Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | Jul. 06, 2020 | |
Registrant Name | Alpine 4 Technologies Ltd. | |
Registrant CIK | 0001606698 | |
SEC Form | 10-Q | |
Period End date | Mar. 31, 2020 | |
Fiscal Year End | --12-31 | |
Tax Identification Number (TIN) | 46-5482689 | |
Filer Category | Non-accelerated Filer | |
Current with reporting | Yes | |
Shell Company | false | |
Small Business | true | |
Emerging Growth Company | true | |
Ex Transition Period | false | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Entity Incorporation, State or Country Code | DE | |
Entity FIle Number | 000-55205 | |
Entity Interactive data current | Yes | |
Entity Address, Address Line One | 2525 E Arizona Biltmore Circle | |
Entity Address, Address Line Two | Suite 237 | |
Entity Address, City or Town | Phoenix | |
Entity Address, State or Province | AZ | |
Entity Address, Postal Zip Code | 85016 | |
City Area Code | 480 | |
Local Phone Number | 702-2431 | |
Common Class A | ||
Number of common stock shares outstanding | 110,677,860 | |
Common Class B | ||
Number of common stock shares outstanding | 9,023,088 | |
Common Class C | ||
Number of common stock shares outstanding | 11,572,267 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
CURRENT ASSETS: | ||
Cash | $ 257,900 | $ 302,486 |
Accounts receivable | 8,724,234 | 8,731,565 |
Contract assets | 1,033,694 | 667,724 |
Inventory, net | 2,334,727 | 2,401,242 |
Prepaid expenses and other current assets | 121,216 | 269,289 |
Total current assets | 12,471,771 | 12,372,306 |
Property and equipment, net | 19,778,126 | 17,157,845 |
Intangible asset, net | 3,606,447 | 2,774,618 |
Right of use assets, net | 596,816 | 660,032 |
Goodwill | 2,617,082 | 2,517,453 |
Other non-current assets | 326,744 | 319,344 |
TOTAL ASSETS | 39,396,986 | 35,801,598 |
CURRENT LIABILITIES: | ||
Accounts payable | 5,728,045 | 5,148,805 |
Accrued expenses | 2,233,680 | 2,676,651 |
Contract liabilities | 194,279 | 170,040 |
Derivative liabilities | 0 | 2,298,609 |
Deposits | 0 | 12,509 |
Notes payable, current portion | 9,225,062 | 8,724,171 |
Notes payable, related parties, current portion | 350,998 | 341,820 |
Convertible notes payable, current portion, net of discount of $601,059 and $846,833 | 280,084 | 1,110,118 |
Financing lease obligation, current portion | 453,233 | 377,330 |
Operating lease obligation, current portion | 279,233 | 266,623 |
Contingent consideration | 0 | 500,000 |
Total current liabilities | 18,744,614 | 21,626,676 |
Notes payable, net of current portion | 11,304,939 | 9,850,184 |
Convertible notes payable, net of current portion | 2,145,043 | 1,673,688 |
Financing lease obligations, net of current portion | 15,534,744 | 13,696,011 |
Operating lease obligations, net of current portion | 328,566 | 403,931 |
Contingent consideration | 592,000 | 0 |
Deferred tax liability | 521,250 | 521,250 |
TOTAL LIABILITIES | 49,171,156 | 47,771,740 |
STOCKHOLDERS' DEFICIT: | ||
Additional paid-in capital | 21,707,848 | 19,763,883 |
Accumulated deficit | (31,495,140) | (31,745,528) |
Total stockholders' deficit | (9,774,170) | (11,970,142) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | 39,396,986 | 35,801,598 |
Series B Preferred Stock | ||
STOCKHOLDERS' DEFICIT: | ||
Preferred stock, value | 5 | 0 |
Common Class A | ||
STOCKHOLDERS' DEFICIT: | ||
Common shares | 11,057 | 10,007 |
Common Class B | ||
STOCKHOLDERS' DEFICIT: | ||
Common shares | 902 | 500 |
Common Class C | ||
STOCKHOLDERS' DEFICIT: | ||
Common shares | 1,158 | 996 |
Preferred Stock [Member] | ||
STOCKHOLDERS' DEFICIT: | ||
Preferred stock, value | $ 0 | $ 0 |
Consolidated Balance Sheets (_2
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Debt Instrument, Unamortized Discount | $ 601,059 | $ 846,833 |
Preferred Stock [Member] | ||
Preferred Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 5,000,000 | 5,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common Class A | ||
Common Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 |
Common Stock, Shares Authorized | 125,000,000 | 125,000,000 |
Common Stock, Shares, Issued | 110,577,860 | 100,070,161 |
Common Stock, Shares, Outstanding | 110,577,860 | 100,070,161 |
Common Class B | ||
Common Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 |
Common Stock, Shares Authorized | 10,000,000 | 10,000,000 |
Common Stock, Shares, Issued | 9,023,088 | 5,000,000 |
Common Stock, Shares, Outstanding | 9,023,088 | 5,000,000 |
Common Class C | ||
Common Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 |
Common Stock, Shares Authorized | 15,000,000 | 15,000,000 |
Common Stock, Shares, Issued | 11,572,267 | 9,955,200 |
Common Stock, Shares, Outstanding | 11,572,267 | 9,955,200 |
Series B Preferred Stock | ||
Preferred Stock, Par or Stated Value Per Share | $ 1 | $ 1 |
Preferred Stock, Shares Authorized | 100 | 100 |
Preferred Stock, Shares Issued | 5 | 0 |
Preferred Stock, Shares Outstanding | 5 | 0 |
Consolidated Statement of Opera
Consolidated Statement of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Text Block [Abstract] | ||
Revenue | $ 8,835,596 | $ 7,125,989 |
Cost of revenue | 7,075,852 | 5,008,456 |
Gross Profit | 1,759,744 | 2,117,533 |
Operating expenses: | ||
General and administrative expenses | 2,863,389 | 2,466,502 |
Total operating expenses | 2,863,389 | 2,466,502 |
Loss from operations | (1,103,645) | (348,969) |
Other income (expenses) | ||
Interest expense | (1,649,227) | (1,031,630) |
Change in value of derivative liability | 2,298,609 | (107,871) |
Gain on extinguishment of debt | 154,592 | 0 |
Change in fair value of contingent consideration | 500,000 | 0 |
Other income (expense) | 50,059 | 58,132 |
Total other income (expenses) | 1,354,033 | (1,081,369) |
Income (loss) before income tax | 250,388 | (1,430,338) |
Income tax (benefit) | 0 | 0 |
Income (loss) from continuing operations | 250,388 | (1,430,338) |
Discontinued operations: | ||
Loss from operations of discontinued operations | 0 | (95,179) |
Gain on disposition of discontinued operations | 0 | 2,515,028 |
Total discontinued operations | 0 | 2,419,849 |
Net income | $ 250,388 | $ 989,511 |
Weighted average shares outstanding : | ||
Basic | 127,207,693 | 30,782,076 |
Diluted | 138,036,023 | 30,782,076 |
Basic Income (loss) per share | ||
Continuing operations | $ 0 | $ (0.05) |
Discontinued operations | 0 | 0.08 |
Basic Income (loss) per share | 0 | 0.03 |
Diluted income (loss) per share | ||
Continuing operations | (0.01) | (0.05) |
Discontinued operations | 0 | 0.08 |
Earnings Per Share | $ (0.01) | $ 0.03 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Deficit (Unaudited) - USD ($) | Series B Preferred Stock | Common Stock Class A | Common Stock Class B | Common Stock Class C | Additional Paid-In Capital | Accumulated Deficit | Total |
Stockholders' Equity Attributable to Parent, Beginning Balance at Dec. 31, 2018 | $ 2,657 | $ 500 | $ 17,018,509 | $ (28,520,094) | $ (11,498,428) | ||
Shares, Outstanding, Beginning Balance at Dec. 31, 2018 | 26,567,410 | 5,000,000 | |||||
Issuance of shares of common stock for convertible note payable and accrued interest | $ 167 | 26,421 | 26,588 | ||||
Issuance of shares of common stock for convertible note payable and accrued interest, shares | 1,670,000 | ||||||
Derivative liability resolution | 10,993 | 10,993 | |||||
Share-based compensation expense | 19,341 | 19,341 | |||||
Net loss | 989,511 | 989,511 | |||||
Stockholders' Equity Attributable to Parent, Ending Balance at Mar. 31, 2019 | $ 2,824 | $ 500 | 17,075,264 | (27,530,583) | (10,451,995) | ||
Shares, Outstanding, Ending Balance at Mar. 31, 2019 | 28,237,410 | 5,000,000 | |||||
Stockholders' Equity Attributable to Parent, Beginning Balance at Dec. 31, 2019 | $ 10,007 | $ 500 | $ 996 | 19,763,883 | (31,745,528) | (11,970,142) | |
Shares, Outstanding, Beginning Balance at Dec. 31, 2019 | 100,070,161 | 5,000,000 | 9,955,200 | ||||
Issuance of shares of common stock for cash | $ 394 | 249,606 | 250,000 | ||||
Issuance of shares of common stock for cash, shares | 3,941,753 | ||||||
Issuance of shares of common stock for convertible note payable and accrued interest | $ 464 | 696,868 | 697,332 | ||||
Issuance of shares of common stock for convertible note payable and accrued interest, shares | 4,648,879 | ||||||
Issuance of shares of common stock for debt settlement | $ 162 | $ 162 | 330,204 | 330,528 | |||
Issuance of shares of common stock for debt settlement, shares | 1,617,067 | 1,617,067 | |||||
Issuance of shares of common stock for penalty interest | $ 30 | 44,670 | 44,700 | ||||
Issuance of shares of common stock for penalty interest, shares | 300,000 | ||||||
Issuance of shares of common stock for settlement of unpaid salaries | $ 402 | 603,061 | 603,463 | ||||
Issuance of shares of common stock for settlement of unpaid salaries, shares | 4,023,088 | ||||||
Issuance of shares of series B preferred stock for services | $ 5 | 5 | |||||
Issuance of shares of series B preferred stock for services, shares | 5 | ||||||
Share-based compensation expense | 19,556 | 19,561 | |||||
Net loss | 909,271 | 250,388 | |||||
Stockholders' Equity Attributable to Parent, Ending Balance at Mar. 31, 2020 | $ 5 | $ 11,057 | $ 902 | $ 1,158 | $ 21,707,848 | $ (30,836,257) | $ (9,774,170) |
Shares, Outstanding, Ending Balance at Mar. 31, 2020 | 5 | 110,577,860 | 9,023,088 | 11,572,267 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Net Cash Provided by (Used in) Operating Activities | ||
Net income | $ 250,388 | $ 989,511 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation | 78,171 | 234,444 |
Amortization | 406,091 | 18,853 |
Gain loss on extinguishment of debt | (154,592) | 0 |
Change in fair value of contingent consideration | (500,000) | 0 |
Change in value of derivative liabilities | (2,298,609) | 107,871 |
Stock issued for penalties interest | 44,700 | 0 |
Employee stock compensation | 19,561 | 19,341 |
Amortization of debt discounts | 245,774 | 397,550 |
Gain on disposal of discontinued operations | 0 | (2,515,028) |
Noncash lease expense | 63,216 | 43,686 |
Change in operating assets and liabilities: | ||
Accounts receivable | 1,950,811 | (815,437) |
Inventory | 75,590 | (520,361) |
Contract assets | (365,970) | 0 |
Prepaid expenses and other assets | 140,673 | 160,834 |
Accounts payable | 239,089 | 56,824 |
Accrued expenses | 64,767 | 860,066 |
Contract liabilities | 24,239 | 0 |
Operating lease liability | (62,755) | (43,686) |
Deposits | (12,509) | 0 |
Deferred revenue | 0 | (20,367) |
Net cash used in operating activities | 208,635 | (1,025,899) |
Net Cash Provided by (Used in) Investing Activities | ||
Capital expenditures | (68,182) | (20,417) |
Cash paid for acquisitions, net of cash acquired | (2,033,355) | (1,967,606) |
Net cash used in investing activities | (2,101,537) | (1,988,023) |
Net Cash Provided by (Used in) Financing Activities | ||
Proceeds from the sale of common stock | 250,000 | 0 |
Proceeds from issuances of notes payable, related party | 19,000 | 0 |
Proceeds from issuances of notes payable, non-related party | 748,710 | 537,500 |
Proceeds from issuances of convertible notes payable | 0 | 103,000 |
Proceeds from financing lease | 2,000,000 | 3,267,000 |
Repayments of notes payable, related party | (9,822) | 0 |
Repayments of notes payable, non-related party | (545,646) | (1,214,257) |
Repayments of convertible notes payable | (73,902) | (441,699) |
Proceeds from (repayment of) line of credit, net | (454,660) | 931,224 |
Cash paid on financing lease obligations | (85,364) | (186,323) |
Net cash provided by financing activities | 1,848,316 | 2,996,445 |
NET DECREASE IN CASH AND RESTRICTED CASH | (44,586) | (17,477) |
CASH AND RESTRICTED CASH, BEGINNING BALANCE | 302,486 | 414,516 |
CASH AND RESTRICTED CASH, ENDING BALANCE | 257,900 | 397,039 |
Supplemental Cash Flow Information | ||
Cash paid for Interest Paid | 1,114,034 | 1,277,225 |
Cash paid for Income Taxes Paid | 0 | 0 |
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES: | ||
Common stock issued for convertible note and accrued interest | 697,332 | 26,588 |
Common stock issued for debt settlement | 330,528 | 0 |
Common stock issued to settle unpaid salaries | 603,463 | 0 |
Issuance of note payable for acquisitions | 2,300,000 | 3,450,000 |
Penalty interest added to debt | 15,000 | 0 |
Debt discount due to derivative liabilities | 0 | 103,000 |
Release of derivative liability | 0 | 10,993 |
ROU asset and operating lease obligation recognized upon adoption of Topic 842 | $ 0 | $ 676,944 |
Note 1 - Organization and Basis
Note 1 - Organization and Basis of Presentation | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure Text Block [Abstract] | |
Note 1 - Organization and Basis of Presentation | Note 1 – Organization and Basis of Presentation The unaudited financial statements were prepared by Alpine 4 Technologies Ltd. (‘we”, “our”, the "Company"), pursuant to the rules and regulations of the Securities Exchange Commission ("SEC"). The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly present the operating results for the respective periods. Certain information and footnote disclosures normally present in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") were omitted pursuant to such rules and regulations. These financial statements should be read in conjunction with the audited financial statements and footnotes included in the Company's Annual Report on Form 10-K filed with the SEC on June 1, 2020. The results for the three months ended March 31, 2020, are not necessarily indicative of the results to be expected for the year ending December 31, 2020. Description of Business The Company was incorporated under the laws of the State of Delaware on April 22, 2014. The Company was formed to serve as a vehicle to affect an asset acquisition, merger, exchange of capital stock, or other business combination with a domestic or foreign business. Effective January 1, 2019, the Company purchased Morris Sheet Metal Corp., an Indiana corporation, JTD Spiral, Inc. a wholly owned subsidiary of MSM, an Indiana corporation, Morris Enterprises LLC, an Indiana limited liability company and Morris Transportation LLC, an Indiana limited liability company (collectively “Morris”) (see Note 9). Effective November 6, 2019, the Company purchased Deluxe Sheet Metal, Inc., an Indiana corporation, DSM Holding, LLC, an Indiana limited liability company, and Lonewolf Enterprises, LLC, an Indiana limited liability company (collectively “Deluxe”) (see Note 9). Effective February 21, 2020, the Company purchased Excel Fabrication, LLC., an Idaho Limited Liability Company (“Excel”) (See Note 9). The Company is a technology holding company owning seven companies (ALTIA, LLC; Quality Circuit Assembly, Inc. ("QCA"); American Precision Fabricators, Inc., an Arkansas corporation (“APF”), Morris, Deluxe and Excel. |
Note 2 - Summary of Significant
Note 2 - Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure Text Block [Abstract] | |
Note 2 - Summary of Significant Accounting Policies | Note 2 - Summary of Significant Accounting Policies Principles of consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries as of March 31, 2020, and December 31, 2019. Significant intercompany balances and transactions have been eliminated. Basis of presentation The accompanying financial statements present the balance sheets, statements of operations, stockholders' deficit and cash flows of the Company. The financial statements have been prepared in accordance with U.S. GAAP. Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. These estimates and judgments are based on historical information, information that is currently available to the Company and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results could differ from those estimates. The ultimate impact from COVID-19 on the Company’s operations and financial results during 2020 will depend on, among other things, the ultimate severity and scope of the pandemic, the pace at which governmental and private travel restrictions and public concerns about public gatherings will ease, the rate at which historically large increases in unemployment rates will decrease, if at all, and whether, and the speed with which the economy recovers. We are not able to fully quantify the impact that these factors will have on our financial results during 2020 and beyond, but expect developments related to COVID-19 to materially affect the Company’s financial performance in 2020. Reclassification Certain prior year amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on net earnings and financial position. Advertising Advertising costs are expensed when incurred. All advertising takes place at the time of expense. We have no long-term contracts for advertising. Advertising expense for all periods presented were not significant. Cash Cash and cash equivalents consist of cash and short-term investments with original maturities of less than 90 days. As of March 31, 2020, and December 31, 2019, the Company had no cash equivalents. The following table provides a reconciliation of cash and restricted cash reported within the accompanying consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows. March 31, March 31, 2020 2019 Cash $ 257,900 $ 189,728 Restricted cash included in other non-current assets - 207,311 Total cash and restricted cash shown in statement of cash flows $ 257,900 $ 397,039 Major Customers The Company had two customers that made up 15% and 11%, respectively, of accounts receivable as of March 31, 2020. The Company had one customer that made up 7%, respectively, of accounts receivable as of December 31, 2019. For the three months ended March 31, 2020, the Company had two customers that made up 14% and 11%, respectively, of total revenues. For the three months ended March 31, 2019, the Company had two customers that made up 24% and 10%, respectively, of total revenues. Accounts Receivable The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Reserves are recorded primarily on a specific identification basis. As of March 31, 2020, and December 31, 2019, allowance for bad debt was $0 and $0, respectively. Inventory Inventory for all subsidiaries, except Deluxe, is valued at weighted average and first-in; first-out basis for Deluxe. Management compares the cost of inventory with its net realizable value and an allowance is made to write down inventory to net realizable value, if lower. Inventory is segregated into three areas, raw materials, work-in-process and finished goods. Inventory, net at March 31, 2020 and December 31, 2019 consists of: March 31, December 31, 2020 2019 Raw materials $ 1,707,405 $ 1,791,733 WIP 232,616 576,196 Finished goods 394,706 59,972 2,334,727 2,427,901 Reserve - (26,659) Inventory, net $ 2,334,727 $ 2,401,242 Property and Equipment Property and equipment are carried at cost less depreciation. Depreciation and amortization are provided principally on the straight-line method over the estimated useful lives of the assets, which range from five years to 39 years as follows: Automobiles & Trucks 5 to 7 years Buildings and improvements 15 to 39 years Leasehold Improvements 15 years or time remaining on lease (whichever is shorter) Machinery and equipment 5 to 7 years Maintenance and repair costs are charged against income as incurred. Significant improvements or betterments are capitalized and depreciated over the estimated life of the asset. Property and equipment consisted of the following as of March 31, 2020 and December 31, 2019: March 31, December 31, 2020 2019 Automobiles and trucks $ 911,114 $ 563,614 Machinery and equipment 4,484,652 3,792,964 Office furniture and fixtures 119,526 119,526 Buildings and improvements 16,167,000 14,167,000 Leasehold improvements - 12,816 Total Property and equipment 21,682,292 18,655,920 Less: Accumulated depreciation (1,904,166) (1,498,075) Property and equipment, net $ 19,778,126 $ 17,157,845 During the year ended December 31, 2019, the Company terminated its lease agreement for the building it leased in San Diego, California which removed $3,895,000 and $294,525 from building and leasehold improvements, respectively. The lease of the San Diego building was accounted for as a capital lease. In addition, as part of the termination, the Company issued the landlord a note payable in the amount of $2,740,000. (See Note 5) Purchased Intangibles and Other Long-Lived Assets The Company amortizes intangible assets with finite lives over their estimated useful lives, which range between three and fifteen years as follows: Customer lists 3 to 15 years Non-compete agreements 15 years Software development 5 years Intangible assets consisted of the following as of March 31, 2020 and December 31, 2019: March 31, December 31, 2020 2019 Software $ 278,474 $ 278,474 Noncompete 100,000 100,000 Customer lists 3,771,187 2,861,187 Total Intangible assets 4,149,661 3,239,661 Less: Accumulated amortization (543,214) (465,043) Intangibles, net $ 3,606,447 $ 2,774,618 Expected amortization expense of intangible assets over the next 5 years and thereafter is as follows: Twelve Months Ending March 31, 2021 $ 589,960 2022 589,960 2023 548,473 2024 253,028 2025 253,028 Thereafter 1,371,998 Total $ 3,606,447 Other long-term assets consisted of the following as of March 31, 2020 and December 31, 2019: March 31, December 31, 2020 2019 Deposits $ 293,327 $ 285,927 Other 33,417 33,417 $ 326,744 $ 319,344 Impairment of Long-Lived Assets The Company accounts for long-lived assets in accordance with the provisions of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 360, Accounting for the Impairment of Long-Lived Assets Goodwill In financial reporting, goodwill is not amortized, but is tested for impairment annually or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Events that result in an impairment review include significant changes in the business climate, declines in our operating results, or an expectation that the carrying amount may not be recoverable. We assess potential impairment by considering present economic conditions as well as future expectations. All assessments of goodwill impairment are conducted at the individual reporting unit level. As of March 31, 2020, and December 31, 2019, the reporting units with goodwill were QCA, APF, Morris and Excel. The Company used qualitative factors according to ASC 350-20-35-3 to determine whether it is more likely than not that the fair value of goodwill is less than its carrying amount. Based on the qualitative criteria the Company believes there not to be any triggers for potential impairment of goodwill and therefore the Company has recorded no impairment of goodwill in any period presented. Fair Value Measurement The Company's financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, convertible notes, notes and line of credit. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements. For additional information, please see Note 11 – Derivative Liabilities and Fair Value Measurements. Revenue Recognition On January 1, 2018, the Company adopted ASC Topic 606, Revenue from Contracts with Customers The following is a summary of the revenue recognition policy for each of the Company’s subsidiaries. Revenue is recognized under Topic 606 · executed contracts with the Company’s customers that it believes are legally enforceable; · identification of performance obligations in the respective contract; · determination of the transaction price for each performance obligation in the respective contract; · allocation the transaction price to each performance obligation; and · recognition of revenue only when the Company satisfies each performance obligation. The following is a summary of the revenue recognition policy for each of the Company’s subsidiaries. ALTIA Revenues recorded by ALTIA relate primarily to the Company’s 6th Sense Auto service. The Company accounts for its revenue by deferring the total contract amount and recognizing the amounts over the monthly subscription period, ranging from 12 to 36 months. QCA and Excel Fabrication QCA and Excel Fabrication are contract manufacturers and recognize revenue when the products have been built and control has been transferred to the customer. If a deposit for product or service is received prior to completion, the payment is recorded to deferred revenue until such point the product or services meets our revenue recognition policy. Management assesses the materiality and likelihood of warranty work and returns, and records reserves as needed. For all periods presented, management determined that the warranty and returns would be immaterial. APF APF is a contract manufacturer and recognizes revenue when the products have been built and control has been transferred to the customer. If a deposit for product or service is received prior to completion, the payment is recorded to deferred revenue until such point the product or services meets our revenue recognition policy. Management assesses the materiality and likelihood of warranty work and returns, and records reserves as needed. For all periods presented, management determined that the warranty and returns would be immaterial. Morris Sheet Metal and Deluxe Sheet Metal For our construction contracts, revenue is generally recognized over time as our performance creates or enhances an asset that the customer controls as it is created or enhanced. Our fixed price construction projects generally use a cost-to-cost input method to measure our progress towards complete satisfaction of the performance obligation as we believe it best depicts the transfer of control to the customer which occurs as we incur costs on our contracts. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. For certain of our revenue streams, that are performed under time and materials contracts, our progress towards complete satisfaction of such performance obligations is measured using an output method as the customer receives and consumes the benefits of our performance completed to date. Due to uncertainties inherent in the estimation process, it is possible that estimates of costs to complete a performance obligation will be revised in the near-term. For those performance obligations for which revenue is recognized using a cost-to-cost input method, changes in total estimated costs, and related progress towards complete satisfaction of the performance obligation, are recognized on a cumulative catch-up basis in the period in which the revisions to the estimates are made. When the current estimate of total costs for a performance obligation indicate a loss, a provision for the entire estimated loss on the unsatisfied performance obligation is made in the period in which the loss becomes evident. Contract Assets and Contract Liabilities The timing of revenue recognition may differ from the timing of invoicing to customers. Contract assets include unbilled amounts from our construction projects when revenues recognized under the cost-to-cost measure of progress exceed the amounts invoiced to our customers, as the amounts cannot be billed under the terms of our contracts. Such amounts are recoverable from our customers based upon various measures of performance, including achievement of certain milestones, completion of specified units or completion of a contract. In addition, many of our time and materials arrangements, are billed pursuant to contract terms that are standard within the industry, resulting in contract assets being recorded, as revenue is recognized in advance of billings. Our contract assets do not include capitalized costs to obtain and fulfill a contract. Contract assets are generally classified as current within the consolidated balance sheets. Contract liabilities from our construction contracts arise when amounts invoiced to our customers exceed revenues recognized under the cost-to-cost measure of progress. Contract liabilities additionally include advanced payments from our customers on certain contracts. Contract liabilities decrease as we recognize revenue from the satisfaction of the related performance obligation. Contract Retentions As of March 31, 2020, and December 31, 2019, accounts receivable included retainage billed under terms of our contracts. These retainage amounts represent amounts which have been contractually invoiced to customers where payments have been partially withheld pending the achievement of certain milestones, satisfaction of other contractual conditions or completion of the project. Earnings (loss) per share Basic earnings (loss) per common share is computed by dividing net income (loss) available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per common share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if potentially dilutive securities had been issued. The only potentially dilutive securities outstanding during the periods presented were the convertible debt and options. The following table illustrates the computation of basic and diluted EPS for the three months ended March 31, 2020 and 2019: For the Three Months Ended March 31, 2020 For the Three Months Ended March 31, 2019 Net Income (Loss) Shares Per Share Amount Net Income (Loss) Shares Per Share Amount Basic EPS Income (loss) available to stockholders $ 250,388 127,207,693 $ 0.00 $ 989,511 30,782,076 $ 0.03 Effect of Dilutive Securities Convertible debt and options (1,974,908) 10,828,330 - - - - Dilute EPS Income (loss) available to stockholders plus assumed conversions $ (1,724,520) 138,036,023 $ (0.01) $ 989,511 30,782,076 $ 0.03 Stock-based compensation The Company accounts for equity instruments issued in exchange for the receipt of goods or services in accordance with ASC 718-10, Compensation – Stock Compensation Income taxes The Company records income taxes under the asset and liability method, whereby deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and attributable to operating loss and tax credit carry forwards. Accounting standards regarding income taxes requires a reduction of the carrying amounts of deferred tax assets by a valuation allowance, if based on the available evidence, it is more likely than not that such assets will not be realized. Accordingly, the need to establish valuation allowances for deferred tax assets is assessed at each reporting period based on a more-likely-than-not realization threshold. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carry forward periods, the Company's experience with operating loss and tax credit carry forwards not expiring unused, and tax planning alternatives. The Company recorded valuation allowances on the net deferred tax assets. Management will reassess the realization of deferred tax assets based on the accounting standards for income taxes each reporting period. To the extent that the financial results of operations improve, and it becomes more likely than not that the deferred tax assets are realizable, the Company will be able to reduce the valuation allowance. Significant judgment is required in evaluating the Company's tax positions and determining its provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. Accounting standards regarding uncertainty in income taxes provides a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50% likely, based solely on the technical merits, of being sustained on examinations. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments, and which may not accurately anticipate actual outcomes. Embedded Conversion Features The Company evaluates embedded conversion features within convertible debt under ASC 815 Derivatives and Hedging Debt with Conversion and Other Options Related Party Disclosure ASC 850, Related Party Disclosures Recent Accounting Pronouncements In January 2017, the FASB issued ASU 2017-04, Intangibles Goodwill and Other (Topic 350) Simplifying the Test for Goodwill Impairment Intangibles - Goodwill and Other In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes which amends ASC 740 Income Taxes Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future financial statements. |
Note 3 - Going Concern
Note 3 - Going Concern | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure Text Block [Abstract] | |
Note 3 - Going Concern | Note 3 – Going Concern The accompanying financial statements have been prepared on a going concern basis. The working capital of the Company is currently negative and causes doubt as to the ability of the Company to continue. The Company requires capital for its operational and marketing activities. The Company's ability to raise additional capital through the future issuances of common stock is unknown. The obtainment of additional financing, the successful development of the Company's plan of operations, and its ultimate transition to the attainment of profitable operations are necessary for the Company to continue operations. The ability to successfully resolve these factors raise substantial doubt about the Company's ability to continue as a going concern. The financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties. In order to mitigate the risk related with the going concern uncertainty, the Company has a three-fold plan to resolve these risks. First, the acquisitions of QCA, APF, Morris, Deluxe and Excel have allowed for an increased level of cash flow to the Company. Second, the Company is considering other potential acquisition targets that, like QCA, Morris, Deluxe and Excel should increase income and cash flow to the Company. Third, the Company plans to issue additional shares of common stock for cash and services during the next 12 months and has engaged professional service firms to provide advisory services in connection with that capital raise. |
Note 4 - Leases
Note 4 - Leases | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure Text Block [Abstract] | |
Note 4 - Leases | Note 4 – Leases The Company determines whether a contract is or contains a lease at inception of the contract and whether that lease meets the classification criteria of a finance or operating lease. When available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, most of the Company’s leases do not provide a readily determinable implicit rate. Therefore, the Company must discount lease payments based on an estimate of its incremental borrowing rate. As of March 31, 2020, the future minimum financing and operating lease payments, net of amortization of debt issuance costs, were as follows: Finance Operating Twelve Months Ending March 31, Leases Leases 2021 $ 1,737,720 $ 351,847 2022 1,763,064 286,847 2023 1,795,633 70,087 2024 1,797,556 5,850 2025 1,808,083 - Thereafter 18,884,602 - Total payments 27,786,658 714,631 Less: imputed interest (11,798,681) (106,832) Total obligation 15,987,977 607,799 Less: current portion (453,233) (279,233) Non-current capital leases obligations $ 15,534,744 $ 328,566 Finance Leases On April 5, 2018, the Company acquired APF. In order to fund a portion of the acquisition price, the Company simultaneously entered into a sale leaseback transaction with a third-party lender whereby the building acquired from APF was sold for $1,900,000, and leased back to the company for a period of 15 years at a monthly rate of $15,833, subject to an annual increase of 2% throughout the term of the lease. The Company had no gain or loss resulting from the sale of the property, and the resulting lease qualifies as a capital lease. As a result, the Company has capitalized the cost of the building and the resulting capital lease obligation liability of $1,900,000. The payments related to this lease are reflected in the table above. On January 1, 2019, the Company acquired Morris. In order to fund a portion of the acquisition price, the Company simultaneously entered into a sale leaseback transaction with a third-party lender whereby the building acquired from Morris was sold for $3,267,000, and leased back to the company for a period of 15 years at a monthly rate of $27,500, subject to an annual increase of 2% throughout the term of the lease. The transaction did not qualify as a sale and leaseback transaction under Topic 842 and as such was accounted for as a financing lease. The payments related to this lease are reflected in the table above. On November 6, 2019, the Company acquired Deluxe. In order to fund a portion of the acquisition price, the Company simultaneously entered into a sale leaseback transaction with a third-party lender whereby the building acquired from Deluxe was sold for $9,000,000, and leased back to the company for a period of 15 years at a monthly rate of $75,000, subject to an annual increase of 2.5% throughout the term of the lease. The transaction did not qualify as a sale and leaseback transaction under Topic 842 and as such was accounted for as a financing lease. The payments related to this lease are reflected in the table above. On February 21, 2020, the Company acquired Excel. In order to fund a portion of the acquisition price, the Company simultaneously entered into a sale leaseback transaction with a third-party lender whereby the building acquired from Excel was sold for $2,000,000, and leased back to the Company for a period of 15 years at a monthly rate of $18,700 for the first five years, subject to annual increases throughout the term of the lease. The transaction did not qualify as a sale and leaseback transaction under Topic 842 and as such was accounted for as a financing lease. The payments related to this lease are reflected in the table above. Operating Leases The table below presents the lease related assets and liabilities recorded on the Company’s consolidated balance sheets as of March 31, 2020 and December 31, 2019: March 31 December 31, Classification on Balance Sheet 2020 2019 Assets Operating lease assets Operating lease right of use assets $ 596,816 $ 660,032 Total lease assets $ 596,816 $ 660,032 Liabilities Current liabilities Operating lease liability Current operating lease liability $ 279,233 $ 266,623 Noncurrent liabilities Operating lease liability Long-term operating lease liability 328,566 403,931 Total lease liability $ 607,799 $ 670,554 The lease expense for the three months ended March 31, 2020 was $87,584. The cash paid under operating leases during the three months ended March 31, 2020 was $87,123. At March 31, 2020, the weighted average remaining lease terms were 2.15 years and the weighted average discount rate was 15%. |
Note 5 - Notes Payable
Note 5 - Notes Payable | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure Text Block [Abstract] | |
Note 5 - Notes Payable | Note 5 – Notes Payable In May 2018, APF secured a line of credit with Crestmark, providing for borrowings up to $1,000,000 at a variable interest rate, collateralized by APF’s outstanding accounts receivable. In February 2019 the Company moved the Crestmark line of credit to FSW with a variable interest and collateralized by APF’s accounts receivable. In January 2020 the Company received a default notice from Crestmark regarding noncompliance with certain loan covenants, including but not limited to, QCA’s failure to maintain a tangible net worth as contained in the loan agreement. QCA’s credit line with Crestmark totaled $2,800,000 and was restructured from an ABL line of credit to a ledger line of credit. In addition, a minimum interest of 7.75% interest was imposed; an exit fee of 1% through January 31, 2021 and the financial covenant replaced with a requirement for QCA to maintain a free cash flow of at least $1.00 beginning with QCA’s financial statements as of January 31, 2020. The CEO has also validity guaranteed the $2.8 million line of credit with Crestmark. In addition with the acquisitions of Morris, Deluxe and Excel, the Company secured four lines of credit with Advanced Energy Capital for borrowings up to $6,250,000 at variable interest rates, collateralized by their respective accounts receivable. On February 22, 2018, the Company issued a $3,000,000 note payable under the Amended and Restated Secured Promissory Note with the seller of VWES. The note is secured by the assets of VWES and bears interest at 7% per annum and is due in semi-annual payments of $150,000 commencing on June 1, 2018, through June 1, 2020. The remaining principal and accrued interest is due on the 3 year anniversary. The Company is not current on its payments on the note. The balance as of March 31, 2020 is $2,910,000. On April 5, 2018, the Company issued two secured promissory notes in the aggregate principal amount of $1,950,000 (“Secured APF Notes”) as part of the consideration for the purchase of APF. The Secured APF Notes are secured by the equipment, customer accounts and intellectual property of the Company, and all of the products and proceeds from any of the assets of APF. The Secured APF Notes bear interest at 4.25% per annum and have aggregate monthly payments of $19,975 for the first 23 months, with a balloon payment due in April 2020 for the remaining principal and interest outstanding. The note with an outstanding balance as of March 31, 2020 of approximately $1.09 million was amended subsequent to March 31, 2020. (SeeNote 13). The Company is currently negotiating the extension of the other note with an outstanding balance of approximately $562,000 with the lender. On May 3, 2018, the Company entered into an equipment note with a lender for total borrowings of $630,750, which is secured by the equipment of APF. The note bears interest at 10.25% per annum and is payable in weekly payments of $3,795 commencing on the loan date through May 4, 2022. In connection with the Morris acquisition in January 2019, the Company issued three subordinated secured promissory notes for an aggregate of $3,100,000. The notes bear interest at 4.25% per annum, require monthly payment for the first 35 months of $31,755 with any remaining principal and accrued interest due on the 3 year-anniversary. The Company also issued three supplemental notes payable for an aggregate of $350,000. The notes bear interest at 4.25% per annum and are due on the 1-year anniversary. The supplemental notes were amended in May 2020. (See Note 13). In connection with the Deluxe acquisition in November 2019, the Company issued two subordinated secured promissory notes to the seller. The first note for $1,900,000 bears interest at 4.25% per annum, require monthly payment for the first 35 months of $19,463 with any remaining principal and accrued interest due on the 3 year-anniversary. The second note for $496,343 bears interest at 8.75% and is due in January 2020. In January 2020, the Company entered into a debt conversion agreement with the seller which fully settled the second note. (See Note 8) In connection with the Excel acquisition in February 2020, the Company issued a subordinated secured promissory note to the seller. The note for $2,300,000 bears interest at 4.25% per annum, requires monthly interest only payments for 48 months and is due February 2024. There was unpaid cash consideration of $392,362 as of March 31, 2020, which is included in notes payable as of March 31, 2020. In November 2019, in connection with the termination of the lease for the San Diego building, the Company issued the landlord a note payable. The note is for $2,740,000, bears interest at 7% with monthly payments starting at $15,984 and is due in November 2034. In October and November 2019 the Company entered into two merchant agreements which are secured by rights to customer receipts until the loans have been repaid in full and subject to interest rates ranging from 13% to 20%. Under the terms of these agreements, the Company will receive the disclosed purchase price of $600,000 and $300,000, respectively and agreed to repay the disclosed purchased amount of $839,400 and $420,000, respectively. The merchant lenders collect the purchase amounts at the disclosed weekly payment rates of $29,978 and $11,667 over a period of 28 weeks and 36 weeks, respectively. These loans were personally guaranteed by the CEO and COO. In January 2020, the Company entered into a $200,000 term note with Celtic Capital, Inc. The note is subject to annual interest which is the greater of 13% or 11% plus the 3 month LIBOR rate and requires monthly payments of $3,333 over a period of 60 months. The note is secured by certain equipment of Deluxe. In connection with the Excel acquisition, the Company entered into a $425,000 term note with Celtic Capital, Inc. The note is subject to annual interest which is the greater of 13% or 11% plus the 3 month LIBOR rate and requires monthly payments of $7,083 over a period of 60 months. The note is secured by certain equipment of Excel. The Company issued a $48,000 note in January 2020 to a private investor with an interest rate of 15% with a due date of 1 year. In October 2019 Morris entered into an equipment finance note for $107,997 with an interest rate of 9.4% for 48 monthly payments with Bryn Mawr Equipment Finance Inc. March 31, December 31, 2020 2019 Lines of credit, current portion $ 3,361,446 $ 3,816,103 Equipment loans, current portion 310,921 368,011 Term notes, current portion 5,122,695 3,849,273 Merchant loans 430,000 690,784 Total current 9,225,062 8,724,171 Long-term portion 11,304,939 9,850,184 Total notes payable $ 20,530,001 $ 18,574,355 $755,000 worth of term loans are past due and are currently being negotiated with the lenders. Future scheduled maturities of outstanding notes payable are as follows: Twelve Months Ending March 31, 2021 $ 9,225,062 2022 1,276,038 2023 4,896,304 2024 2,537,129 2025 196,832 Thereafter 2,398,636 Total $ 20,530,001 |
Note 6 - Notes Payable, Related
Note 6 - Notes Payable, Related Parties | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure Text Block [Abstract] | |
Note 6 - Notes Payable, Related Parties | Note 6 – Notes Payable, Related Parties At March 31, 2020 and December 31, 2019, notes payable due to related parties consisted of the following: March 31, December 31, 2020 2019 Notes payable; non-interest bearing; due upon demand; unsecured $ 4,500 $ 4,500 Note payable; bearing interest at 8% per annum; due June 30, 2017; unsecured 7,500 7,500 Series of notes payable, bearing interest at rates from 10% to 20% per annum, with maturity dates from April 2018 to July 2020, unsecured 338,998 329,820 Total notes payable - related parties $ 350,998 $ 341,820 The above notes which are in default as of March 31, 2020, except for one note due in July 2020 with an outstanding balance of approximately $105,000, were due on demand by the lenders as of the date of this Report. |
Note 7 - Convertible Notes Paya
Note 7 - Convertible Notes Payable | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure Text Block [Abstract] | |
Note 7 - Convertible Notes Payable | Note 7 – Convertible Notes Payable At March 31, 2020 and December 31, 2019, convertible notes payable consisted of the following: March 31, December 31, 2020 2019 Series of convertible notes payable issued prior to December 31, 2016, bearing interest at rates of 8% - 20% per annum, with due dates ranging from April 2016 through October 2017. The outstanding principal and interest balances are convertible into shares of Class A common stock at the option of the debt holder at exercise prices ranging from $0.10 to $1 per share. $ 25,000 $ 25,000 Secured convertible notes payable issued to the sellers of QCA on April 1, 2016 for an aggregate of $2,000,000, bearing interest at 5% per annum, due in monthly payments starting on July 1, 2016 and due in full on July 1, 2019. On August 6 and 11, 2019, the Company extended the due date of the two notes to December 31, 2020 and December 31, 2022, respectively. The outstanding principal and interest balances are convertible after 12 months into Class A common stock at the option of the debt holder at a conversion price of $1 per share. 1,271,186 1,324,588 Convertible note payable issued in January 2017, bearing interest at rates of 10% per annum, and due in January 2018. The outstanding principal and interest balances are convertible into shares of Class A common stock at the option of the debt holder at an exercise price of $1 per share. 10,000 10,000 On April 5, 2018, the Company entered into convertible promissory notes for an aggregate principal amount of $450,000 as part of the consideration for the acquisition of APF. The convertible notes are due in full in 36 months and bear interest at 4.25% per annum, and are convertible into shares of Class A common stock after 6 months from the issuance date at a rate of $1 per share. 450,000 450,000 On April 9, 2018, the Company entered into a variable convertible note for $124,199 with net proceeds of $115,000. The note is due January 9, 2019 and bears interest at 12% per annum. After 180 days, the note is convertible into shares of the Company's Class A common stock at a discount of 35% to the average of the three lowest trading closing prices of the stock for ten days prior to conversion. In connection with this variable convertible note, the Company issued 76,670 shares of its Class A common stock, along with warrants to purchase 153,340 shares of Class A common stock at an exercise price of $1 per share which are immediately vested and have a 3 years contractual life. The value of the common stock and warrants have been recorded as a discount. - 500 On August 30, 2018, the Company entered into a variable convertible note for $337,500 with net proceeds of $303,750. The note is due February 28, 2019 and bears interest at 10% per annum. The note is immediately convertible into shares of the Company's Class A common stock at a discount of 42% to the average of the two lowest trading closing prices of the stock for ten days prior to conversion. This note was amended in November 2019 to affect a floor in the conversion price of $0.15 per share. The note was fully converted as of March 31, 2020. - 187,681 On October 23, 2018, the Company entered into a variable convertible note for $220,000 with net proceeds of $198,000. The note is due December 14, 2018 and bears interest at 10% per annum. The note is immediately convertible into shares of the Company's Class A common stock at a discount of 42% to the average of the two lowest trading closing prices of the stock for ten days prior to conversion. This note was amended in November 2019 to affect a floor in the conversion price of $0.15 per share. The note was fully converted as of March 31, 2020. - 115,000 On December 7, 2018, the Company entered into a variable convertible note for $130,000 with net proceeds of $122,200. The note is due September 7, 2019 and bears interest at 12% per annum. The note is immediately convertible into shares of the Company's Class A common stock at a discount of 40% to the lowest trading closing prices of the stock for 20 days prior to conversion. This note was amended in November 2019 to increase the principal amount by $180,000 due to penalty interest; increased the interest to 15% and affect a floor in the conversion price of $0.15 per share. 105,000 195,000 On November 6, 2019, the Company issued a convertible note for $600,000 with net proceeds of $570,000. The note is due November 6, 2020 and bears interest at 15% per annum. The note is immediately convertible into shares of the Company's Class A common stock at a fixed price of $0.15 per share. 580,000 600,000 On November 6, 2019, the Company issued a convertible note for $350,000. The note is due November 6, 2020 and bears interest at 15% per annum. The note is immediately convertible into shares of the Company's Class A common stock at a fixed price of $0.15 per share. 350,000 350,000 On November 14, 2019, the Company issued a convertible note for $137,870. The note is due November 13, 2020 and bears interest at 15% per annum. The note is immediately convertible into shares of the Company's Class A common stock at a fixed price of $0.15 per share. The note was fully converted as of March 31, 2020. - 137,870 On November 14, 2019, the Company issued convertible note for $35,000. The note is due November 13, 2020 and bears interest at 15% per annum. The note is immediately convertible into shares of the Company's Class A common stock at a fixed price of $0.15 per share. 35,000 35,000 On November 14, 2019, the Company issued convertible note for $200,000. The note is due November 13, 2020 and bears interest at 15% per annum. The note is immediately convertible into shares of the Company's Class A common stock at a fixed price of $0.15 per share. 200,000 200,000 Total convertible notes payable 3,026,186 3,630,639 Less: discount on convertible notes payable (601,059) (846,833) Total convertible notes payable, net of discount 2,425,127 2,783,806 Less: current portion of convertible notes payable (280,084) (1,110,118) Long-term portion of convertible notes payable $ 2,145,043 $ 1,673,688 The discounts on convertible notes payable arise from stock issued with notes payable, beneficial conversion features, as well as conversion features of certain convertible notes being treated as derivative liabilities (see Note 11). The discounts are being amortized over the terms of the convertible notes payable. Amortization of debt discounts during the three months ended March 31, 2020 and 2019 amounted to $245,774 and $397,550, respectively, and is recorded as interest expense in the accompanying consolidated statements of operations. The unamortized discount balance for these notes was $601,059 as of March 31, 2020, which is expected to be amortized over the next 12 months. A summary of the activity in the Company's convertible notes payable is provided below: Balance outstanding, December 31, 2019 $ 2,783,806 Repayment of notes (73,902) Conversion of notes payable to common stock (545,551) Penalty interest added to convertible note 15,000 Amortization of debt discounts 245,774 Balance outstanding, March 31, 2020 $ 2,425,127 |
Note 8 - Stockholders' Equity
Note 8 - Stockholders' Equity | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure Text Block [Abstract] | |
Note 8 - Stockholders' Equity | Note 8 – Stockholders' Equity Preferred Stock The Company is authorized to issue 5,000,000 shares of $.0001 par value preferred stock. Series B Preferred Stock The Company is authorized to issue 100 shares of Series B preferred stock. The Series B Preferred Stock has a $1.00 stated value and does not accrue dividends. The Series B has the following voting rights: · If at least one share of Series B Preferred Stock is issued and outstanding, then the total aggregate issued shares of Series B Preferred Stock at any given time, regardless of their number, shall have that number of votes (identical in every other respect to the voting rights of the holders of all classes of Common Stock or series of preferred stock entitled to vote at any regular or special meeting of stockholders) equal to two hundred percent (200%) of the total voting power of all holders of the Company’s common and preferred stock then outstanding, but not including the Series B Preferred Stock. · If more than one share of Series B Preferred Stock is issued and outstanding at any time, then each individual share of Series B Preferred Stock shall have the voting rights equal to: Two hundred percent (200%) of the total voting power of all holders of the Company’s common and preferred stock then outstanding, but not including the Series B Preferred Stock divided by the number of shares of Series B Preferred Stock issued and outstanding at the time of voting. Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary (a "Liquidation"), the Holders of the Series B Preferred Stock are entitled to receive out of the assets of the Company for each share of Series B Preferred Stock then held by the Holder an amount equal to the Stated Value, and all other amounts in respect thereof then due and payable before any distribution or payment shall be made to the holders of any Junior Securities. The Series B Preferred Stock shall be convertible into shares of the Company's Class A Common Stock only as follows: · In the event that the Holder of Series B Preferred Stock ceases to be a director of the Company, upon such director's resignation or removal from the board by any means, the shares of Series B Preferred Stock held by such resigning or removed director shall convert automatically into that same number of shares of Class A Common Stock (i.e. on a one-for-one share basis). · Shares of Series B Preferred Stock converted into Class A Common Stock, canceled, or redeemed, shall be canceled and shall have the status of authorized but unissued shares of undesignated preferred stock. As of March 31, 2020 and December 31, 2019, 5 and 0 shares of preferred stock were outstanding. Common Stock Pursuant to the Amended and Restated Certificate of Incorporation, the Company is authorized to issue three classes of common stock: Class A common stock, which has one vote per share, Class B common stock, which has ten votes per share and Class C common stock, which has five votes per share. Any holder of Class B common stock may convert his or her shares at any time into shares of Class A common stock on a share-for-share basis. Otherwise the voting rights of the two classes of common stock will be identical. Any holder of Class C common stock may convert 25% of his or her shares at any time after the 3rd to 6th anniversary into shares of Class A common stock on a share-for-share basis. Otherwise the voting rights of the two classes of common stock will be identical. The Company had the following transactions in its common stock during the three months ended March 31, 2020: · Issued 3,941,753 Class A common stock for cash for total proceeds of $250,000; · Issued 4,648,879 Class A common stock for the conversion of convertible debt and accrued interest of $697,332; · Issued 1,617,067 Class A common stock and 1,617,067 Class C common stock to the Seller of Deluxe for the settlement of debt of $485,120; the fair value of the stock was $330,528. The Company recognized a gain on the settlement of debt of $154,592; · Issued 300,000 Class A common stock with a fair value of $44,700 to a noteholder as penalty interest; and · Issued 4,023,088 Class B common stock to settle unpaid salaries of $603,463. Stock Options The Company has issued stock options to purchase shares of the Company’s Class A common stock issued pursuant to the Company's 2016 Stock Option and Stock Award Plan (the "Plan"). The Company uses the Black-Scholes option pricing model to estimate the fair value of stock-based awards on the date of grant and on each modification date. The following summarizes the stock option activity for the three months ended March 31, 2020: Weighted- Weighted- Average Average Remaining Aggregate Exercise Contractual Intrinsic Options Price Life (Years) Value Outstanding at December 31, 2019 1,790,000 $ 0.19 8.10 $ 176,445 Granted - Forfeited - Exercised - Outstanding at March 31, 2020 1,790,000 $ 0.19 7.85 $ - Vested and expected to vest at March 31, 2020 1,790,000 $ 0.19 7.85 $ - Exercisable at March 31, 2020 951,344 $ 0.24 7.67 $ - The following table summarizes information about options outstanding and exercisable as of March 31, 2020: Options Outstanding Options Exercisable Weighted Weighted Weighted Average Average Average Exercise Number Remaining Exercise Number Exercise Price of Shares Life (Years) Price of Shares Price $ 0.05 979,000 8.13 $ 0.05 393,938 $ 0.05 0.10 85,000 8.03 0.10 37,188 0.10 0.13 388,500 7.34 0.13 267,094 0.13 0.26 114,000 7.09 0.26 85,500 0.26 0.90 223,500 7.02 0.90 167,624 0.90 1,790,000 951,344 During the three months ended March 31, 2020 and 2019, stock option expense amounted to $19,556 and $19,341, respectively. Unrecognized stock option expense as of March 31, 2020 amounted to $101,819, which will be recognized over a period extending through December 2022. Warrants As of March 31, 2020, the Company had 275,000 warrants outstanding with a weighted average exercise price of $1.01 and a weighted average remaining life of 0.98 years. |
Note 9 - Business Combination
Note 9 - Business Combination | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure Text Block [Abstract] | |
Note 9 - Business Combination | Note 9 – Business Combinations Morris On January 9, 2019, (with an effective date of January 1, 2019) the Company entered into a Securities Purchase Agreement (the "SPA") with Morris Sheet Metal Corp., an Indiana corporation, JTD Spiral, Inc. a wholly owned subsidiary of MSM, an Indiana corporation, Morris Enterprises LLC, an Indiana limited liability company and Morris Transportation LLC, an Indiana limited liability company. This acquisition was considered an acquisition of a business under ASC 805. A summary of the purchase price allocation at fair value is below. Purchase Allocation Cash $ 192,300 Accounts receivable 2,146,541 Inventory 453,841 Contract assets 210,506 Property and equipment 4,214,965 Customer list 490,000 Goodwill 113,592 Accounts payable (234,236) Accrued expenses (351,865) Contract liabilities (92,043) Notes payable (1,033,695) $ 6,109,906 The purchase price was paid as follows: Cash $ 2,159,906 Seller notes 3,450,000 Acquisition contingency 500,000 $ 6,109,906 One year after the closing date, the sellers will calculate monthly the 85/25 requirement to meet the Construction Industry Exemption for the Withdraw Liability (WDL). If the calculations verify Morris Sheet Metal Corp. and/or JTD Spiral, Inc. met the Exemption requirement for six consecutive months the Company will pay the sellers a $500,000 success fee. In January 2020, the Company determined that the conditions were not met; therefore the Company is no longer required to pay the additional $500,000. Simultaneous with the purchase of Morris, a building, owned by Morris prior to the acquisition, was sold in a sale-leaseback transaction agreement, whereby the building was leased from the buyer for 15 years. The proceeds from the sale-leaseback of $3,267,000 were used to fund the cash consideration to the sellers. The building and the lease is being treated as a financing lease (see Note 4). Deluxe On November 6, 2019, the Company purchased Deluxe Sheet Metal, Inc., an Indiana corporation, DSM Holding, LLC, an Indiana limited liability company, and Lonewolf Enterprises, LLC, an Indiana limited liability company (collectively “Deluxe”) This acquisition was considered an acquisition of a business under ASC 805. A summary of the purchase price allocation at fair value is below. Purchase Allocation Cash $ 140,948 Accounts receivable 2,785,454 Inventory 736,312 Prepaid expenses and other current assets 61,320 Contract assets 350,138 Property and equipment 9,502,045 Customer list 1,050,000 Accounts payable (1,122,317) Accrued expenses and other current liabilities (163,891) Contract liabilities (155,016) Notes payable (7,544,871) Bargain purchase gain (2,143,779) $ 3,496,343 The Company recognized a bargain purchase gain of $2,143,779 on the acquisition of Deluxe as a result the seller being motivated to sell in order to focus his time and effort on another business venture. The purchase price was paid as follows: Cash $ 1,100,000 Seller notes 2,396,343 $ 3,496,343 Simultaneous with the purchase of Deluxe, a building, owned by Deluxe prior to the acquisition, was sold in a sale-leaseback transaction agreement, whereby the building was leased from the buyer for 15 years. The proceeds from the sale-leaseback of $9,000,000 were used to fund the cash consideration to the sellers. The building and the lease is being treated as a financing lease (see Note 4). Excel On February 21, 2020, the Company purchased Excel Fabrication, LLC., an Idaho Limited Liability Company (“Excel”). This acquisition was considered an acquisition of a business under ASC 805. A summary of the purchase price allocation at fair value is below. The business combination accounting is not yet complete and the amounts assigned to assets acquired and liabilities assumed are provisional. Therefore, this may result in future adjustments to the provisional amounts as information is obtained about facts and circumstances that existed at the acquisition date. Purchase Allocation Cash $ 174,283 Accounts receivable 1,943,481 Other current assets 9,074 Property and equipment 2,958,190 Customer list 910,000 Accounts payable (340,151) Accrued expenses and other current liabilities (262,506) Goodwill 99,629 $ 5,492,000 The purchase price was paid as follows: Cash $ 2,600,000 Contingent consideration 592,000 Seller notes 2,300,000 $ 5,492,000 As part of the purchase price, the Company is also liable to the seller for royalty payments over a period of 5 years whenever revenues exceed certain thresholds as provided for in the purchase agreement at rates ranging from 2% to 7%. Simultaneous with the purchase of Excel, a building, owned by Excel prior to the acquisition, was sold in a sale-leaseback transaction agreement, whereby the building was leased from the buyer for 15 years. The proceeds from the sale-leaseback of $2,000,000 were used to fund the cash consideration to the seller. The building and the lease is being treated as a financing lease (see Note 4). The following are the unaudited pro forma results of operations for the three months ended March 31, 2020 and 2019, as if Morris, Deluxe and Excel had been acquired on January 1, 2019. The pro forma results include estimates and assumptions which management believes are reasonable. However, pro forma results do include any anticipated cost savings or other effects of the planned integration of these entities, and are not necessarily indicative of the results that would have occurred if the business combination had been in effect on the dates indicated. Pro Forma Combined Financials (unaudited) Three Months Ended March 31, 2020 2019 Sales $ 9,821,341 $ 10,435,563 Cost of goods sold 7,672,154 8,972,333 Gross profit 2,149,187 1,463,230 Operating expenses 3,059,891 3,522,172 Loss from operations (910,704) (2,058,942) Net income (loss) from continuing operations 443,329 (3,187,476) Income (loss) per share 0.00 (0.10) |
Note 10 - Industry Segments
Note 10 - Industry Segments | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure Text Block [Abstract] | |
Note 10 - Industry Segments | Note 10 – Industry Segments This summary presents the Company's segments, QCA, APF, Morris, Deluxe and Excel for the three months ended March 31, 2020 and 2019: Three Months Ended March 31, 2020 2019 Revenue QCA $ 2,030,126 $ 2,477,542 APF 529,041 1,708,992 Morris 3,254,927 2,870,797 Deluxe 2,394,164 - Excel 627,338 - Unallocated and eliminations - 68,658 $ 8,835,596 $ 7,125,989 Gross profit QCA $ 505,782 $ 658,394 APF (29,642) 700,200 Morris 629,623 721,166 Deluxe 514,195 - Excel 139,786 - Unallocated and eliminations - 37,773 $ 1,759,744 $ 2,117,533 Depreciation and amortization QCA $ 53,981 $ 84,397 APF 71,961 68,708 Morris 151,264 91,859 Deluxe 176,250 - Excel 30,806 - Unallocated and eliminations - 8,333 $ 484,262 $ 253,297 Interest Expenses QCA $ 120,445 $ 180,582 APF 79,944 - Morris 374,400 45,831 Deluxe 257,202 - Excel 47,855 - Unallocated and eliminations 769,381 805,217 $ 1,649,227 $ 1,031,630 Net income (loss) QCA $ (185,690) $ (130,442) APF (365,115) 411,402 Morris 320,412 (17,413) Deluxe (79,306) - Excel (268,815) - Unallocated and eliminations 828,902 (1,693,885) $ 250,388 $ (1,430,338) As of As of March 31, December 31, 2020 2019 Total Assets QCA $ 6,439,268 $ 6,359,711 APF 4,880,556 5,344,175 Morris 7,989,351 8,771,165 Deluxe 13,837,271 14,810,307 Excel 5,904,911 - Unallocated and eliminations 345,629 516,240 $ 39,396,986 $ 35,801,598 Goodwill QCA $ 1,963,761 $ 1,963,761 APF 440,100 440,100 Morris 113,592 113,592 Deluxe - - Excel 99,629 - Unallocated and eliminations - - $ 2,617,082 $ 2,517,453 Accounts receivable, net QCA $ 1,311,406 $ 1,234,898 APF 458,597 831,477 Morris 2,579,153 3,488,340 Deluxe 2,510,114 3,156,492 Excel 1,864,964 - Unallocated and eliminations - 20,358 $ 8,724,234 $ 8,731,565 |
Note 11 - Derivative Liabilitie
Note 11 - Derivative Liabilities and Fair Value Measurements | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure Text Block [Abstract] | |
Note 11- Derivative Liabilities and Fair Value Measurements | Note 11 – Derivative Liabilities and Fair Value Measurements Derivative liabilities The Company has issued convertible notes payable that were evaluated under the guidance in ASC 815-40, Derivatives and Hedging, and were determined to have characteristics of derivative liabilities. As a result of the characteristics of these notes, the conversion options relating to previously issued convertible debt and outstanding Class A common stock warrants were also required to be accounted for as derivative liabilities under ASC 815. Under this guidance, this derivative liability is marked-to-market at each reporting period with the non-cash gain or loss recorded in the period as a gain or loss on derivatives. The valuation of our embedded derivatives is determined by using the Black-Scholes Option Pricing Model. As such, our derivative liabilities have been classified as Level 3. The Company estimated the fair value of the derivative liabilities using the Black-Scholes Option Pricing Model and the following key assumptions at December 31, 2019: December 31, 2019 Risk free rate 1.60% Volatility 287%-298% Expected terms (years) 0.5 to 1.26 Dividend rate 0% Fair value measurements ASC 820, Fair Value Measurements and Disclosures Level 1 Level 2 Level 3 If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level of input that is significant to the fair value measurement of the instrument. The following table provides a summary of the fair value of the derivative liabilities as of March 31, 2020 and December 31, 2019. There were no derivative liabilities at March 31, 2020 as the convertible notes with variable conversion prices were repaid during the three months ended March 31, 2020. Fair Value Fair Value Measurements at As of March 31, 2020 Description March 31, 2020 Using Fair Value Hierarchy Level 1 Level 2 Level 3 Conversion feature on convertible notes $ - $ - $ - $ - Fair Value Fair Value Measurements at As of December 31, 2019 Description December 31, 2019 Using Fair Value Hierarchy Level 1 Level 2 Level 3 Conversion feature on convertible notes $ 2,298,609 $ - $ - $ 2,298,609 The below table presents the change in the fair value of the derivative liabilities during the three months ended March 31, 2020: Derivative liability balance, December 31, 2019 $ 2,298,609 Change in derivative liability during the period (2,298,609) Derivative liability balance, March 31, 2020 $ - |
Note 12 - Discontinued Operatio
Note 12 - Discontinued Operations | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure Text Block [Abstract] | |
Note 12- Discontinued Operations | Note 12 – Discontinued Operations In December 2018, the Company decided to shut down the operations of its VWES subsidiary. In February 2019, VWES filed for Chapter 7 bankruptcy. VWES has been presented as discontinued operations in the accompanying consolidated financial statements. The operating results for VWES have been presented in the accompanying consolidated statement of operations for the nine months ended March 31, 2020 and 2019 as discontinued operations and are summarized below: Three Months Ended March 31, 2020 2019 Revenue $ - $ - Cost of revenue - - Gross Profit - - Operating expenses - 95,179 Loss from operations - (95,179) Other income (expenses) - - Net loss $ - $ (95,179) As of March 31, 2019, VWES’ bankruptcy was completed and the Company removed all the assets and liabilities of VWES resulting in a gain on the disposition of discontinued operations of $2,515,028. |
Note 13 - Subsequent Events
Note 13 - Subsequent Events | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure Text Block [Abstract] | |
Note 15 - Subsequent Events | Note 13 – Subsequent Events In April and May 2020 the Company received five loans under the Paycheck Protection Program of the Coronavirus Aid, Relief and Economic Security (“CARES”) Act totaling $3,761,866. The loans have terms of 24 months and accrue interest at 1% per annum. The Company expects some or all of these loans to be forgiven as provided by in the CARES Act. In May 2020, the Company amended three notes of $116,667 with the sellers of Morris totaling $350,000. The notes were due January 1, 2020. Each of the new notes as of the date of amendment had accrued interest of $2,703. This was added to the note resulting in the principal amount of each of the new notes equaling to $119,370. The amendment required an initial payment of $30,000 for each note, which was made on May 23, 2020, and 8 monthly installments of $13,882 through January 2021. The amended notes have an interest rate of 6%. In May and June 2020 the Company amended the following seller notes: The convertible note with Jeff Moss with a $798,800 balance as of May 4, 2020 was amended to extend the maturity date to May 4, 2027 at 5% interest with weekly payments of $2,605. The convertible note with Dwight Hargreaves with a 623,464 balance as of June 5, 2020 was amended to extend the maturity date to June 5, 2026 at 6% interest with weekly payments of $2,316. The convertible note with Andy Galbach with a balance of $301,500 due in 2021 was forgiven and another note (one of the Secured APF Notes) was amended to increase the principal amount to $1,239,000 at 0% interest with weekly payments of $2,644 and the balance to be paid on May 27, 2022. |
Note 2 - Summary of Significa_2
Note 2 - Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Policy Text Block [Abstract] | |
Principles of Consolidation | Principles of consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries as of March 31, 2020, and December 31, 2019. Significant intercompany balances and transactions have been eliminated. |
Basis of presentation | Basis of presentation The accompanying financial statements present the balance sheets, statements of operations, stockholders' deficit and cash flows of the Company. The financial statements have been prepared in accordance with U.S. GAAP. |
Use of Estimates | Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. These estimates and judgments are based on historical information, information that is currently available to the Company and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results could differ from those estimates. The ultimate impact from COVID-19 on the Company’s operations and financial results during 2020 will depend on, among other things, the ultimate severity and scope of the pandemic, the pace at which governmental and private travel restrictions and public concerns about public gatherings will ease, the rate at which historically large increases in unemployment rates will decrease, if at all, and whether, and the speed with which the economy recovers. We are not able to fully quantify the impact that these factors will have on our financial results during 2020 and beyond, but expect developments related to COVID-19 to materially affect the Company’s financial performance in 2020. |
Reclassification | Reclassification |
Advertising | Advertising Advertising costs are expensed when incurred. All advertising takes place at the time of expense. We have no long-term contracts for advertising. Advertising expense for all periods presented were not significant. |
Cash | Cash Cash and cash equivalents consist of cash and short-term investments with original maturities of less than 90 days. As of March 31, 2020, and December 31, 2019, the Company had no cash equivalents. The following table provides a reconciliation of cash and restricted cash reported within the accompanying consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows. March 31, March 31, 2020 2019 Cash $ 257,900 $ 189,728 Restricted cash included in other non-current assets - 207,311 Total cash and restricted cash shown in statement of cash flows $ 257,900 $ 397,039 |
Major Customers | Major Customers The Company had two customers that made up 15% and 11%, respectively, of accounts receivable as of March 31, 2020. The Company had one customer that made up 7%, respectively, of accounts receivable as of December 31, 2019. For the three months ended March 31, 2020, the Company had two customers that made up 14% and 11%, respectively, of total revenues. For the three months ended March 31, 2019, the Company had two customers that made up 24% and 10%, respectively, of total revenues. |
Accounts Receivable | Accounts Receivable The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Reserves are recorded primarily on a specific identification basis. As of March 31, 2020, and December 31, 2019, allowance for bad debt was $0 and $0, respectively. |
Inventory | Inventory Inventory for all subsidiaries, except Deluxe, is valued at weighted average and first-in; first-out basis for Deluxe. Management compares the cost of inventory with its net realizable value and an allowance is made to write down inventory to net realizable value, if lower. Inventory is segregated into three areas, raw materials, work-in-process and finished goods. Inventory, net at March 31, 2020 and December 31, 2019 consists of: March 31, December 31, 2020 2019 Raw materials $ 1,707,405 $ 1,791,733 WIP 232,616 576,196 Finished goods 394,706 59,972 2,334,727 2,427,901 Reserve - (26,659) Inventory, net $ 2,334,727 $ 2,401,242 |
Property and Equipment | Property and Equipment Property and equipment are carried at cost less depreciation. Depreciation and amortization are provided principally on the straight-line method over the estimated useful lives of the assets, which range from five years to 39 years as follows: Automobiles & Trucks 5 to 7 years Buildings and improvements 15 to 39 years Leasehold Improvements 15 years or time remaining on lease (whichever is shorter) Machinery and equipment 5 to 7 years Maintenance and repair costs are charged against income as incurred. Significant improvements or betterments are capitalized and depreciated over the estimated life of the asset. Property and equipment consisted of the following as of March 31, 2020 and December 31, 2019: March 31, December 31, 2020 2019 Automobiles and trucks $ 911,114 $ 563,614 Machinery and equipment 4,484,652 3,792,964 Office furniture and fixtures 119,526 119,526 Buildings and improvements 16,167,000 14,167,000 Leasehold improvements - 12,816 Total Property and equipment 21,682,292 18,655,920 Less: Accumulated depreciation (1,904,166) (1,498,075) Property and equipment, net $ 19,778,126 $ 17,157,845 During the year ended December 31, 2019, the Company terminated its lease agreement for the building it leased in San Diego, California which removed $3,895,000 and $294,525 from building and leasehold improvements, respectively. The lease of the San Diego building was accounted for as a capital lease. In addition, as part of the termination, the Company issued the landlord a note payable in the amount of $2,740,000. (See Note 5) |
Purchased Intangibles and Other Long-lived Assets | Purchased Intangibles and Other Long-Lived Assets The Company amortizes intangible assets with finite lives over their estimated useful lives, which range between three and fifteen years as follows: Customer lists 3 to 15 years Non-compete agreements 15 years Software development 5 years Intangible assets consisted of the following as of March 31, 2020 and December 31, 2019: March 31, December 31, 2020 2019 Software $ 278,474 $ 278,474 Noncompete 100,000 100,000 Customer lists 3,771,187 2,861,187 Total Intangible assets 4,149,661 3,239,661 Less: Accumulated amortization (543,214) (465,043) Intangibles, net $ 3,606,447 $ 2,774,618 Expected amortization expense of intangible assets over the next 5 years and thereafter is as follows: Twelve Months Ending March 31, 2021 $ 589,960 2022 589,960 2023 548,473 2024 253,028 2025 253,028 Thereafter 1,371,998 Total $ 3,606,447 Other long-term assets consisted of the following as of March 31, 2020 and December 31, 2019: March 31, December 31, 2020 2019 Deposits $ 293,327 $ 285,927 Other 33,417 33,417 $ 326,744 $ 319,344 |
Impairment of Long-lived Assets | Impairment of Long-Lived Assets The Company accounts for long-lived assets in accordance with the provisions of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 360, Accounting for the Impairment of Long-Lived Assets |
Goodwill | Goodwill In financial reporting, goodwill is not amortized, but is tested for impairment annually or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Events that result in an impairment review include significant changes in the business climate, declines in our operating results, or an expectation that the carrying amount may not be recoverable. We assess potential impairment by considering present economic conditions as well as future expectations. All assessments of goodwill impairment are conducted at the individual reporting unit level. As of March 31, 2020, and December 31, 2019, the reporting units with goodwill were QCA, APF, Morris and Excel. The Company used qualitative factors according to ASC 350-20-35-3 to determine whether it is more likely than not that the fair value of goodwill is less than its carrying amount. Based on the qualitative criteria the Company believes there not to be any triggers for potential impairment of goodwill and therefore the Company has recorded no impairment of goodwill in any period presented. |
Fair Value Measurement | Fair Value Measurement The Company's financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, convertible notes, notes and line of credit. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements. For additional information, please see Note 11 – Derivative Liabilities and Fair Value Measurements. |
Revenue Recognition | Revenue Recognition On January 1, 2018, the Company adopted ASC Topic 606, Revenue from Contracts with Customers The following is a summary of the revenue recognition policy for each of the Company’s subsidiaries. Revenue is recognized under Topic 606 · executed contracts with the Company’s customers that it believes are legally enforceable; · identification of performance obligations in the respective contract; · determination of the transaction price for each performance obligation in the respective contract; · allocation the transaction price to each performance obligation; and · recognition of revenue only when the Company satisfies each performance obligation. The following is a summary of the revenue recognition policy for each of the Company’s subsidiaries. ALTIA Revenues recorded by ALTIA relate primarily to the Company’s 6th Sense Auto service. The Company accounts for its revenue by deferring the total contract amount and recognizing the amounts over the monthly subscription period, ranging from 12 to 36 months. QCA and Excel Fabrication QCA and Excel Fabrication are contract manufacturers and recognize revenue when the products have been built and control has been transferred to the customer. If a deposit for product or service is received prior to completion, the payment is recorded to deferred revenue until such point the product or services meets our revenue recognition policy. Management assesses the materiality and likelihood of warranty work and returns, and records reserves as needed. For all periods presented, management determined that the warranty and returns would be immaterial. APF APF is a contract manufacturer and recognizes revenue when the products have been built and control has been transferred to the customer. If a deposit for product or service is received prior to completion, the payment is recorded to deferred revenue until such point the product or services meets our revenue recognition policy. Management assesses the materiality and likelihood of warranty work and returns, and records reserves as needed. For all periods presented, management determined that the warranty and returns would be immaterial. Morris Sheet Metal and Deluxe Sheet Metal For our construction contracts, revenue is generally recognized over time as our performance creates or enhances an asset that the customer controls as it is created or enhanced. Our fixed price construction projects generally use a cost-to-cost input method to measure our progress towards complete satisfaction of the performance obligation as we believe it best depicts the transfer of control to the customer which occurs as we incur costs on our contracts. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. For certain of our revenue streams, that are performed under time and materials contracts, our progress towards complete satisfaction of such performance obligations is measured using an output method as the customer receives and consumes the benefits of our performance completed to date. Due to uncertainties inherent in the estimation process, it is possible that estimates of costs to complete a performance obligation will be revised in the near-term. For those performance obligations for which revenue is recognized using a cost-to-cost input method, changes in total estimated costs, and related progress towards complete satisfaction of the performance obligation, are recognized on a cumulative catch-up basis in the period in which the revisions to the estimates are made. When the current estimate of total costs for a performance obligation indicate a loss, a provision for the entire estimated loss on the unsatisfied performance obligation is made in the period in which the loss becomes evident. Contract Assets and Contract Liabilities The timing of revenue recognition may differ from the timing of invoicing to customers. Contract assets include unbilled amounts from our construction projects when revenues recognized under the cost-to-cost measure of progress exceed the amounts invoiced to our customers, as the amounts cannot be billed under the terms of our contracts. Such amounts are recoverable from our customers based upon various measures of performance, including achievement of certain milestones, completion of specified units or completion of a contract. In addition, many of our time and materials arrangements, are billed pursuant to contract terms that are standard within the industry, resulting in contract assets being recorded, as revenue is recognized in advance of billings. Our contract assets do not include capitalized costs to obtain and fulfill a contract. Contract assets are generally classified as current within the consolidated balance sheets. Contract liabilities from our construction contracts arise when amounts invoiced to our customers exceed revenues recognized under the cost-to-cost measure of progress. Contract liabilities additionally include advanced payments from our customers on certain contracts. Contract liabilities decrease as we recognize revenue from the satisfaction of the related performance obligation. Contract Retentions As of March 31, 2020, and December 31, 2019, accounts receivable included retainage billed under terms of our contracts. These retainage amounts represent amounts which have been contractually invoiced to customers where payments have been partially withheld pending the achievement of certain milestones, satisfaction of other contractual conditions or completion of the project. |
Earnings (loss) per share | Earnings (loss) per share Basic earnings (loss) per common share is computed by dividing net income (loss) available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per common share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if potentially dilutive securities had been issued. The only potentially dilutive securities outstanding during the periods presented were the convertible debt and options. The following table illustrates the computation of basic and diluted EPS for the three months ended March 31, 2020 and 2019: For the Three Months Ended March 31, 2020 For the Three Months Ended March 31, 2019 Net Income (Loss) Shares Per Share Amount Net Income (Loss) Shares Per Share Amount Basic EPS Income (loss) available to stockholders $ 250,388 127,207,693 $ 0.00 $ 989,511 30,782,076 $ 0.03 Effect of Dilutive Securities Convertible debt and options (1,974,908) 10,828,330 - - - - Dilute EPS Income (loss) available to stockholders plus assumed conversions $ (1,724,520) 138,036,023 $ (0.01) $ 989,511 30,782,076 $ 0.03 |
Share-based Compensation | Stock-based compensation The Company accounts for equity instruments issued in exchange for the receipt of goods or services in accordance with ASC 718-10, Compensation – Stock Compensation |
Income Tax | Income taxes The Company records income taxes under the asset and liability method, whereby deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and attributable to operating loss and tax credit carry forwards. Accounting standards regarding income taxes requires a reduction of the carrying amounts of deferred tax assets by a valuation allowance, if based on the available evidence, it is more likely than not that such assets will not be realized. Accordingly, the need to establish valuation allowances for deferred tax assets is assessed at each reporting period based on a more-likely-than-not realization threshold. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carry forward periods, the Company's experience with operating loss and tax credit carry forwards not expiring unused, and tax planning alternatives. The Company recorded valuation allowances on the net deferred tax assets. Management will reassess the realization of deferred tax assets based on the accounting standards for income taxes each reporting period. To the extent that the financial results of operations improve, and it becomes more likely than not that the deferred tax assets are realizable, the Company will be able to reduce the valuation allowance. Significant judgment is required in evaluating the Company's tax positions and determining its provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. Accounting standards regarding uncertainty in income taxes provides a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50% likely, based solely on the technical merits, of being sustained on examinations. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments, and which may not accurately anticipate actual outcomes. |
Embedded Conversion Features | Embedded Conversion Features The Company evaluates embedded conversion features within convertible debt under ASC 815 Derivatives and Hedging Debt with Conversion and Other Options |
Related Party Disclosure | Related Party Disclosure ASC 850, Related Party Disclosures |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In January 2017, the FASB issued ASU 2017-04, Intangibles Goodwill and Other (Topic 350) Simplifying the Test for Goodwill Impairment Intangibles - Goodwill and Other In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes which amends ASC 740 Income Taxes Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future financial statements. |
Note 2 - Summary of Significa_3
Note 2 - Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Table Text Block Supplement [Abstract] | |
Restrictions on Cash and Cash Equivalents | The following table provides a reconciliation of cash and restricted cash reported within the accompanying consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows. March 31, March 31, 2020 2019 Cash $ 257,900 $ 189,728 Restricted cash included in other non-current assets - 207,311 Total cash and restricted cash shown in statement of cash flows $ 257,900 $ 397,039 |
Schedule of Inventory, Current | Inventory, net at March 31, 2020 and December 31, 2019 consists of: March 31, December 31, 2020 2019 Raw materials $ 1,707,405 $ 1,791,733 WIP 232,616 576,196 Finished goods 394,706 59,972 2,334,727 2,427,901 Reserve - (26,659) Inventory, net $ 2,334,727 $ 2,401,242 |
Schedule of Property and Equipment, Estimated Useful Lives | Depreciation and amortization are provided principally on the straight-line method over the estimated useful lives of the assets, which range from five years to 39 years as follows: Automobiles & Trucks 5 to 7 years Buildings and improvements 15 to 39 years Leasehold Improvements 15 years or time remaining on lease (whichever is shorter) Machinery and equipment 5 to 7 years |
Property, Plant and Equipment | Property and equipment consisted of the following as of March 31, 2020 and December 31, 2019: March 31, December 31, 2020 2019 Automobiles and trucks $ 911,114 $ 563,614 Machinery and equipment 4,484,652 3,792,964 Office furniture and fixtures 119,526 119,526 Buildings and improvements 16,167,000 14,167,000 Leasehold improvements - 12,816 Total Property and equipment 21,682,292 18,655,920 Less: Accumulated depreciation (1,904,166) (1,498,075) Property and equipment, net $ 19,778,126 $ 17,157,845 |
Schedule of Finite Lived Intangible Assets, Estimated Useful Lives | The Company amortizes intangible assets with finite lives over their estimated useful lives, which range between three and fifteen years as follows: Customer lists 3 to 15 years Non-compete agreements 15 years Software development 5 years |
Schedule of Intangible Assets | Intangible assets consisted of the following as of March 31, 2020 and December 31, 2019: March 31, December 31, 2020 2019 Software $ 278,474 $ 278,474 Noncompete 100,000 100,000 Customer lists 3,771,187 2,861,187 Total Intangible assets 4,149,661 3,239,661 Less: Accumulated amortization (543,214) (465,043) Intangibles, net $ 3,606,447 $ 2,774,618 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Expected amortization expense of intangible assets over the next 5 years and thereafter is as follows: Twelve Months Ending March 31, 2021 $ 589,960 2022 589,960 2023 548,473 2024 253,028 2025 253,028 Thereafter 1,371,998 Total $ 3,606,447 |
Schedule of Other Assets, Noncurrent | Other long-term assets consisted of the following as of March 31, 2020 and December 31, 2019: March 31, December 31, 2020 2019 Deposits $ 293,327 $ 285,927 Other 33,417 33,417 $ 326,744 $ 319,344 |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following table illustrates the computation of basic and diluted EPS for the three months ended March 31, 2020 and 2019: For the Three Months Ended March 31, 2020 For the Three Months Ended March 31, 2019 Net Income (Loss) Shares Per Share Amount Net Income (Loss) Shares Per Share Amount Basic EPS Income (loss) available to stockholders $ 250,388 127,207,693 $ 0.00 $ 989,511 30,782,076 $ 0.03 Effect of Dilutive Securities Convertible debt and options (1,974,908) 10,828,330 - - - - Dilute EPS Income (loss) available to stockholders plus assumed conversions $ (1,724,520) 138,036,023 $ (0.01) $ 989,511 30,782,076 $ 0.03 |
Note 4 - Leases (Tables)
Note 4 - Leases (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Table Text Block Supplement [Abstract] | |
Schedule of Future Minimum Lease Payments for Capital Leases | As of March 31, 2020, the future minimum financing and operating lease payments, net of amortization of debt issuance costs, were as follows: Finance Operating Twelve Months Ending March 31, Leases Leases 2021 $ 1,737,720 $ 351,847 2022 1,763,064 286,847 2023 1,795,633 70,087 2024 1,797,556 5,850 2025 1,808,083 - Thereafter 18,884,602 - Total payments 27,786,658 714,631 Less: imputed interest (11,798,681) (106,832) Total obligation 15,987,977 607,799 Less: current portion (453,233) (279,233) Non-current capital leases obligations $ 15,534,744 $ 328,566 |
Schedule of Right of Use Assets and Lease Liabilities | The table below presents the lease related assets and liabilities recorded on the Company’s consolidated balance sheets as of March 31, 2020 and December 31, 2019: March 31 December 31, Classification on Balance Sheet 2020 2019 Assets Operating lease assets Operating lease right of use assets $ 596,816 $ 660,032 Total lease assets $ 596,816 $ 660,032 Liabilities Current liabilities Operating lease liability Current operating lease liability $ 279,233 $ 266,623 Noncurrent liabilities Operating lease liability Long-term operating lease liability 328,566 403,931 Total lease liability $ 607,799 $ 670,554 |
Note 5 - Notes Payable (Tables)
Note 5 - Notes Payable (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Table Text Block Supplement [Abstract] | |
Schedule of Notes Payable | The outstanding balances for the loans were as follows: March 31, December 31, 2020 2019 Lines of credit, current portion $ 3,361,446 $ 3,816,103 Equipment loans, current portion 310,921 368,011 Term notes, current portion 5,122,695 3,849,273 Merchant loans 430,000 690,784 Total current 9,225,062 8,724,171 Long-term portion 11,304,939 9,850,184 Total notes payable $ 20,530,001 $ 18,574,355 |
Future Scheduled Maturities of Outstanding Notes Payable | Future scheduled maturities of outstanding notes payable are as follows: Twelve Months Ending March 31, 2021 $ 9,225,062 2022 1,276,038 2023 4,896,304 2024 2,537,129 2025 196,832 Thereafter 2,398,636 Total $ 20,530,001 |
Note 6 - Notes Payable, Relat_2
Note 6 - Notes Payable, Related Parties (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Table Text Block Supplement [Abstract] | |
Schedule of Notes Payable, Related Parties | At March 31, 2020 and December 31, 2019, notes payable due to related parties consisted of the following: March 31, December 31, 2020 2019 Notes payable; non-interest bearing; due upon demand; unsecured $ 4,500 $ 4,500 Note payable; bearing interest at 8% per annum; due June 30, 2017; unsecured 7,500 7,500 Series of notes payable, bearing interest at rates from 10% to 20% per annum, with maturity dates from April 2018 to July 2020, unsecured 338,998 329,820 Total notes payable - related parties $ 350,998 $ 341,820 |
Note 7 - Convertible Notes Pa_2
Note 7 - Convertible Notes Payable: (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Table Text Block Supplement [Abstract] | |
Schedule of Convertible Notes Payable | At March 31, 2020 and December 31, 2019, convertible notes payable consisted of the following: March 31, December 31, 2020 2019 Series of convertible notes payable issued prior to December 31, 2016, bearing interest at rates of 8% - 20% per annum, with due dates ranging from April 2016 through October 2017. The outstanding principal and interest balances are convertible into shares of Class A common stock at the option of the debt holder at exercise prices ranging from $0.10 to $1 per share. $ 25,000 $ 25,000 Secured convertible notes payable issued to the sellers of QCA on April 1, 2016 for an aggregate of $2,000,000, bearing interest at 5% per annum, due in monthly payments starting on July 1, 2016 and due in full on July 1, 2019. On August 6 and 11, 2019, the Company extended the due date of the two notes to December 31, 2020 and December 31, 2022, respectively. The outstanding principal and interest balances are convertible after 12 months into Class A common stock at the option of the debt holder at a conversion price of $1 per share. 1,271,186 1,324,588 Convertible note payable issued in January 2017, bearing interest at rates of 10% per annum, and due in January 2018. The outstanding principal and interest balances are convertible into shares of Class A common stock at the option of the debt holder at an exercise price of $1 per share. 10,000 10,000 On April 5, 2018, the Company entered into convertible promissory notes for an aggregate principal amount of $450,000 as part of the consideration for the acquisition of APF. The convertible notes are due in full in 36 months and bear interest at 4.25% per annum, and are convertible into shares of Class A common stock after 6 months from the issuance date at a rate of $1 per share. 450,000 450,000 On April 9, 2018, the Company entered into a variable convertible note for $124,199 with net proceeds of $115,000. The note is due January 9, 2019 and bears interest at 12% per annum. After 180 days, the note is convertible into shares of the Company's Class A common stock at a discount of 35% to the average of the three lowest trading closing prices of the stock for ten days prior to conversion. In connection with this variable convertible note, the Company issued 76,670 shares of its Class A common stock, along with warrants to purchase 153,340 shares of Class A common stock at an exercise price of $1 per share which are immediately vested and have a 3 years contractual life. The value of the common stock and warrants have been recorded as a discount. - 500 On August 30, 2018, the Company entered into a variable convertible note for $337,500 with net proceeds of $303,750. The note is due February 28, 2019 and bears interest at 10% per annum. The note is immediately convertible into shares of the Company's Class A common stock at a discount of 42% to the average of the two lowest trading closing prices of the stock for ten days prior to conversion. This note was amended in November 2019 to affect a floor in the conversion price of $0.15 per share. The note was fully converted as of March 31, 2020. - 187,681 On October 23, 2018, the Company entered into a variable convertible note for $220,000 with net proceeds of $198,000. The note is due December 14, 2018 and bears interest at 10% per annum. The note is immediately convertible into shares of the Company's Class A common stock at a discount of 42% to the average of the two lowest trading closing prices of the stock for ten days prior to conversion. This note was amended in November 2019 to affect a floor in the conversion price of $0.15 per share. The note was fully converted as of March 31, 2020. - 115,000 On December 7, 2018, the Company entered into a variable convertible note for $130,000 with net proceeds of $122,200. The note is due September 7, 2019 and bears interest at 12% per annum. The note is immediately convertible into shares of the Company's Class A common stock at a discount of 40% to the lowest trading closing prices of the stock for 20 days prior to conversion. This note was amended in November 2019 to increase the principal amount by $180,000 due to penalty interest; increased the interest to 15% and affect a floor in the conversion price of $0.15 per share. 105,000 195,000 On November 6, 2019, the Company issued a convertible note for $600,000 with net proceeds of $570,000. The note is due November 6, 2020 and bears interest at 15% per annum. The note is immediately convertible into shares of the Company's Class A common stock at a fixed price of $0.15 per share. 580,000 600,000 On November 6, 2019, the Company issued a convertible note for $350,000. The note is due November 6, 2020 and bears interest at 15% per annum. The note is immediately convertible into shares of the Company's Class A common stock at a fixed price of $0.15 per share. 350,000 350,000 On November 14, 2019, the Company issued a convertible note for $137,870. The note is due November 13, 2020 and bears interest at 15% per annum. The note is immediately convertible into shares of the Company's Class A common stock at a fixed price of $0.15 per share. The note was fully converted as of March 31, 2020. - 137,870 On November 14, 2019, the Company issued convertible note for $35,000. The note is due November 13, 2020 and bears interest at 15% per annum. The note is immediately convertible into shares of the Company's Class A common stock at a fixed price of $0.15 per share. 35,000 35,000 On November 14, 2019, the Company issued convertible note for $200,000. The note is due November 13, 2020 and bears interest at 15% per annum. The note is immediately convertible into shares of the Company's Class A common stock at a fixed price of $0.15 per share. 200,000 200,000 Total convertible notes payable 3,026,186 3,630,639 Less: discount on convertible notes payable (601,059) (846,833) Total convertible notes payable, net of discount 2,425,127 2,783,806 Less: current portion of convertible notes payable (280,084) (1,110,118) Long-term portion of convertible notes payable $ 2,145,043 $ 1,673,688 |
Schedule of Acitivity of Convertible Notes Payable | A summary of the activity in the Company's convertible notes payable is provided below: Balance outstanding, December 31, 2019 $ 2,783,806 Repayment of notes (73,902) Conversion of notes payable to common stock (545,551) Penalty interest added to convertible note 15,000 Amortization of debt discounts 245,774 Balance outstanding, March 31, 2020 $ 2,425,127 |
Note 8 - Stockholders' Equity (
Note 8 - Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Table Text Block Supplement [Abstract] | |
Stock option activity | The following summarizes the stock option activity for the three months ended March 31, 2020: Weighted- Weighted- Average Average Remaining Aggregate Exercise Contractual Intrinsic Options Price Life (Years) Value Outstanding at December 31, 2019 1,790,000 $ 0.19 8.10 $ 176,445 Granted - Forfeited - Exercised - Outstanding at March 31, 2020 1,790,000 $ 0.19 7.85 $ - Vested and expected to vest at March 31, 2020 1,790,000 $ 0.19 7.85 $ - Exercisable at March 31, 2020 951,344 $ 0.24 7.67 $ - |
Summary of options outstanding and exercisable | The following table summarizes information about options outstanding and exercisable as of March 31, 2020: Options Outstanding Options Exercisable Weighted Weighted Weighted Average Average Average Exercise Number Remaining Exercise Number Exercise Price of Shares Life (Years) Price of Shares Price $ 0.05 979,000 8.13 $ 0.05 393,938 $ 0.05 0.10 85,000 8.03 0.10 37,188 0.10 0.13 388,500 7.34 0.13 267,094 0.13 0.26 114,000 7.09 0.26 85,500 0.26 0.90 223,500 7.02 0.90 167,624 0.90 1,790,000 951,344 |
Note 9 - Business Combination (
Note 9 - Business Combination (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Business Acquisition, Pro Forma Information | However, pro forma results do include any anticipated cost savings or other effects of the planned integration of these entities, and are not necessarily indicative of the results that would have occurred if the business combination had been in effect on the dates indicated. Pro Forma Combined Financials (unaudited) Three Months Ended March 31, 2020 2019 Sales $ 9,821,341 $ 10,435,563 Cost of goods sold 7,672,154 8,972,333 Gross profit 2,149,187 1,463,230 Operating expenses 3,059,891 3,522,172 Loss from operations (910,704) (2,058,942) Net income (loss) from continuing operations 443,329 (3,187,476) Income (loss) per share 0.00 (0.10) |
Morris | |
Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination | A summary of the purchase price allocation at fair value is below. Purchase Allocation Cash $ 192,300 Accounts receivable 2,146,541 Inventory 453,841 Contract assets 210,506 Property and equipment 4,214,965 Customer list 490,000 Goodwill 113,592 Accounts payable (234,236) Accrued expenses (351,865) Contract liabilities (92,043) Notes payable (1,033,695) $ 6,109,906 The purchase price was paid as follows: Cash $ 2,159,906 Seller notes 3,450,000 Acquisition contingency 500,000 $ 6,109,906 |
Deluxe | |
Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination | A summary of the purchase price allocation at fair value is below. Purchase Allocation Cash $ 140,948 Accounts receivable 2,785,454 Inventory 736,312 Prepaid expenses and other current assets 61,320 Contract assets 350,138 Property and equipment 9,502,045 Customer list 1,050,000 Accounts payable (1,122,317) Accrued expenses and other current liabilities (163,891) Contract liabilities (155,016) Notes payable (7,544,871) Bargain purchase gain (2,143,779) $ 3,496,343 The purchase price was paid as follows: Cash $ 1,100,000 Seller notes 2,396,343 $ 3,496,343 |
Excel | |
Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination | A summary of the purchase price allocation at fair value is below. The business combination accounting is not yet complete and the amounts assigned to assets acquired and liabilities assumed are provisional. Therefore, this may result in future adjustments to the provisional amounts as information is obtained about facts and circumstances that existed at the acquisition date. Purchase Allocation Cash $ 174,283 Accounts receivable 1,943,481 Other current assets 9,074 Property and equipment 2,958,190 Customer list 910,000 Accounts payable (340,151) Accrued expenses and other current liabilities (262,506) Goodwill 99,629 $ 5,492,000 The purchase price was paid as follows: Cash $ 2,600,000 Contingent consideration 592,000 Seller notes 2,300,000 $ 5,492,000 |
Note 10 - Industry Segments (Ta
Note 10 - Industry Segments (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Table Text Block Supplement [Abstract] | |
Schedule of Segment Reporting Information, by Segment | This summary presents the Company's segments, QCA, APF, Morris, Deluxe and Excel for the three months ended March 31, 2020 and 2019: Three Months Ended March 31, 2020 2019 Revenue QCA $ 2,030,126 $ 2,477,542 APF 529,041 1,708,992 Morris 3,254,927 2,870,797 Deluxe 2,394,164 - Excel 627,338 - Unallocated and eliminations - 68,658 $ 8,835,596 $ 7,125,989 Gross profit QCA $ 505,782 $ 658,394 APF (29,642) 700,200 Morris 629,623 721,166 Deluxe 514,195 - Excel 139,786 - Unallocated and eliminations - 37,773 $ 1,759,744 $ 2,117,533 Depreciation and amortization QCA $ 53,981 $ 84,397 APF 71,961 68,708 Morris 151,264 91,859 Deluxe 176,250 - Excel 30,806 - Unallocated and eliminations - 8,333 $ 484,262 $ 253,297 Interest Expenses QCA $ 120,445 $ 180,582 APF 79,944 - Morris 374,400 45,831 Deluxe 257,202 - Excel 47,855 - Unallocated and eliminations 769,381 805,217 $ 1,649,227 $ 1,031,630 Net income (loss) QCA $ (185,690) $ (130,442) APF (365,115) 411,402 Morris 320,412 (17,413) Deluxe (79,306) - Excel (268,815) - Unallocated and eliminations 828,902 (1,693,885) $ 250,388 $ (1,430,338) As of As of March 31, December 31, 2020 2019 Total Assets QCA $ 6,439,268 $ 6,359,711 APF 4,880,556 5,344,175 Morris 7,989,351 8,771,165 Deluxe 13,837,271 14,810,307 Excel 5,904,911 - Unallocated and eliminations 345,629 516,240 $ 39,396,986 $ 35,801,598 Goodwill QCA $ 1,963,761 $ 1,963,761 APF 440,100 440,100 Morris 113,592 113,592 Deluxe - - Excel 99,629 - Unallocated and eliminations - - $ 2,617,082 $ 2,517,453 Accounts receivable, net QCA $ 1,311,406 $ 1,234,898 APF 458,597 831,477 Morris 2,579,153 3,488,340 Deluxe 2,510,114 3,156,492 Excel 1,864,964 - Unallocated and eliminations - 20,358 $ 8,724,234 $ 8,731,565 |
Note 11 - Derivative Liabilit_2
Note 11 - Derivative Liabilities and Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Table Text Block Supplement [Abstract] | |
Schedule of Assumptions for Fair Value as of Balance Sheet Date of Assets or Liabilities | The Company estimated the fair value of the derivative liabilities using the Black-Scholes Option Pricing Model and the following key assumptions at December 31, 2019: December 31, 2019 Risk free rate 1.60% Volatility 287%-298% Expected terms (years) 0.5 to 1.26 Dividend rate 0% |
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation | The following table provides a summary of the fair value of the derivative liabilities as of March 31, 2020 and December 31, 2019. There were no derivative liabilities at March 31, 2020 as the convertible notes with variable conversion prices were repaid during the three months ended March 31, 2020. Fair Value Fair Value Measurements at As of March 31, 2020 Description March 31, 2020 Using Fair Value Hierarchy Level 1 Level 2 Level 3 Conversion feature on convertible notes $ - $ - $ - $ - Fair Value Fair Value Measurements at As of December 31, 2019 Description December 31, 2019 Using Fair Value Hierarchy Level 1 Level 2 Level 3 Conversion feature on convertible notes $ 2,298,609 $ - $ - $ 2,298,609 |
Schedule of Derivative Liabilities at Fair Value | The below table presents the change in the fair value of the derivative liabilities during the three months ended March 31, 2020: Derivative liability balance, December 31, 2019 $ 2,298,609 Change in derivative liability during the period (2,298,609) Derivative liability balance, March 31, 2020 $ - |
Note 12 - Discontinued Operat_2
Note 12 - Discontinued Operations (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Table Text Block Supplement [Abstract] | |
Disposal Groups, Including Discontinued Operations | The operating results for VWES have been presented in the accompanying consolidated statement of operations for the nine months ended March 31, 2020 and 2019 as discontinued operations and are summarized below: Three Months Ended March 31, 2020 2019 Revenue $ - $ - Cost of revenue - - Gross Profit - - Operating expenses - 95,179 Loss from operations - (95,179) Other income (expenses) - - Net loss $ - $ (95,179) |
Note 2 - Summary of Significa_4
Note 2 - Summary of Significant Accounting Policies: Cash, Policy: Restrictions on Cash and Cash Equivalents (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 |
Cash | $ 257,900 | $ 189,728 | |
Other non-current assets | 326,744 | $ 319,344 | |
Total cash and restricted cash shown in statement of cash flows | 257,900 | 397,039 | |
Restricted Cash {1} | |||
Other non-current assets | $ 0 | $ 207,311 |
Note 2 - Summary of Significa_5
Note 2 - Summary of Significant Accounting Policies: Major Customers (Details) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Accounts Receivable Concentration Risk | |||
Concentration Risk, Customer | The Company had two customers that made up 15% and 11%, respectively, of accounts receivable | The Company had one customer that made up 7%, respectively, of accounts receivable | |
Revenues Concentration Risk | |||
Concentration Risk, Customer | Company had two customers that made up 14% and 11%, respectively, of total revenues | Company had two customers that made up 24% and 10%, respectively, of total revenues |
Note 2 - Summary of Significa_6
Note 2 - Summary of Significant Accounting Policies: Accounts Receivable (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Text Block [Abstract] | ||
Accounts Receivable, Allowance for Credit Loss | $ 0 | $ 0 |
Note 2 - Summary of Significa_7
Note 2 - Summary of Significant Accounting Policies: Inventory: Schedule of Inventory, Current (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Text Block [Abstract] | ||
Raw materials | $ 1,707,405 | $ 1,791,733 |
WIP | 232,616 | 576,196 |
Finished goods | 394,706 | 59,972 |
Total inventory | 2,334,727 | 2,427,901 |
Reserve | 0 | (26,659) |
Inventory | $ 2,334,727 | $ 2,401,242 |
Note 2 - Summary of Significa_8
Note 2 - Summary of Significant Accounting Policies: Property and Equipment: Schedule of Property and Equipment, Estimated Useful Lives (Details) | 3 Months Ended |
Mar. 31, 2020 | |
Vehicles | Minimum | |
Property, Plant and Equipment, Useful Life | 5 years |
Vehicles | Maximum | |
Property, Plant and Equipment, Useful Life | 7 years |
Building Improvements | Minimum | |
Property, Plant and Equipment, Useful Life | 15 years |
Building Improvements | Maximum | |
Property, Plant and Equipment, Useful Life | 39 years |
Leasehold Improvements [Member] | |
Property, Plant and Equipment, Useful Life | 15 years |
Machinery and equipment | Minimum | |
Property, Plant and Equipment, Useful Life | 5 years |
Machinery and equipment | Maximum | |
Property, Plant and Equipment, Useful Life | 7 years |
Note 2 - Summary of Significa_9
Note 2 - Summary of Significant Accounting Policies: Property and Equipment: Property, Plant and Equipment (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Total Property and equipment | $ 21,682,292 | $ 18,655,920 |
Less: Accumulated depreciation | (1,904,166) | (1,498,075) |
Property and equipment, net | 19,778,126 | 17,157,845 |
Vehicles | ||
Total Property and equipment | 911,114 | 563,614 |
Machinery and equipment | ||
Total Property and equipment | 4,484,652 | 3,792,964 |
Furniture and Fixtures | ||
Total Property and equipment | 119,526 | 119,526 |
Building Improvements | ||
Total Property and equipment | 16,167,000 | 14,167,000 |
Leasehold Improvements [Member] | ||
Total Property and equipment | $ 0 | $ 12,816 |
Note 2 - Summary of Signific_10
Note 2 - Summary of Significant Accounting Policies: Purchased Intangibles and Other Long-lived Assets: Schedule of Finite Lived Intangible Assets, Estimated Useful Lives (Details) | 3 Months Ended |
Mar. 31, 2020 | |
Software Development | |
Finite-Lived Intangible Asset, Useful Life | 5 years |
Customer Lists | Minimum | |
Finite-Lived Intangible Asset, Useful Life | 3 years |
Customer Lists | Maximum | |
Finite-Lived Intangible Asset, Useful Life | 15 years |
Noncompete Agreements | |
Finite-Lived Intangible Asset, Useful Life | 15 years |
Note 2 - Summary of Signific_11
Note 2 - Summary of Significant Accounting Policies: Purchased Intangibles and Other Long-lived Assets: Schedule of Intangible Assets (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Total Intangible assets | $ 4,149,661 | $ 3,239,661 |
Less: Accumulated amortization | (543,214) | (465,043) |
Total Intangible assets | 3,606,447 | 2,774,618 |
Computer Software, Intangible Asset | ||
Total Intangible assets | 278,474 | 278,474 |
Noncompete Agreements | ||
Total Intangible assets | 100,000 | 100,000 |
Customer Lists | ||
Total Intangible assets | $ 3,771,187 | $ 2,861,187 |
Note 2 - Summary of Signific_12
Note 2 - Summary of Significant Accounting Policies: Purchased Intangibles and Other Long-lived Assets: Schedule of Finite-Lived Intangible Assets, Future Amortization Expense (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Text Block [Abstract] | ||
2021 | $ 589,960 | |
2022 | 589,960 | |
2023 | 548,473 | |
2024 | 253,028 | |
2025 | 253,028 | |
Thereafter | 1,371,998 | |
Total | $ 3,606,447 | $ 2,774,618 |
Note 2 - Summary of Signific_13
Note 2 - Summary of Significant Accounting Policies: Purchased Intangibles and Other Long-lived Assets: Schedule of Other Assets, Noncurrent (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Other non-current assets | $ 326,744 | $ 319,344 |
Deposits {1} | ||
Other non-current assets | 293,327 | 285,927 |
Other | ||
Other non-current assets | $ 33,417 | $ 33,417 |
Note 2 - Summary of Signific_14
Note 2 - Summary of Significant Accounting Policies: Earnings (loss) per share : Computation of basic and diluted EPS (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Text Block [Abstract] | ||
Income (loss) available to stockholders | $ 250,388 | $ 989,511 |
Convertible debt and options | (1,974,908) | 0 |
Income (loss) available to stockholders plus assumed conversions | $ 1,724,520 | $ 989,511 |
Weighted Average Number of Shares Outstanding, Basic | 127,207,693 | 30,782,076 |
Convertible debt and options | 10,828,330 | 0 |
Weighted Average Number of Shares Outstanding, Diluted | 138,036,023 | 30,782,076 |
Earnings Per Share, Basic | $ 0 | $ 0.03 |
Convertible debt and options | .00 | .00 |
Earnings Per Share, Diluted | $ (0.01) | $ 0.03 |
Note 2 - Summary of Signific_15
Note 2 - Summary of Significant Accounting Policies: Recent Accounting Pronouncements (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 | Jan. 02, 2019 |
Text Block [Abstract] | |||
Right of use asset | $ 596,816 | $ 660,032 | $ 891,413 |
Lease payable obligation | $ 607,799 | $ 670,554 | $ 891,413 |
Note 4 - Leases (Details)
Note 4 - Leases (Details) | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Operating lease expense | $ 87,584 |
Payment of Operating lease | $ 87,123 |
Finance Lease, Weighted Average Remaining Lease Term | 2 years 1 month 24 days |
Finance Lease, Weighted Average Discount Rate, Percent | 15.00% |
Morris | |
Sale-leaseback | $ 3,267,000 |
Deluxe | |
Sale-leaseback | 9,000,000 |
Excel | |
Sale-leaseback | 2,000,000 |
Finance Leases | APF | |
Monthly Operating Lease Obligation | 15,833 |
Capital Lease Obligations | 1,900,000 |
Sale-leaseback | 1,900,000 |
Finance Leases | Morris | |
Monthly Operating Lease Obligation | 27,500 |
Sale-leaseback | 3,267,000 |
Finance Leases | Deluxe | |
Monthly Operating Lease Obligation | 75,000 |
Sale-leaseback | 9,000,000 |
Finance Leases | Excel | |
Monthly Operating Lease Obligation | 18,700 |
Sale-leaseback | $ 2,000,000 |
Note 4 - Leases_ Schedule of Fu
Note 4 - Leases: Schedule of Future Minimum Lease Payments for Capital Leases (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 | Jan. 02, 2019 |
Finance Leases | |||
2021 | $ 1,737,720 | ||
2022 | 1,763,064 | ||
2023 | 1,795,633 | ||
2024 | 1,797,556 | ||
2025 | 1,808,083 | ||
Thereafter | 18,884,602 | ||
Finance Lease, Liability, Payment, Due | 27,786,658 | ||
Imputed Interest on Capital Lease | (11,798,681) | ||
Total obligation | 15,987,977 | ||
Financing lease obligation, current portion | (453,233) | ||
Financing lease obligations, net of current portion | 15,534,744 | ||
Operating Leases | |||
2021 | 351,847 | ||
2022 | 286,847 | ||
2023 | 70,087 | ||
2024 | 5,850 | ||
2025 | 0 | ||
Thereafter | 0 | ||
Total minimum lease payments | 714,631 | ||
Less imputed interest | (106,832) | ||
Total obligation | 607,799 | $ 670,554 | $ 891,413 |
Less:Operating lease obligation, current portion | (279,233) | (266,623) | |
Operating lease obligations, net of current portion | $ 328,566 | $ 403,931 |
Note 4 - Leases_ Schedule of Ri
Note 4 - Leases: Schedule of Right of Use Assets and Lease Liabilities (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 | Jan. 02, 2019 |
Text Block [Abstract] | |||
Operating lease right of use assets | $ 596,816 | $ 660,032 | $ 891,413 |
Operating lease obligation, current portion | 279,233 | 266,623 | |
Operating lease obligations, net of current portion | 328,566 | 403,931 | |
Operating Lease, Liability | $ 607,799 | $ 670,554 | $ 891,413 |
Note 5 - Notes Payable (Details
Note 5 - Notes Payable (Details) - USD ($) | May 03, 2018 | Apr. 05, 2018 | Feb. 28, 2020 | Jan. 31, 2020 | Nov. 30, 2019 | Oct. 31, 2019 | Jan. 31, 2019 | May 31, 2018 | May 22, 2018 | Mar. 31, 2020 | Dec. 31, 2019 |
Notes payable | $ 20,530,001 | $ 18,574,355 | |||||||||
Investor | |||||||||||
Principal amount | $ 48,000 | ||||||||||
Interest rate | 15.00% | ||||||||||
Due date | Jan. 31, 2020 | ||||||||||
Morris | |||||||||||
Principal amount | $ 107,997 | ||||||||||
Interest rate | 9.40% | ||||||||||
Short Term Notes | |||||||||||
Principal amount | $ 1,950,000 | ||||||||||
Secured APF Notes | |||||||||||
Periodic payments | $ 19,975 | ||||||||||
Interest rate | 4.25% | ||||||||||
Due date | Apr. 30, 2020 | ||||||||||
Debt description | The note with an outstanding balance as of March 31, 2020 of approximately $1.09 million was amended subsequent to March 31, 2020 and make reference to Note 13. The company is currently negotiating the extension of the other note with an outstanding balance of approximately $562,000 with the lender. | ||||||||||
Equipment note | |||||||||||
Principal amount | $ 630,750 | ||||||||||
Periodic payments | $ 3,795 | ||||||||||
Interest rate | 10.25% | ||||||||||
Due date | May 4, 2022 | ||||||||||
San Diego building | |||||||||||
Principal amount | $ 2,740,000 | ||||||||||
Periodic payments | $ 15,984 | ||||||||||
Interest rate | 7.00% | ||||||||||
Due date | Nov. 30, 2034 | ||||||||||
Merchant Agreements | |||||||||||
Principal amount | $ 300,000 | $ 600,000 | |||||||||
Periodic payments | $ 11,667 | $ 29,978 | |||||||||
Interest rate | 20.00% | 13.00% | |||||||||
Repayment of debt | $ 420,000 | $ 839,400 | |||||||||
VWES | |||||||||||
Principal amount | $ 3,000,000 | ||||||||||
Periodic payments | $ 150,000 | ||||||||||
Interest rate | 7.00% | ||||||||||
Notes payable | $ 2,910,000 | ||||||||||
APF | |||||||||||
Principal amount | $ 1,000,000 | ||||||||||
Credit line | $ 2,800,000 | ||||||||||
Minimum interest | 7.75% | ||||||||||
Exit fee | 1.00% | ||||||||||
Morris | Promissory Notes | |||||||||||
Principal amount | $ 3,100,000 | ||||||||||
Periodic payments | $ 31,755 | ||||||||||
Interest rate | 4.25% | ||||||||||
Notes payable | $ 350,000 | ||||||||||
Deluxe | Celtic Capital | |||||||||||
Principal amount | $ 200,000 | ||||||||||
Periodic payments | 3,333 | ||||||||||
Deluxe | First note | |||||||||||
Principal amount | 1,900,000 | ||||||||||
Periodic payments | $ 19,463 | ||||||||||
Interest rate | 4.25% | ||||||||||
Deluxe | Second Note | |||||||||||
Principal amount | $ 496,343 | ||||||||||
Interest rate | 8.75% | ||||||||||
Due date | Jan. 31, 2020 | ||||||||||
Excel | Celtic Capital | |||||||||||
Principal amount | 425,000 | ||||||||||
Periodic payments | $ 7,083 | ||||||||||
Excel | Promissory Notes | |||||||||||
Principal amount | $ 2,300,000 | ||||||||||
Interest rate | 4.25% | ||||||||||
Due date | Feb. 29, 2024 |
Note 5 - Notes Payable_ Schedul
Note 5 - Notes Payable: Schedule of Notes Payable (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Notes payable, current portion | $ 9,225,062 | $ 8,724,171 |
Notes Payable | 20,530,001 | 18,574,355 |
Lines of Credit | ||
Notes payable, current portion | 3,361,446 | 3,816,103 |
Equipment Loans | ||
Notes payable, current portion | 310,921 | 368,011 |
Short Term Notes | ||
Notes payable, current portion | 5,122,695 | 3,849,273 |
Merchant Loans | ||
Notes payable, current portion | 430,000 | 690,784 |
Equipment, Noncurrent | ||
Long-term Debt | $ 11,304,939 | $ 9,850,184 |
Note 5 - Notes Payable_ Future
Note 5 - Notes Payable: Future Scheduled Maturities of Outstanding Notes Payable to Third Parties (Details) | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Text Block [Abstract] | |
2021 | $ 9,225,062 |
2022 | 1,276,038 |
2023 | 4,896,304 |
2024 | 2,537,129 |
2025 | 196,832 |
Thereafter | 2,398,636 |
Total | $ 20,530,001 |
Note 6 - Notes Payable, Relat_3
Note 6 - Notes Payable, Related Parties: Schedule of Notes Payable, Related Parties (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Notes payable, related parties, current portion | $ 350,998 | $ 341,820 |
Notes Payable 1 | ||
Notes payable, related parties, current portion | 4,500 | 4,500 |
Notes Payable 2 | ||
Notes payable, related parties, current portion | 7,500 | 7,500 |
Notes Payable 3 | ||
Notes payable, related parties, current portion | $ 338,998 | $ 329,820 |
Note 7 - Convertible Notes Pa_3
Note 7 - Convertible Notes Payable: Schedule of Convertible Notes Payable (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Convertible Notes Payable | $ 3,026,186 | $ 3,630,639 |
Debt Instrument, Unamortized Discount | (601,059) | (846,833) |
Convertible Notes Payable, net of discount | 2,425,127 | 2,783,806 |
Convertible notes payable, current | (280,084) | (1,110,118) |
Convertible notes payable, net of current portion | 2,145,043 | 1,673,688 |
Convertible Notes Payable 1 | ||
Convertible Notes Payable | 25,000 | 25,000 |
Convertible Notes Payable 2 | ||
Convertible Notes Payable | 1,271,186 | 1,324,588 |
Convertible Notes Payable 3 | ||
Convertible Notes Payable | 10,000 | 10,000 |
Convertible Notes Payable 4 | ||
Convertible Notes Payable | 450,000 | 450,000 |
Convertible Notes Payable 5 | ||
Convertible Notes Payable | 0 | 500 |
Convertible Notes Payable 6 | ||
Convertible Notes Payable | 0 | 187,681 |
Convertible Notes Payable 7 | ||
Convertible Notes Payable | 0 | 115,000 |
Convertible Notes Payable 8 | ||
Convertible Notes Payable | 105,000 | 195,000 |
Convertible Notes Payable 9 | ||
Convertible Notes Payable | 580,000 | 600,000 |
Convertible Notes Payable 10 | ||
Convertible Notes Payable | 350,000 | 350,000 |
Convertible Notes Payable 11 | ||
Convertible Notes Payable | 0 | 137,870 |
Convertible Notes Payable 12 | ||
Convertible Notes Payable | 35,000 | 35,000 |
Convertible Notes Payable 13 | ||
Convertible Notes Payable | $ 200,000 | $ 200,000 |
Note 7 - Convertible Notes Pa_4
Note 7 - Convertible Notes Payable: Schedule of Acitivity of Convertible Notes Payable (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Text Block [Abstract] | ||
Convertible Notes Payable, net of discount at beginning | $ 2,783,806 | |
Repayment of notes | (73,902) | $ (441,699) |
Conversion of notes payable to common stock | (545,551) | |
Penalty interest added to convertible note | 15,000 | |
Amortization of debt discounts | 245,774 | $ 397,550 |
Convertible Notes Payable, net of discount at end | $ 2,425,127 |
Note 8 - Stockholders' Equity_2
Note 8 - Stockholders' Equity (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Common stock issued, amount | $ 250,000 | ||
(Gain) loss on extinguishment of debt | (154,592) | $ 0 | |
Issuance of shares of common stock for settlement of unpaid salaries | 603,463 | ||
Stock Options Expense | 19,556 | $ 19,341 | |
Unrecognized stock option expense | $ 101,819 | ||
Preferred Stock [Member] | |||
Preferred Stock, Shares Authorized | 5,000,000 | 5,000,000 | |
Preferred Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 | |
Preferred Stock, Shares Issued | 0 | 0 | |
Preferred Stock, Shares Outstanding | 0 | 0 | |
Convertible Notes | |||
Stock issued for settlement of debt, Amount | $ 485,120 | ||
Fair value of stock | 330,528 | ||
(Gain) loss on extinguishment of debt | (154,592) | ||
Common Class B | |||
Issuance of shares of common stock for settlement of unpaid salaries | $ 603,463 | ||
Issuance of shares of common stock for settlement of unpaid salaries, shares | 4,023,088 | ||
Common Class C | |||
Stock issued for settlement of debt, shares | 1,617,067 | ||
Common Class A | |||
Common stock issued, shares | 3,941,753 | ||
Common stock issued, amount | $ 250,000 | ||
Stock issued for debt conversion, shares | 4,648,879 | ||
Stock issued for debt conversion, Amount | $ 697,332 | ||
Stock issued for settlement of debt, shares | 1,617,067 | ||
Stock issued for penalty, shares | 300,000 | ||
Stock issued for penalty, Amount | $ 44,700 | ||
Series B Preferred Stock | |||
Preferred Stock, Shares Authorized | 100 | 100 | |
Preferred Stock, Par or Stated Value Per Share | $ 1 | $ 1 | |
Preferred Stock, Shares Issued | 5 | 0 | |
Preferred Stock, Shares Outstanding | 5 | 0 | |
Warrant [Member] | |||
Warrants granted | 275,000 | ||
Warrant term | 11 months 23 days | ||
Warrant exercise price | $ 1.01 |
Note 8 - Stockholders' Equity_
Note 8 - Stockholders' Equity: Stock option activity (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Options | ||
Options outstanding, beginning balance | 1,790,000 | |
Options Granted | 0 | |
Options, Forfeited | 0 | |
Options Exercised | 0 | |
Options outstanding, ending balance | 1,790,000 | 1,790,000 |
Options Vested and expected to vest | 1,790,000 | |
Options, Exercisable | 951,344 | |
Weighted Average Price Per Share | ||
Weighted average price per share - beginning balance | $ 0.19 | |
Weighted average price per share - ending balance | 0.19 | $ 0.19 |
Weighted average price per share - Vested and Expected to Vest | 0.19 | |
Weighted average price per share - Exercisable | $ 0.24 | |
Weighted Average Remaining Contractual Life (Years) | ||
Weighted Average Remaining Contractual Term, Options, Outstanding | 7 years 10 months 6 days | 8 years 1 month 6 days |
Weighted Average Remaining Contractual Term, Options, Vested and Expected to Vest | 7 years 10 months 6 days | |
Weighted Average Remaining Contractual Term, Options, Exercisable | 7 years 8 months 2 days | |
Aggregate Intrinsic Value | ||
Options, Outstanding at beginning, Intrinsic Value | $ 176,445 | |
Options, Vested and Expected to Vest, Outstanding, Aggregate Intrinsic Value | 0 | |
Options, Exercisable, Intrinsic Value | 0 | |
Options, Outstanding at end Intrinsic Value | $ 0 | $ 176,445 |
Note 8 - Stockholders' Equity_3
Note 8 - Stockholders' Equity: Schedule of Common Stock Outstanding Roll Forward (Details) - $ / shares | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Options outstanding | 1,790,000 | 1,790,000 |
Options outstanding, weighted average exercise price | $ 0.19 | $ 0.19 |
Options exercisable | 951,344 | |
Options exercisable, weighted average exercise price | $ 0.24 | |
Stock Option 1 | ||
Options outstanding | 979,000 | |
Options outstanding, weighted average remaining contractual life (Years) | 8 years 1 month 16 days | |
Options outstanding, weighted average exercise price | $ 0.05 | |
Options exercisable | 393,938 | |
Options exercisable, weighted average exercise price | $ 0.05 | |
Stock Option 2 | ||
Options outstanding | 85,000 | |
Options outstanding, weighted average remaining contractual life (Years) | 8 years 11 days | |
Options outstanding, weighted average exercise price | $ 0.10 | |
Options exercisable | 37,188 | |
Options exercisable, weighted average exercise price | $ 0.1 | |
Stock Option 3 | ||
Options outstanding | 388,500 | |
Options outstanding, weighted average remaining contractual life (Years) | 7 years 4 months 2 days | |
Options outstanding, weighted average exercise price | $ 0.13 | |
Options exercisable | 267,094 | |
Options exercisable, weighted average exercise price | $ 0.13 | |
Stock Option 4 | ||
Options outstanding | 114,000 | |
Options outstanding, weighted average remaining contractual life (Years) | 7 years 1 month 2 days | |
Options outstanding, weighted average exercise price | $ 0.26 | |
Options exercisable | 85,500 | |
Options exercisable, weighted average exercise price | $ 0.26 | |
Stock Option 5 | ||
Options outstanding | 223,500 | |
Options outstanding, weighted average remaining contractual life (Years) | 7 years 7 days | |
Options outstanding, weighted average exercise price | $ 0.90 | |
Options exercisable | 167,624 | |
Options exercisable, weighted average exercise price | $ 0.9 |
Note 9 - Business Combination_2
Note 9 - Business Combination (Details) | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Morris | |
Success fee | $ 500,000 |
Sale-leaseback | 3,267,000 |
Deluxe | |
Sale-leaseback | 9,000,000 |
Bargain purchase gain | 2,143,779 |
Excel | |
Sale-leaseback | $ 2,000,000 |
Note 9 - Business Combination_
Note 9 - Business Combination: Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Purchase Price Paid, Contingent consideration | $ (500,000) | $ 0 |
Morris | ||
Cash | 192,300 | |
Accounts receivable | 2,146,541 | |
Inventory | 453,841 | |
Contract assets | 210,506 | |
Property and equipment | 4,214,965 | |
Customer list | 490,000 | |
Goodwill | 113,592 | |
Accounts payable | (234,236) | |
Accrued expenses | (351,865) | |
Contract liabilities | (92,043) | |
Notes payable | (1,033,695) | |
Purchase price allocation | 6,109,906 | |
Purchase Price Paid, Cash | 2,159,906 | |
Purchase Price Paid, Seller Notes | 3,450,000 | |
Purchase Price Paid, Acquisition Contingency | 500,000 | |
Business Combination, Step Acquisition, Equity Interest in Acquiree, Fair Value | 6,109,906 | |
Deluxe | ||
Cash | 140,948 | |
Accounts receivable | 2,785,454 | |
Inventory | 736,312 | |
Prepaid expenses and other current assets | 61,320 | |
Contract assets | 350,138 | |
Property and equipment | 9,502,045 | |
Customer list | 1,050,000 | |
Accounts payable | (1,122,317) | |
Accrued expenses and other current liabilities | (163,891) | |
Contract liabilities | (155,016) | |
Notes payable | (7,544,871) | |
Bargain purchase gain | (2,143,779) | |
Purchase price allocation | 3,496,343 | |
Purchase Price Paid, Cash | 1,100,000 | |
Purchase Price Paid, Seller Notes | 2,396,343 | |
Business Combination, Step Acquisition, Equity Interest in Acquiree, Fair Value | 3,496,343 | |
Excel | ||
Cash | 174,283 | |
Accounts receivable | 1,943,481 | |
Prepaid expenses and other current assets | 9,074 | |
Property and equipment | 2,958,190 | |
Customer list | 910,000 | |
Goodwill | 99,629 | |
Accounts payable | (340,151) | |
Accrued expenses and other current liabilities | (262,506) | |
Purchase price allocation | 5,492,000 | |
Purchase Price Paid, Cash | 2,600,000 | |
Purchase Price Paid, Contingent consideration | 592,000 | |
Purchase Price Paid, Seller Notes | 2,300,000 | |
Business Combination, Step Acquisition, Equity Interest in Acquiree, Fair Value | $ 5,492,000 |
Note 9 - Business Combination_3
Note 9 - Business Combination: Business Acquisition, Pro Forma Information (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Text Block [Abstract] | ||
Sales | $ 9,821,341 | $ 10,435,563 |
Cost of goods sold | 7,672,154 | 8,972,333 |
Gross profit | 2,149,187 | 1,463,230 |
Operating Expenses | 3,059,891 | 3,522,172 |
Loss from Operations | (910,704) | (2,058,942) |
Net income (loss) from continuing operations | $ 443,329 | $ (3,187,476) |
Income (loss) per share | $ .00 | $ (0.10) |
Note 10 - Industry Segments_ Sc
Note 10 - Industry Segments: Schedule of Segment Reporting Information, by Segment (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Revenue | $ 8,835,596 | $ 7,125,989 | |
Gross Profit | 1,759,744 | 2,117,533 | |
Interest Expenses | 1,649,227 | 1,031,630 | |
Net income (loss) | 250,388 | 989,511 | |
Total Assets | 39,396,986 | $ 35,801,598 | |
Goodwill | 2,617,082 | 2,517,453 | |
Accounts receivable, net | 8,724,234 | 8,731,565 | |
QCA | |||
Revenue | 2,030,126 | 2,477,542 | |
Gross Profit | 505,782 | 658,394 | |
Depreciation and amortization | 53,981 | 84,397 | |
Interest Expenses | 120,445 | 180,582 | |
Net income (loss) | (185,690) | (130,442) | |
Total Assets | 6,439,268 | 6,359,711 | |
Goodwill | 1,963,761 | 1,963,761 | |
Accounts receivable, net | 1,311,406 | 1,234,898 | |
APF | |||
Revenue | 529,041 | 1,708,992 | |
Gross Profit | (29,642) | 700,200 | |
Depreciation and amortization | 71,961 | 68,708 | |
Interest Expenses | 79,944 | 0 | |
Net income (loss) | (365,115) | 411,402 | |
Total Assets | 4,880,556 | 5,344,175 | |
Goodwill | 440,100 | 440,100 | |
Accounts receivable, net | 458,597 | 831,477 | |
Morris | |||
Revenue | 3,254,927 | 2,870,797 | |
Gross Profit | 629,623 | 721,166 | |
Depreciation and amortization | 151,264 | 91,859 | |
Interest Expenses | 374,400 | 45,831 | |
Net income (loss) | 320,412 | (17,413) | |
Total Assets | 7,989,351 | 8,771,165 | |
Goodwill | 113,592 | 113,592 | |
Accounts receivable, net | 2,579,153 | 3,488,340 | |
Deluxe | |||
Revenue | 2,394,164 | 0 | |
Gross Profit | 514,195 | 0 | |
Depreciation and amortization | 176,250 | 0 | |
Interest Expenses | 257,202 | 0 | |
Net income (loss) | (79,306) | 0 | |
Total Assets | 13,837,271 | 14,810,307 | |
Goodwill | 0 | 0 | |
Accounts receivable, net | 2,510,114 | 3,156,492 | |
Excel | |||
Revenue | 627,338 | 0 | |
Gross Profit | 139,786 | 0 | |
Depreciation and amortization | 30,806 | 0 | |
Interest Expenses | 47,855 | 0 | |
Net income (loss) | (268,815) | 0 | |
Total Assets | 5,904,911 | 0 | |
Goodwill | 99,629 | 0 | |
Accounts receivable, net | 1,864,964 | 0 | |
Unallocated and Eliminiations | |||
Revenue | 0 | 68,658 | |
Gross Profit | 0 | 37,773 | |
Depreciation and amortization | 0 | 8,333 | |
Interest Expenses | 769,381 | 805,217 | |
Net income (loss) | 828,902 | (1,693,885) | |
Total Consolidated | |||
Revenue | 8,835,596 | 7,125,989 | |
Gross Profit | 1,759,744 | 2,117,533 | |
Depreciation and amortization | 484,262 | 253,297 | |
Interest Expenses | 1,649,227 | 1,031,630 | |
Net income (loss) | 250,388 | $ (1,430,338) | |
Total Assets | 39,396,986 | 35,801,598 | |
Goodwill | 2,617,082 | 2,517,453 | |
Accounts receivable, net | 8,724,234 | 8,731,565 | |
Unallocated and Eliminiations | |||
Total Assets | 345,629 | 516,240 | |
Goodwill | 0 | 0 | |
Accounts receivable, net | $ 0 | $ 20,358 |
Note 11 - Derivative Liabilit_3
Note 11 - Derivative Liabilities and Fair Value Measurements: Fair Value as of Assets or Liabilities (Details) - Derivative Liabilities | 12 Months Ended |
Dec. 31, 2019 | |
Risk Free Interest Rate | 1.60% |
Dividend rate | 0.00% |
Minimum | |
Volatility | 287.00% |
Expected terms (years) | 6 months |
Maximum | |
Volatility | 298.00% |
Expected terms (years) | 1 year 3 months 4 days |
Note 11 - Derivative Liabilit_4
Note 11 - Derivative Liabilities and Fair Value Measurements: Fair Value, Net Derivative Asset (Liability) (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Derivative Liability | $ 0 | $ 2,298,609 |
Fair Value, Inputs, Level 1 | ||
Derivative Liability | 0 | 0 |
Fair Value, Inputs, Level 2 | ||
Derivative Liability | 0 | 0 |
Fair Value, Inputs, Level 3 | ||
Derivative Liability | $ 0 | $ 2,298,609 |
Note 11 - Derivative Liabilit_5
Note 11 - Derivative Liabilities and Fair Value Measurements: Schedule of Derivative Liabilities at Fair Value (Details) | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Text Block [Abstract] | |
Derivative Liability at beginning | $ 2,298,609 |
Change in value of derivative liability | (2,298,609) |
Derivative Liabilities at end | $ 0 |
Note 12 - Discontinued Operat_3
Note 12 - Discontinued Operations: Disposal Groups, Including Discontinued Operations (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenue | $ 8,835,596 | $ 7,125,989 |
Cost of revenue | 7,075,852 | 5,008,456 |
Gross Profit | 1,759,744 | 2,117,533 |
Total operating expenses | 2,863,389 | 2,466,502 |
Loss from operations | (1,103,645) | (348,969) |
Other expenses | 1,354,033 | (1,081,369) |
Net loss | 250,388 | 989,511 |
VWES | ||
Revenue | 0 | 0 |
Cost of revenue | 0 | 0 |
Gross Profit | 0 | 0 |
Total operating expenses | 0 | 95,179 |
Loss from operations | 0 | (95,179) |
Other expenses | 0 | 0 |
Net loss | $ 0 | $ (95,179) |
Note 13 - Subsequent Events (De
Note 13 - Subsequent Events (Details) - USD ($) | 1 Months Ended | 2 Months Ended | ||
May 31, 2020 | Oct. 31, 2019 | Jun. 30, 2020 | May 31, 2020 | |
Morris | ||||
Interest rate | 9.40% | |||
Principal amount | $ 107,997 | |||
Subsequent Event [Member] | ||||
Proceeds from loans | $ 3,761,866 | |||
Subsequent Event [Member] | Morris | ||||
Interest rate | 6.00% | |||
Principal amount | $ 350,000 | $ 350,000 | ||
Periodic payments | $ 13,882 | |||
Due date | Jan. 31, 2021 | |||
Subsequent Event [Member] | Jeff Moss | ||||
Interest rate | 5.00% | |||
Principal amount | $ 798,800 | |||
Periodic payments | $ 2,605 | |||
Due date | May 4, 2027 | |||
Subsequent Event [Member] | Dwight Hargreaves | ||||
Interest rate | 6.00% | |||
Principal amount | $ 623,464 | |||
Periodic payments | $ 2,316 | |||
Due date | Jun. 5, 2026 | |||
Subsequent Event [Member] | Andy Galbach | ||||
Interest rate | 0.00% | |||
Principal amount | $ 1,239,000 | |||
Periodic payments | $ 2,644 | |||
Due date | May 27, 2022 |