable in the market and the degree that the inputs are observable. The categorization of financial instruments within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The hierarchy is prioritized into three levels defined as follows: Level 1: Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access. Level 2: Observable inputs other than prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated with observable market data. Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies, and similar techniques that use significant unobservable inputs. The carrying amount of our cash and cash equivalents, accounts receivable, accounts payable, and other current assets and liabilities in our consolidated financial statements approximates fair value because of the short-term nature of the instruments. Investments in non-marketable equity securities are carried at cost less other-than-temporary impairments. The carrying amount of our notes payable and convertible debt at March 31, 2019 and December 31, 2018 approximates their fair values based on our incremental borrowing rates. There have been no changes in Level 1, Level 2, and Level 3 categorizations and no changes in valuation techniques for these assets or liabilities for the three-month period ended March 31, 2019. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid short-term cash investments with an original maturity of three months or less to be cash equivalents. As of March 31, 2019 and December 31, 2018, the Company did not maintain any cash equivalents. The Company maintains cash with financial institutions that may from time to time exceed federally-insured limits. The Company has not experienced any losses related to these balances and believes the risk to be minimal. |
Accounts Receivable, Net | Accounts Receivable, Net Trade accounts receivables are carried at the original invoiced amounts less an allowance for doubtful accounts. As of March 31, 2019 and December 31, 2018, the balance of allowance for doubtful accounts was $18,920. The allowances for doubtful accounts are calculated based on a detailed review of certain individual customer accounts and an estimation of the overall economic conditions affecting the Company's customer base. The Company reviews a customer's credit history before extending credit to the customer. If the financial condition of its customers were to deteriorate, resulting in an impairment of their ability to make payments, additions to the allowance would be required. A provision is made against accounts receivable to the extent they are considered unlikely to be collected. Occasionally the Company will write off bad debt directly to the bad debt expense account when the balance is determined to be uncollectable. Bad debt expense for the three months ended March 31, 2019 and 2018 was $11,615 and $16,864, respectively. |
Inventories | Inventories Inventories, consisting entirely of finished goods inventories, are stated at the lower of cost or net realizable value, with cost determined using the average cost method. 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 at the realization of change in value. Once written down, inventories are carried at this lower basis until sold or scrapped. |
Property and Equipment, Net | Property and Equipment, Net Property and equipment is stated at cost less accumulated depreciation, amortization and impairment. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. When property and equipment is retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes. The Company uses other depreciation methods (generally accelerated) for tax purposes where appropriate. No impairment charges were recorded for three months ended March 31, 2019 and 2018. The estimated useful lives for significant property and equipment categories are as follows: Computer and Technology Equipment 3 years Furniture and Equipment 5 years Operating Lease Right of Use Assets Lease term Leasehold Improvements Lease term Vehicles 3 years Software 3 years Other Equipment 3 or 5 years |
Equity Investments | Equity Investments Equity investments without readily determinable fair values and for which the Company does not have the ability to exercise significant influence are accounted for at cost with adjustments for observable changes in prices or impairments. Equity investments for which the Company has the ability to exercise significant influence, but not control, are accounted for using the equity method of accounting. The Company’s share of the earnings or losses as reported by equity-method investees are classified as “Income (Loss) from equity investees, net of tax” on the Company’s consolidated statements of operations and comprehensive income (loss). |
Intangible Assets | Intangible Assets The Company’s intangible assets, consisting of legal fees for application of patents and trademarks and license fees paid for inspection services, are recorded at cost. Patents and trademarks, once approved, will be amortized using the straight-line method over an estimated life, generally 5 years for patents and 10 to 20 years for trademarks. License fees are amortized over 10 years. Intangible assets are included in “other assets” on the balance sheets. |
Customer Deposit | Customer Deposits The Company’s policy is to collect deposits from customers at the beginning of the project prior to the design phase. The customer payments received are recorded as a customer deposit liability on the balance sheet. When the project is complete and meets all the criteria for revenue recognition, the deposit is recorded against the customer’s receivable balance. In certain situations when the customer has paid the deposit and design work has been completed but the customer chooses not to proceed with the project, the Company may keep the deposit and recognize revenue. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers, Revenue from Contracts with Customers |
Cost of Sales | Cost of Sales The Company’s policy is to recognize cost of sales the same manner as, and in conjunction with, revenue recognition. The Company’s cost of sales includes the costs directly attributable to revenue recognized and includes expenses related to the purchasing of our products, fees for third-party commissions and shipping costs. Total shipping costs included in the cost of goods sold was $128,867 and $76,200 for the three months ended March 31, 2019 and 2018, respectively. |
Advertising Costs | Advertising Costs The Company expenses advertisings costs in the periods the costs are incurred. Prepayments made under contracts are included in prepaid expenses and expensed when the advertisement is run. Total advertising expense incurred was $27,668 and $22,270 for the three months ended March 31, 2019 and 2018, respectively. |
Derivative Financial Instruments | Derivative Financial Instruments The Company accounts for its warrants by estimating the fair value of these warrants at the respective balance sheet dates using the Black-Scholes option pricing based on the estimated market value of the underlying common stock at the valuation measurement date, the remaining contractual term, risk-free interest rate, and expected volatility of the price of the underlying common stock. There is a moderate degree of subjectivity involved when using option pricing models to estimate the warrants and the assumptions used in the Black-Scholes option-pricing model are moderately judgmental. |
Share Based Compensation | Share Based Compensation The Company periodically issues both options and shares of its Common Stock to employees and consultants in non-capital raising transactions for fees and services. The Company accounts for stock issued to non-employees with the value of the stock compensation based upon the measurement date as determined at the grant date of the award. Accounting for stock-based compensation to non-employees requires the measurement and recognition of compensation expense for all share-based payment awards made to non-employees based on estimated fair values. The Company accounts for stock grants issued and vesting to employees with the award being measured at its fair value at the date of grant and amortized ratably over the vesting period. Accounting for stock-based compensation to employees requires the measurement and recognition of compensation expense for all share-based payment awards made to employees based on estimated fair values. The Company also estimates forfeitures at the time of grant and revises those estimates in subsequent periods if actual forfeitures differ from its estimates. |
Income Taxes | Income Taxes The Company files a federal income tax return in the United States. In addition, it files tax returns in state and local jurisdictions as applicable. Provisions for current income tax liabilities, if any, would be calculated and accrued on income and expense amounts expected to be included in the income tax returns for the current year. Income taxes reported in earnings, if any, would also include deferred income tax provisions. Deferred income tax assets and liabilities, if any, would be computed on differences between the financial statement bases of assets and liabilities at the enacted tax rates. Changes in deferred income tax assets and liabilities would be included as a component of income tax expense. The effect on deferred income tax assets and liabilities attributable to changes in enacted tax rates would be charged or credited to income tax expense in the period of enactment. Valuation allowances would be established for certain deferred tax assets when realization is not likely. Assets and liabilities would be established for uncertain tax positions taken or positions expected to be taken in income tax returns when such positions, in the judgement of the Company, do not meet a more-likely-than-not threshold based on the technical merits of the positions. Valuation allowances would be established for certain deferred tax assets when realization is not likely. |
Earnings (Loss) Per Share | Earnings (Loss) Per Share The Company computes net earnings (loss) per share by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS is computed by dividing net income (loss) by the weighted-average of all potentially dilutive shares of common stock that were outstanding during the periods presented, unless that calculation would result in an anti-dilutive calculation of EPS. The treasury stock method is used in calculating diluted EPS for potentially dilutive stock options and share purchase warrants, which assumes that any proceeds received from the exercise of in-the-money stock options and share purchase warrants would be used to purchase common shares at the average market price for the period. |
Recently Adopted Accounting Pronoucements | Recently Adopted Accounting Pronouncements In February 2016, the FASB issued an ASU amending the accounting for leases. The new guidance requires the recognition of lease assets and liabilities for operating leases with terms of more than 12 months, in addition to those currently recorded, on our consolidated balance sheets. Presentation of leases within the consolidated statements of operations and comprehensive income (loss) and consolidated cash flows will be generally consistent with the prior lease accounting guidance. The ASU was effective for reporting periods beginning after December 13, 2018, with early adoption permitted. The Company adopted the ASU effective January 1, 2019 under the modified retrospective method with respect to lease contracts in effect as of the adoption date. The adoption of the ASU increased our assets and liabilities by $139,266 as of January 1, 2019 due to the recognition of right-of-use assets and lease liabilities with respect to operating leases. |
1. Organization, Merger and A_2
1. Organization, Merger and Acquisitions; Business Plan; Liquidity (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Acquisition of Impact | Purchase Price $ 1,000,000 Allocation of Purchase Price: Cash $ 49,742 Accounts receivable, net $ 149,648 Goodwill $ 846,229 Accrued expenses $ 45,619 |
2. Summary of Significant Acc_3
2. Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Schedule of property and equipment useful lives | Computer and Technology Equipment 3 years Furniture and Equipment 5 years Operating Lease Right of Use Assets Lease term Leasehold Improvements Lease term Vehicles 3 years Software 3 years Other Equipment 3 or 5 years |
4. Prepayments and Advances (Ta
4. Prepayments and Advances (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of prepaid balances | March 31, December 31, 2019 2018 Vendor Prepayments $ 1,684,259 $ 776,478 Prepaid Services and Fees 255,211 152,204 Prepayments and Advances $ 1,939,470 $ 928,682 |
5. Property and Equipment (Tabl
5. Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property, plant and equipment | March 31, December 31, 2019 2018 Computer and Technology Equipment $ 75,311 $ 61,910 Furniture and Equipment 30,162 30,162 Leasehold Improvements 143,215 143,215 Vehicles 132,875 132,875 Software 265,845 233,783 R&D Assets 84,031 84,031 Other Equipment 66,232 65,140 Accumulated depreciation and amortization (368,617 ) (309,975 ) Property and equipment, net $ 429,054 $ 441,141 |
6. Investments (Tables)
6. Investments (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
Cost Method Investments | March 31, December 31, 2019 2018 Investment in Edyza, cost method $ 812,884 $ 812,883 Investment in TGH, cost method 696,766 448,766 $ 1,509,650 $ 1,261,649 |
8. Accrued Expenses (Tables)
8. Accrued Expenses (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses | March 31, December 31, 2019 2018 Accrued operating expenses $ 343,915 $ 240,941 Accrued wages and related expenses 600,160 490,961 Accrued interest expense 40,000 10,958 Accrued sales tax payable 383,887 401,282 $ 1,367,962 $ 1,144,142 |
9. Notes Payable and Operatin_2
9. Notes Payable and Operating Lease Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of notes payable | March 31, December 31, 2019 2018 Unsecured, interest only, note payable with Chris Parkes. Interest payments due monthly at an annual rate of 20.4%. Note payable revised in December 2018 amending principal due and extending maturity date to June 30, 2019. $ 80,000 80,000 Unsecured, interest only, note payable with David Parkes. Interest payments due monthly at an annual rate of 18%. Note payable revised in December 2018 amending principal due and extending maturity date to June 30, 2019. 100,000 100,000 Unsecured, interest only, note payable with Michael S. Bank. Interest at 19.8% per year is paid twice per month. The note contains a demand re-payment provision that can be executed by Mr. Bank at any time by providing a one-time notice. The Company may re-pay any part or the entire principal sum at any time with penalty and abatement of interest expense from date of early payment. The note includes six thousand warrants, each exercisable to purchase one share of the Company's common stock at a price of $1.00 per share. In March 2019, the Company repaid $35,000 of the principle and extended the maturity date to April 30, 2019. The note was repaid in full on April 30, 2019. 265,000 298,869 Unsecured, interest only, note payable with Cloud9 Support Inc. The note is personally guaranteed by the Company’s two majority shareholders who are also the Company’s CEO and Chief Development Officer. Interest at 12.0% per year is payable monthly. The note includes additional consideration of 30,000 options at an exercise price of $1.20. The note was extended in May 2019. In consideration for extending the due date of the Note to December 31, 2019 the interest rate increased to 9% per annum and the Company issued the Holder 10,000 shares of Common Stock. 995,543 1,000,000 Note payable with Hydrofarm, secured by all currently existing and future assets. Interest accrues at 8.0% per year and is paid quarterly. The note matures on the earlier of: (a) 90 days after the date that the Company and Hydrofarm abandon the Merger (see Note 1); (b) acceleration of the note payable due to the Company being in default; or (c) December 2023. As there are currently no discussions between the parties regarding the Merger, the Company believes the note payable should be classified as a current maturity. 2,000,000 2,000,000 Total 3,440,543 3,478,869 Less current maturities (3,440,543 ) (3,478,869 ) Long Term $ – $ – |
Schedule of lease liability | Operating lease of the Company’s headquarters. Monthly payments of $7,750 through August 31, 2020 at an imputed incremental borrowing rate of 8.0%. $ 118,800 $ – Less current portion (81,859 ) – Long Term $ 36,941 $ – |
10. Convertible Debentures (Tab
10. Convertible Debentures (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Summary of convertible debenture liabilities | March 31, December 31, 2019 2018 Convertible debentures maturing on May 31, 2021, net of remaining unamortized: (a) initial issuing costs of $60.00 per Unit; (b) initial value of $239.39 per Unit assigned to warrants associated with the debentures; and (c) equity value of $280.50 per Unit assigned to the exercise price associated with the conversion price of the debentures. Interest accrues at 8.0% per year, compounded annually, and is due at maturity. 425 and 0 debenture units issued as of March 31, 2019 and December 31, 2018, respectively $ 178,547 $ – Total 178,547 – Less current maturities – – Long Term $ 178,547 $ – |
13. Stock Compensation (Tables)
13. Stock Compensation (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of stock grant activity | Grants outstanding as of December 31, 2018 1,802,667 Grants awarded 20,000 Forfeiture/Cancelled (20,000 ) Grants vested (20,000 ) Grants outstanding as of March 31, 2019 1,782,667 |
Schedule of stock grant vesting periods | Number of Shares Period Ending December 31, 678,499 2019 – 9 Months 622,500 2020 – 12 Months 481,668 2021 – 12 Months 1,782,667 |
Schedule of stock option activity | Number of Weighted Average Remaining Weighted Average Stock options outstanding as of December 31, 2018 1,184,000 9.68 $ 1.15 Issued 437,499 – $ 1.20 Exercised – – – Expired (15,000 ) – $ 1.20 Stock options outstanding at March 31, 2019 1,606,499 – $ 1.16 Stock options exercisable at March 31, 2019 100,000 – $ 1.10 |
Schedule of stock option vesting periods | Number of Shares Period Ending December 31, 494,996 2019 – 9 Months 521,664 2020 – 12 Months 433,174 2021 – 12 Months 56,665 2022 – 12 Months 1,506,499 |
16. Derivative Financial Inst_2
16. Derivative Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Notes to Financial Statements | |
Schedule of warrant activity | Number of Shares Weighted Average Exercise Price Warrants outstanding as of December 31, 2018 6,000 $ 1.00 Warrants issued in connection with convertible debenture offering (see Note 10): Issued to convertible debenture holders 88,171 $ 3.00 Issued to 4Front as part of compensation – $ 2.41 Warrants exercised – – Warrants expired – – Warrants outstanding as of March 31, 2019 94,171 $ 2.87 |
1. Organization, Basis of Prese
1. Organization, Basis of Presentation and Liquidity (Details) - USD ($) | 2 Months Ended | ||
Mar. 07, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | |
Allocation of Purchase Price | |||
Goodwill | $ 846,229 | $ 0 | |
Impact Engineering [Member] | |||
Purchase price | $ 1,000,000 | ||
Allocation of Purchase Price | |||
Cash | 49,742 | ||
Accounts receivable, net | 149,648 | ||
Goodwill | 846,229 | ||
Accrued expenses | $ 45,619 | ||
Stock issued | 500,000 |
1. Organization, Basis of Pre_2
1. Organization, Basis of Presentation and Liquidity (Details Narrative) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Accumulated deficit | $ (10,021,524) | $ (8,540,053) | ||
Working capital | (6,294,451) | |||
Stockholders' Equity | (3,480,545) | $ (3,826,551) | $ (1,863,827) | $ (1,361,028) |
Cash and cash equivalents | $ 851,172 |
2. Summary of Significant Acc_4
2. Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Allowance for doubtful accounts | $ 18,920 | $ 18,920 | |
Bad debt expense | 11,615 | $ 16,864 | |
Impairment charges | 0 | 0 | |
Amortization expense | 493 | 67 | |
Shipping expense | 4,089,840 | 2,442,493 | |
Advertising | 27,668 | 22,270 | |
Shipping and Handling [Member] | |||
Shipping expense | $ 128,867 | $ 76,200 | |
Patents [Member] | |||
Property useful lives | 5 years | ||
Trademarks [Member] | |||
Property useful lives | 10-20 years | ||
Computer and Technology Equipment [Member] | |||
Property useful lives | 3 years | ||
Furniture and Fixtures [Member] | |||
Property useful lives | 5 years | ||
Leasehold Improvements [Member] | |||
Property useful lives | Lease term | ||
Molds and Tooling [Member] | |||
Property useful lives | 3 years | ||
Vehicles [Member] | |||
Property useful lives | 3 years | ||
Equipment [Member] | |||
Property useful lives | 3 years | ||
Software [Member] | |||
Property useful lives | 3 years |
3. Related Party Transactions (
3. Related Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Minimum lease payments remainder of year | $ 15,000 | ||
Bravo Lighting [Member] | |||
Related party purchases | 2,432 | $ 69,978 | |
Related party receivables | 44,541 | $ 43,121 | |
Related party payables | 2,216 | 5,562 | |
Cloud 9 [Member] | |||
Related party receivables | 23,688 | 79,235 | |
Related party payables | 14,853 | $ 13,240 | |
Cost of services | 14,853 | 84,746 | |
Sale to related parties | 99,985 | $ 370,948 | |
James Lowe [Member] | |||
Note payable - related party | $ 1,000,000 |
4. Prepayments and Advances (De
4. Prepayments and Advances (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Prepayments and advances | $ 1,939,470 | $ 928,682 |
Vendor Prepayments [Member] | ||
Prepayments and advances | 1,684,259 | 776,478 |
Prepaid Services and Fees [Member] | ||
Prepayments and advances | $ 255,211 | $ 152,204 |
5. Property and Equipment (Deta
5. Property and Equipment (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Accumulated depreciation | $ (368,617) | $ (309,975) |
Property and equipment, net | 429,054 | 441,141 |
Computer and Technology Equipment [Member] | ||
Property and equipment, gross | 75,311 | 61,910 |
Furniture and Fixtures [Member] | ||
Property and equipment, gross | 30,162 | 30,162 |
Leasehold Improvements [Member] | ||
Property and equipment, gross | 143,215 | 143,215 |
Vehicles [Member] | ||
Property and equipment, gross | 132,875 | 132,875 |
Software [Member] | ||
Property and equipment, gross | 265,845 | 233,783 |
Research and Development Assets [Member] | ||
Property and equipment, gross | 84,031 | 84,031 |
Equipment [Member] | ||
Property and equipment, gross | $ 66,232 | $ 65,140 |
5. Property and Equipment (De_2
5. Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 58,642 | $ 34,815 |
6. Investments (Details)
6. Investments (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Cost method investments | $ 1,509,650 | $ 1,261,649 |
Edyza [Member] | ||
Cost method investments | 812,884 | 812,883 |
Total Grow Control [Member] | ||
Cost method investments | $ 696,766 | $ 448,766 |
7. Other Assets (Details Narrat
7. Other Assets (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||
Patents | $ 0 | $ 0 | |
Intangible assets | 72,281 | $ 63,755 | |
Amortization expense | $ 493 | $ 67 |
8. Accrued Expenses (Details)
8. Accrued Expenses (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Accrued expenses | $ 1,367,962 | $ 1,144,142 |
Accrued Operating Expenses [Member] | ||
Accrued expenses | 343,915 | 240,941 |
Accrued Wages and Related Expenses [Member] | ||
Accrued expenses | 600,160 | 490,961 |
Accrued Interest Expense [Member] | ||
Accrued expenses | 40,000 | 10,958 |
Accrued Sales Tax Payable [Member] | ||
Accrued expenses | $ 383,887 | $ 401,282 |
8. Accrued Expenses (Details Na
8. Accrued Expenses (Details Narrative) | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Payables and Accruals [Abstract] | |
Sales tax receivable | $ 39,377 |
Sales tax collected | $ 37,745 |
9. Notes Payable and Operatin_3
9. Notes Payable and Operating Lease Liabilities (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Notes payable | $ 3,440,543 | $ 3,478,869 |
Notes payable, current maturities | (3,440,543) | (3,478,869) |
Notes payable, long term | 0 | 0 |
Note Payable 1 [Member] | ||
Notes payable | 80,000 | 80,000 |
Note Payable 2 [Member] | ||
Notes payable | 100,000 | 100,000 |
Note Payable 3 [Member] | ||
Notes payable | 265,000 | 298,869 |
Note Payable 4 [Member] | ||
Notes payable | 995,543 | 1,000,000 |
Note Payable 5 [Member] | ||
Notes payable | $ 2,000,000 | $ 2,000,000 |
9. Notes Payable and Operatin_4
9. Notes Payable and Operating Lease Liabilities (Details - Lease) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Debt Disclosure [Abstract] | ||
Operating lease liability | $ 118,800 | |
Operating lease liability - current | (81,859) | $ 0 |
Operating lease liability - noncurrent | $ 36,941 | $ 0 |
Operating lease discount rate | 8.00% | |
Lease expiration date | Aug. 31, 2020 |
9. Notes Payable and Operatin_5
9. Notes Payable and Operating Lease Liabilities (Details Narrative) | 3 Months Ended |
Mar. 31, 2019 | |
Note Payable 1 [Member] | |
Debt interest rate | 20.40% |
Debt maturity date | Jun. 30, 2019 |
Note Payable 2 [Member] | |
Debt interest rate | 18.00% |
Debt maturity date | Jun. 30, 2019 |
Note Payable 3 [Member] | |
Debt interest rate | 19.80% |
Debt maturity date | Dec. 31, 2019 |
Note Payable 4 [Member] | |
Debt interest rate | 9.00% |
Debt maturity date | Apr. 30, 2019 |
Note Payable 5 [Member] | |
Debt interest rate | 8.00% |
Debt maturity date | Dec. 31, 2023 |
10. Convertible Debentures (Det
10. Convertible Debentures (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Convertible debt - noncurrent | $ 178,547 | $ 0 |
Convertible Debentures [Member] | ||
Convertible debt | 178,547 | 0 |
Convertible debt - current | 0 | 0 |
Convertible debt - noncurrent | $ 178,547 | $ 0 |
Debt maturity date | May 31, 2021 |
10. Convertible Debentures (D_2
10. Convertible Debentures (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Proceeds from convertible debt | $ 425,000 | $ 0 |
Convertible Debentures [Member] | ||
Proceeds from convertible debt | $ 425,000 |
12. Risks and Uncertainties (De
12. Risks and Uncertainties (Details Narrative) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Product Concentration Risk [Member] | One Vendor [Member] | ||||
Concentration risk percentage | 24.00% | 17.00% | ||
Automated Fertigation Controls [Member] | Accounts Payable [Member] | ||||
Concentration risk percentage | 8.00% | 19.00% | ||
One Customer [Member] | Sales Revenue Net [Member] | ||||
Concentration risk percentage | 15.00% | 27.00% |
13. Stock Compensation (Details
13. Stock Compensation (Details - Grant activity) - Common Stock Grants [Member] | 3 Months Ended |
Mar. 31, 2019shares | |
Common stock grants, beginning balance | 1,802,667 |
Common stock grants, awards | 20,000 |
Common stock grants, forfeiture/cancelled | (20,000) |
Common stock grants, vested | (20,000) |
Common stock grants, ending balance | 1,782,667 |
13. Stock Compensation (Detai_2
13. Stock Compensation (Details - Grant vesting periods) - Common Stock Grants [Member] - shares | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Common stock grants outstanding | 1,782,667 | 1,802,667 |
Grant 1 [Member] | ||
Common stock grants outstanding | 678,499 | |
Vesting period | 91 years | |
Grant 2 [Member] | ||
Common stock grants outstanding | 622,500 | |
Vesting period | 2 years | |
Grant 3 [Member] | ||
Common stock grants outstanding | 481,668 | |
Vesting period | 3 years |
13. Stock Compensation (Detai_3
13. Stock Compensation (Details - Option activity) - Options [Member] | 3 Months Ended |
Mar. 31, 2019$ / sharesshares | |
Stock options outstanding, beginning balance | shares | 1,184,000 |
Stock options issued | shares | 437,499 |
Stock options exercised | shares | 0 |
Stock options expired | shares | (15,000) |
Stock options outstanding, ending balance | shares | 1,606,499 |
Stock options exercisable | shares | 100,000 |
Weighted average remaining life | 9 years 8 months 5 days |
Weighted average exercise price, outstanding | $ / shares | $ 1.15 |
Weighted average exercise price, issued | $ / shares | 1.20 |
Weighted average exercise price, exercised | $ / shares | |
Weighted average exercise price, expired | $ / shares | 1.20 |
Weighted average exercise price, outstanding | $ / shares | 1.16 |
Weighted average exercise price, exercisable | $ / shares | $ 1.10 |
13. Stock Compensation (Detai_4
13. Stock Compensation (Details - Options vesting schedule) - Options [Member] - shares | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Stock options outstanding | 1,606,499 | 1,184,000 |
Vesting period | 9 years 8 months 5 days | |
Options 1 [Member] | ||
Stock options outstanding | 494,996 | |
Vesting period | 1 year | |
Options 2 [Member] | ||
Stock options outstanding | 521,664 | |
Vesting period | 2 years | |
Options 3 [Member] | ||
Stock options outstanding | 433,174 | |
Vesting period | 3 years | |
Options 4 [Member] | ||
Stock options outstanding | 56,665 | |
Vesting period | 4 years |
13. Stock Compensation (Detai_5
13. Stock Compensation (Details Narrative) | Mar. 31, 2019shares |
Stock Option Plan [Member] | |
Stock authorized for issuance | 3,000,000 |
16. Derivative Financial Inst_3
16. Derivative Financial Instruments (Details) - Warrants [Member] | 3 Months Ended |
Mar. 31, 2019$ / sharesshares | |
Warrants outstanding, beginning balance | 6,000 |
Warrants issued | 88,171 |
Warrants exercised | 0 |
Warrants outstanding, ending balance | 94,171 |
Weighted average exercise price, beginning | $ / shares | $ 1 |
Weighted average exercise price, exercised | $ / shares | |
Weighted average exercise price, ending | $ / shares | $ 2.87 |
Debenture Holders [Member] | |
Warrants issued | 87,171 |
Weighted average exercise price, issued | $ / shares | $ 3 |
4Front [Member] | |
Warrants issued | 0 |
Weighted average exercise price, issued | $ / shares | $ 2.41 |