Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Mar. 26, 2021 | Jun. 30, 2020 | |
Cover [Abstract] | |||
Entity Registrant Name | urban-gro, Inc. | ||
Entity Central Index Key | 0001706524 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2020 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | true | ||
Entity Ex-transition period | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 8,359,761 | ||
Entity Common Stock, Shares Outstanding | 10,866,471 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2020 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Current Assets | ||
Cash | $ 184,469 | $ 448,703 |
Accounts receivable, net | 915,052 | 1,564,969 |
Inventories | 537,104 | 676,175 |
Related party receivable | 61,678 | 49,658 |
Prepayments and other assets | 3,547,068 | 1,258,700 |
Total current assets | 5,245,371 | 3,998,205 |
Non-current assets | ||
Property, plant, and equipment, net | 129,444 | 165,035 |
Operating lease right of use assets, net | 88,889 | 215,848 |
Investments | 1,710,358 | 2,020,358 |
Goodwill | 902,067 | 902,067 |
Other assets | 84,514 | 106,179 |
Total non-current assets | 2,915,272 | 3,409,487 |
Total assets | 8,160,643 | 7,407,692 |
Current liabilities | ||
Accounts payable | 653,998 | 3,753,862 |
Accrued expenses | 1,798,494 | 1,686,841 |
Related party payable | 24,972 | |
Customer deposits | 4,878,863 | 2,915,406 |
Related party note payable | 1,000,000 | |
Notes payable, current portion | 1,854,500 | 2,812,709 |
Short-term debt, Term Loan, net | 1,868,320 | |
Short-term debt, Revolving Facility | 3,403,143 | |
Operating lease liabilities | 88,889 | 123,395 |
Total current liabilities | 14,546,207 | 12,317,185 |
Non-current liabilities | ||
Notes payable, long-term | 1,020,600 | |
Operating lease liabilities | 98,841 | |
Total non-current liabilities | 1,020,600 | 98,841 |
Total liabilities | 15,566,807 | 12,416,026 |
Commitments and contingencies, Note 12 | ||
Equity | ||
Common stock, $0.001 par value; 100,000,000 shares authorized; 4,718,714 and 4,701,552 shares issued and outstanding as of December 31, 2020 and 2019, respectively | 4,719 | 4,702 |
Additional Paid in Capital | 14,553,438 | 11,877,590 |
Accumulated deficit | (21,964,321) | (16,890,626) |
Total stockholders' deficit | (7,406,164) | (5,008,334) |
Total liabilities and stockholders' deficit | $ 8,160,643 | $ 7,407,692 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 4,718,714 | 4,701,552 |
Common stock, shares outstanding | 4,718,714 | 4,701,552 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Revenue | ||
Total Revenue | $ 25,837,917 | $ 24,189,803 |
Cost of revenue | 20,122,281 | 17,563,594 |
Gross profit | 5,715,636 | 6,626,209 |
Operating expenses | ||
Marketing | 313,784 | 1,016,073 |
General and administrative | 6,344,119 | 9,207,737 |
General and administrative - amortization of broker issuing costs and broker warrants associated with convertible debentures | 432,578 | |
Stock-based compensation | 1,803,403 | 1,830,426 |
Total operating expenses | 8,461,306 | 12,486,814 |
Loss from operations | (2,745,670) | (5,860,605) |
Non-operating income (expenses): | ||
Interest expense | (1,497,469) | (704,230) |
Interest expense - amortization of warrants and conversion price associated with convertible debentures | (1,333,520) | |
Contingent consideration | (155,000) | |
Impairment loss on investment | (310,000) | (505,766) |
Unrealized exchange loss | (397,292) | |
Other income, net | 31,736 | 53,548 |
Total non-operating expenses | (2,328,025) | (2,489,968) |
Loss before income taxes | (5,073,695) | (8,350,573) |
Income tax expense | ||
Net income (loss) | (5,073,695) | (8,350,573) |
Comprehensive income (loss) | $ (5,073,695) | $ (8,350,573) |
Earnings (loss) per share | ||
Net loss per share - basic and diluted | $ (1.06) | $ (1.90) |
Weighted average outstanding shares - basic and diluted | 4,766,294 | 4,386,343 |
Equipment Systems [Member] | ||
Revenue | ||
Total Revenue | $ 22,058,696 | $ 18,383,440 |
Services [Member] | ||
Revenue | ||
Total Revenue | 1,902,969 | 3,167,237 |
Consumable Products [Member] | ||
Revenue | ||
Total Revenue | $ 1,876,252 | $ 2,639,126 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Deficit - USD ($) | Common Stock [Member] | Additional Paid in Capital [Member] | Retained Earnings (Deficit) [Member] | Total |
Beginning balance at Dec. 31, 2018 | $ 4,205 | $ 4,709,297 | $ (8,540,053) | $ (3,826,551) |
Beginning balance, shares at Dec. 31, 2018 | 4,204,972 | |||
Stock based compensation | 1,830,426 | 1,830,426 | ||
Stock options issued for loan term revisions | 37,829 | 37,829 | ||
Stock options issued for loan term revisions, shares | ||||
Stock grants issued for loan term revisions | $ 3 | 31,297 | 31,300 | |
Stock grants issued for loan term revisions, shares | 2,667 | |||
Stock grant program vesting | $ 227 | (227) | ||
Stock grant program vesting, shares | 226,828 | |||
Stock issuance related to conversion of convertible debentures | $ 184 | 2,656,853 | $ 2,657,037 | |
Stock issuance related to conversion of convertible debentures,shares | 183,752 | |||
Claw back of stock granted, shares | 122,750 | |||
Stock issuance related to acquisition | $ 83 | 999,917 | $ 1,000,000 | |
Stock issuance related to acquisition, shares | 83,333 | |||
Warrants issued related to convertible debentures | 614,041 | 614,041 | ||
Equity value of exercise price associated with convertible debentures | 719,479 | 719,479 | ||
Broker warrants associated with issuance of convertible debentures | 278,678 | 278,678 | ||
Net loss | (8,350,573) | (8,350,573) | ||
Ending balance at Dec. 31, 2019 | $ 4,702 | 11,877,590 | (16,890,626) | (5,008,334) |
Ending balance, shares at Dec. 31, 2019 | 4,701,552 | |||
Stock based compensation | 1,803,403 | 1,803,403 | ||
Stock grant to satisfy accounts payable | $ 2 | 9,638 | $ 9,640 | |
Stock grant to satisfy accounts payable, shares | 1,606 | |||
Stock issuance related to loan term revisions | $ 16 | 99,984 | $ 100,000 | |
Stock issuance related to loan term revisions, shares | 16,667 | |||
Stock grant program vesting | $ 49 | (49) | ||
Stock grant program vesting, shares | 48,889 | |||
Claw back of stock granted | $ (183) | 183 | ||
Claw back of stock granted, shares | (183,333) | 404,167 | ||
Stock issuance related to debt | $ 83 | 499,917 | $ 500,000 | |
Stock issuance related to debt, shares | 83,333 | |||
Stock issuance related to acquisition | $ 42 | 154,958 | 155,000 | |
Stock issuance related to acquisition, shares | 41,667 | |||
Warrants issued related to debt | 76,822 | 76,822 | ||
Stock issued for lease revision | $ 8 | 30,992 | 31,000 | |
Stock issued for lease revision, shares | 8,333 | |||
Net loss | (5,073,695) | (5,073,695) | ||
Ending balance at Dec. 31, 2020 | $ 4,719 | $ 14,553,483 | $ (21,964,321) | $ (7,406,164) |
Ending balance, shares at Dec. 31, 2020 | 4,718,714 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Cash Flows from Operating Activities | ||
Net Loss | $ (5,073,695) | $ (8,350,573) |
Adjustment to reconcile net loss from operations: | ||
Depreciation and amortization | 258,440 | 266,476 |
Amortization of deferred financing costs | 557,903 | |
Amortization of convertible debenture components | 1,612,197 | |
Stock-based compensation expense | 1,803,403 | 1,830,426 |
Contingent consideration | 155,000 | |
Impairment of investment | 310,000 | 505,766 |
Loss (gain) on disposal of assets | 3,468 | (72,416) |
Inventory write-offs | 91,730 | 94,727 |
Unrealized exchange losses | 397,292 | |
Bad debt expense | 58,849 | 67,633 |
Changes in Operating Assets and Liabilities (net of acquired amounts): | ||
Accounts receivable | 530,333 | (849,355) |
Inventory | 47,341 | 443,322 |
Prepayments and other assets | (1,723,056) | (324,273) |
Accounts payable and accrued expenses | (3,013,183) | 2,671,838 |
Customer deposits | 1,963,457 | (383,203) |
Net Cash Provided by (Used in) Operating Activities | (3,632,718) | (2,487,435) |
Cash Flows from Investing Activities | ||
Purchases of investments | (1,085,975) | |
Purchases of property and equipment | (175,965) | (192,954) |
Proceeds from sale of assets | 121,500 | |
Cash acquired in acquisition | 49,742 | |
Purchases of intangible assets | (40,255) | |
Net Cash Provided By (Used In) Investing Activities | (175,965) | (1,147,942) |
Cash Flows from Financing Activities | ||
Proceeds from issuance of Revolving Facility | 2,207,432 | |
Proceeds from issuance of Term Loan | 2,000,000 | |
Proceeds from Revolving Facility advances | 1,069,061 | |
Issuance of convertible debentures | 2,565,000 | |
Proceeds from notes payables | 1,870,600 | 970,000 |
Debt financing costs | (638,046) | |
Repayments of notes payable | (2,964,598) | (629,772) |
Net Cash Provided by (Used In) Financing Activities | 3,544,449 | 2,905,228 |
Net Increase (Decrease) in Cash | (264,234) | (730,149) |
Cash at Beginning of Period | 448,703 | 1,178,852 |
Cash at End of Period | 184,469 | 448,703 |
Supplemental Cash Flow Information: | ||
Interest Paid | 920,891 | 612,138 |
Income Tax Paid | ||
Supplemental disclosure of non-cash investing and financing activities: | ||
Convertible debentures and accrued interest converted into common stock | 2,657,037 | |
Stock issuance related to acquisition | 1,000,000 | |
Debt financing costs booked in equity | $ 676,822 |
Organization and Acquisitions,
Organization and Acquisitions, Business Plan, and Liquidity | 12 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Acquisitions, Business Plan, and Liquidity | NOTE 1 – ORGANIZATION AND ACQUISITIONS, BUSINESS PLAN, AND LIQUIDITY Organization and Acquisitions urban-gro, Inc. (“we,” “us,” “our,” the “Company,” or “urban-gro”) is a leading engineering and design services company focused on the sustainable commercial indoor horticulture market. We engineer and design indoor controlled environment agriculture (“CEA”) facilities and then integrate complex environmental equipment systems into those facilities. Through this work, we create high-performance indoor cultivation facilities for our clients to grow specialty crops, including leafy greens, vegetables, herbs, and plant-based medicines. To date, a large number of our clients have been cannabis producers, and we will continue to do substantial work for those clients, but we have added a focus on non-cannabis crops as we seek to address a broader market. In particular, our focus going forward is on the vertical farming CEA sub-segment. Our custom-tailored approach to design, procurement, and equipment integration provides a single point of accountability across all aspects of indoor growing operations. We also help our clients achieve operational efficiency and economic advantages through a full spectrum of professional services and programs focused on facility optimization and environmental health which establish facilities that allow clients to manage, operate and perform at the highest level throughout their entire cultivation lifecycle once they are up and running. We aim to work with our clients from inception of their project in a way that provides value throughout the life of their facility. We are a trusted partner and advisor to our clients and offer a complete set of engineering and managed services complemented by a vetted suite of select cultivation equipment systems. Effective March 7, 2019, the Company acquired 100% of the stock of Impact Engineering, Inc. (d/b/a Grow2Guys) (“Impact”), a provider of mechanical, electrical and plumbing (“MEP”) engineering services predominantly focused on the indoor commercial horticulture industry. The Company believes the acquisition of Impact will improve the Company’s ability to better serve its current and future client base by expanding on the fully integrated products and services offered by the Company. The Company initially issued 83,333 shares of Common Stock valued at $12.00 per share to effect the acquisition of Impact. The Company accounted for the acquisition of Impact as follows: Purchase Price $ 1,000,000 Allocation of Purchase Price: Cash $ 49,742 Accounts receivable, net $ 93,811 Goodwill $ 902,067 Accrued expenses $ 45,620 The following table summarizes the supplemental information on an unaudited pro forma basis, as if the acquisition had been consummated as of January 1, 2019: 2019 Revenue $ 24,477,011 Net loss (8,268,920 ) The unaudited pro form results of operations do not purport to represent what the Company’s results of operations would actually have been had the acquisition occurred on January 1, 2019. Actual future results may vary considerably based on a variety of factors beyond the Company’s control. Under the terms of the agreement to acquire Impact, the Company was required to issue additional shares of Common Stock to the former Impact owner if the average closing price per share of the Company’s Common Stock was less than or equal to $12.00 per share for the 30-day period beginning on the date that was 150 days after the initial date of the listing of the Company’s Common Stock on a national securities exchange or quotation on the OTCQB or OTCQX (the “Valuation Period”). The Company’s Common Stock price was lower than $12.00 per share during the Valuation Period and the Company was required to issue additional shares of the Company’s Common Stock to the former Impact owner. In September 2020, however, the Company and the former Impact owner agreed to satisfy this provision of the agreement by the Company issuing 41,667 additional shares of Common Stock to the former Impact owner. The Company valued the issuance of these additional 41,667 shares at $3.72 per share of Common Stock based on the market price of our shares on the date of the agreement and recorded the additional issuance of shares as contingent consideration in the statements of operations and comprehensive income (loss). Basis of Presentation These consolidated financial statements are presented in United States dollars and have been prepared in accordance with United States generally accepted accounting principles (“GAAP”). On December 31, 2020, we effected a 1-for-6 reverse stock split with respect to our common stock. All share and per share information in these consolidated financial statements gives effect to this reverse stock split, including restating prior period reported amounts. Liquidity and Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business within one year after the date the consolidated financial statements are available to be issued. Since inception, the Company has incurred significant operating losses and has funded its operations primarily through the issuance of equity securities, debt, and operating revenue. As of December 31, 2020, the Company had an accumulated deficit of $21,964,321, a working capital deficit of $9,300,836, and negative stockholders’ equity of $7,406,164. Prior consolidated financial statements contained an explanatory paragraph indicating that there could be no assurances that the Company would be able to raise equity or debt financing in sufficient amounts, when and if needed, on acceptable terms or at all, in order to provide assurances that the Company would be able to continue as a going concern. As indicated in Note 18 – Subsequent Events, on February 17, 2021 the Company received $62,100,000 in gross proceeds from completion of an equity offering and listing of the Company’s common shares on the Nasdaq Capital Market (“NASDAQ”) (the “Offering”). Based on management’s evaluation, the proceeds from the Offering will be more than sufficient for the Company to meet its obligations as they come due and to fund its operations for at least 12 months after the date the consolidated financial statements are available to be issued. Accordingly, the conditions that previously raised substantial doubt about the Company’s ability to continue as a going concern as of the date of issuance of the Company’s December 31, 2020 consolidated financial statements have been alleviated. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates In preparing consolidated financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates. Significant estimates include estimated useful lives and potential impairment of long-lived assets and goodwill, inventory write offs, allowance for deferred tax assets, and allowance for bad debt. Basis of Presentation and Principles of Consolidation These consolidated financial statements are presented in United States dollars and they include the accounts of urban-gro, Inc. and its wholly owned subsidiaries. The financial results of Impact have been included in the Company’s consolidated financial statements from the date of acquisition on March 7, 2019 and all intercompany transactions have been eliminated. Functional and reporting currency and foreign currency translation The functional and reporting currency of the Company and its subsidiaries is US dollars. All transactions in currencies other than US dollars are translated into US dollars on the date of the transaction. Any exchange gains and losses related to these transactions are recognized in the current period earnings as other income (expense). Fair Value of Financial Instruments The Company’s financial instruments consist principally of cash and cash equivalents, accounts receivable, accounts payable, notes payable and other current assets and liabilities. We value our financial assets and liabilities using fair value measurements. Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are categorized based on whether the inputs are observable in the market and the degree that the inputs are observable. The categorization of financial instruments within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The hierarchy is prioritized into three levels (with Level 3 being the lowest) defined as follows: Level 1: Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access. Level 2: Observable inputs other than prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated with observable market data. Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies, and similar techniques that use significant unobservable inputs. The carrying amount of our cash and cash equivalents, accounts receivable, accounts payable, and other current assets and liabilities in our consolidated financial statements approximates fair value because of the short-term nature of the instruments. Investments in non-marketable equity securities are carried at cost less other-than-temporary impairments. The carrying amount of our notes payable and convertible debt at December 31, 2020 and 2019 approximates their fair values based on our incremental borrowing rates. There have been no changes in Level 1, Level 2, and Level 3 categorizations and no changes in valuation techniques for these assets or liabilities for the years ended December 31, 2020 and 2019. Cash and Cash Equivalents The Company considers all highly liquid short-term cash investments with an original maturity of three months or less to be cash equivalents. As of December 31, 2020 and 2019, the Company did not maintain any cash equivalents. The Company maintains cash with financial institutions that may from time to time exceed federally-insured limits. The Company has not experienced any losses related to these balances and believes the risk to be minimal. There are no restricted or compensating cash balances as of December 31, 2020. Accounts Receivable, Net Trade accounts receivables are carried at the original invoiced amounts less an allowance for doubtful accounts. As of December 31, 2020 and 2019, the balance of allowance for doubtful accounts was $15,955 and $18,920, respectively. The allowances for doubtful accounts are calculated based on a detailed review of certain individual customer accounts and an estimation of the overall economic conditions affecting the Company’s customer base. The Company reviews a customer’s credit history before extending credit to the customer. If the financial condition of its customers were to deteriorate, resulting in an impairment of their ability to make payments, additions to the allowance would be required. A provision is made against accounts receivable to the extent they are considered unlikely to be collected. Occasionally the Company will write off bad debt directly to the bad debt expense account when the balance is determined to be uncollectable. Bad debt expense for the years ended December 31, 2020 and 2019 was $58,849 and $67,633, respectively. Inventories Inventories, consisting entirely of finished goods, are stated at the lower of cost or net realizable value, with cost determined using the weighted average cost method. The Company periodically reviews the value of items in inventory and provides write-downs or write-offs of inventory based on its assessment of market conditions. Write-downs and write-offs are charged to cost of goods sold at the realization of change in value. Once written down, inventories are carried at this lower basis until sold or scrapped. Property, Plant, and Equipment, net Property and equipment is stated at cost less accumulated depreciation and impairment. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. When property and equipment is retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes. The Company uses other depreciation methods (generally accelerated) for tax purposes where appropriate. No impairment charges were recorded for the years ended December 31, 2020 and 2019. The estimated useful lives for significant property and equipment categories are as follows: Computer and Technology Equipment 3 years Furniture and Equipment 5 years Leasehold Improvements Lease term Vehicles 3 years Other Equipment 3 or 5 years Software 3 years Operating Lease Right of Use Assets Operating lease right of use assets are stated at cost less accumulated depreciation, amortization and impairment. The Company has one operating lease with an imputed annual interest rate of 8%. The terms of the lease are 12 months commencing on September 1, 2020 and ending on August 31, 2021. The Company is currently evaluating whether to renew this lease. Intangible Assets The Company’s intangible assets, consisting of legal fees for application of patents and trademarks and license fees paid for inspection services, are recorded at cost. Patents and trademarks, once approved, are amortized using the straight-line method over an estimated life, generally 5 years for patents and 10 to 20 years for trademarks. License fees are amortized over 10 years. Intangible assets are included in “other assets” on the balance sheets. The net balance of intangible assets for December 31, 2020 and 2019 was $84,514 and $86,151, respectively. Amortization expense totaled $1,637 and $1,879 for the years ended December 31, 2020 and 2019, respectively. Goodwill Goodwill represents the excess of the purchase price over the fair value of net assets acquired in a business combination. Goodwill is not amortized, but is tested for impairment annually as of December 31 and at any time when events or circumstances suggest impairment may have occurred. The testing for impairment consists of a comparison of the fair value of the reporting unit with its carrying amount. If the carrying amount of the reporting unit, including goodwill, exceeds the fair value, an impairment will be recognized equal to the difference between the carrying value of the reporting unit’s goodwill and the implied fair value of the goodwill. In testing goodwill for impairment, we determine the estimated fair value of our reporting units based upon a discounted future cash flow analysis. Goodwill is our only indefinite-lived intangible asset. Definite-lived intangible assets are amortized using the straight line method over the shorter of their contractual term or estimated useful lives. Impairment of Long-lived Assets The Company evaluates potential impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. An impairment will be recognized as the amount by which the carrying amount of a long-lived asset exceeds its fair value. Investments Investments without readily determinable fair values and for which the Company does not have the ability to exercise significant influence are accounted for at cost with adjustments for observable changes in prices or impairments. Convertible Notes The Company accounts for its convertible notes at issuance by allocating the proceeds received from a convertible note among freestanding instruments according to ASC 470, Debt, based upon their relative fair values. The fair value of debt and common stock was determined based on the closing price of the common stock on the date of the transaction, and the fair value of warrants was determined using the Black-Scholes option-pricing model. Convertible notes were subsequently carried at amortized cost. The fair value of the warrants is recorded as additional paid-in capital, with a corresponding amount recorded as a debt discount from the face amount of the convertible note. Each convertible note was analyzed for the existence of a beneficial conversion feature (“BCF”), defined as the fair value of the common stock at the commitment date for the convertible note, less the effective conversion price. BCFs were recognized at their intrinsic value, and recorded as an increase to additional paid-in capital, with a corresponding reduction in the carrying amount of the convertible note (as a debt discount from the face amount of the convertible note). The discounts on the convertible notes, consisting of amounts ascribed to warrants and beneficial conversion features, is amortized to interest expense, using the effective interest method, over the terms of the related convertible notes. BCFs that are contingent upon the occurrence of a future event are recorded when the contingency is resolved. Revenue Recognition The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers, Our equipment systems, services and consumable product revenues arise from contracts with customers. Service revenues include full facility programming, engineering and design services, start-up commissioning services, facility optimization services and IPM planning and strategy services. Product revenues include an integrated suite of select cultivation equipment systems and consumable crop management products. We enter into separate contracts for the service and product revenues we provide to our customers in order to clarify our obligations under the terms of the contracts. New contracts are entered into if the services to be performed or products to be delivered need to be modified. Service revenues are satisfied when services are rendered or completed in accordance with the terms of the contract. Product revenues are satisfied when control of the products is transferred to the customer. Customer Deposits The Company’s policy is to collect deposits from customers at the beginning of the contract. The customer payments received are recorded as a customer deposit liability on the balance sheet. When the contract is complete and meets all the criteria for revenue recognition, the customer is billed for the entire contract amount and the deposit is recorded against the customer’s receivable balance. In certain situations when the customer has paid the deposit and services have been performed but the customer chooses not to proceed with the contract, the Company may keep the deposit and recognize revenue. Of the outstanding customer deposit balance of $2,915,406 at December 31, 2019, $1,955,902 was recognized as revenue in the year ended December 31, 2020. The entire customer deposit balance of $3,298,609 at December 31, 2018 was recognized as revenue in the year ended December 31, 2019. Cost of Revenue The Company’s policy is to recognize cost of revenues in the same manner as, and in conjunction with, revenue recognition. The Company’s cost of revenues includes the costs directly attributable to revenue recognized and includes expenses related to the purchasing of products and providing services, fees for third-party commissions and shipping costs. Total shipping costs included in the cost of goods sold for the years ended December 31, 2020 and 2019 were $790,996 and $679,911, respectively. Advertising Costs The Company expenses advertising costs in the periods the costs are incurred. Prepayments made under contracts are included in prepaid expenses and expensed when the advertisement is run. Total advertising expense incurred for the years ended December 31, 2020 and 2019 was $58,849 and $159,728, respectively. Warrants The Company estimates the fair value of these warrants at the respective balance sheet dates using the Black-Scholes option pricing based on the estimated market value of the underlying common stock at the valuation measurement date, the remaining contractual term, risk-free interest rate, and expected volatility of the price of the underlying common stock. There is a moderate degree of subjectivity involved when using option pricing models to estimate the warrants and the assumptions used in the Black-Scholes option-pricing model are moderately judgmental. Stock-Based Compensation The Company periodically issues shares of its common stock and stock options to employees and consultants in non-capital raising transactions for fees and services. The Company accounts for stock issued to non-employees with the value of the stock compensation based upon the measurement date as determined at the grant date of the award. The Company accounts for stock grants issued and vesting to employees with the award being measured at its fair value at the date of grant and amortized ratably over the vesting period. Income Taxes The Company files income federal tax returns in the United States and Canada and state and local tax return in applicable jurisdictions. Provisions for current income tax liabilities, if any, would be calculated and accrued on income and expense amounts expected to be included in the income tax returns for the current year. Income taxes reported in earnings, if any, would also include deferred income tax provisions. Deferred income tax assets and liabilities, if any, would be computed on differences between the financial statement bases of assets and liabilities at the enacted tax rates. Changes in deferred income tax assets and liabilities would be included as a component of income tax expense. The effect on deferred income tax assets and liabilities attributable to changes in enacted tax rates would be charged or credited to income tax expense in the period of enactment. Valuation allowances would be established for certain deferred tax assets when realization is not likely. Assets and liabilities would be established for uncertain tax positions taken or positions expected to be taken in income tax returns when such positions, in the judgment of the Company, do not meet a more-likely-than-not threshold based on the technical merits of the positions. Valuation allowances would be established for certain deferred tax assets when realization is not likely. Loss Per Share The Company computes net loss per share by dividing net loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share would be computed by dividing net loss by the weighted-average of all potentially dilutive shares of common stock that were outstanding during the periods presented. The diluted earnings per share calculation is not presented as it results in an anti-dilutive calculation of net loss per share. The treasury stock method would be used to calculate diluted earnings per share for potentially dilutive stock options and share purchase warrants. This method assumes that any proceeds received from the exercise of in-the-money stock options and share purchase warrants would be used to purchase common shares at the average market price for the period. Recently Adopted Accounting Pronouncements From time to time, the Financial Accounting Standards Board (the “FASB”) or other standards setting bodies issue new accounting pronouncements. The FASB issues updates to new accounting pronouncements through the issuance of an Accounting Standards Update (“ASU”). Unless otherwise discussed, the Company believes that the impact of recently issued guidance, whether adopted or to be adopted in the future, is not expected to have a material impact on the Company’s financial statements upon adoption. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This update replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This update is effective for interim and annual periods beginning after December 15, 2022, with a modified-retrospective approach. The Company is currently evaluating the impact that this new guidance will have on its consolidated financial statements. In August 2020, the FASB issued ASU 2020-06—Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)—Accounting For Convertible Instruments and Contracts in an Entity’s Own Equity. ASU 2020-06 simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. ASU 2020-06 removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for it. ASU 2020-06 also simplifies the diluted net income per share calculation in certain areas. The new guidance is effective for annual and interim periods beginning after December 15, 2021, and early adoption is permitted for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The Company is currently evaluating the impact that this new guidance will have on its consolidated financial statements. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 3 – RELATED PARTY TRANSACTIONS In October 2018, we issued a $1,000,000 unsecured note payable to Cloud9 Support Inc. (“Cloud9 Support”), an entity owned by James Lowe, a director of the Company, which originally became due April 30, 2019 (the “James Lowe Note”). The James Lowe Note was personally guaranteed by Bradley Nattrass, our Chief Executive Officer, and Octavio Gutierrez. The loan had a one-time origination fee of $12,500. Interest accrued at the rate of 12% per annum and was paid monthly. As additional consideration for the James Lowe Note, we granted Mr. Lowe (as designee of Cloud9 Support) an option to purchase 5,000 shares of our common stock at an exercise price of $7.20 per share, which option is exercisable for a period of five years. The due date for the James Lowe Note was extended in May 2019 to December 31, 2019 and the interest rate was decreased to 9% per year. In consideration for Cloud9 Support extending the maturity date of the note and reducing the interest rate, we issued 1,667 shares of our common stock to Mr. Lowe (as designee of Cloud9 Support). On February 21, 2020, we entered into an agreement to amend the James Lowe Note to extend the maturity date of therein from December 31, 2019 to the date which is the earlier of 60 days following the date: (a) on which demand for repayment is made by the lenders under the Credit Agreement, as described in Note 10, (which is now only applicable in the case of an event of default under the Credit Agreement because of the removal of the demand feature pursuant to the First Amendment to the Credit Agreement); or (b) which is the maturity date under the Credit Agreement. In addition, on February 25, 2020, the Company entered into a subordination, postponement and standstill agreement with Cloud9 Support (the “Subordination Agreement”) pursuant to which Cloud9 Support agreed to postpone and subordinate all payments due under the promissory note until the facilities under the Credit Agreement have been fully and finally repaid. The term for the Subordination Agreement will continue in force as long as the Company is indebted to the agent or lenders under the Credit Agreement. In consideration for Cloud9 Support’s agreement to extend the maturity date of the promissory note and to enter into the Subordination Agreement, we issued 16,667 shares of common stock to Mr. Lowe (as designee of Cloud9 Support). On December 15, 2020, James Lowe agreed to convert the $1,000,000 James Lowe Note plus $4,500 of accrued interest (the “New James Lowe Note”) into a convertible note bridge financing (see “Bridge Financing” in Note 9 – Notes Payable). The New James Lowe Note carries interest at the rate of 12% and matures on December 31, 2021. The New James Lowe Note will be mandatorily converted into shares of our common stock upon the closing of a qualified offering, at 75% of the per share price paid by investors in a qualified offering. The Company has purchased goods from Cloud 9 Support. Purchases from Cloud 9 Support were $0 and $97,329 during the years ended 2020 and 2019, respectively. Cloud 9 Support also purchases materials from the Company for use with their customers. Total sales to Cloud 9 Support from the Company were $414,108 and $392,963 during the years ended 2020 and 2019, respectively. Outstanding receivables from Cloud 9 Support as of December 31, 2020 and 2019 totaled $61,678 and $49,659, respectively. Net outstanding payables for purchases of inventory and other services to Cloud 9 Support as of December 31, 2020 and 2019, totaled $0 and $16,402, respectively. The Company purchases some cultivation products from Bravo Lighting, LLC (d/b/a Bravo Enterprises) (“Bravo”) and Enviro-Glo, LLC (“Enviro-Glo”), manufacturers and distributors of commercial building lighting and other product solutions with common control by the Company’s two major stockholders, Bradley Nattrass and Octavio Gutierrez. Purchases from Bravo and Enviro-Glo totaled $0 and $45,129 for the years ended 2020 and 2019, respectively. Outstanding receivables from Bravo and Enviro-Glo for the years ended 2020 and 2019 totaled $0 and $0, respectively. Net outstanding payables incurred for purchases of inventory and other services to Bravo and Enviro-Glo as of December 31, 2020 and 2019, was $0 and $8,570, respectively. |
Prepayments & Other Assets
Prepayments & Other Assets | 12 Months Ended |
Dec. 31, 2020 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Prepayments & Other Assets | NOTE 4 – PREPAYMENTS & OTHER ASSETS Prepayments and other assets are comprised of prepayments paid to vendors to initiate orders and prepaid services and fees. The prepaid balances are summarized as follows: 2020 2019 Vendor prepayments $ 2,676,493 $ 1,070,788 Prepaid services and fees 365,931 187,912 Deferred financing cost (See Note 10 - Debt) 504,644 – Others - 20,028 Prepayments and other assets $ 3,547,068 $ 1,278,728 |
Property Plant & Equipment, net
Property Plant & Equipment, net | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property Plant & Equipment, net | NOTE 5 - PROPERTY PLANT & EQUIPMENT, NET Property Plant and Equipment balances are summarized as follows: 2020 2019 Computers & Technology Equip $ 67,754 $ 87,300 Furniture and Fixtures 85,662 42,518 Leasehold Improvements 164,072 164,072 Vehicles 20,000 57,414 Software 142,721 142,721 R&D Assets 3,031 3,031 Other Equipment 34,063 38,355 Accumulated depreciation (387,859 ) (370,376 ) Property plant and equipment, net $ 129,444 $ 165,035 Depreciation expense for the years ended December 31, 2020 and 2019 totaled $256,803 and $264,597, respectively. |
Investments
Investments | 12 Months Ended |
Dec. 31, 2020 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investments | NOTE 6 – INVESTMENTS The components of investments are summarized as follows: 2020 2019 Investment in Edyza $ 1,710,358 $ 1,710,358 Investment in TGH – 310,000 $ 1,710,358 $ 2,020,358 Edyza [ add in sentence what Edyza is from MDA above ]. ]During 2019, the Company acquired an additional 827,018 shares for $897,475. The Company has capitalized an additional $12,883 in legal fees associated with the purchases of the Edyza Common Stock. The Company measures this investment at cost, less any impairment changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. TGH On January 24, 2020, the Company entered into a Membership Interest Redemption Agreement (the “Redemption Agreement”) with Total Grow Holdings LLC (d/b/a Total Grow Control, LLC) (“TGH”), whereby the Company agreed to sell the Company’s 24.4% membership interests in TGH back to TGH for total consideration of $370,000. As a result of TGH’s failure to perform its obligations under the Redemption Agreement, the Company initiated a lawsuit against TGH seeking damages (the “Lawsuit”), and subsequently fully impaired the remaining investment in TGH in June 2020. On September 24, 2020, the Company and TGH entered into a Settlement Agreement (the “Settlement Agreement”), pursuant to which the parties agreed to settle all claims brought in the Lawsuit. Pursuant to the Settlement Agreement, TGH agreed to pay the Company a total of $61,919 in six equal installments. TGH’s first payment was due by October 4, 2020. TGH also agreed to reimburse the Company for up to $25,000 of its attorney’s fees related to the Lawsuit and the Settlement Agreement. In consideration of the foregoing and subject to TGH satisfying its payment obligations, the Company agreed to release any and all claims related to the Lawsuit. The Settlement Agreement also provides for a mutual release between the parties. On September 24, 2020, in connection with the Settlement Agreement, the Company also entered into an agreement (the “Pullar Agreement”) by and between the Company and George R. Pullar, a former director of the Company and the Company’s former chief financial officer and the current chief financial officer of TGH. Pursuant to the Pullar Agreement, in exchange for Mr. Pullar relinquishing all right, title and interest in and to 166,667 shares of the Company’s common stock, the Company agreed to (i) execute the Settlement Agreement, (ii) transfer, sell and assign to Mr. Pullar the Company’s 24.4% membership interest in TGH pursuant to the Settlement Agreement and (iii) issue Mr. Pullar a fully vested warrant, to purchase 66,667 shares of Common Stock at an exercise price of $6.00 per share which expires five years from the date of issuance. The Pullar Agreement also provides for a mutual release between the Company and Mr. Pullar. |
Goodwill
Goodwill | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | NOTE 7 – GOODWILL The Company recorded goodwill in conjunction with the initial acquisition of Impact on March 7, 2019. The goodwill balance as of December 31, 2020 and 2019 was $902,067. Goodwill is not amortized. There is no goodwill for income tax purposes. The Company did not record any impairment charges related to goodwill for the years ended December 31, 2020 and 2019. |
Accrued Expenses
Accrued Expenses | 12 Months Ended |
Dec. 31, 2020 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | NOTE 8 – ACCRUED EXPENSES Accrued expenses are summarized as follows: 2020 2019 Accrued operating expenses $ 717,503 $ 854,056 Accrued wages and related expenses 408,907 487,327 Accrued interest expense 99,258 – Accrued sales tax payable 572,826 345,458 $ 1,798,494 $ 1,686,841 Accrued sales tax payable is comprised of amounts due to various states and Canadian provinces for 2015 through 2020. |
Notes Payable
Notes Payable | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Notes Payable | NOTE 9 – NOTES PAYABLE The following is a summary of notes payable excluding related party notes payable: December 31, December 31, 2020 2019 Unsecured, interest only, note payable with Chris Parkes originally due December 31, 2018. Initial interest payments due monthly at an annual rate of 20.4%. Note payable revised in December 2018 extending the maturity date to March 31, 2019. During August 2019, the maturity date was extended to March 31, 2020 and the interest rate was decreased to an annual rate of 9%. In consideration for extending the due date of the note and reducing the interest rate, the Company issued the holder 500 shares of Common Stock. This note was fully repaid on December 3, 2020. $ - $ 80,000 Unsecured, interest only, note payable with David Parkes originally due December 31, 2018. Initial interest payments due monthly at an annual rate of 18.0%. Note payable revised in December 2018 extending the maturity date to March 31, 2019. During August 2019, the maturity date was extended to March 31, 2020 and the interest rate was decreased to an annual rate of 9%. In consideration for extending the due date of the note and reducing the interest rate, the Company issued the holder 500 shares of Common Stock. This note was fully repaid on December 3, 2020. - 100,000 Note payable with Hydrofarm Holdings Group, Inc. (“Hydrofarm”), secured by all currently existing and future assets. Interest accrues at 8.0% per year and is paid quarterly. The note matures on the earlier of: (a) 90 days’ notice from Hydrofarm; (b) acceleration of the note payable due to the Company being in default; or (c) December 2023. The note was repaid in full on February 27, 2020. - 2,000,000 Secured agreement to sell future receivables to GCF Resources, LLC, net of $30,000 in closing fees. The agreement requires 32 weekly payments of $42,190 totaling $1,350,000. The agreement matured on May 7, 2020 but is repayable prior to maturity for less than the $1,350,000 in total payments. The note was repaid in full on February 27, 2020. - 632,709 Paycheck Protection Program (“PPP”) loan entered into on April 16, 2020. Interest rate of 1.0% per annum. Payments of principal and interest are deferred until August 1, 2021 (the “Deferral Period”). The PPP loan may be forgiven in part or fully depending on the Company meeting certain PPP loan forgiveness guidelines. The Company has not yet determined if any of the PPP loan is subject to forgiveness and has therefore continued to present the entire PPP loan as an obligation on its financial statements. Any unforgiven portion of the PPP loan is payable over a two-year term, with payments deferred during the Deferral Period. The Company may prepay the unforgiven loan balance at any time without payment of any premium. 1,020,600 - Convertible notes related to bridge financing. See Bridge Financing Notes below. 1,854,500 - Total 2,875,100 2,812,709 Less current maturities (1,854,500 ) (2,812,709 ) Long term $ 1,020,600 $ – During the fourth quarter of 2020 the Company entered into bridge financing notes (the “Bridge Financing Notes”) totaling $1,854,500. The Bridge Financing Notes are a combination of $1,004,500 in the New James Lowe Note (See Note 3 – Related Party Transactions), $350,000 received in November 2020, and an additional $500,000 received in December 2020. The Bridge Financing Notes carry interest at the rate of 12% and mature on December 31, 2021. The Bridge Financing Notes will be mandatorily converted upon the closing of a sale of the securities of the Company, whether in a private placement or pursuant to an effective registration statement under the Securities Act, resulting in at least $2,500,000 of gross proceeds to the Company (a “Qualified Offering”). In the event of a Qualified Offering, the outstanding principal and interest of the Bridge Financing Notes will be converted into the identical security issued at such Qualified Offering at 75% of the per security price paid by investors in connection with the Qualified Offering. The Offering described in Note 18 – Subsequent Events, was a Qualified Offering and the Bridge Financing Notes were converted into equity in connection with the Offering in February 2021. |
Debt
Debt | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Debt | NOTE 10 – DEBT The Company’s borrowings as of December 31, 2020 and 2019 consisted of the following: 2020 2019 Revolving Facility $ 3,403,143 $ – Term Loan, net of $252,322 unamortized debt issuance costs 1,868,320 – Total 5,271,463 – Less current debt due within one year (5,271,463 ) – Total long-term debt $ - $ – On February 21, 2020, we entered into a letter agreement (the “Credit Agreement”) by and among the Company, as borrower, urban-gro Canada Technologies Inc. and Impact., as guarantors, the lenders party thereto (the “Lenders”), and Bridging Finance Inc., as administrative agent for the Lenders (the “Agent”). The Credit Agreement, which is denominated in Canadian dollars (C$), is comprised of (i) a 12-month senior secured demand term loan facility in the amount of C$2.7 million ($2.0 million), which was funded in its entirety on the closing date (the “Term Loan”); and (ii) a 12-month demand revolving credit facility of up to C$5.4 million ($4.0 million), which may be drawn from time to time, subject to the terms and conditions set forth in the Credit Agreement and described further below (the “Revolving Facility,” and together with the Term Loan, the “Facilities”). The Credit Agreement is personally guaranteed by the Company’s CEO and Chairman, Brad Nattrass, and was to be in place for the original term of the Credit Agreement (1 year) plus a 1-year extension period at the discretion of the Lender as provided in the Credit Agreement. The final maturity date of the Facilities was initially stipulated in the Credit Agreement as the earlier of (i) demand, and (ii) the date that is 12 months after the closing date, with a potential extension to the date that is 24 months after the closing date (the “Initial Maturity Date”). The Facilities bore interest at the annual rate established and designated by the Bank of Nova Scotia as the prime rate, plus 11% per annum. Accrued interest on the outstanding principal amount of the Facilities is due and payable monthly in arrears, on the last business day of each month, and on the Initial Maturity Date. The Revolving Facility could initially be borrowed and re-borrowed on a revolving basis by the Company during the term of the Facilities, provided that borrowings under the Revolving Facility were limited by a loan availability formula equal to the sum of (i) 90% of insured accounts receivable, (ii) 85% of investment grade receivables, (iii) 75% of other accounts receivable, (iv) 50% of eligible inventory, and (v) the lesser of C$4.05 million ($3.0 million) and (A) 75% of uncollected amounts on eligible signed equipment orders for equipment systems contracts and (B) 85% of uncollected amounts on eligible signed professional services order forms for design contracts. The Revolving Facility may be prepaid in part or in full without a penalty at any time during the term of the Facilities, and the Term Loan may be prepaid in full or in part without penalty subject to 60 days prior notice in each case subject to certain customary conditions. On September 4, 2020, the Company executed an amendment to the Credit Agreement (the “First Amendment”) whereas the Facilities described above are now due on December 31, 2021 (the “Revised Maturity Date”). The First Amendment also increased the rate at which the Facilities will bear interest to the annual rate established and designated by the Bank of Nova Scotia as the prime rate, plus 12% per annum (14.5% as of September 30, 2020). As a result of the First Amendment, the Company is required to prepay, on or before January 31, 2021, $1,000,000 of the balance of the Term Loan and begin making monthly payments of $100,000 on the balance on the Term Loan starting on March 1, 2021. Additionally, the Company is required to make monthly payments of $50,000 on the balance under the Revolving Facility beginning October 1, 2020 and can make no more draws under the Revolving Facility. The Company incurred $1,314,868 of debt issuance costs in connection with these Facilities, of which $676,822 was non-cash in the form of Common Stock and warrant issuances. The Company estimated the fair value of these warrants at the respective balance sheet dates using the Black-Scholes option pricing based on the market value of the underlying Common Stock at the valuation measurement date of $6.00, the remaining contractual terms of the warrants of 5 years, risk free interest rate of 1.14% an expected volatility of the price of the underlying Common Stock of 100%. The Company recorded the debt issuance costs as either a deferred financing asset or a direct reduction of the loan obligation based on the pro-rata value of the Revolving Facility and Term Loan, respectively, on the closing date. The debt issuance costs are amortized as interest expense over the life of the Facilities, until the Revised Maturity Date. As of December 31, 2020, there were $504,644 and $252,322 of unamortized debt issuance costs remaining related to the Revolving Facility and Term Loan, respectively. The Company recorded interest expense of $557,903 related to the amortization of debt issuance costs and a foreign exchange loss of $397,292 for the year ended December 31, 2020. On February 19, 2021, the Company repaid all amounts outstanding and terminated the Credit Agreement. |
Unit Offering
Unit Offering | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Unit Offering | NOTE 11 – UNIT OFFERING Effective January 9, 2019, the Company executed a letter agreement with 4Front Capital Partners, Inc., Toronto, Canada (“4Front”), whereby 4Front agreed to act as the Company’s exclusive placement agent in connection with a private placement offering. Beginning in March 2019, 4Front initiated an offering (the “Offering”) of up to $6,000,000 from the sale of Units, with each Unit consisting of a $1,000 Convertible Debenture (the “Debentures” or a “Debenture”) and Common Stock Purchase Warrants (the “Warrants”) exercisable to purchase 34.58 shares of Common Stock at $18.00 per share for a period of two years from the purchase date. The Debentures are due May 31, 2021 and bear interest at 8%, compounded annually, with interest due at maturity. The Debentures, plus any accrued but unpaid interest, will automatically convert for no additional consideration into Common Shares at a conversion price of $14.46 per share upon the occurrence of a liquidity event. A liquidity event means: (a) the date on which the Company’s Common Stock is listed for trading on a recognized stock exchange in either Canada or the United States; and (b) securities issued pursuant to the Offering, including the Common Stock underlying both the conversion right included in the Debentures and underlying the Warrants, have been duly qualified by a registration statement in the United States, allowing the securities to be freely tradeable pursuant to the U.S. securities laws, or a prospectus in Canada. The Company filed a registration statement with the SEC on September 17, 2019, to register the securities in connection with the Offering. That registration statement was declared effective October 16, 2019, triggering the liquidity event indicated above and the $2,565,000 in Debentures plus $92,037 in accrued interest were converted into 183,752 Common Shares at $14.46 per share. The Warrants contain a mandatory exercise provision if the weighted average share price of the Company’s Common Stock exceeds $30.00 per share for a period of five consecutive days. |
Operating Lease Liabilities & C
Operating Lease Liabilities & Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Operating Lease Liabilities & Commitments and Contingencies | NOTE 12 – OPERATING LEASE LIABILITIES & COMMITMENTS AND CONTINGENCIES The Company has one operating leases with an imputed annual interest rate of 8%. The terms of the lease are 12 months commencing on September 1, 2020 and ending on August 31, 2021. The Company is currently evaluating whether to renew this lease. The following is a summary of operating lease liabilities: 2020 2019 Operating lease liabilities related to right of use assets. $ 88,888 $ 222,236 Less current portion (88,888 ) (123,395 ) Long term $ - $ 98,841 The following is a schedule showing future minimum lease payments: Year ending Total Minimum December 31, Lease Payments 2021 96,000 From time to time, the Company is involved in routine litigation that arises in the ordinary course of business. There are no legal proceedings for which management believes the ultimate outcome would have a material adverse effect on the Company’s results of operations and cash flows. |
Risks and Uncertainties
Risks and Uncertainties | 12 Months Ended |
Dec. 31, 2020 | |
Risks and Uncertainties [Abstract] | |
Risks and Uncertainties | NOTE 13 – RISKS AND UNCERTAINTIES Concentration Risk During the year ended December 31, 2020, one customer represented 25% of total revenue and another represented 13% of total revenue. During the year ended December 31, 2019, one customer represented 21% of total revenue. At December 31, 2020, one customer represented 12% of total outstanding accounts receivables. At December 31, 2019, one customer represented 15% and another represented 11% of total outstanding receivables. During the year ended December 31, 2020, one vendor composed 33% and another composed 13% of total purchases. During the year ended December 31, 2019, one vendor composed 24% of total purchases. Foreign Exchange Risk Although our revenues and expenses are expected to be predominantly denominated in United States dollars, we may be exposed to currency exchange fluctuations. Recent events in the global financial markets have been coupled with increased volatility in the currency markets. Fluctuations in the exchange rate between the U.S. dollar, the Canadian dollar, the Euro, the Swiss franc, and the currency of other regions in which we may operate may have a material adverse effect on our business, financial condition and operating results. We may, in the future, establish a program to hedge a portion of our foreign currency exposure with the objective of minimizing the impact of adverse foreign currency exchange movements. However, even if we develop a hedging program, there can be no assurance that it will effectively mitigate currency risks. Coronavirus Pandemic The outbreak of COVID-19, a novel strain of coronavirus first identified in China, which has spread across the globe including the U.S., has had an adverse impact on our operations and financial condition. The response to this coronavirus by federal, state and local governments in the U.S. has resulted in significant market and business disruptions across many industries and affecting businesses of all sizes. This pandemic has also caused significant stock market volatility and further tightened capital access for most businesses. Given that the COVID-19 pandemic and its disruptions are of an unknown duration, they could have an adverse effect on our liquidity and profitability. As a result of these events, we assessed our near-term operations, working capital, finances and capital formation opportunities, and implemented, in late March 2020, a downsizing of our operations and workforce to preserve cash resources and focus our operations on client-centric sales and project management activities. The duration and likelihood of success of this workforce reduction are uncertain; however, we have since rehired several employees who were impacted by the downsizing effort. If this downsizing effort does not meet our expectations, or additional capital is not available, we may not be able to continue our operations. The pandemic and its effects resulted in temporary delays in our projects, however, work on all such projects has resumed. Other factors that will affect our ability to continue operations include the market demand for our products and services, our ability to service the needs of our clients and prospects with a reduced workforce, potential contract cancellations, project scope reductions and project delays, our ability to fulfill our current backlog, management of our working capital, the availability of cash to fund our operations, and the continuation of normal payment terms and conditions for purchase of our products. In light of these extenuating circumstances, there is no assurance that we will be successful in growing and maintaining our business with our clients. If our clients or prospects are unable to obtain project financing and we are unable to increase revenues, or otherwise generate cash flows from operations, we will not be able to successfully execute on the various strategies and initiatives we have set forth in this Report to grow our business. The ultimate magnitude of COVID-19, including the extent of its impact on our financial and operational results, which could be material, will depend on the length of time that the pandemic continues, its effect on the demand for our products and our supply chain, the effect of governmental regulations imposed in response to the pandemic, as well as uncertainty regarding all of the foregoing. We cannot at this time predict the full impact of the COVID-19 pandemic, but it could have a larger material adverse effect on our business, financial condition, results of operations and cash flows beyond what is discussed within this Report. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | NOTE 14 – STOCK-BASED COMPENSATION Stock-based compensation expense for the years ended December 31, 2020 and 2019 was $1,803,403 and $1,830,426, respectively based on the vesting schedule of the stock grants and options. During the year ended December 31, 2020, 48,889 shares vested and were issued to employees. No cash flow affects are anticipated for stock grants. In January 2017, the Company began granting stock to attract, retain, and reward employees with Common Stock. Stock grants are offered as part of the employment offer package, to ensure continuity of employment or as a reward for performance. Each of these grants requires a specific tenure of employment before the grant vests with typical vesting periods of 1 to 3 years of employment. In January 2018, the Company implemented an equity incentive plan to reward and attract employees and compensate vendors for services when applicable. Stock options are offered as part of an employment offer package, to ensure continuity of service or as a reward for performance. The stock option plan authorizes 500,000 shares of common stock. In May 2019, the Company adopted a new equity incentive plan, authorizing an aggregate of 588,333 shares of Common Stock for issuance thereunder. Stock grants under the equity incentive programs are valued at the price of the stock on the date of grant. The fair value of stock options granted under the equity incentive plans is calculated using the Black-Scholes pricing model based on the estimated market value of the underlying stock at the valuation measurement date, the remaining contractual term of the stock options, risk-free interest rate, and expected volatility of the underlying Common Stock. There is a moderate degree of subjectivity involved when estimating the value of stock options with the Black-Scholes option pricing model as the assumptions used are moderately judgmental. Stock grants and stock options are sometimes offered as part of an employment offer package, to ensure continuity of service or as a reward for performance. Stock grants and stock options typically require a 1 to 3 year period of continued employment or service performance before the stock grant or stock option vests. The following schedule shows stock grant activity for the year ended December 31, 2020 and 2019: Grants outstanding as of December 31, 2018 300,444 Grants awarded 6,967 Forfeiture/Cancelled (11,667) Grants vested (226,994) Grants outstanding as of December 31, 2019 68,750 Grants outstanding as of December 31, 2019 68,750 Grants awarded 132,361 Forfeiture/Cancelled (33,333 ) Grants vested (48,889 ) Grants outstanding as of December 31, 2020 118,889 The following table summarizes stock grant vesting periods. Number of Unrecognized stock compensation Year Ending Shares expense December 31, 85,555 $ 215,451 2021 16,667 33,333 2022 16,667 2,778 2023 118,889 $ 251,562 The following schedule shows stock option activity for the year ended December 31, 2020 and 2019. Number of Weighted Average Remaining Weighted Average Stock options outstanding as of December 31, 2018 197,334 9.68 $ 6.90 Issued 122,750 9.20 $ 8.28 Expired 36,389 9.12 $ 7.98 Stock options outstanding at December 31, 2019 283,695 9.21 $ 7.26 Stock options exercisable at December 31, 2019 117,256 8.89 $ 7.02 Number of Weighted Average Remaining Weighted Average Stock options outstanding as of December 31, 2019 283,695 9.21 $ 7.26 Issued 404,167 4.00 $ 6.00 Expired 49,584 8.02 $ 6.90 Stock options outstanding at December 31, 2020 638,278 7.25 $ 6.49 Stock options exercisable at December 31, 2020 363,951 7.72 $ 6.48 The following table summarizes stock option vesting periods under the two stock option plans. Number of Unrecognized stock compensation Year Ending Shares expense December 31, 163,716 $ 815,518 2021 110,611 521,223 2022 274,327 $ 1,336,741 The aggregate intrinsic value of the stock options outstanding and exercisable at December 31, 2020 is $0. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2020 | |
Equity [Abstract] | |
Stockholders' Equity | NOTE 15 – STOCKHOLDERS’ EQUITY Preferred stock, $0.10 par value; 10,000,000 shares authorized; 0 and 0 shares issued and outstanding as of December 31, 2020 and 2019 respectively. In March 2020, an executive left the Company and returned 16,667 common shares as part of the related separation agreement. The Company retired the shares and reduced its issued and outstanding stock by 16,667 shares. In September 2020, a former executive who had the right to receive 166,667 shares of Common Stock per the terms of his separation agreement that was reached in September 2019, entered into an agreement with the Company to exchange the right to receive those 166,667 shares of Common Stock for the Company’s ownership interest in TGH (see Note 6 – Investments) and a warrant to purchase 66,666 shares of the Company’s Common Stock at $6.00 per share. The Company retired the shares and reduced its issued and outstanding stock by 166,667 shares. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 16 - INCOME TAXES The Company accounts for income taxes in accordance with the asset and liability method prescribed in ASC 740, “Accounting for Income Taxes”. The Company has adopted the provisions of ASC 740-10-25, which provides recognition criteria and a related measurement model for uncertain tax positions taken or expected to be taken in income tax returns. ASC 740-10-25 requires that a position taken or expected to be taken in a tax return be recognized in the financial statements when it is more likely than not that the position would be sustained upon examination by tax authorities. Tax positions that meet the more likely than not threshold are then measured using a probability weighted approach recognizing the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement. The Company had no tax positions relating to open income tax returns that were considered to be uncertain. The Company has experienced substantial losses for both book and tax purposes since inception and has recorded no tax provisions for the years ended December 31, 2020 and 2019. The potential future recovery of any tax assets that the Company may be entitled to due to these accumulated losses is uncertain and any tax assets that that the Company may be entitled to have been fully reserved based on management’s current estimates. Management intends to continue maintaining a full valuation allowance on the Company’s deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. As of December 31, 2020, the Company had approximately $11,356,890 of operating loss carryforwards for United States tax purposes, expiring as follows: ● $2,182,354 expiring in 2037 ● $9,174,536 with no expiration Realization of operating loss carryforwards to offset future operating income for tax purposes are subject to various limitations including change of ownership and current year taxable income percentage limitations. The Company has no credit carryforwards for tax purposes. The Company’s primary filing jurisdictions are the United States and Canada. Due to the Company’s net operating loss carryforwards, the Company’s income tax returns remain subject to examination by federal, foreign and most state taxing authorities for all tax years. |
Warrants
Warrants | 12 Months Ended |
Dec. 31, 2020 | |
Warrants and Rights Note Disclosure [Abstract] | |
Warrants | NOTE 17 – WARRANTS The following table shows warrant activity for the years ended December 31, 2020 and 2019. Number of shares Weighted Average Exercise Price Warrants outstanding as of December 31, 2018 1,000 $ 6.00 Warrants issued in connection with convertible debenture offering (see Note 11): Issued to convertible debenture holders 88,689 18.00 Issued to 4Front as part of compensation 25,650 $ 14.46 Warrants outstanding as of December 31, 2019 115,339 $ 17.28 Warrants exercisable as of December 31, 2019 115,339 $ 17.28 Number of shares Weighted Average Exercise Price Warrants outstanding as of December 31, 2019 115,339 $ 17.28 Issued in conjunction with debt 20,747 18.00 Issued in conjunction with agreement with former executive (see Note 15 – Stockholders’ Equity) 66,666 $ 6.00 Warrants outstanding as of December 31, 2020 202,752 $ 13.64 Warrants exercisable as of December 31, 2020 202,752 $ 13.64 The fair value of the warrants are calculated using the Black-Scholes pricing model based on the estimated market value of the underlying stock at the valuation measurement date, the remaining contractual term of the warrants, risk-free interest rate, and expected volatility of the underlying Common Stock. There is a moderate degree of subjectivity involved when estimating the value of warrants with the Black-Scholes option pricing model as the assumptions used are moderately judgmental The weighted-average life of the warrants is 2.2 years. The aggregate intrinsic value of the warrants outstanding and exercisable at December 31, 2020 is $0. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 18 – SUBSEQUENT EVENTS On February 17, 2021, we completed an offering of 6,210,000 shares of our common stock, inclusive of the underwrites full overallotment, at $10.00 per share for total gross offering proceeds of $62,100,000. In connection with this offering, we received approval to list our common stock on the Nasdaq Capital Market under the symbol “UGRO”. On February 19, 2021, we repaid all of the amounts outstanding under and terminated the Credit Agreement (See “NOTE 10 – DEBT”). |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates In preparing consolidated financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates. Significant estimates include estimated useful lives and potential impairment of long-lived assets and goodwill, inventory write offs, allowance for deferred tax assets, and allowance for bad debt. |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation These consolidated financial statements are presented in United States dollars and they include the accounts of urban-gro, Inc. and its wholly owned subsidiaries. The financial results of Impact have been included in the Company’s consolidated financial statements from the date of acquisition on March 7, 2019 and all intercompany transactions have been eliminated. |
Functional and Reporting Currency and Foreign Currency Translation | Functional and reporting currency and foreign currency translation The functional and reporting currency of the Company and its subsidiaries is US dollars. All transactions in currencies other than US dollars are translated into US dollars on the date of the transaction. Any exchange gains and losses related to these transactions are recognized in the current period earnings as other income (expense). |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company’s financial instruments consist principally of cash and cash equivalents, accounts receivable, accounts payable, notes payable and other current assets and liabilities. We value our financial assets and liabilities using fair value measurements. Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are categorized based on whether the inputs are observable in the market and the degree that the inputs are observable. The categorization of financial instruments within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The hierarchy is prioritized into three levels (with Level 3 being the lowest) defined as follows: Level 1: Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access. Level 2: Observable inputs other than prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated with observable market data. Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies, and similar techniques that use significant unobservable inputs. The carrying amount of our cash and cash equivalents, accounts receivable, accounts payable, and other current assets and liabilities in our consolidated financial statements approximates fair value because of the short-term nature of the instruments. Investments in non-marketable equity securities are carried at cost less other-than-temporary impairments. The carrying amount of our notes payable and convertible debt at December 31, 2020 and 2019 approximates their fair values based on our incremental borrowing rates. There have been no changes in Level 1, Level 2, and Level 3 categorizations and no changes in valuation techniques for these assets or liabilities for the years ended December 31, 2020 and 2019. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid short-term cash investments with an original maturity of three months or less to be cash equivalents. As of December 31, 2020 and 2019, the Company did not maintain any cash equivalents. The Company maintains cash with financial institutions that may from time to time exceed federally-insured limits. The Company has not experienced any losses related to these balances and believes the risk to be minimal. There are no restricted or compensating cash balances as of December 31, 2020. |
Accounts Receivable, Net | Accounts Receivable, Net Trade accounts receivables are carried at the original invoiced amounts less an allowance for doubtful accounts. As of December 31, 2020 and 2019, the balance of allowance for doubtful accounts was $15,955 and $18,920, respectively. The allowances for doubtful accounts are calculated based on a detailed review of certain individual customer accounts and an estimation of the overall economic conditions affecting the Company’s customer base. The Company reviews a customer’s credit history before extending credit to the customer. If the financial condition of its customers were to deteriorate, resulting in an impairment of their ability to make payments, additions to the allowance would be required. A provision is made against accounts receivable to the extent they are considered unlikely to be collected. Occasionally the Company will write off bad debt directly to the bad debt expense account when the balance is determined to be uncollectable. Bad debt expense for the years ended December 31, 2020 and 2019 was $58,849 and $67,633, respectively. |
Inventories | Inventories Inventories, consisting entirely of finished goods, are stated at the lower of cost or net realizable value, with cost determined using the weighted average cost method. The Company periodically reviews the value of items in inventory and provides write-downs or write-offs of inventory based on its assessment of market conditions. Write-downs and write-offs are charged to cost of goods sold at the realization of change in value. Once written down, inventories are carried at this lower basis until sold or scrapped. |
Property, Plant, and Equipment, Net | Property, Plant, and Equipment, net Property and equipment is stated at cost less accumulated depreciation and impairment. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. When property and equipment is retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes. The Company uses other depreciation methods (generally accelerated) for tax purposes where appropriate. No impairment charges were recorded for the years ended December 31, 2020 and 2019. The estimated useful lives for significant property and equipment categories are as follows: Computer and Technology Equipment 3 years Furniture and Equipment 5 years Leasehold Improvements Lease term Vehicles 3 years Other Equipment 3 or 5 years Software 3 years |
Operating Lease Right of Use Assets | Operating Lease Right of Use Assets Operating lease right of use assets are stated at cost less accumulated depreciation, amortization and impairment. The Company has one operating lease with an imputed annual interest rate of 8%. The terms of the lease are 12 months commencing on September 1, 2020 and ending on August 31, 2021. The Company is currently evaluating whether to renew this lease. |
Intangible Assets | Intangible Assets The Company’s intangible assets, consisting of legal fees for application of patents and trademarks and license fees paid for inspection services, are recorded at cost. Patents and trademarks, once approved, are amortized using the straight-line method over an estimated life, generally 5 years for patents and 10 to 20 years for trademarks. License fees are amortized over 10 years. Intangible assets are included in “other assets” on the balance sheets. The net balance of intangible assets for December 31, 2020 and 2019 was $84,514 and $86,151, respectively. Amortization expense totaled $1,637 and $1,879 for the years ended December 31, 2020 and 2019, respectively. |
Goodwill | Goodwill Goodwill represents the excess of the purchase price over the fair value of net assets acquired in a business combination. Goodwill is not amortized, but is tested for impairment annually as of December 31 and at any time when events or circumstances suggest impairment may have occurred. The testing for impairment consists of a comparison of the fair value of the reporting unit with its carrying amount. If the carrying amount of the reporting unit, including goodwill, exceeds the fair value, an impairment will be recognized equal to the difference between the carrying value of the reporting unit’s goodwill and the implied fair value of the goodwill. In testing goodwill for impairment, we determine the estimated fair value of our reporting units based upon a discounted future cash flow analysis. Goodwill is our only indefinite-lived intangible asset. Definite-lived intangible assets are amortized using the straight line method over the shorter of their contractual term or estimated useful lives. |
Impairment of Long-lived Assets | Impairment of Long-lived Assets The Company evaluates potential impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. An impairment will be recognized as the amount by which the carrying amount of a long-lived asset exceeds its fair value. |
Investments | Investments Investments without readily determinable fair values and for which the Company does not have the ability to exercise significant influence are accounted for at cost with adjustments for observable changes in prices or impairments. |
Convertible Notes | Convertible Notes The Company accounts for its convertible notes at issuance by allocating the proceeds received from a convertible note among freestanding instruments according to ASC 470, Debt, based upon their relative fair values. The fair value of debt and common stock was determined based on the closing price of the common stock on the date of the transaction, and the fair value of warrants was determined using the Black-Scholes option-pricing model. Convertible notes were subsequently carried at amortized cost. The fair value of the warrants is recorded as additional paid-in capital, with a corresponding amount recorded as a debt discount from the face amount of the convertible note. Each convertible note was analyzed for the existence of a beneficial conversion feature (“BCF”), defined as the fair value of the common stock at the commitment date for the convertible note, less the effective conversion price. BCFs were recognized at their intrinsic value, and recorded as an increase to additional paid-in capital, with a corresponding reduction in the carrying amount of the convertible note (as a debt discount from the face amount of the convertible note). The discounts on the convertible notes, consisting of amounts ascribed to warrants and beneficial conversion features, is amortized to interest expense, using the effective interest method, over the terms of the related convertible notes. BCFs that are contingent upon the occurrence of a future event are recorded when the contingency is resolved. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers, Our equipment systems, services and consumable product revenues arise from contracts with customers. Service revenues include full facility programming, engineering and design services, start-up commissioning services, facility optimization services and IPM planning and strategy services. Product revenues include an integrated suite of select cultivation equipment systems and consumable crop management products. We enter into separate contracts for the service and product revenues we provide to our customers in order to clarify our obligations under the terms of the contracts. New contracts are entered into if the services to be performed or products to be delivered need to be modified. Service revenues are satisfied when services are rendered or completed in accordance with the terms of the contract. Product revenues are satisfied when control of the products is transferred to the customer. |
Customer Deposits | Customer Deposits The Company’s policy is to collect deposits from customers at the beginning of the contract. The customer payments received are recorded as a customer deposit liability on the balance sheet. When the contract is complete and meets all the criteria for revenue recognition, the customer is billed for the entire contract amount and the deposit is recorded against the customer’s receivable balance. In certain situations when the customer has paid the deposit and services have been performed but the customer chooses not to proceed with the contract, the Company may keep the deposit and recognize revenue. Of the outstanding customer deposit balance of $2,915,406 at December 31, 2019, $1,955,902 was recognized as revenue in the year ended December 31, 2020. The entire customer deposit balance of $3,298,609 at December 31, 2018 was recognized as revenue in the year ended December 31, 2019. |
Cost of Revenue | Cost of Revenue The Company’s policy is to recognize cost of revenues in the same manner as, and in conjunction with, revenue recognition. The Company’s cost of revenues includes the costs directly attributable to revenue recognized and includes expenses related to the purchasing of products and providing services, fees for third-party commissions and shipping costs. Total shipping costs included in the cost of goods sold for the years ended December 31, 2020 and 2019 were $790,996 and $679,911, respectively. |
Advertising Costs | Advertising Costs The Company expenses advertising costs in the periods the costs are incurred. Prepayments made under contracts are included in prepaid expenses and expensed when the advertisement is run. Total advertising expense incurred for the years ended December 31, 2020 and 2019 was $58,849 and $159,728, respectively. |
Warrants | Warrants The Company estimates the fair value of these warrants at the respective balance sheet dates using the Black-Scholes option pricing based on the estimated market value of the underlying common stock at the valuation measurement date, the remaining contractual term, risk-free interest rate, and expected volatility of the price of the underlying common stock. There is a moderate degree of subjectivity involved when using option pricing models to estimate the warrants and the assumptions used in the Black-Scholes option-pricing model are moderately judgmental. |
Stock-Based Compensation | Stock-Based Compensation The Company periodically issues shares of its common stock and stock options to employees and consultants in non-capital raising transactions for fees and services. The Company accounts for stock issued to non-employees with the value of the stock compensation based upon the measurement date as determined at the grant date of the award. The Company accounts for stock grants issued and vesting to employees with the award being measured at its fair value at the date of grant and amortized ratably over the vesting period. |
Income Taxes | Income Taxes The Company files income federal tax returns in the United States and Canada and state and local tax return in applicable jurisdictions. Provisions for current income tax liabilities, if any, would be calculated and accrued on income and expense amounts expected to be included in the income tax returns for the current year. Income taxes reported in earnings, if any, would also include deferred income tax provisions. Deferred income tax assets and liabilities, if any, would be computed on differences between the financial statement bases of assets and liabilities at the enacted tax rates. Changes in deferred income tax assets and liabilities would be included as a component of income tax expense. The effect on deferred income tax assets and liabilities attributable to changes in enacted tax rates would be charged or credited to income tax expense in the period of enactment. Valuation allowances would be established for certain deferred tax assets when realization is not likely. Assets and liabilities would be established for uncertain tax positions taken or positions expected to be taken in income tax returns when such positions, in the judgment of the Company, do not meet a more-likely-than-not threshold based on the technical merits of the positions. Valuation allowances would be established for certain deferred tax assets when realization is not likely. |
Loss Per Share | Loss Per Share The Company computes net loss per share by dividing net loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share would be computed by dividing net loss by the weighted-average of all potentially dilutive shares of common stock that were outstanding during the periods presented. The diluted earnings per share calculation is not presented as it results in an anti-dilutive calculation of net loss per share. The treasury stock method would be used to calculate diluted earnings per share for potentially dilutive stock options and share purchase warrants. This method assumes that any proceeds received from the exercise of in-the-money stock options and share purchase warrants would be used to purchase common shares at the average market price for the period. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements From time to time, the Financial Accounting Standards Board (the “FASB”) or other standards setting bodies issue new accounting pronouncements. The FASB issues updates to new accounting pronouncements through the issuance of an Accounting Standards Update (“ASU”). Unless otherwise discussed, the Company believes that the impact of recently issued guidance, whether adopted or to be adopted in the future, is not expected to have a material impact on the Company’s financial statements upon adoption. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This update replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This update is effective for interim and annual periods beginning after December 15, 2022, with a modified-retrospective approach. The Company is currently evaluating the impact that this new guidance will have on its consolidated financial statements. In August 2020, the FASB issued ASU 2020-06—Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)—Accounting For Convertible Instruments and Contracts in an Entity’s Own Equity. ASU 2020-06 simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. ASU 2020-06 removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for it. ASU 2020-06 also simplifies the diluted net income per share calculation in certain areas. The new guidance is effective for annual and interim periods beginning after December 15, 2021, and early adoption is permitted for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The Company is currently evaluating the impact that this new guidance will have on its consolidated financial statements. |
Organization and Acquisitions_2
Organization and Acquisitions, Business Plan, and Liquidity (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Acquisition of Impact Engineering | The Company accounted for the initial acquisition of Impact as follows: Purchase Price $ 1,000,000 Allocation of Purchase Price: Cash $ 49,742 Accounts receivable, net $ 93,811 Goodwill $ 902,067 Accrued expenses $ 45,620 |
Schedule of Business Acquisition Proforma Information | The following table summarizes the supplemental information on an unaudited pro forma basis, as if the acquisition had been consummated as of January 1, 2019: 2019 Revenue $ 24,477,011 Net loss (8,268,920 ) |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Schedule of Estimated Useful Lives of Property and Equipment | The estimated useful lives for significant property and equipment categories are as follows: Computer and Technology Equipment 3 years Furniture and Equipment 5 years Leasehold Improvements Lease term Vehicles 3 years Other Equipment 3 or 5 years Software 3 years |
Prepayments & Other Assets (Tab
Prepayments & Other Assets (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Prepaid Balances | The prepaid balances are summarized as follows: 2020 2019 Vendor prepayments $ 2,676,493 $ 1,070,788 Prepaid services and fees 365,931 187,912 Deferred financing cost (See Note 10 - Debt) 504,644 – Others - 20,028 Prepayments and other assets $ 3,547,068 $ 1,278,728 |
Property Plant & Equipment, n_2
Property Plant & Equipment, net (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Plant and Equipment | Property Plant and Equipment balances are summarized as follows: 2020 2019 Computers & Technology Equip $ 67,754 $ 87,300 Furniture and Fixtures 85,662 42,518 Leasehold Improvements 164,072 164,072 Vehicles 20,000 57,414 Software 142,721 142,721 R&D Assets 3,031 3,031 Other Equipment 34,063 38,355 Accumulated depreciation (387,859 ) (370,376 ) Property plant and equipment, net $ 129,444 $ 165,035 |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of Cost Method Investments | The components of investments are summarized as follows: 2020 2019 Investment in Edyza $ 1,710,358 $ 1,710,358 Investment in TGH – 310,000 $ 1,710,358 $ 2,020,358 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses | Accrued expenses are summarized as follows: 2020 2019 Accrued operating expenses $ 717,503 $ 854,056 Accrued wages and related expenses 408,907 487,327 Accrued interest expense 99,258 – Accrued sales tax payable 572,826 345,458 $ 1,798,494 $ 1,686,841 |
Notes Payable (Tables)
Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Notes Payable | The following is a summary of notes payable excluding related party notes payable: December 31, December 31, 2020 2019 Unsecured, interest only, note payable with Chris Parkes originally due December 31, 2018. Initial interest payments due monthly at an annual rate of 20.4%. Note payable revised in December 2018 extending the maturity date to March 31, 2019. During August 2019, the maturity date was extended to March 31, 2020 and the interest rate was decreased to an annual rate of 9%. In consideration for extending the due date of the note and reducing the interest rate, the Company issued the holder 500 shares of Common Stock. This note was fully repaid on December 3, 2020. $ - $ 80,000 Unsecured, interest only, note payable with David Parkes originally due December 31, 2018. Initial interest payments due monthly at an annual rate of 18.0%. Note payable revised in December 2018 extending the maturity date to March 31, 2019. During August 2019, the maturity date was extended to March 31, 2020 and the interest rate was decreased to an annual rate of 9%. In consideration for extending the due date of the note and reducing the interest rate, the Company issued the holder 500 shares of Common Stock. This note was fully repaid on December 3, 2020. - 100,000 Note payable with Hydrofarm Holdings Group, Inc. (“Hydrofarm”), secured by all currently existing and future assets. Interest accrues at 8.0% per year and is paid quarterly. The note matures on the earlier of: (a) 90 days’ notice from Hydrofarm; (b) acceleration of the note payable due to the Company being in default; or (c) December 2023. The note was repaid in full on February 27, 2020. - 2,000,000 Secured agreement to sell future receivables to GCF Resources, LLC, net of $30,000 in closing fees. The agreement requires 32 weekly payments of $42,190 totaling $1,350,000. The agreement matured on May 7, 2020 but is repayable prior to maturity for less than the $1,350,000 in total payments. The note was repaid in full on February 27, 2020. - 632,709 Paycheck Protection Program (“PPP”) loan entered into on April 16, 2020. Interest rate of 1.0% per annum. Payments of principal and interest are deferred until August 1, 2021 (the “Deferral Period”). The PPP loan may be forgiven in part or fully depending on the Company meeting certain PPP loan forgiveness guidelines. The Company has not yet determined if any of the PPP loan is subject to forgiveness and has therefore continued to present the entire PPP loan as an obligation on its financial statements. Any unforgiven portion of the PPP loan is payable over a two-year term, with payments deferred during the Deferral Period. The Company may prepay the unforgiven loan balance at any time without payment of any premium. 1,020,600 - Convertible notes related to bridge financing. See Bridge Financing Notes below. 1,854,500 - Total 2,875,100 2,812,709 Less current maturities (1,854,500 ) (2,812,709 ) Long term $ 1,020,600 $ – |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | The Company’s borrowings as of December 31, 2020 and 2019 consisted of the following: 2020 2019 Revolving Facility $ 3,403,143 $ – Term Loan, net of $252,322 unamortized debt issuance costs 1,868,320 – Total 5,271,463 – Less current debt due within one year (5,271,463 ) – Total long-term debt $ - $ – |
Operating Lease Liabilities &_2
Operating Lease Liabilities & Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Operating Lease Liabilities | The following is a summary of operating lease liabilities: 2020 2019 Operating lease liabilities related to right of use assets. $ 88,888 $ 222,236 Less current portion (88,888 ) (123,395 ) Long term $ - $ 98,841 |
Schedule of Future Minimum Lease Payments | The following is a schedule showing future minimum lease payments: Year ending Total Minimum December 31, Lease Payments 2021 96,000 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Stock Grant Activity | The following schedule shows stock grant activity for the year ended December 31, 2020 and 2019: Grants outstanding as of December 31, 2018 300,444 Grants awarded 6,967 Forfeiture/Cancelled (11,667) Grants vested (226,994) Grants outstanding as of December 31, 2019 68,750 Grants outstanding as of December 31, 2019 68,750 Grants awarded 132,361 Forfeiture/Cancelled (33,333 ) Grants vested (48,889 ) Grants outstanding as of December 31, 2020 118,889 |
Schedule of Stock Grant Vesting Periods | The following table summarizes stock grant vesting periods. Number of Unrecognized stock compensation Year Ending Shares expense December 31, 85,555 $ 215,451 2021 16,667 33,333 2022 16,667 2,778 2023 118,889 $ 251,562 |
Schedule of Stock Option Activity | The following schedule shows stock option activity for the year ended December 31, 2020 and 2019. Number of Weighted Average Remaining Weighted Average Stock options outstanding as of December 31, 2018 197,334 9.68 $ 6.90 Issued 122,750 9.20 $ 8.28 Expired 36,389 9.12 $ 7.98 Stock options outstanding at December 31, 2019 283,695 9.21 $ 7.26 Stock options exercisable at December 31, 2019 117,256 8.89 $ 7.02 Number of Weighted Average Remaining Weighted Average Stock options outstanding as of December 31, 2019 283,695 9.21 $ 7.26 Issued 404,167 4.00 $ 6.00 Expired 49,584 8.02 $ 6.90 Stock options outstanding at December 31, 2020 638,278 7.25 $ 6.49 Stock options exercisable at December 31, 2020 363,951 7.72 $ 6.48 |
Schedule of Stock Option Vesting Periods | The following table summarizes stock option vesting periods under the two stock option plans. Number of Unrecognized stock compensation Year Ending Shares expense December 31, 163,716 $ 815,518 2021 110,611 521,223 2022 274,327 $ 1,336,741 |
Warrants (Tables)
Warrants (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Warrants and Rights Note Disclosure [Abstract] | |
Schedule of Warrant Activity | The following table shows warrant activity for the years ended December 31, 2020 and 2019. Number of shares Weighted Average Exercise Price Warrants outstanding as of December 31, 2018 1,000 $ 6.00 Warrants issued in connection with convertible debenture offering (see Note 11): Issued to convertible debenture holders 88,689 18.00 Issued to 4Front as part of compensation 25,650 $ 14.46 Warrants outstanding as of December 31, 2019 115,339 $ 17.28 Warrants exercisable as of December 31, 2019 115,339 $ 17.28 Number of shares Weighted Average Exercise Price Warrants outstanding as of December 31, 2019 115,339 $ 17.28 Issued in conjunction with debt 20,747 18.00 Issued in conjunction with agreement with former executive (see Note 15 – Stockholders’ Equity) 66,666 $ 6.00 Warrants outstanding as of December 31, 2020 202,752 $ 13.64 Warrants exercisable as of December 31, 2020 202,752 $ 13.64 |
Organization and Acquisitions_3
Organization and Acquisitions, Business Plan, and Liquidity (Details Narrative) - USD ($) | Feb. 17, 2021 | Feb. 17, 2021 | Dec. 31, 2020 | Mar. 07, 2019 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Common stock additional shares issued | ||||||||
Reverse stock split description | 1-for-6 reverse stock split | |||||||
Accumulated deficit | $ (21,964,321) | $ (21,964,321) | $ (16,890,626) | |||||
Working capital | (9,300,836) | (9,300,836) | ||||||
Stockholders' equity | (7,406,164) | $ (7,406,164) | (5,008,334) | $ (3,826,551) | ||||
Subsequent Event [Member] | ||||||||
Common stock additional shares issued | 6,210,000 | |||||||
Common stock per share | $ 10 | $ 10 | ||||||
Proceeds from equity offering | $ 62,100,000 | |||||||
Common Stock [Member] | ||||||||
Common stock additional shares issued | 1,606 | |||||||
Stockholders' equity | $ 4,719 | $ 4,719 | $ 4,702 | $ 4,205 | ||||
Impact Engineering [Member] | ||||||||
Business acquisition, effective date of acquisition | Mar. 7, 2019 | |||||||
Business acquisition, ownership percentage | 100.00% | |||||||
Impact Engineering [Member] | Common Stock [Member] | ||||||||
Business acquisition, initially common stock issued | 83,333 | |||||||
Business acquisition, share price | $ 12 | |||||||
Impact Engineering [Member] | Common Stock [Member] | Provision Agreement [Member] | ||||||||
Common stock additional shares issued | 41,667 | |||||||
Common stock per share | $ 3.72 |
Organization and Acquisitions_4
Organization and Acquisitions, Business Plan, and Liquidity - Schedule of Acquisition of Impact Engineering (Details) - USD ($) | 2 Months Ended | ||
Mar. 07, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
Goodwill | $ 902,067 | $ 902,067 | |
Impact Engineering [Member] | |||
Purchase price | $ 1,000,000 |
Organization and Acquisitions_5
Organization and Acquisitions, Business Plan, and Liquidity - Schedule of Business Acquisition Proforma Information (Details) - Impact Engineering [Member] | Jan. 02, 2019USD ($) |
Revenue | $ 24,477,011 |
Net loss | $ (8,268,920) |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Cash equivalents | ||
Allowance for doubtful accounts | 15,955 | 18,920 |
Bad debt expense | 58,849 | 67,633 |
Impairment charges | ||
Operating lease discount rate | 8.00% | |
Operating lease term | 1 year | |
License fees amortized period | 10 years | |
Intangible assets, net | $ 84,514 | 86,151 |
Amortization expense | 1,637 | 1,879 |
Customer deposits | 4,878,863 | 2,915,406 |
Revenue recognized from customer deposits | 1,955,902 | 3,298,609 |
Advertising | 58,849 | 159,728 |
Shipping and Handling [Member] | ||
Shipping expense | $ 790,996 | $ 679,911 |
Patents [Member] | ||
Estimated useful life of intangible assets | 5 years | |
Trademarks [Member] | Minimum [Member] | ||
Estimated useful life of intangible assets | 10 years | |
Trademarks [Member] | Maximum [Member] | ||
Estimated useful life of intangible assets | 20 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details - Schedule of Estimated Useful Lives of Property and Equipment (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Computer and Technology Equipment [Member] | |
Useful lives of property and equipment | 3 years |
Furniture and Equipment [Member] | |
Useful lives of property and equipment | 5 years |
Leasehold Improvements [Member] | |
Estimated useful lives of property and equipment | Lease term |
Vehicles [Member] | |
Useful lives of property and equipment | 3 years |
Other Equipment [Member] | Minimum [Member] | |
Useful lives of property and equipment | 3 years |
Other Equipment [Member] | Maximum [Member] | |
Useful lives of property and equipment | 5 years |
Software [Member] | |
Useful lives of property and equipment | 3 years |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | Dec. 15, 2020 | Feb. 25, 2020 | Aug. 31, 2019 | May 31, 2019 | Oct. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 |
Stock option exercise price per share | $ 7.02 | $ 6.48 | $ 7.02 | |||||
Stock option exercisable term | 7 years 8 months 19 days | 8 years 10 months 21 days | ||||||
Common stock issued during the period | ||||||||
Related party receivables | $ 49,658 | $ 61,678 | $ 49,658 | |||||
Related party payables | $ 24,972 | 24,972 | ||||||
Common Stock [Member] | ||||||||
Common stock issued during the period | 1,606 | |||||||
Unsecured Note Payable [Member] | ||||||||
Debt maturity date | Mar. 31, 2020 | |||||||
James Lowe [Member] | ||||||||
Debt instrument face amount | $ 1,004,500 | |||||||
Stock options granted | 5,000 | |||||||
Stock option exercise price per share | $ 7.20 | |||||||
Stock option exercisable term | 5 years | |||||||
James Lowe [Member] | Bridge Financing [Member] | ||||||||
Debt maturity date | Dec. 31, 2021 | |||||||
Debt instrument, interest rate percentage | 12.00% | |||||||
Debt instrument, convertible into bridge financing | $ 1,000,000 | |||||||
Accrued interest | $ 4,500 | |||||||
Debt conversion, description | The New James Lowe Note will be mandatorily converted into shares of our common stock upon the closing of a qualified offering, at 75% of the per share price paid by investors in a qualified offering. | |||||||
James Lowe [Member] | Common Stock [Member] | ||||||||
Common stock issued during the period | 16,667 | 1,667 | ||||||
James Lowe [Member] | Unsecured Note Payable [Member] | ||||||||
Debt instrument face amount | $ 1,000,000 | |||||||
Debt maturity date | Apr. 30, 2019 | |||||||
Debt instrument, origination fee amount | $ 12,500 | |||||||
Debt instrument, interest rate percentage | 12.00% | 9.00% | ||||||
Debt instrument, frequency of payment | Paid monthly | |||||||
Debt maturity date, description | The due date for the James Lowe Note was extended in May 2019 to December 31, 2019 | |||||||
Cloud 9 Support [Member] | ||||||||
Related party purchases | 0 | 97,329 | ||||||
Related party sales | 414,108 | 392,963 | ||||||
Related party receivables | $ 49,659 | 61,678 | 49,659 | |||||
Related party payables | 16,402 | 0 | 16,402 | |||||
Bravo and Enviro-Glo [Member] | ||||||||
Related party purchases | 0 | 45,129 | ||||||
Related party receivables | 0 | 0 | 0 | |||||
Related party payables | $ 8,570 | $ 0 | $ 8,570 |
Prepayments & Other Assets - Sc
Prepayments & Other Assets - Schedule of Prepaid Balances (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Vendor prepayments | $ 2,676,493 | $ 1,070,788 |
Prepaid services and fees | 365,931 | 187,912 |
Deferred financing cost (See Note 10 - Debt) | 504,644 | |
Others | 20,028 | |
Prepayments and other assets | $ 3,547,068 | $ 1,258,700 |
Property Plant & Equipment, N_3
Property Plant & Equipment, Net (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 256,803 | $ 264,597 |
Property Plant & Equipment, N_4
Property Plant & Equipment, Net - Schedule of Property, Plant and Equipment (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Accumulated depreciation | $ (387,859) | $ (370,376) |
Property and equipment, net | 129,444 | 165,035 |
Computer and Technology Equipment [Member] | ||
Property and equipment, gross | 67,754 | 87,300 |
Furniture and Fixtures [Member] | ||
Property and equipment, gross | 85,662 | 42,518 |
Leasehold Improvements [Member] | ||
Property and equipment, gross | 164,072 | 164,072 |
Vehicles [Member] | ||
Property and equipment, gross | 20,000 | 57,414 |
Software [Member] | ||
Property and equipment, gross | 142,721 | 142,721 |
Research and Development Assets [Member] | ||
Property and equipment, gross | 3,031 | 3,031 |
Other Equipment [Member] | ||
Property and equipment, gross | $ 34,063 | $ 38,355 |
Investments (Details Narrative)
Investments (Details Narrative) - USD ($) | Sep. 24, 2020 | Jan. 24, 2020 | Dec. 31, 2020 | Dec. 31, 2019 |
Purchase of investment | $ 1,085,975 | |||
Pullar Agreement [Member] | ||||
Percentage of membership insterests agreed to sell | 2.44% | |||
Number of shares issued | 166,667 | |||
Exercise price | $ 6 | |||
Pullar Agreement [Member] | Common Stock [Member] | ||||
Fully vested warrant shares issued | 66,667 | |||
Edyza [Member] | ||||
Stock received for acquisition, shares | 827,018 | |||
Purchase of investment | $ 897,475 | |||
Legal and Attorney's fees | $ 12,883 | |||
Total Grow Holdings LLC [Member] | ||||
Percentage of membership insterests agreed to sell | 24.40% | |||
Total consideration | $ 370,000 | |||
Total Grow Holdings LLC [Member] | Settlement Agreement [Member] | ||||
Payable of legal settlement amount in six equal installements | $ 61,919 | |||
Total Grow Holdings LLC [Member] | Settlement Agreement [Member] | Maximum [Member] | ||||
Legal and Attorney's fees | $ 25,000 |
Investments - Schedule of Cost
Investments - Schedule of Cost Method Investments (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Investments | $ 1,710,358 | $ 2,020,358 |
Edyza [Member] | ||
Investments | 1,710,358 | 1,710,358 |
Total Grow Holdings LLC [Member] | ||
Investments | $ 310,000 |
Goodwill (Details Narrative)
Goodwill (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill | $ 902,067 | $ 902,067 |
Goodwill impairment charges |
Accrued Expenses - Schedule of
Accrued Expenses - Schedule of Accrued Expenses (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Payables and Accruals [Abstract] | ||
Accrued operating expenses | $ 717,503 | $ 854,056 |
Accrued wages and related expenses | 408,907 | 487,327 |
Accrued interest expense | 99,258 | |
Accrued sales tax payable | 572,826 | 345,458 |
Accrued expenses | $ 1,798,494 | $ 1,686,841 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2020 | Nov. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2020 | |
James Lowe [Member] | ||||
Debt instrument principal amount | $ 1,004,500 | $ 1,004,500 | $ 1,004,500 | |
Bridge Financing Notes [Member] | ||||
Debt instrument principal amount | 1,854,500 | $ 1,854,500 | $ 1,854,500 | |
Proceeds from debt | $ 500,000 | $ 350,000 | ||
Debt interest rate | 12.00% | 12.00% | 12.00% | |
Debt maturity date | Dec. 31, 2021 | |||
Gross proceeds from qualified offering | $ 2,500,000 |
Notes Payable - Schedule of Not
Notes Payable - Schedule of Notes Payable (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Notes payable | $ 2,875,100 | $ 2,812,709 |
Notes payable, current maturities | (1,854,500) | (2,812,709) |
Notes payable, long term | 1,020,600 | |
Hydrofarm Note Payable [Member] | ||
Notes payable | 2,000,000 | |
Paycheck Protection Program Loan Payable [Member] | ||
Notes payable | 1,020,600 | |
Unsecured Note Payable [Member] | ||
Notes payable | 80,000 | |
Unsecured Note Payable One [Member] | ||
Notes payable | 100,000 | |
Secured Note Payable [Member] | ||
Notes payable | 632,709 | |
Convertible Debenture [Member] | ||
Notes payable | $ 1,854,500 |
Notes Payable - Schedule of N_2
Notes Payable - Schedule of Notes Payable (Details) (Parenthetical) - USD ($) | Aug. 31, 2019 | Dec. 31, 2020 |
Hydrofarm Note Payable [Member] | ||
Debt interest rate | 8.00% | |
Periodic payment frequency | quarterly | |
Paycheck Protection Program Loan Payable [Member] | ||
Debt interest rate | 1.00% | |
Debt maturity date | Aug. 1, 2021 | |
Debt maturity term | 2 years | |
Unsecured Note Payable [Member] | ||
Debt annual rate | 20.40% | |
Debt interest rate | 9.00% | |
Debt maturity date | Mar. 31, 2020 | |
Stock issued in consideration for extending due date of note, shares | 500 | |
Unsecured Note Payable One [Member] | ||
Debt annual rate | 18.00% | |
Debt interest rate | 9.00% | |
Debt maturity date | Mar. 31, 2020 | |
Stock issued in consideration for extending due date of note, shares | 500 | |
Periodic payment frequency | monthly | |
Secured Note Payable [Member] | ||
Debt maturity date | May 7, 2020 | |
Periodic payment frequency | 32 weekly payments | |
Debt closing fees | $ 30,000 | |
Debt periodic payment | 42,190 | |
Debt instrument principal amount | $ 1,350,000 |
Debt (Details Narrative)
Debt (Details Narrative) | Mar. 01, 2021USD ($) | Jan. 31, 2021USD ($) | Oct. 02, 2020USD ($) | Sep. 30, 2020 | Sep. 04, 2020USD ($)$ / shares | Feb. 21, 2020USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) |
Amortization of debt issuance costs | $ 557,903 | |||||||
Foreign exchange loss | 397,292 | |||||||
Term Loan [Member] | ||||||||
Unamortized debt issuance costs | 252,322 | |||||||
Credit Agreement [Member] | ||||||||
Debt, description | The Credit Agreement, which is denominated in Canadian dollars (C$), is comprised of (i) a 12-month senior secured demand term loan facility in the amount of C$2.7 million ($2.0 million), which was funded in its entirety on the closing date (the "Term Loan"); and (ii) a 12-month demand revolving credit facility of up to C$5.4 million ($4.0 million), which may be drawn from time to time, subject to the terms and conditions set forth in the Credit Agreement and described further below (the "Revolving Facility," and together with the Term Loan, the "Facilities"). The Credit Agreement is personally guaranteed by the Company's CEO and Chairman, Brad Nattrass, and was to be in place for the original term of the Credit Agreement (1 year) plus a 1-year extension period at the discretion of the Lender as provided in the Credit Agreement. | |||||||
Maturity date, description | The final maturity date of the Facilities was initially stipulated in the Credit Agreement as the earlier of (i) demand, and (ii) the date that is 12 months after the closing date, with a potential extension to the date that is 24 months after the closing date (the "Initial Maturity Date"). | |||||||
Maturity Date | Dec. 31, 2021 | |||||||
Warrants term | 5 years | |||||||
Credit Agreement [Member] | Share Price [Member] | ||||||||
Fair value of warrants | $ / shares | 6 | |||||||
Credit Agreement [Member] | Risk Free Interest Rate [Member] | ||||||||
Fair value of warrants | 1.14 | |||||||
Credit Agreement [Member] | Expected Volatility [Member] | ||||||||
Fair value of warrants | 100 | |||||||
Credit Agreement [Member] | Prime Rate [Member] | ||||||||
Interest rate | 14.50% | 12.00% | 11.00% | |||||
Credit Agreement [Member] | Term Loan [Member] | ||||||||
Credit facility loan amount | $ 4,000,000 | |||||||
Unamortized debt issuance costs | 252,322 | |||||||
Credit Agreement [Member] | Term Loan [Member] | Subsequent Event [Member] | ||||||||
Prepayment of debt | $ 1,000,000 | |||||||
Monthly payment of debt | $ 100,000 | |||||||
Credit Agreement [Member] | CAD [Member] | Term Loan [Member] | ||||||||
Credit facility loan amount | 5,400,000 | |||||||
Credit Agreement [Member] | Revolving Credit Facility [Member] | ||||||||
Credit facility loan amount | $ 2,000,000 | |||||||
Credit facility, discription | The Revolving Facility could initially be borrowed and re-borrowed on a revolving basis by the Company during the term of the Facilities, provided that borrowings under the Revolving Facility were limited by a loan availability formula equal to the sum of (i) 90% of insured accounts receivable, (ii) 85% of investment grade receivables, (iii) 75% of other accounts receivable, (iv) 50% of eligible inventory, and (v) the lesser of C$4.05 million ($3.0 million) and (A) 75% of uncollected amounts on eligible signed equipment orders for equipment systems contracts and (B) 85% of uncollected amounts on eligible signed professional services order forms for design contracts. | |||||||
Monthly payment of debt | $ 50,000 | |||||||
Debt issuance costs | $ 1,314,868 | |||||||
Unamortized debt issuance costs | $ 504,644 | |||||||
Credit Agreement [Member] | Revolving Credit Facility [Member] | Common Stock and Warrant [Member] | ||||||||
Debt issuance costs | $ 676,822 | |||||||
Credit Agreement [Member] | Revolving Credit Facility [Member] | CAD [Member] | ||||||||
Credit facility loan amount | $ 2,700,000 |
Debt - Schedule of Debt (Detail
Debt - Schedule of Debt (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Total | $ 5,271,463 | |
Less current debt due within one year | (5,271,463) | |
Total long-term debt | ||
Term Loan [Member] | ||
Total | 1,868,320 | |
Revolving Credit Facility [Member] | ||
Total | $ 3,403,143 |
Debt - Schedule of Debt (Deta_2
Debt - Schedule of Debt (Details) (Parenthetical) | Dec. 31, 2020USD ($) |
Term Loan [Member] | |
Unamortized debt issuance costs | $ 252,322 |
Unit Offering (Details Narrativ
Unit Offering (Details Narrative) - 4Front Capital Partners, Inc [Member] - Private Placement Offering [Member] - USD ($) | Oct. 16, 2019 | Jan. 09, 2019 |
Proceeds from sale of unit | $ 6,000,000 | |
Warrants, description | The Warrants contain a mandatory exercise provision if the weighted average share price of the Company's Common Stock exceeds $30.00 per share for a period of five consecutive days. | |
Convertible Debenture [Member] | ||
Debt instrument principal amount | $ 1,000 | |
Number of securities by each warrant | 34.58 | |
Exercise price of warrants | $ 18 | |
Debt maturity date | May 31, 2021 | |
Interest rate | 8.00% | |
Conversion price | $ 14.46 | |
Debt converted, amount | $ 2,565,000 | |
Accrued interest | $ 92,037 | |
Convertible Debenture [Member] | Common Stock [Member] | ||
Number of shares converted | 183,752 | |
Common stock price per share | $ 14.46 |
Operating Lease Liabilities &_3
Operating Lease Liabilities & Commitments and Contingencies (Details Narrative) | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Imputed annual interest rate for operating | 8.00% |
Lease term | 12 months |
Lease description | The Company has one operating leases with an imputed annual interest rate of 8%. The terms of the lease are 12 months commencing on September 1, 2020 and ending on August 31, 2021. The Company is currently evaluating whether to renew this lease. |
Operating Lease Liabilities &_4
Operating Lease Liabilities & Commitments and Contingencies - Schedule of Operating Lease Liabilities (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating lease liabilities related to right of use assets. | $ 88,888 | $ 222,236 |
Less current portion | (88,889) | (123,395) |
Long term | $ 98,841 |
Operating Lease Liabilities &_5
Operating Lease Liabilities & Commitments and Contingencies - Schedule of Future Minimum Lease Payments (Details) | Dec. 31, 2020USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2021 | $ 96,000 |
Risks and Uncertainties (Detail
Risks and Uncertainties (Details Narrative) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Revenue [Member] | Customer One [Member] | ||
Concentration risk percentage | 25.00% | 21.00% |
Revenue [Member] | Customer Two [Member] | ||
Concentration risk percentage | 13.00% | |
Accounts Receivable [Member] | Customer One [Member] | ||
Concentration risk percentage | 12.00% | 15.00% |
Accounts Receivable [Member] | Customer Two [Member] | ||
Concentration risk percentage | 11.00% | |
Purchases [Member] | Vendor One [Member] | ||
Concentration risk percentage | 33.00% | 24.00% |
Purchases [Member] | Vendor Two [Member] | ||
Concentration risk percentage | 13.00% |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | |||
Jan. 31, 2017 | Dec. 31, 2020 | Dec. 31, 2019 | May 31, 2019 | Jan. 31, 2018 | |
Stock based compensation expense | $ 1,803,403 | $ 1,830,426 | |||
Shares vested and issued | 48,889 | ||||
Stock authorized for issuance | 274,327 | 588,333 | 500,000 | ||
Intrinsic value of stock options outstanding | $ 0 | ||||
Intrinsic value of the stock options exercisable | $ 0 | ||||
Minimum [Member] | |||||
Vesting period | 1 year | ||||
Maximum [Member] | |||||
Vesting period | 3 years |
Stock-Based Compensation - Sche
Stock-Based Compensation - Schedule of Stock Grant Activity (Details) - shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | ||
Grants outstanding, beginning | 68,750 | 300,444 |
Grants awarded | 132,361 | 6,967 |
Forfeiture/Cancelled | (33,333) | (11,667) |
Grants vested | (48,889) | (226,994) |
Grants outstanding, ending | 118,889 | 68,750 |
Stock-Based Compensation - Sc_2
Stock-Based Compensation - Schedule of Stock Grant Vesting Periods (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Number of Shares | 118,889 | 68,750 | 300,444 |
Unrecognized stock compensation expense | $ 251,562 | ||
2021 [Member] | |||
Number of Shares | 85,555 | ||
Unrecognized stock compensation expense | $ 215,451 | ||
2022 [Member] | |||
Number of Shares | 16,667 | ||
Unrecognized stock compensation expense | $ 33,333 | ||
2023 [Member] | |||
Number of Shares | 16,667 | ||
Unrecognized stock compensation expense | $ 2,778 |
Stock-Based Compensation - Sc_3
Stock-Based Compensation - Schedule of Stock Option Activity (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | ||
Stock options outstanding, Number of shares, beginning | 283,695 | 197,334 |
Issued, Number of shares | 404,167 | 122,750 |
Expired, Number of shares | 49,584 | 36,389 |
Stock options outstanding, Number of shares, ending | 638,278 | 283,695 |
Stock options exercisable, Number of shares | 363,951 | 117,256 |
Stock options outstanding, Weighted Average Remaining Life (Years) | 9 years 2 months 16 days | 9 years 8 months 5 days |
Issued, Weighted Average Remaining Life (Years) | 4 years | 9 years 2 months 12 days |
Expired, Weighted Average Remaining Life (Years) | 8 years 7 days | 9 years 1 month 13 days |
Stock options outstanding, Weighted Average Remaining Life (Years) | 7 years 2 months 30 days | 9 years 2 months 16 days |
Stock options exercisable, Weighted Average Remaining Life (Years) | 7 years 8 months 19 days | 8 years 10 months 21 days |
Stock options outstanding, Weighted Average Exercise Price, beginning | $ 7.26 | $ 6.90 |
Issued, Weighted Average Exercise Price | 6 | 8.28 |
Expired, Weighted Average Exercise Price | 6.90 | 7.98 |
Stock options outstanding, Weighted Average Exercise Price, ending | 6.49 | 7.26 |
Stock options exercisable, Weighted Average Exercise Price | $ 6.48 | $ 7.02 |
Stock-Based Compensation - Sc_4
Stock-Based Compensation - Schedule of Stock Option Vesting Periods (Details) - USD ($) | Dec. 31, 2020 | May 31, 2019 | Jan. 31, 2018 |
Number of Shares | 274,327 | 588,333 | 500,000 |
Unrecognized stock compensation expense | $ 1,336,741 | ||
2021 [Member] | |||
Number of Shares | 163,716 | ||
Unrecognized stock compensation expense | $ 815,518 | ||
2022 [Member] | |||
Number of Shares | 110,611 | ||
Unrecognized stock compensation expense | $ 521,223 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - $ / shares | 1 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Preferred stock, par value | $ 0.10 | $ 0.10 | ||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | ||
Preferred stock, shares issued | 0 | 0 | ||
Preferred stock, shares outstanding | 0 | 0 | ||
Returned shares of common stock | 16,667 | |||
Retired shares of common stock | 16,667 | 166,667 | ||
Former Executive [Member] | ||||
Warrant outstanding | 66,666 | |||
Exercise price | $ 6 | |||
Seperation Agreement [Member] | Former Executive [Member] | ||||
Number of common stock shares right to receive | 166,667 | |||
Seperation Agreement [Member] | Former Executive [Member] | Total Grow Controls [Member] | ||||
Number of common stock shares right to receive | 166,667 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) | Dec. 31, 2020USD ($) |
Operating loss carryforwards | $ 11,356,890 |
Tax credit carryforward | |
Expiring in 2037 [Member] | |
Operating loss carryforwards | 2,182,354 |
No Expiration [Member] | |
Operating loss carryforwards | $ 9,174,536 |
Warrants (Details Narrative)
Warrants (Details Narrative) - Warrants [Member] | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Weighted-average term | 2 years 2 months 12 days |
Aggregate intrinsic value outstanding and exercisable amount | $ 0 |
Warrants - Schedule of Warrant
Warrants - Schedule of Warrant Activity (Details) - Warrants [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Warrants outstanding, shares beginning balance | 115,339 | 1,000 |
Issued in conjunction with debt, shares | 20,747 | 88,689 |
Issued in conjunction with agreement with former executive (see Note 15 - Shareholders' Equity), shares | 66,666 | 25,650 |
Warrants outstanding, shares ending balance | 202,752 | 115,339 |
Warrants exercisable, shares end of period | 202,752 | 115,339 |
Weighted average exercise price, beginning | $ 17.28 | $ 6 |
Issued in conjunction with debt, weighted average exercise price | 18 | 18 |
Issued in conjunction with agreement with former executive (see Note 15 - Shareholders' Equity), weighted average exercise price | 6 | 14.46 |
Weighted average exercise price, ending | 13.64 | 17.28 |
Weighted average exercise price, exercisable | $ 13.64 | $ 17.28 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Feb. 17, 2021 | Dec. 31, 2020 |
Common stock issued during the period | ||
Subsequent Event [Member] | ||
Common stock issued during the period | 6,210,000 | |
Shares issued, price per share | $ 10 | |
Proceeds from issuance of common stock | $ 62,100,000 |