Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Apr. 14, 2020 | Jun. 30, 2019 | |
Document And Entity Information | |||
Entity Registrant Name | Charlie's Holdings, Inc. | ||
Entity Central Index Key | 0001134765 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2019 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Interactive Data Current | Yes | ||
Entity Incorporation, State or Country Code | NV | ||
Entity File Number | 001-32420 | ||
Entity Common Stock, Shares Outstanding | 18,982,290,068 | ||
Entity Public Float | $ 53,148,000 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2019 |
CONSOLIDATED BALANCE SHEET
CONSOLIDATED BALANCE SHEET - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash | $ 2,448 | $ 304 |
Accounts receivable, net | 918 | 711 |
Inventories, net | 1,516 | 658 |
Prepaid expenses and other current assets | 729 | 427 |
Total current assets | 5,611 | 2,100 |
Non-current assets: | ||
Property and equipment, net | 543 | 45 |
Right-of-use asset, net | 1,623 | 0 |
Other assets | 71 | 42 |
Total non-current assets | 2,237 | 87 |
Total assets | 7,848 | 2,187 |
Current liabilities: | ||
Accounts payable and accrued expenses | 2,516 | 1,216 |
Derivative liability | 4,144 | 0 |
Lease liabilities | 426 | 0 |
Deferred revenue | 91 | 180 |
Total current liabilities | 7,177 | 1,396 |
Non-current liabilities: | ||
Lease liabilities, net of current portion | 1,218 | 0 |
Total non-current liabilities | 1,218 | 0 |
Total liabilities | 8,395 | 1,396 |
Commitments and contingencies | ||
Stockholders' equity | ||
Common stock ($0.001 par value); 50 billion shares authorized; 18,974 billion shares and 141 million shares issued and outstanding as of December 31, 2019 and 2018, respectively | 18,974 | 141 |
Additional paid in capital | (17,045) | 0 |
Retained earnings (accumulated deficit) | (2,476) | 649 |
Total stockholders' equity (deficit) | (547) | 791 |
Total liabilities and stockholders' equity (deficit) | 7,848 | 2,187 |
Series A Preferred Stock | ||
Stockholders' equity | ||
Convertible preferred stock ($0.001 par value); 1,800,000 shares authorized | 0 | 0 |
Series B Preferred Stock | ||
Stockholders' equity | ||
Convertible preferred stock ($0.001 par value); 1,800,000 shares authorized | $ 0 | $ 1 |
CONSOLIDATED BALANCE SHEET (Par
CONSOLIDATED BALANCE SHEET (Parenthetical) - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 |
Preferred stock par value | $ .001 | $ .001 |
Preferred stock shares authorized | 1,800,000 | 1,800,000 |
Common stock, par value | $ .001 | $ 0.001 |
Common stock, shares authorized | 50,000,000,000 | 50,000,000,000 |
Common stock, shares issued | 18,974,000,000 | 141,000,000 |
Common stock, shares outstanding | 18,974,000,000 | 141,000,000 |
Series A Preferred Stock | ||
Preferred stock shares authorized | 300,000 | 300,000 |
Preferred stock shares issued | 204,561 | 0 |
Preferred stock shares outstanding | 24,561 | 0 |
Series B Preferred Stock | ||
Preferred stock shares authorized | 1,500,000 | 1,500,000 |
Preferred stock shares issued | 0 | 1,400,000 |
Preferred stock shares outstanding | 0 | 1,400,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Revenues: | ||
Product revenue, net | $ 22,740 | $ 20,841 |
Total revenues | 22,740 | 20,841 |
Operating costs and expenses: | ||
Cost of goods sold - product revenue | 10,071 | 8,515 |
General and administrative | 15,017 | 3,158 |
Sales and marketing | 2,314 | 1,968 |
Research and development | 1,102 | 0 |
Total operating costs and expenses | 28,504 | 13,641 |
(Loss) income from operations | (5,764) | 7,200 |
Other income: | ||
Change in fair value of derivative liabilities | 3,618 | 0 |
Total other income | 3,618 | 0 |
Net income (loss) | (2,146) | 7,200 |
Deemed dividend on Series A preferred stock | (1,650) | 0 |
Net (loss) earnings applicable to common stockholders | $ (3,796) | $ 7,200 |
Net (loss) earnings per share applicable to common stockholders | ||
Basic | $ 0 | $ 0.05 |
Diluted | $ 0 | $ 0 |
Weighted average shares used in computing basic earnings per share | 10,648,129,286 | 141,040,886 |
Weighted average shares used in computing diluted earnings per share | 10,648,129,286 | 14,104,089,886 |
CONSOLIDATED STATEMENT OF STOCK
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) $ in Thousands | Series A Preferred Stock | Series B Preferred Stock | Common Stock | Additional Paid-In Capital | Retained Earnings | Total |
Beginning balance, shares at Dec. 31, 2017 | 0 | 1,396 | 141,041 | |||
Beginning balance, amount at Dec. 31, 2017 | $ 0 | $ 1 | $ 141 | $ 0 | $ 1,401 | $ 1,543 |
Cash distributions to CCD Members | (7,952) | (7,952) | ||||
Net income (loss) | 7,200 | 7,200 | ||||
Ending balance, shares at Dec. 31, 2018 | 0 | 1,396 | 141,041 | |||
Ending balance, amount at Dec. 31, 2018 | $ 0 | $ 1 | $ 141 | 0 | 649 | 791 |
Effect of reverse merger, shares | 2,377,530 | |||||
Effect of reverse merger, amount | $ 2,378 | (2,378) | 0 | |||
Conversion of Series A convertible preferred stock, shares | (2) | 38,081 | ||||
Conversion of Series A convertible preferred stock, amount | $ 38 | (38) | 0 | |||
Conversion of Series B convertible preferred stock, shares | (1,396) | 13,963,048 | ||||
Conversion of Series B convertible preferred stock, amount | $ (1) | $ 13,963 | (13,962) | 0 | ||
Issuance of common stock and warrants in a private offering, net of warrant liability, shares | 206 | 1,551,466 | ||||
Issuance of common stock and warrants in a private offering, net of warrant liability, amount | $ 1,551 | 18,186 | 19,737 | |||
Offering cost related to private offering | (4,339) | (4,339) | ||||
Cash distributions to CCD Members | (17,430) | (979) | (18,409) | |||
Stock compensation, shares | 902,662 | |||||
Stock compensation, amount | $ 903 | 2,916 | 3,819 | |||
Net income (loss) | (2,146) | (2,146) | ||||
Ending balance, shares at Dec. 31, 2019 | 204 | 0 | 18,973,828 | |||
Ending balance, amount at Dec. 31, 2019 | $ 0 | $ 0 | $ 18,974 | $ (17,045) | $ (2,476) | $ (547) |
CONSOLIDATED STATEMENT OF CASH
CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Cash Flows from Operating Activities: | ||
Net (loss) income | $ (2,146) | $ 7,200 |
Reconciliation of net (loss) income to net cash (used in) provided by operating activities: | ||
Bad debt recoveries | 573 | 93 |
Depreciation and amortization | 73 | 18 |
Change in fair value of derivative liabilities | (3,618) | 0 |
Amortization of operating lease right-of-use asset | 190 | 0 |
Stock based compensation | 3,819 | 0 |
Subtotal of non-cash charges | 1,037 | 111 |
Change in operating assets and liabilities: | ||
Accounts receivable | (780) | 129 |
Inventories | (858) | (291) |
Prepaid expenses and other current assets | (302) | 14 |
Other assets | (29) | (5) |
Accounts payable and accrued expenses | 1,300 | 394 |
Deferred revenue | (89) | 65 |
Lease liabilities | (169) | 0 |
Net cash (used in) provided by operating activities | (2,036) | 7,617 |
Cash Flows from Investing Activities: | ||
Purchase of property, plant and equipment | (571) | (16) |
Net cash used in investing activities | (571) | (16) |
Cash Flows from Financing Activities: | ||
Proceeds from issuance of common stock and warrants in a private offering, net | 23,160 | 0 |
Cash distributions to CCD Members | (18,409) | (7,952) |
Net cash provided by (used in) financing activities | 4,751 | (7,952) |
Net increase (decrease) in cash | 2,144 | (351) |
Cash, beginning of the period | 304 | 655 |
Cash, end of the period | 2,448 | 304 |
Supplemental disclosure of cash flow information | ||
Cash paid for interest | 0 | 0 |
Cash paid for income taxes | 0 | 0 |
Effect of reverse merger | 2,378 | 0 |
Conversion of Series B convertible preferred stock | $ 13,963 | $ 0 |
DESCRIPTION OF THE BUSINESS AND
DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION | 12 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION | Description of the Business Charlie’s Holdings, Inc., (formerly True Drinks Holdings, Inc.) a Nevada corporation, together with its wholly owned subsidiaries and consolidated variable interest entity (collectively, the “ Company we Don Polly CBD In addition to Don Polly, we are also the holding company for two wholly-owned subsidiaries, Charlie’s Chalk Dust, LLC (“ Charlie’s CCD Acquisition of True Drinks Holdings, Inc. On April 26, 2019 (the “ Closing Date Members Direct Investors Series B Preferred Series A Preferred Investor Warrants Share Exchange Immediately prior to, and in connection with, the Share Exchange, Charlie’s consummated a private offering of membership interests that resulted in net proceeds to Charlie’s of approximately $27.5 million (the “ Charlie’s Financing Katalyst Placement Agent Warrants The Share Exchange resulted in a change of control of the Company, with the Members and Direct Investors owning approximately 86.1% of the Company’s outstanding voting securities immediately after the Share Exchange, and the Company’s current stockholders beneficially owning approximately 13.9% of the issued and outstanding voting securities, which includes the Advisory Shares. Following the Share Exchange, Ryan Stump and Brandon Stump, the founders of Charlie’s and the Company’s Chief Executive Officer and Chief Operating Officer, respectively, held in excess of 50% of the Company’s issued and outstanding voting securities. The Share Exchange is accounted for as a reverse recapitalization in accordance with accounting principles generally accepted in the United States (“ U.S. GAAP Basis of Presentation The consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “ SEC Historical financial information presented prior to April 26, 2019 is that of Charlie’s only, while financial information presented after April 26, 2019 includes Charlie’s, Don Polly, Bazi Drinks and the Company, which includes the transactions associated with the share exchange and private placement transaction along with ongoing corporate costs. Going Concern Uncertainty Regarding the Legal and Regulatory Environment, Liquidity and Management’s plan of operation The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company operates in a rapidly changing legal and regulatory environment; new laws and regulations or changes to existing laws and regulations could significantly limit the Company’s ability to sell its products, and/or result in additional costs. Additionally, the Company is required to apply for FDA approval to continue selling and marketing its products used for the vaporization of nicotine in the United States. There is significant cost associated with the application process and there can be no assurance the FDA will approve the application(s). In addition, the recent outbreak of Coronavirus in March 2020 has had a negative impact on the global economy and markets which could impact the Company’s supply chain and/or sales. For the year ended December 31, 2019 the Company has incurred losses from operations of $5,764,000 and a consolidated net loss of approximately $2,146,000 and the Company has negative stockholders’ equity of $547,000. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments to the carrying amount and classification of recorded assets and liabilities should the Company be unable to continue operations. Management's plans depend on its ability to increase revenues and continue its business development efforts, including the expenditure of approximately $4,400,000 to complete the PMTA registration process. The Company does not anticipate that its current cash position will be sufficient to meet its working capital requirements, to continue its sales and marketing efforts and complete the PMTA registration process. The Company is currently seeking term debt or other sources of financing in order to ensure that it have sufficient cash to operate for the next 12 months. If in the future the plans or assumptions change or prove to be inaccurate, or there is a significant change in the regulatory environment or the recent outbreak of Coronavirus continues to impact the global economy, the Company will need to raise additional funds through public or private debt or equity offerings, financings, corporate collaborations, or other means. There can be no assurance that such financing will be available on acceptable terms, or at all, and there can be no assurance that any such arrangement, if required or otherwise sought, would be available on terms deemed to be commercially acceptable and in its best interests. Risks and Uncertainties The Company operates in an environment that is subject to rapid changes and developments in laws and regulations that could have a significant impact on the Company’s ability to sell its products. Beginning in September 2019, certain states temporarily banned the sale of flavored e-cigarettes, and several states and municipalities are considering implementing similar restrictions. Federal, state, and local governmental bodies across the United States have indicated that flavored e-cigarette liquid, vaporization products and certain other consumption accessories may become subject to new laws and regulations at the federal, state and local levels. The application of any new laws or regulations that may be adopted in the future, at a federal, state, or local level, directly or indirectly implicating flavored e-cigarette liquid and products used for the vaporization of nicotine could significantly limit the Company’s ability to sell such products, result in additional compliance expenses, and/or require the Company to change its labeling and/or methods of distribution. Any ban of the sale of flavored e-cigarettes directly limits the markets in which the Company may sell its products. In the event the prevalence of such bans and/or changes in laws and regulations increase across the United States, or internationally, the Company’s business, results of operations and financial condition could be adversely impacted. In addition, the Company is presently in the process of submitting PMTA applications for some of its nicotine-based e liquid products. The applications are due in May 2020, which if approved, will allow the Company to continue to sell its products in the United States. The Company is also seeking additional financing in order to complete the application process .There is no assurance that regulatory approval to sell our products will be granted or that we can raise the additional financing required, and if not, this could have a significant impact on our sales. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Principles of Consolidation As noted above, the consolidated financial statements include the accounts of the Company, Charlie’s Holdings, Inc., its two 100% wholly owned subsidiaries, Charlie’s Chalk Dust, LLC and Bazi, Inc, and Don Polly, LLC, a consolidated variable interest for which the Company is the primary beneficiary (see Note 7). All inter-company balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Fair Value of Financial Instruments U.S. GAAP requires disclosing the fair value of financial instruments to the extent practicable for financial instruments which are recognized or unrecognized in the balance sheet. The fair value of the financial instruments disclosed herein is not necessarily representative of the amount that could be realized or settled, nor does the fair value amount consider the tax consequences of realization or settlement. In assessing the fair value of financial instruments, the Company uses a variety of methods and assumptions, which are based on estimates of market conditions and risks existing at the time. For certain instruments, including cash and cash equivalents, accounts receivable, accounts payable, warrant liability and accrued expenses, it was estimated that the carrying amount approximated fair value because of the short maturities of these instruments. Revenue Recognition The Company recognizes revenues in accordance with Accounting Standards Codification (“ ASC In circumstances where shipping and handling activities occur after the customer has obtained control of the product, the Company has elected to account for shipping and handling activities as a fulfillment cost rather than an additional promised service. Contract durations are generally less than one year, and therefore costs paid to obtain contracts, which generally consist of sales commissions, are recognized as expenses in the period incurred. Revenue is measured by the transaction price, which is defined as the amount of consideration expected to be received in exchange for providing goods to customers. The transaction price is adjusted for estimates of known or expected variable consideration, which includes refunds and returns as well as incentive offers and promotional discounts on current orders. Sales returns are generally not material to the financial statements, and do not comprise a significant portion of variable consideration. Estimates for sales returns are based on, among other things, an assessment of historical trends, information from customers, and anticipated returns related to current sales activity. These estimates are established in the period of sale and reduce revenue in the period of the sale. Variable consideration related to incentive offers and promotional programs are recorded as a reduction to revenue based on amounts the Company expects to collect. Estimates are regularly updated and the impact of any adjustments are recognized in the period the adjustments are identified. In many cases, key sales terms such as pricing and quantities ordered are established at the time an order is placed and incentives have very short-term durations. Amounts billed and due from customers are short term in nature and are classified as receivables since payments are unconditional and only the passage of time related to credit terms is required before payments are due. The Company does not grant payment financing terms greater than one year. Payments received in advance of revenue recognition are recorded as deferred revenue. Cash and Cash Equivalents The Company considers all liquid investments purchased with original maturities of ninety days or less to be cash equivalents. Accounts Receivable Accounts receivable is recorded at the invoiced amount and does not bear interest. We determine the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history and current economic conditions and set up an allowance for doubtful accounts when collection is uncertain. Customers’ accounts are written off against the allowance when all attempts to collect have been exhausted. Recoveries of accounts receivable previously written off are recorded as income when received. As of December 31, 2019 and 2018, the allowance for bad debt totaled $639,000 and $151,000, respectively. Inventories Inventories primarily consist of finished goods and are stated at the lower of cost (determined by the average cost method) or net realizable value. We calculate estimates of excess and obsolete inventories determined primarily by reviewing inventory on hand, historical sales activity, industry trends and expected net realizable value. As of December 31, 2019 and 2018, the reserve for excess and obsolete inventories totaled $83,000 and $74,000, respectively. Stock-Based Compensation We account for all stock-based compensation using a fair value-based method. The fair value of equity-classified awards granted to employees is estimated on the date of the grant using the Black-Scholes option-pricing model and the related stock-based compensation expense is recognized over the vesting period during which an employee is required to provide service in exchange for the award. We measure the fair value of liability-classified awards using a Monte Carlo valuation model. Compensation cost is recognized over the service period and is remeasured at each reporting period through settlement. Income taxes Income taxes are computed under the liability method. This method requires the recognition of deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of our assets and liabilities. The impact on deferred taxes of changes in tax rates and laws, if any, are applied to the years during which temporary differences are expected to be settled and are reflected in the consolidated financial statements in the period of enactment. A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized. Financial statement effects of a tax position are initially recognized when it is more likely than not, based on the technical merits, that the position will be sustained upon examination by a taxing authority. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that meets the more-likely-than-not threshold of being realized upon ultimate settlement with a taxing authority. We recognize potential accrued interest and penalties related to unrecognized tax benefits as income tax expense. Research and development We expense the cost of research and development as incurred. Research and development expenses include costs incurred in funding research and development activities, license fees, and other external costs. Nonrefundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity is performed or when the goods have been received, rather than when payment is made. Segments Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business in one operating segment. The following table disaggregates revenue from our single operating segment by geographic market and customer type for the periods ending December 31, 2019 and 2018, respectively: December 31, 2019 December 31, 2018 Geographic Market International 24.0 % 28.0 % United States 76.0 % 72.0 % Customer Type Retailers 36.0 % 45.0 % Distributors 64.0 % 55.0 % Recently Issued Accounting Pronouncements Revenue from Contracts with Customer The Financial Accounting Standards Board (“ FASB Revenue from Contracts with Customers (Topic 606). The Company adopted this guidance on January 1, 2018 using the modified retrospective transition method. Prior periods were not adjusted and, based on the Company’s implementation assessment, no cumulative-effect adjustment was made to the opening balance of retained earnings. The adoption of this standard did not have a material impact on the financial statements other than expanded disclosures. For further description of the Company’s revenue recognition policy refer to the Revenue Recognition section above and for disaggregated revenue information refer to the Segment Reporting section above. Leases In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) in order to increase transparency and comparability among organizations by, among other provisions, recognizing lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous GAAP. For public companies, ASU 2016-02 was effective for fiscal years beginning after December 15, 2018 (including interim periods within those periods) using a modified retrospective approach and early adoption was permitted. In transition, entities may also elect a package of practical expedients that must be applied in its entirety to all leases commencing before the adoption date, unless the lease is modified, and permits entities to not reassess (a) the existence of a lease, (b) lease classification or (c) determination of initial direct costs, as of the adoption date, which effectively allows entities to carryforward accounting conclusions under previous U.S. GAAP. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements, which provides entities an optional transition method to apply the guidance under Topic 842 as of the adoption date, rather than as of the earliest period presented. The Company adopted Topic 842 on January 1, 2019, using the optional transition method to apply the new guidance as of January 1, 2019, rather than as of the earliest period presented, and elected the package of practical expedients described above. Based on the analysis, on January 1, 2019, the Company recorded right of use assets of approximately $81,000 and lease liability of approximately $81,000. Improvements to Non-Employee Share-Based Payment Accounting In June 2018, the FASB issued ASU 2018-07 “Improvements to Non-employee Share-Based Payment Accounting”, which simplifies the accounting for share-based payments granted to non-employees for goods and services. Under the ASU, most of the guidance on such payments to non-employees would be aligned with the requirements for share-based payments granted to employees. The amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. The Company has early adopted the new standard effective January 1, 2019 and the adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements. Income Taxes In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | In accordance with ASC 820 (Fair Value Measurements and Disclosures), the Company uses various inputs to measure the outstanding warrants on a recurring basis to determine the fair value of the liability. ASC 820 also establishes a hierarchy categorizing inputs into three levels used to measure and disclose fair value. The hierarchy gives the highest priority to quoted prices available in active markets and the lowest priority to unobservable inputs. An explanation of each level in the hierarchy is described below: Level 1 - Unadjusted quoted prices in active markets for identical instruments that are accessible by the Company on the measurement date Level 2 - Quoted prices in markets that are not active or inputs which are either directly or indirectly observable Level 3 - Unobservable inputs for the instrument requiring the development of assumptions by the Company The following table classifies the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy as of December 31, 2019 (amount in thousands): Fair Value at December 31, 2019 Total Level 1 Level 2 Level 3 Liabilities: Derivative liability - Warrants 4,144 - - 4,144 Total liabilities $ 4,144 $ - $ - $ 4,144 There were no transfers between Level 1, 2 or 3 during the year ended December 31, 2019. The following table presents changes in Level 3 liabilities measured at fair value for the year ended December 31, 2019. Both observable and unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long- dated volatilities) inputs (amount in thousands). Warrant Liability Balance at January 1, 2019 $ - Addition 7,762 Change in fair value (3,618 ) Balance at December 31, 2019 $ 4,144 A summary of the weighted average (in aggregate) significant unobservable inputs (Level 3 inputs) used in the Monte Carlo simulation measuring the Company’s derivative liabilities that are categorized within Level 3 of the fair value hierarchy as of December 31, 2019 is as follows: As of December 31, 2019 Exercise price $ 0.0044 Contractual term (years) 4.32 Volatility (annual) 70.0 % Risk-free rate 1.7 % Dividend yield (per share) 0 % |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement, Noncash Expense [Abstract] | |
STOCK-BASED COMPENSATION | On April 26, 2019, in connection with employment agreements with its CEO and COO, the Company issued market condition awards contingent upon the achievement of certain market capitalization targets. The awards are subject to a three-year service vesting period. The awards are settleable in a variable number of common shares based on defined percentages of the Company's total shares determined by market capitalization targets and are, therefore, classified as liabilities in accordance with ASC 718. The fair value of the awards is remeasured at each reporting period until settlement. Compensation cost is attributed over the period encompassing the derived service period and the explicit service period. The fair value of the market condition awards as of , 3019, was approximately $1.4 million. The market condition awards were valued using a Monte Carlo simulation technique, a risk-free interest rate of 1.6% and a volatility of 85% based on volatility over 3 years using daily stock prices. For the year ending , 2019, the Company recorded an expense of $ for these awards. On April 26, 2019, as additional consideration for advisory services provided in connection with the Charlie’s Financing and the Share Exchange (see Note 1 above), the Company issued an aggregate of 902.7 million shares of common stock (the “ Advisory Shares Prior to the Share Exchange, Charlie’s employees held Member units, which were automatically converted into 7.1 million shares of common stock and 69,815 shares of Series B Preferred (or 698.1 million shares of common stock equivalents) due to the effect of the Share Exchange. The 705.3 million shares of common stock will vest over a two-year period. The fair value of a share of common stock was $0.0032 which is based upon a valuation prepared by the Company on the date of the Share Exchange. The Company recorded stock-based compensation of approximately $ during the year ended , 2019. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | Property and Equipment detail as of December 31, 2019 and 2018 are as follows (amount in thousands): December 31, December 31, 2019 2018 Machinery and equipment $ 96 $ 64 Trade show booth 171 144 Office equipment 118 26 Leasehold improvements 440 20 825 254 Accumulated depreciation (282 ) (209 ) $ 543 $ 45 Depreciation and amortization expense totaled $73,000 and $18,000, respectively, during the years ended December 31, 2019 and 2018. |
CONCENTRATIONS
CONCENTRATIONS | 12 Months Ended |
Dec. 31, 2019 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATIONS | Vendors The Company’s concentration of purchases are as follows: For the year ended December 31, 2019 2018 Vendor A 57 % 74 % Vendor B 16 % 15 % During the year ended December 31, 2019, purchases from two vendors represented 73% of total inventory purchases. During the year ended December 31, 2018, purchases from two vendors represented 89% of total inventory purchases. As of December 31, 2019 and 2018, amounts owed to these vendors totaled $58,000 and $654,000 respectively, which are included in accounts payable in the accompanying condensed consolidated balance sheets. Accounts Receivable The Company’s concentration of accounts receivable are as follows: December 31, 2019 2018 Customer A 18 % 6 % One customer made up more than 10% of net accounts receivable at December 31, 2019. Customer A owed the Company a total of $211,000, representing 23% of net receivables. No customer exceeded 10% of total net sales for the years ended December 31, 2019 and 2018, respectively. |
DON POLLY, LLC.
DON POLLY, LLC. | 12 Months Ended |
Dec. 31, 2019 | |
Variable Interest Entity, Measure of Activity [Abstract] | |
DON POLLY, LLC. | Don Polly, LLC is a Nevada limited liability company that is owned by entities controlled by Brandon and Ryan Stump, the Company’s Chief Executive Officer and Chief Operating Officer, respectively, and a consolidated variable interest for which the Company is the primary beneficiary. Don Polly formulates, sells and distributes the Company’s CBD product lines. We evaluate our ownership, contractual and other interests in entities that are not wholly-owned to determine if these entities are variable interest entities (“ VIEs Don Polly operates under exclusive licensing and service contracts with the Company whereby the Company receives 75% of net income from the licensing agreement and 25% of net income from the service agreement, therefore, as the Company receives 100% of the net income or incurs 100% of the net loss of the VIE, no non-controlling interests are recorded. |
ACCOUNTS PAYABLE AND ACCRUED EX
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 12 Months Ended |
Dec. 31, 2019 | |
Payables and Accruals [Abstract] | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | Accounts payable and accrued expenses as of December 31, 2019 and 2018 are as follows (amount in thousands): December 31, December 31, 2019 2018 Accounts payable $ 673 $ 901 Accrued compensation 1,635 288 Insurance payable - 20 Other accrued expenses 208 7 $ 2,516 $ 1,216 |
EARNING PER SHARE BASIC AND FUL
EARNING PER SHARE BASIC AND FULLY DILUTED | 12 Months Ended |
Dec. 31, 2019 | |
Earnings Per Share, Basic and Diluted [Abstract] | |
EARNING PER SHARE BASIC AND FULLY DILUTED | Basic earnings per common share is computed by dividing net income by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per common share is computed similar to basic earnings per common share except that it reflects the potential dilution that could occur if dilutive securities or other obligations to issue common stock were exercised or converted into common stock. Diluted weighted average common shares include common stock potentially issuable under the Company’s convertible preferred stock, warrants and vested and unvested stock options. The following table sets forth the computation of earnings per share (in thousands): For the years ended December 31, 2019 2018 Net (loss) earnings applicable to common shareholders- basic $ (3,796 ) $ 7,200 Net (loss) earnings applicable to common shareholders - diluted $ (3,796 ) $ 7,200 Weighted average shares outstanding - basic 10,648,129 141,041 Series B convertible preferred shares - 13,963,048 Weighted average shares outstanding - diluted 10,648,129 14,104,089 The following securities were not included in the diluted net earnings per share calculation because their effect was anti-dilutive as of the periods presented (in thousands): For the years ended December 31, 2019 2018 Options 801,325 85,991 Series A convertible preferred shares 4,616,268 - Warrants 4,033,769 - Total 9,451,362 85,991 |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2019 | |
Stockholders' equity | |
STOCKHOLDERS' EQUITY | Series A Preferred On April 25, 2019, in connection with the Share Exchange, the Company filed the Certificate of Designation, Preferences and Rights of the Series A Convertible Preferred Stock (the “ Series A COD Series A Stated Value The Series A Preferred provides the holders with the right to receive a one-time dividend payment equal to 8% of the Series A Stated Value (the “ Series A Dividend Each share of Series A Preferred is convertible, at the option of the holder, into that number of shares of common stock equal to the Series A Stated Value, plus all accrued but unpaid dividends, divided by $0.044313, which conversion rate is subject to adjustment in accordance with the terms of the Series A COD. Holders of Series A Preferred are prohibited from converting Series A Preferred into common stock if, as a result of such conversion, the holder, together with its affiliates, would own more than 4.99% (or 9.99% upon the election of the holder prior to the issuance of the Series A Preferred) of the total number of shares of common stock then issued and outstanding. Each share of Series A Preferred is convertible at the option of the Company, at the same conversion rate set forth above, at such time, if ever, that the Company’s common stock is listed on the Nasdaq Stock Market and the Company has paid the Series A Dividend. In addition, upon the occurrence of a Bankruptcy Event (as defined in the Series A COD), the Company shall be required to redeem, in cash, all outstanding shares of Series A Preferred at a price equal to the conversion amount; provided, however Holders of the Series A Preferred are entitled to vote on an as-converted basis along with holders of the Company’s common stock on all matters presented to the Company’s stockholders; provided, however Conversion of Preferred Shares For the year ended December 31,2019 the Company issued approximately 38,081,000 common stock conversion shares as 1,687 shares of Series A preferred were converted into common shares. Deemed Dividends on Series A Preferred Stock As a result of the issuance of preferred stock, we have a deemed dividend of approximately $1,650,000 which is due on April 26, 2020 and is payable in cash, or if certain equity conditions are met, it is payable in common shares of the Company. In the event the Equity Conditions are satisfied, and the Corporation elects to pay the Dividend Amount in shares of Common Stock, the number of shares of Common Stock to be issued to each Holder shall be determined by dividing the Dividend Amount payable to each Holder on the applicable payment date as set forth above, and rounding up to the nearest whole share, by the Dividend Conversion Price. The term Dividend Conversion Price shall mean 90% of the VWAP of the Corporation’s Common Stock for the five (5) Trading Days prior to the Dividend Payment Date, as adjusted for any stock dividend, stock split, stock combination or other similar transaction during such five (5) Trading Day period. “Equity Conditions” means that each of the following conditions is satisfied: (i) the number of authorized but unissued and otherwise unreserved shares of Common Stock is sufficient for such issuance; (ii) such shares of Common Stock are registered for resale by the Holders and may be sold by the Holders pursuant to an effective registration statement or all such shares may be sold without volume restrictions pursuant to Rule 144 under the 1933 Act;(iii) the Common Stock is listed or quoted (and is not suspended from trading) on an Eligible Market; (iv) the average daily dollar value of shares of Common Stock traded on the Eligible Market for the ten (10) Trading Days prior to the Dividend Payment Date is greater than $500,000; and (v) such issuance would be permitted in full without violation Section 4(e) below or the rules or regulations of any Eligible Market. If the equity conditions are not met and the Company does not wish to pay the dividends in cash it will have to seek waivers from the Series A preferred shareholders. Series B Preferred On April 26, 2019, in connection with the Share Exchange, the Company filed the Certificate of Designation, Preferences and Rights of the Series B Convertible Preferred Stock (the “ Series B COD The Series B Preferred was structured to act as a common stock equivalent, and, on June 28, 2019, the Company amended and restated its Articles of Incorporation (the “ Amended and Restated Charter At December 31, 2019, no shares of Series B Preferred were outstanding. Prior to the filing of the Amended and Restated Charter, holders of the Series B Preferred were entitled to vote on an as-converted basis along with holders of the Company’s common stock on all matters presented to the Company’s stockholders. In addition, pursuant to the Series B COD, the Company was not permitted to take the following actions without obtaining the prior consent of at least 50% of the holders of the outstanding Series B Preferred, voting separately as a single class: (i) amend the provisions of the Series B COD so as to adversely affect holders of the Series B Preferred, (ii) increase the authorized number of shares of Series B Preferred, or (iii) effect any distribution with respect to junior stock, unless the Company also provides such distribution to holders of the Series B Preferred. Common Stock On June 28, 2019, the Company filed the Amended and Restated Charter to change the name of the Company to “Charlie’s Holdings, Inc.” , as well as to increase the number of shares of the Company’s common stock authorized for issuance from 7.0 billion shares to 50.0 billion shares. Warrants On April 26, 2019, pursuant to the Share Exchange as described in Notes 1 and 3, the Company Derivatives and Hedging ASC 815 |
STOCK OPTIONS
STOCK OPTIONS | 12 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
STOCK OPTIONS | The True Drinks Holdings, Inc. 2013 Stock Incentive Plan (the “ Prior Plan Prior Plan Amendment The Company will not grant any additional awards or shares of common stock under the Prior Plan beyond those that are currently outstanding. On May 8, 2019, our Board of Directors approved the Charlie’s Holdings, Inc. 2019 Omnibus Incentive Plan (the “ Plan ”), and the 2019 Plan was subsequently approved by holders of a majority of our outstanding voting securities on the same date. The 2019 Plan will supersede and replace the Prior Plan and no new awards will be granted under the Prior Plan. Any awards outstanding under the Prior Plan on the date of stockholder approval of the 2019 Plan will remain subject to the terms in the Prior Plan, including those granted under the Prior Plan Amendment, and any shares subject to outstanding awards under the Prior Plan that subsequently expire, terminate, or are surrendered or forfeited for any reason without issuance of shares will automatically become available for issuance under the 2019 Plan. Up to 1,107,254,205 stock options may be granted under the 2019 Plan. The shares of common stock issuable under the 2019 Plan will consist of authorized and unissued shares, treasury shares, and shares purchased on the open market or otherwise. The following table summarizes stock option activities during the year ended December 31, 2019 (all option amounts are in thousands): Stock Options Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in years) Aggregate Intrinsic Value Outstanding at January 1, 2019 85,991 $ 0.02 1.12 $ - Options granted 788,882 0.02 9.49 - Options forfeited/expired (73,548 ) 0.02 - - Outstanding at December 31, 2019 801,325 $ 0.01 9.41 $ - Options vested and exercisable at December 31, 2019 61,825 $ 0.02 4.47 $ - During the year ended December 31, 2019, the Company modified 49.4 million option to extend its maturity date. All options were fully vested as of the modification date. The Company accounted for the modification as a Type I (probable-to-probable) modification. Any additional compensation related to this modification was considered immaterial. During the year ended December 31, 2019, the Company granted 739.5 million option under the 2019 Plan. The fair value of the option on the grant date was approximately $1.1 million based on the following assumptions: October 28, 2019 Exercise price $ 0.0044 Expected term (years) 5.79 Volatility (annual) 70.0 % Risk-free rate 1.7 % Dividend yield (per share) 0 % As of December 31, 2019, there was approximately $1.0 million of total unrecognized compensation expense related to non-vested share-based compensation arrangements granted under the 2019 Plan. That cost is expected to be recognized over a weighted average period of 2.5 years. For the year ended December 31, 2019 the Company recorded compensation expense of $178,000 related to the issuance of stock options. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | The Company leases office space under agreements classified as operating leases that expire on various dates through 2024. All of the Company’s lease liabilities result from the lease of its headquarters in Costa Mesa, California, which expires in 2024, its warehouse in Santa Ana, California, which expires in 2021, its office and warehouse in Denver, Colorado, which expires in 2022, and its warehouse space in Huntington Beach, California, which expires in 2022. Such leases do not require any contingent rental payments, impose any financial restrictions, or contain any residual value guarantees. Certain of the Company’s leases include renewal options and escalation clauses; renewal options have not been included in the calculation of the lease liabilities and right of use assets as the Company is not reasonably certain to exercise the options. Variable expenses generally represent the Company’s share of the landlord’s operating expenses. The Company does not act as a lessor or have any leases classified as financing leases. The Company excludes short-term leases having initial terms of 12 months or less from Topic 842 as an accounting policy election and recognizes rent expense on a straight-line basis over the lease term. The Company entered into a commercial lease for the Company’s corporate headquarters (the “ Lease At December 31, 2019, the Company had operating lease liabilities of approximately $1,644,000 and right of use assets of approximately $1,623,000, which were included in the consolidated balance sheet. The following summarizes quantitative information about the Company’s operating leases (amount in thousands): For the Year Ended December 31, 2019 Operating leases Operating lease cost $ 271 Variable lease cost - Operating lease expense 271 Short-term lease rent expense - Total rent expense $ 271 For the Year Ended December 31, 2019 Operating cash flows from operating leases $ 169 Weighted-average remaining lease term – operating leases (in years) 3.8 Weighted-average discount rate – operating leases 12.0 % Maturities of our operating leases, excluding short-term leases, are as follows: Year Ended December 31, 2020 $ 600 Year Ended December 31, 2021 577 Year Ended December 31, 2022 400 Year Ended December 31, 2023 275 Year Ended December 31, 2024 206 Total 2,058 Less present value discount (414 ) Operating lease liabilities as of December 31, 2019 $ 1,644 Legal proceedings From time to time, the Company may be involved in various claims and counterclaims and legal actions arising in the ordinary course of business. Other than as set forth below, there are no additional pending or threatened legal proceedings at this time. C.H. Robinson Worldwide, Inc. v. True Drinks, Inc. Robinson |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | The Company was classified as a partnership through the Closing Date, and therefore, not subject to entity level tax. After the Closing Date, the Company is taxed as a C corporation and files a consolidated return with True Drinks, Inc. The tax effects of temporary differences and tax loss and credit carry forwards that give rise to significant portions of deferred tax assets and liabilities at December 31, 2019 are comprised of the following (in thousands): As of December 31, 2019 2018 Deferred tax assets: Bad Debt 133 - Inventory 9 - Lease liability 385 - Stock compensation 349 - Transaction costs 808 - Net operation loss 698 - Derivatives 268 - Total deferred income tax assets 2,650 - Deferred income tax liabilities: ROU assets (384 ) - Fixed assets (20 ) - Total deferred income tax liabilities (404 ) - Net deferred income tax assets 2,246 - Valuation allowance (2,246 ) - Deferred tax asset, net of allowance (0 ) $ - At December 31, 2019, the Company had federal and state net operating loss carry forwards for income tax purposes of approximately $73.5 million. The effect of an ownership change would be the imposition of an annual limitation on the use of net operating loss carryforwards (“NOL”) attributable to periods before the change. Any limitation may result in expiration of a portion of the NOL carryforwards before utilization. The Company has not performed a detailed analysis to determine the realizability of the NOL under Section 382 of the IRC.. As such, deferred tax assets related to NOLs incurred before the Closing Date of $71M relating to True Drinks, Inc. have not been recorded. NOLs incurred after the Closing Date of $2.5M will begin to expire in 2029. The expected tax expense (benefit) based on the U.S. federal statutory rate is reconciled with actual tax expense (benefit) as follows: Year ended December 31, 2019 Year ended December 31, 2018 Statutory federal income tax rate 21.0 % - % Non-taxable Income 15.1 % - % State taxes, net of federal tax benefit 20.6 % - % Non-deductible expenses (1.3 %) - % Derivatives 27.2 % - % Change in valuation allowance (81.3 %) - % Income taxes provision (benefit) 1.3 % - % (in thousands) As of December 31, 2019 2018 Current US Federal $ - $ - US State - - Total current provision - - Deferred US Federal 1,331 - US State 443 - Total deferred benefit 1,774 - Change in valuation allowance (1,745 ) - Total provision for income taxes $ 29 $ - ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. As of December 31, 2019, and 2018, there were no uncertain tax positions. The Company’s policy for recording interest and penalties associated with uncertain tax positions is to record such expense as a component of income tax expense. There were no amounts accrued for penalties or interest during the year ended December 31, 2019. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its position. The Company is subject to U.S. federal and state taxes in the normal course of business, and its income tax returns are subject to examination by the relevant tax authorities. Tax years 2016-2018 are still open for examination by Federal tax authorities and tax years 2015-2018 are generally open for examination by state tax authorities. The Company is under IRS audit for 2017, however no material adjustments have currently been identified that would affect the tax provision as stated. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | The Company has evaluated events subsequent to December 31, 2019 to assess the need for potential recognition or disclosure in this report. Such events were evaluated through the date these financial statements were available to be issued. Based upon this evaluation the following items were noted. On February 12, 2020, the Company, entered into a form of Amended and Restated Employment Agreement with both the Company’s Chief Executive Officer and Chief Operating Officer, respectively. The terms of the Amended Employment Agreements have been amended as follows: (i) the annual equity awards based upon, among other conditions, the Company’s market capitalization and a percentage of base salary have been eliminated; however, the awards based on financial milestones remain in full force and effect; and (ii) payment of the 2019 bonuses has been deferred, resulting in the accrual of such bonuses on the books and records of the Company. All other terms of the respective Employment Agreements will remain in full force and effect subject to further review by the Board as it deems necessary and appropriate. On March 11, 2020, the World Health Organization designated the ongoing and evolving coronavirus (COVID-19) outbreak as a pandemic. The outbreak has caused substantial disruption in international and U.S. economies and markets as it continues to spread. The outbreak is having a temporary adverse impact on our industry as well as our business, with regards to certain supply chain disruptions and sales volume. While the disruption from COVID-19 is currently expected to be temporary, there is uncertainty around the duration. The financial impact of this matter on our business cannot be reasonably estimated at this time, however, if repercussions of the outbreak are prolonged, it will have an adverse impact on our business. On April 8, 2020, the Company. and its wholly-owned subsidiaries, Charlie's Chalk Dust, LLC and its variable interest entity, Don Polly LLC, issued a secured promissory note (" Note Lender Note Financing The Note requires the payment of principal and guaranteed interest in the amount of at least $75,000 on or before the earlier date of (i) a Liquidity Event, as defined under the terms of the Note; or (ii) October 1, 2020. The Company intends to use the proceeds from the Note Financing for general corporate purposes, and its working capital requirements, pending availability of long-term working capital. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | As noted above, the consolidated financial statements include the accounts of the Company, Charlie’s Holdings, Inc., its two 100% wholly owned subsidiaries, Charlie’s Chalk Dust, LLC and Bazi, Inc, and Don Polly, LLC, a consolidated variable interest for which the Company is the primary beneficiary (see Note 7). All inter-company balances and transactions have been eliminated in consolidation. |
Use of Estimates | The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. |
Fair Value of Financial Instruments | U.S. GAAP requires disclosing the fair value of financial instruments to the extent practicable for financial instruments which are recognized or unrecognized in the balance sheet. The fair value of the financial instruments disclosed herein is not necessarily representative of the amount that could be realized or settled, nor does the fair value amount consider the tax consequences of realization or settlement. In assessing the fair value of financial instruments, the Company uses a variety of methods and assumptions, which are based on estimates of market conditions and risks existing at the time. For certain instruments, including cash and cash equivalents, accounts receivable, accounts payable, warrant liability and accrued expenses, it was estimated that the carrying amount approximated fair value because of the short maturities of these instruments. |
Revenue Recognition | The Company recognizes revenues in accordance with Accounting Standards Codification (“ ASC In circumstances where shipping and handling activities occur after the customer has obtained control of the product, the Company has elected to account for shipping and handling activities as a fulfillment cost rather than an additional promised service. Contract durations are generally less than one year, and therefore costs paid to obtain contracts, which generally consist of sales commissions, are recognized as expenses in the period incurred. Revenue is measured by the transaction price, which is defined as the amount of consideration expected to be received in exchange for providing goods to customers. The transaction price is adjusted for estimates of known or expected variable consideration, which includes refunds and returns as well as incentive offers and promotional discounts on current orders. Sales returns are generally not material to the financial statements, and do not comprise a significant portion of variable consideration. Estimates for sales returns are based on, among other things, an assessment of historical trends, information from customers, and anticipated returns related to current sales activity. These estimates are established in the period of sale and reduce revenue in the period of the sale. Variable consideration related to incentive offers and promotional programs are recorded as a reduction to revenue based on amounts the Company expects to collect. Estimates are regularly updated and the impact of any adjustments are recognized in the period the adjustments are identified. In many cases, key sales terms such as pricing and quantities ordered are established at the time an order is placed and incentives have very short-term durations. Amounts billed and due from customers are short term in nature and are classified as receivables since payments are unconditional and only the passage of time related to credit terms is required before payments are due. The Company does not grant payment financing terms greater than one year. Payments received in advance of revenue recognition are recorded as deferred revenue. |
Cash and Cash Equivalents | The Company considers all liquid investments purchased with original maturities of ninety days or less to be cash equivalents. |
Accounts Receivable | Accounts receivable is recorded at the invoiced amount and does not bear interest. We determine the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history and current economic conditions and set up an allowance for doubtful accounts when collection is uncertain. Customers’ accounts are written off against the allowance when all attempts to collect have been exhausted. Recoveries of accounts receivable previously written off are recorded as income when received. As of December 31, 2019 and 2018, the allowance for bad debt totaled $639,000 and $151,000, respectively. |
Inventories | Inventories primarily consist of finished goods and are stated at the lower of cost (determined by the average cost method) or net realizable value. We calculate estimates of excess and obsolete inventories determined primarily by reviewing inventory on hand, historical sales activity, industry trends and expected net realizable value. As of December 31, 2019 and 2018, the reserve for excess and obsolete inventories totaled $83,000 and $74,000, respectively. |
Stock-Based Compensation | We account for all stock-based compensation using a fair value-based method. The fair value of equity-classified awards granted to employees is estimated on the date of the grant using the Black-Scholes option-pricing model and the related stock-based compensation expense is recognized over the vesting period during which an employee is required to provide service in exchange for the award. We measure the fair value of liability-classified awards using a Monte Carlo valuation model. Compensation cost is recognized over the service period and is remeasured at each reporting period through settlement. |
Income Taxes | Income taxes are computed under the liability method. This method requires the recognition of deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of our assets and liabilities. The impact on deferred taxes of changes in tax rates and laws, if any, are applied to the years during which temporary differences are expected to be settled and are reflected in the consolidated financial statements in the period of enactment. A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized. Financial statement effects of a tax position are initially recognized when it is more likely than not, based on the technical merits, that the position will be sustained upon examination by a taxing authority. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that meets the more-likely-than-not threshold of being realized upon ultimate settlement with a taxing authority. We recognize potential accrued interest and penalties related to unrecognized tax benefits as income tax expense. |
Research and development | We expense the cost of research and development as incurred. Research and development expenses include costs incurred in funding research and development activities, license fees, and other external costs. Nonrefundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity is performed or when the goods have been received, rather than when payment is made. |
Segments | Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business in one operating segment. The following table disaggregates revenue from our single operating segment by geographic market and customer type for the periods ending December 31, 2019 and 2018, respectively: December 31, 2019 December 31, 2018 Geographic Market International 24.0 % 28.0 % United States 76.0 % 72.0 % Customer Type Retailers 36.0 % 45.0 % Distributors 64.0 % 55.0 % |
Recently Issued Accounting Pronouncements | Revenue from Contracts with Customer The Financial Accounting Standards Board (“ FASB Revenue from Contracts with Customers (Topic 606). The Company adopted this guidance on January 1, 2018 using the modified retrospective transition method. Prior periods were not adjusted and, based on the Company’s implementation assessment, no cumulative-effect adjustment was made to the opening balance of retained earnings. The adoption of this standard did not have a material impact on the financial statements other than expanded disclosures. For further description of the Company’s revenue recognition policy refer to the Revenue Recognition section above and for disaggregated revenue information refer to the Segment Reporting section above. Leases In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) in order to increase transparency and comparability among organizations by, among other provisions, recognizing lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous GAAP. For public companies, ASU 2016-02 was effective for fiscal years beginning after December 15, 2018 (including interim periods within those periods) using a modified retrospective approach and early adoption was permitted. In transition, entities may also elect a package of practical expedients that must be applied in its entirety to all leases commencing before the adoption date, unless the lease is modified, and permits entities to not reassess (a) the existence of a lease, (b) lease classification or (c) determination of initial direct costs, as of the adoption date, which effectively allows entities to carryforward accounting conclusions under previous U.S. GAAP. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements, which provides entities an optional transition method to apply the guidance under Topic 842 as of the adoption date, rather than as of the earliest period presented. The Company adopted Topic 842 on January 1, 2019, using the optional transition method to apply the new guidance as of January 1, 2019, rather than as of the earliest period presented, and elected the package of practical expedients described above. Based on the analysis, on January 1, 2019, the Company recorded right of use assets of approximately $81,000 and lease liability of approximately $81,000. Improvements to Non-Employee Share-Based Payment Accounting In June 2018, the FASB issued ASU 2018-07 “Improvements to Non-employee Share-Based Payment Accounting”, which simplifies the accounting for share-based payments granted to non-employees for goods and services. Under the ASU, most of the guidance on such payments to non-employees would be aligned with the requirements for share-based payments granted to employees. The amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. The Company has early adopted the new standard effective January 1, 2019 and the adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements. Income Taxes In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Operating segments | December 31, 2019 December 31, 2018 Geographic Market International 24.0 % 28.0 % United States 76.0 % 72.0 % Customer Type Retailers 36.0 % 45.0 % Distributors 64.0 % 55.0 % |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair value of financial liabilities on a recurring basis | Fair Value at December 31, 2019 Total Level 1 Level 2 Level 3 Liabilities: Derivative liability - Warrants 4,144 - - 4,144 Total liabilities $ 4,144 $ - $ - $ 4,144 |
Changes in recurring fair value measurements included in net loss | Warrant Liability Balance at January 1, 2019 $ - Addition 7,762 Change in fair value (3,618 ) Balance at December 31, 2019 $ 4,144 |
Weighted average significant unobservable inputs | As of December 31, 2019 Exercise price $ 0.0044 Contractual term (years) 4.32 Volatility (annual) 70.0 % Risk-free rate 1.7 % Dividend yield (per share) 0 % |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment | December 31, December 31, 2019 2018 Machinery and equipment $ 96 $ 64 Trade show booth 171 144 Office equipment 118 26 Leasehold improvements 440 20 825 254 Accumulated depreciation (282 ) (209 ) $ 543 $ 45 |
CONCENTRATIONS (Tables)
CONCENTRATIONS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Risks and Uncertainties [Abstract] | |
Concentration of purchases and accounts receivable | Vendors The Company’s concentration of purchases are as follows: For the year ended December 31, 2019 2018 Vendor A 57 % 74 % Vendor B 16 % 15 % Accounts Receivable The Company’s concentration of accounts receivable are as follows: December 31, 2019 2018 Customer A 18 % 6 % |
ACCOUNTS PAYABLE AND ACCRUED _2
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Payables and Accruals [Abstract] | |
Accounts payable and accrued expenses | December 31, December 31, 2019 2018 Accounts payable $ 673 $ 901 Accrued compensation 1,635 288 Insurance payable - 20 Other accrued expenses 208 7 $ 2,516 $ 1,216 |
EARNING PER SHARE BASIC AND F_2
EARNING PER SHARE BASIC AND FULLY DILUTED (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Earnings Per Share, Basic and Diluted [Abstract] | |
Computation of earnings (loss) per share | For the years ended December 31, 2019 2018 Net (loss) earnings applicable to common shareholders- basic $ (3,796 ) $ 7,200 Net (loss) earnings applicable to common shareholders - diluted $ (3,796 ) $ 7,200 Weighted average shares outstanding - basic 10,648,129 141,041 Series B convertible preferred shares - 13,963,048 Weighted average shares outstanding - diluted 10,648,129 14,104,089 |
Anti-dilutive securities | For the years ended December 31, 2019 2018 Options 801,325 85,991 Series A convertible preferred shares 4,616,268 - Warrants 4,033,769 - Total 9,451,362 85,991 |
STOCK OPTIONS (Tables)
STOCK OPTIONS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock option activity | Stock Options Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in years) Aggregate Intrinsic Value Outstanding at January 1, 2019 85,991 $ 0.02 1.12 $ - Options granted 788,882 0.02 9.49 - Options forfeited/expired (73,548 ) 0.02 - - Outstanding at December 31, 2019 801,325 $ 0.01 9.41 $ - Options vested and exercisable at December 31, 2019 61,825 $ 0.02 4.47 $ - |
Fair value of options granted assumptions | October 28, 2019 Exercise price $ 0.0044 Expected term (years) 5.79 Volatility (annual) 70.0 % Risk-free rate 1.7 % Dividend yield (per share) 0 % |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Operating lease quantitative information | For the Year Ended December 31, 2019 Operating leases Operating lease cost $ 271 Variable lease cost - Operating lease expense 271 Short-term lease rent expense - Total rent expense $ 271 For the Year Ended December 31, 2019 Operating cash flows from operating leases $ 169 Weighted-average remaining lease term – operating leases (in years) 3.8 Weighted-average discount rate – operating leases 12.0 % |
Maturities of operating leases | Year Ended December 31, 2020 $ 600 Year Ended December 31, 2021 577 Year Ended December 31, 2022 400 Year Ended December 31, 2023 275 Year Ended December 31, 2024 206 Total 2,058 Less present value discount (414 ) Operating lease liabilities as of December 31, 2019 $ 1,644 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Deferred tax assets and liabilities | As of December 31, 2019 2018 Deferred tax assets: Bad Debt 133 - Inventory 9 - Lease liability 385 - Stock compensation 349 - Transaction costs 808 - Net operation loss 698 - Derivatives 268 - Total deferred income tax assets 2,650 - Deferred income tax liabilities: ROU assets (384 ) - Fixed assets (20 ) - Total deferred income tax liabilities (404 ) - Net deferred income tax assets 2,246 - Valuation allowance (2,246 ) - Deferred tax asset, net of allowance (0 ) $ - |
Income tax rate reconciliation | Year ended December 31, 2019 Year ended December 31, 2018 Statutory federal income tax rate 21.0 % - % Non-taxable Income 15.1 % - % State taxes, net of federal tax benefit 20.6 % - % Non-deductible expenses (1.3 %) - % Derivatives 27.2 % - % Change in valuation allowance (81.3 %) - % Income taxes provision (benefit) 1.3 % - % |
Income tax provision (benefit) | (in thousands) As of December 31, 2019 2018 Current US Federal $ - $ - US State - - Total current provision - - Deferred US Federal 1,331 - US State 443 - Total deferred benefit 1,774 - Change in valuation allowance (1,745 ) - Total provision for income taxes $ 29 $ - |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Retail [Member] | ||
Segment percentage | 36.00% | 64.00% |
Distributor [Member] | ||
Segment percentage | 45.00% | 55.00% |
International [Member] | ||
Segment percentage | 24.00% | 76.00% |
United States[Member] | ||
Segment percentage | 28.00% | 72.00% |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Accounting Policies [Abstract] | ||
Allowance for bad debt | $ 639 | $ 151 |
Reserve for excess and obsolete inventories | $ 83 | $ 74 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Warrant liability | $ 4,144 | $ 0 |
Total liabilities | 4,144 | |
Level 1 | ||
Warrant liability | 0 | |
Total liabilities | 0 | |
Level 2 | ||
Warrant liability | 0 | |
Total liabilities | 0 | |
Level 3 | ||
Warrant liability | 4,144 | |
Total liabilities | $ 4,144 |
FAIR VALUE MEASUREMENTS (Deta_2
FAIR VALUE MEASUREMENTS (Details 1) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | ||
Warranty liability, beginning balance | $ 0 | |
Addition | 7,762 | |
Change in fair value | (3,618) | $ 0 |
Warranty liability, ending balance | $ 4,144 | $ 0 |
FAIR VALUE MEASUREMENTS (Deta_3
FAIR VALUE MEASUREMENTS (Details 2) | 12 Months Ended |
Dec. 31, 2019$ / shares | |
Fair Value Disclosures [Abstract] | |
Exercise price | $ .0044 |
Contractual term (years) | 4 years 3 months 25 days |
Volatility (annual) | 70.00% |
Risk-free rate | 1.70% |
Dividend yield (per share) | 0.00% |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details Narrative) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Share-based Payment Arrangement, Noncash Expense [Abstract] | |
Stock-based compensation | $ 752 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Property and equipment, gross | $ 825 | $ 254 |
Accumulated depreciation | (282) | (209) |
Property and equipment, net | 543 | 45 |
Machinery and Equipment | ||
Property and equipment, gross | 96 | 64 |
Trade Show Booth | ||
Property and equipment, gross | 171 | 144 |
Office Equipment | ||
Property and equipment, gross | 118 | 26 |
Leasehold Improvements | ||
Property and equipment, gross | $ 440 | $ 0 |
PROPERTY AND EQUIPMENT (Detai_2
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation and amortization | $ 73 | $ 18 |
CONCENTRATIONS (Details)
CONCENTRATIONS (Details) - Purchases | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Vendor A | ||
Concentration risk | 57.00% | 74.00% |
Vendor B | ||
Concentration risk | 16.00% | 15.00% |
CONCENTRATIONS (Details 1)
CONCENTRATIONS (Details 1) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Accounts Receivable | Customer A | ||
Concentration risk | 18.00% | 6.00% |
ACCOUNTS PAYABLE AND ACCRUED _3
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Payables and Accruals [Abstract] | ||
Accounts payable | $ 673 | $ 901 |
Accrued compensation | 1,635 | 288 |
Insurance payable | 0 | 20 |
Other accrued expenses | 208 | 7 |
Accounts payable and accrued expenses | $ 2,516 | $ 1,216 |
EARNING PER SHARE BASIC AND F_3
EARNING PER SHARE BASIC AND FULLY DILUTED (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Earnings Per Share, Basic and Diluted [Abstract] | ||
Net (loss) earnings applicable to common shareholders - basic | $ (3,796) | $ 7,200 |
Net (loss) earnings applicable to common shareholders - diluted | $ (3,796) | $ 7,200 |
Weighted average shares outstanding - basic | 10,648,129,286 | 141,040,886 |
Series B convertible preferred shares | 0 | 13,963,048,000 |
Weighted average shares outstanding - diluted | 10,648,129,286 | 14,104,089,886 |
EARNING PER SHARE BASIC AND F_4
EARNING PER SHARE BASIC AND FULLY DILUTED (Details 1) - shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Anti-dilutive securities | 9,451,362,000 | 95,991,000 |
Options | ||
Anti-dilutive securities | 801,325,000 | 85,991,000 |
Series A Preferred Stock | ||
Anti-dilutive securities | 4,616,268,000 | 0 |
Warrants | ||
Anti-dilutive securities | 4,033,769,000 | 0 |
STOCK OPTIONS (Details)
STOCK OPTIONS (Details) $ / shares in Units, $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($)$ / sharesshares | |
Share-based Payment Arrangement [Abstract] | |
Number of options outstanding, beginning | shares | 85,991,000 |
Number of options granted | shares | 788,882,000 |
Number of options forfeited | shares | (73,548,000) |
Number of options outstanding, ending | shares | 801,325,000 |
Number of options vested and exercisable | shares | 61,825,000 |
Weighted average exercise price outstanding, beginning | $ .02 |
Weighted average exercise price granted | .02 |
Weighted average exercise price forfeited | .02 |
Weighted average exercise price outstanding, ending | .01 |
Weighted average exercise price vested and exercisable | $ .02 |
Weighted average remaining contractual life, beginning | 1 year 1 month 13 days |
Weighted average remaining contractual life granted | 9 years 5 months 26 days |
Weighted average remaining contractual life, ending | 9 years 4 months 28 days |
Weighted average remaining contractual life vested and exercisable | 4 years 5 months 19 days |
Aggregate intrinsic value outstanding, beginning | $ | $ 0 |
Aggregate intrinsic value granted | $ 0 |
Aggregate intrinsic value forfeited | $ 0 |
Aggregate intrinsic value outstanding, ending | $ | $ 0 |
Aggregate intrinsic value vested and exercisable | $ | $ 0 |
STOCK OPTIONS (Details 1)
STOCK OPTIONS (Details 1) | 12 Months Ended |
Dec. 31, 2019$ / shares | |
Share-based Payment Arrangement [Abstract] | |
Exercise price | $ .0044 |
Contractual term (years) | 5 years 9 months 15 days |
Volatility (annual) | 70.00% |
Risk-free rate | 1.70% |
Dividend yield (per share) | 0.00% |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | |
Operating lease cost | $ 271 |
Variable lease cost | 0 |
Operating lease expense | 271 |
Short-term lease rent expense | 0 |
Total rent expense | $ 271 |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES (Details 1) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | |
Operating cash flows from operating leases | $ 169 |
Weighted-average remaining lease term - operating leases | 3 years 9 months 18 days |
Weighted-average discount rate - operating leases | 12.00% |
COMMITMENTS AND CONTINGENCIES_4
COMMITMENTS AND CONTINGENCIES (Details 2) $ in Thousands | Dec. 31, 2019USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Year Ended December 31, 2020 | $ 600 |
Year Ended December 31, 2021 | 577 |
Year Ended December 31, 2022 | 400 |
Year Ended December 31, 2023 | 275 |
Year Ended December 31, 2024 | 206 |
Total | 2,058 |
Less present value discount | (414) |
Operating lease liabilities | $ 1,644 |
COMMITMENTS AND CONTINGENCIES_5
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating lease liabilities | $ 1,644 | |
Right of use assets | $ 1,623 | $ 0 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred tax asset | ||
Bad Debt | $ 133 | $ 0 |
Inventory | 9 | 0 |
Lease liability | 385 | 0 |
Stock compensation | 349 | 0 |
Transaction costs | 808 | 0 |
Net operaton loss | 698 | 0 |
Derivatives | 268 | 0 |
Total deferred tax assets | 2,650 | 0 |
Deferred income tax liabilities: | ||
ROU assets | (384) | 0 |
Fixed assets | (20) | 0 |
Total deferred income tax liabilities | (404) | 0 |
Net deferred income tax assets | 2,246 | 0 |
Valuation allowance | (2,246) | 0 |
Deferred tax asset, net of allowance | $ 0 | $ 0 |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Statutory federal income tax rate | 21.00% | 0.00% |
Non-taxable income | 15.10% | 0.00% |
State taxes, net of federal tax benefit | 20.60% | 0.00% |
Non-deductible expenses | (1.30%) | 0.00% |
Derivatives | 27.20% | 0.00% |
Change in valuation allowance | (81.30%) | 0.00% |
Income tax provision (benefit) | 1.30% | 0.00% |
INCOME TAXES (Details 2)
INCOME TAXES (Details 2) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Current | ||
Federal Current | $ 0 | $ 0 |
State Current | 0 | 0 |
Total current provision | 0 | 0 |
Deferred | ||
Federal Deferred | 1,331 | 0 |
State Deferred | 443 | 0 |
Total deferred provision | 1,774 | 0 |
Change in valuation allowance | (1,745) | 0 |
Income provision for income taxes | $ 29 | $ 0 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - Federal and State $ in Thousands | Dec. 31, 2019USD ($) |
Net operating loss carry forwards | $ 73,500 |
Unrecorded deferred tax assets | $ 71,000 |