Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2020 | Aug. 12, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | urban-gro, Inc. | |
Entity Central Index Key | 0001706524 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 28,830,978 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2020 | |
Entity Small Business | true | |
Entity Emerging Growth | true | |
Entity Ex-transition period | false | |
Entity Shell Company | false | |
Entity Interactive Data Current | Yes | |
Entity File Number | 000-55966 | |
Entity Incorporation State Code | CO |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash | $ 402,481 | $ 448,703 |
Accounts receivable, net | 862,602 | 1,564,969 |
Inventories, net | 975,628 | 676,175 |
Related party receivable | 64,348 | 49,658 |
Prepayments and advances | 2,116,483 | 1,278,728 |
Total current assets | 4,421,542 | 4,018,233 |
Non-current assets | ||
Property, plant, and equipment, net | 176,021 | 165,035 |
Operating lease right of use assets, net | 147,961 | 215,848 |
Investments | 1,710,358 | 2,020,358 |
Goodwill | 902,067 | 902,067 |
Intangible assets, net | 85,333 | 86,151 |
Total non-current assets | 3,021,740 | 3,389,459 |
Total assets | 7,443,282 | 7,407,692 |
Current liabilities | ||
Accounts payable | 1,372,060 | 3,753,862 |
Accrued expenses | 1,944,303 | 1,686,841 |
Related party payable | 0 | 24,972 |
Customer deposits | 3,356,924 | 2,915,406 |
Related party note payable | 1,000,000 | 1,000,000 |
Notes payable | 120,000 | 2,812,709 |
Revolving facility | 3,412,957 | 0 |
Term loan, net | 1,660,466 | 0 |
Operating lease liabilities | 94,691 | 123,395 |
Total current liabilities | 12,961,401 | 12,317,185 |
Non-current liabilities | ||
Notes payable | 1,020,600 | 0 |
Operating lease liabilities | 65,845 | 98,841 |
Total non-current liabilities | 1,086,445 | 98,841 |
Total liabilities | 14,047,846 | 12,416,026 |
Shareholders' deficit: | ||
Preferred stock, $0.10 par value; 10,000,000 shares authorized; 0 shares issued and outstanding | 0 | 0 |
Common stock, $0.001 par value; 100,000,000 shares authorized; 28,830,978 and 28,209,312 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively | 28,831 | 28,209 |
Additional paid in capital | 13,522,832 | 11,854,083 |
Accumulated deficit | (20,156,227) | (16,890,626) |
Total shareholders' deficit | (6,604,564) | (5,008,334) |
Total liabilities and shareholders' deficit | $ 7,443,282 | $ 7,407,692 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Jun. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
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 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares outstanding | 28,830,978 | 28,209,312 |
Common stock, shares issued | 28,830,978 | 28,209,312 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Revenue | $ 4,005,264 | $ 5,639,658 | $ 8,266,267 | $ 11,473,674 |
Cost of revenue | 2,811,812 | 3,794,296 | 5,959,327 | 7,878,489 |
Gross profit | 1,193,452 | 1,845,362 | 2,306,940 | 3,595,185 |
Operating expenses | ||||
Marketing | 77,388 | 252,812 | 193,344 | 538,642 |
General and administrative | 1,483,111 | 2,363,371 | 3,462,563 | 4,620,675 |
Stock-based Compensation | 559,904 | 508,440 | 992,549 | 1,097,137 |
Total operating expenses | 2,120,403 | 3,124,623 | 4,648,456 | 6,256,454 |
Loss from operations | (926,951) | (1,279,261) | (2,341,516) | (2,661,269) |
Non-operating income (expenses): | ||||
Interest expense | (365,709) | (149,146) | (664,343) | (249,117) |
Impairment of investment | (310,000) | 0 | (310,000) | 0 |
Other income | 32,690 | 4 | 50,258 | 512 |
Total other expenses, net | (643,019) | (149,142) | (924,085) | (248,605) |
Loss before income taxes | (1,569,970) | (1,428,403) | (3,265,601) | (2,909,874) |
Income tax expense (benefit) | 0 | 0 | 0 | 0 |
Net loss | (1,569,970) | (1,428,403) | (3,265,601) | (2,909,874) |
Comprehensive loss | $ (1,569,970) | $ (1,428,403) | $ (3,265,601) | $ (2,909,874) |
Earnings (loss) per share | ||||
Net loss per share - basic and diluted | $ (0.05) | $ (0.06) | $ (0.11) | $ (0.11) |
Weighted average outstanding shares | 28,754,770 | 25,763,501 | 28,590,283 | 25,567,313 |
Product Sales [Member] | ||||
Revenue | $ 3,378,596 | $ 4,562,671 | $ 7,224,933 | $ 10,015,643 |
Services [Member] | ||||
Revenue | $ 626,668 | $ 1,076,987 | $ 1,041,334 | $ 1,458,031 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Shareholders' Deficit (Unaudited) - USD ($) | Common Stock | Additional Paid-In Capital | Retained Earnings (accumulated deficit) | Total |
Beginning balance, shares at Dec. 31, 2018 | 25,229,833 | |||
Beginning balance, value at Dec. 31, 2018 | $ 25,230 | $ 4,688,272 | $ (8,540,053) | $ (3,826,551) |
Stock Based Compensation | 1,097,137 | 1,097,137 | ||
Stock Options Issued for loan term revisions, shares | ||||
Stock Options Issued for loan term revisions, value | 17,827 | 17,827 | ||
Stock grants issued for loan term revisions, shares | 10,000 | |||
Stock grants issued for loan term revisions, value | $ 10 | 24,090 | 24,100 | |
Stock grant program vesting, shares | 80,800 | |||
Stock grant program vesting, value | $ 81 | (81) | ||
Stock issuance related to acquisition, shares | 500,000 | |||
Stock issuance related to acquisition, value | $ 500 | 999,500 | 1,000,000 | |
Warrant issuance related to convertible debentures | 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 | (2,909,874) | (2,909,874) | ||
Ending balance, shares at Jun. 30, 2019 | 25,820,633 | |||
Ending balance, value at Jun. 30, 2019 | $ 25,821 | 8,438,943 | (11,449,927) | (2,985,163) |
Beginning balance, shares at Dec. 31, 2018 | 25,229,833 | |||
Beginning balance, value at Dec. 31, 2018 | $ 25,230 | 4,688,272 | (8,540,053) | (3,826,551) |
Ending balance, shares at Dec. 31, 2019 | 28,209,312 | |||
Ending balance, value at Dec. 31, 2019 | $ 28,209 | 11,854,083 | (16,890,626) | (5,008,334) |
Beginning balance, shares at Mar. 31, 2019 | 25,749,833 | |||
Beginning balance, value at Mar. 31, 2019 | $ 25,750 | 6,515,229 | (10,021,524) | (3,480,545) |
Stock Based Compensation | 508,440 | 508,440 | ||
Stock Options Issued for loan term revisions, value | $ 10 | 24,090 | 24,100 | |
Stock grants issued for loan term revisions, shares | 10,000 | |||
Stock grant program vesting, shares | 60,800 | |||
Stock grant program vesting, value | $ 61 | (61) | ||
Warrant issuance related to convertible debentures | 512,300 | 512,300 | ||
Equity value of exercise price associated with convertible debentures | 600,267 | 600,267 | ||
Broker warrants associated with issuance of convertible debentures | 278,678 | 278,678 | ||
Net loss | (1,428,403) | (1,428,403) | ||
Ending balance, shares at Jun. 30, 2019 | 25,820,633 | |||
Ending balance, value at Jun. 30, 2019 | $ 25,821 | 8,438,943 | (11,449,927) | (2,985,163) |
Beginning balance, shares at Dec. 31, 2019 | 28,209,312 | |||
Beginning balance, value at Dec. 31, 2019 | $ 28,209 | 11,854,083 | (16,890,626) | (5,008,334) |
Stock Based Compensation | 992,549 | 992,549 | ||
Clawback of stock granted, shares | (100,000) | |||
Clawback of stock granted, value | $ (100) | 100 | ||
Stock Options Issued for loan term revisions, value | $ 100 | 99,900 | 100,000 | |
Stock grants issued for loan term revisions, shares | 100,000 | |||
Stock grant program vesting, shares | 121,666 | |||
Stock grant program vesting, value | $ 122 | (122) | ||
Stock issuance related to debt, shares | 500,000 | |||
Stock issuance related to debt, value | $ 500 | 499,500 | 500,000 | |
Warrants issued related to debt | 76,822 | 76,822 | ||
Net loss | (3,265,601) | (3,265,601) | ||
Ending balance, shares at Jun. 30, 2020 | 28,830,978 | |||
Ending balance, value at Jun. 30, 2020 | $ 28,831 | 13,522,832 | (20,156,227) | (6,604,564) |
Beginning balance, shares at Mar. 31, 2020 | 28,709,312 | |||
Beginning balance, value at Mar. 31, 2020 | $ 28,709 | 12,963,050 | (18,586,257) | (5,594,498) |
Stock Based Compensation | 559,904 | 559,904 | ||
Stock grant program vesting, shares | 121,666 | |||
Stock grant program vesting, value | $ 122 | (122) | ||
Net loss | (1,569,970) | (1,569,970) | ||
Ending balance, shares at Jun. 30, 2020 | 28,830,978 | |||
Ending balance, value at Jun. 30, 2020 | $ 28,831 | $ 13,522,832 | $ (20,156,227) | $ (6,604,564) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Cash Flows from Operating Activities | ||
Net Loss | $ (3,265,601) | $ (2,909,874) |
Adjustment to reconcile net loss from operations: | ||
Depreciation and amortization | 120,410 | 120,028 |
Amortization of deferred financing costs | 203,721 | 0 |
Interest expense - related to loan revisions | 0 | 43,059 |
Stock-based compensation expense | 992,549 | 1,097,137 |
Impairment of investment | 310,000 | 0 |
Gain on disposal of assets | 3,468 | 0 |
Inventory write-offs | 25,528 | 14,462 |
Bad debt expense | 25,239 | 11,615 |
Changes in Operating Assets and Liabilities: | ||
Accounts receivable | 613,723 | (491,566) |
Inventories | (324,981) | (62,615) |
Prepayments and other assets | (158,687) | (203,052) |
Accounts payable and accrued expenses | (2,149,312) | 2,146,861 |
Customer deposits | 441,518 | (1,409,085) |
Net Cash Used in Operating Activities | (3,162,425) | (1,643,030) |
Cash Flows from Investing Activities | ||
Purchase of investment | 0 | (477,000) |
Purchase of intangible assets | 0 | (25,000) |
Purchases of property and equipment | (85,331) | (75,924) |
Cash acquired in acquisition | 0 | 49,742 |
Net Cash Used In Investing Activities | (85,331) | (528,182) |
Cash Flows from Financing Activities | ||
Proceeds from issuance of Revolving Facility | 2,207,432 | 0 |
Proceeds from issuance of Term Loan | 2,000,000 | 0 |
Proceeds from Revolving Facilty advances | 1,205,525 | 0 |
Issuance of convertible debentures | 0 | 2,565,000 |
Long-term note payable | 1,020,600 | |
Debt financing costs | (545,501) | 0 |
Repayment of notes payable | (2,686,522) | (340,934) |
Net Cash Provided by Financing Activities | 3,201,534 | 2,224,066 |
Net Increase (Decrease) in Cash | (46,222) | 52,854 |
Cash at Beginning of Period | 448,703 | 1,178,852 |
Cash at End of Period | 402,481 | 1,231,706 |
Supplemental Cash Flow Information: | ||
Interest Paid | 664,343 | 249,117 |
Income Tax Paid | 0 | 0 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Operating lease right of use asset set-up effective January 1, 2019 | 0 | 139,266 |
Debt financing costs booked in equity | $ 676,822 | $ 0 |
1. Organization and Acquisition
1. Organization and Acquisitions, Liquidity and Going Concern | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Acquisitions, Liquidity and Going Concern | NOTE 1 – ORGANIZATION AND ACQUISITIONS, LIQUIDITY AND GOING CONCERN Organization and Acquisitions urban-gro, Inc. (“we,” “us,” our” or the “Company”) is a leading engineering design services company that integrates complex environmental equipment systems to create high performance indoor cultivation facilities for the global commercial horticulture market. Our custom tailored, plant-centric approach to design, procurement, and integration provides a single point of accountability across all aspects of indoor cultivation operations. Our solution offers functionality that helps customers manage the entire cultivation lifecycle, from facility engineering and design to operation and day-to-day management. We offer a full range of custom services that are integrated with select cultivation equipment and product solutions, which we primarily source from third party technology and manufacturing partners but also develop in-house. Our service offerings include full facility engineering design services, start-up commissioning services, facility optimization services and Integrated Pest Management (“IPM”) planning and strategy services. Complementing these services, we work with customers to source an integrated suite of select cultivation equipment systems and crop management products, which include: (1) environmental controls, fertigation, and irrigation distribution systems; (2) freshwater, wastewater, and condensation treatment systems; (3) light emitting diode (“LED”), high-pressure sodium (“HPS”) and ceramic metal halide (“CMH”) lighting systems; (4) rolltop, multi-tier, and automated container benching systems; (5) odor mitigation & microbial reduction systems; (6) air flow systems; (7) industrial spray applicators; (8) pesticides and bio-controls; (9) plant nutrition products; (10) substrate and coco bag solutions; and (11) our Soleil® technology data analytics platform that includes wireless environmental & substrate sensing and remote monitoring and support. In June 2018, the Company formed urban-gro Canada Technologies, Inc. as a wholly owned Canadian subsidiary, which it utilizes for its Canadian sales operations. 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 cannabis industry. The Company believes the acquisition of Impact will improve the Company’s ability to better serve its current and future customer base by expanding on the fully integrated products and services offered by the Company. The Company issued 500,000 shares of Common Stock (“Common Stock”) valued at $2.00 per share to effect the acquisition of Impact. The Company has initially accounted for the acquisition of Impact as follows: Purchase Price $ 1,000,000 Allocation of Purchase Price: Cash $ 49,742 Accounts receivable, net $ 93,811 Goodwill $ 902,067 Accrued expenses $ 45,620 Liquidity and Going Concern 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 June 30, 2020, the Company had an accumulated deficit of $20,156,227, a working capital deficit of $8,539,859, and negative stockholders’ equity of $6,604,564. These facts and conditions raise substantial doubt about the Company’s ability to continue as a going concern, within one year after the date that these financial statements are issued. The Company continually evaluates opportunities to raise equity and debt financing and has also sought to implement cost reduction and revenue enhancing measures to help achieve profitability and continue operations. There can, however, be no assurances that the Company will be able to raise equity or debt financing in sufficient amounts, when and if needed, on acceptable terms or at all, nor can there be any assurances that the Company will be able to implement cost reduction and revenue enhancing measures that will enable the Company to achieve profitable operations going forward. The accompanying financial statements have been prepared on a going concern basis. Pursuant to Accounting Standards Codification (“ASC”) 205-40, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, |
2. Summary of Significant Accou
2. Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Unaudited Condensed Consolidated Financial Statements The Company has prepared the accompanying condensed consolidated financial statements pursuant to the rules and regulations of the SEC for condensed financial reporting. The condensed consolidated financial statements are unaudited and, in the Company’s opinion, include all adjustments, consisting of normal recurring adjustments and accruals necessary for a fair presentation of the Company’s condensed consolidated balance sheets, condensed consolidated statements of operations and comprehensive income (loss), condensed consolidated statements of shareholders’ deficit and condensed consolidated statements of cash flows for the periods presented. The results reported in these condensed consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been omitted in accordance with regulations of the SEC. These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Significant Accounting Policies For a detailed discussion about the Company’s significant accounting policies, refer to Note 2 — “Summary of Significant Accounting Policies,” in the Company’s consolidated financial statements included in the Company’s 2019 Form 10-K. During the six months ended June 30, 2020, there were no material changes made to the Company’s significant accounting policies. Use of Estimates In preparing condensed 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 condensed 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. Reclassification Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations. Recently Issued Accounting Pronouncements From time to time, the Financial Accounting Standards Board (the “FASB”) or other standards setting bodies issue new accounting pronouncements. The FASB issues updates to new accounting pronouncements through the issuance of an Accounting Standards Update ("ASU"). Unless otherwise discussed, the Company believes that the impact of recently issued guidance, whether adopted or to be adopted in the future, is not expected to have a material impact on the Company’s financial statements upon adoption. |
3. Related Party Transactions
3. Related Party Transactions | 6 Months Ended |
Jun. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 3 – RELATED PARTY TRANSACTIONS 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 shareholders, Bradley Nattrass and Octavio Gutierrez. Purchases from Bravo and Enviro-Glo totaled $0 and $4,728 for the six months ended June 30, 2020 and 2019, respectively, and $0 and $2,296 for the three months ended June 30, 2020 and 2019, respectively. There were no outstanding receivables from Bravo and Enviro-Glo as of June 30, 2020 and December 31, 2019. Net outstanding payables incurred for purchases of inventory and other services to Bravo and Enviro-Glo as of June 30, 2020 and December 31, 2019 were $0 and $8,570, respectively. The Company has purchased goods from Cloud 9 Support, LLC (“Cloud 9”), a company owned by James Lowe, a director, shareholder, and debt holder. Purchases from Cloud 9 were $0 and $15,322 during the six months ended June 30, 2020 and 2019, respectively, and $0 and $469 during the three months ended June 30, 2020 and 2019, respectively. Cloud 9 also purchases materials from the Company for use with their customers. Total sales to Cloud 9 from the Company were $247,157 and $196,600 during the six months ended June 30, 2020 and 2019, respectively, and were $114,285 and $96,615 during the three months ended June 30, 2020 and 2019, respectively. Outstanding receivables from Cloud 9 as of June 30, 2020 and December 31, 2019 totaled $64,348 and $49,659, respectively. Net outstanding payables for purchases of inventory and other services from Cloud 9 as of June 30, 2020 and December 31, 2019 were $0 and $16,402, respectively. In October 2018, the Company received a $1,000,000, unsecured, interest only, promissory note (the “Promissory Note”) from Cloud 9. The Promissory Note was originally due April 30, 2019. The Promissory Note is personally guaranteed by the Company’s largest shareholders, Bradley Nattrass, who is the Company’s Chairman and Chief Executive Officer, and Octavio Gutierrez, a former officer and director of the Company. The Promissory Note includes additional consideration of 30,000 options at an exercise price of $1.20 per share. Under the initial terms of the Promissory Note, the interest rate was 12.0% per year with interest payable monthly. In May 2019, the due date of the Promissory Note was extended to December 31, 2019 and the interest rate was decreased to 9.0% per year payable monthly. In connection with the execution of the Credit Agreement (see Note 9 – Debt) on February 21, 2020, the Company entered into an agreement to amend the Promissory Note (the “Amending Agreement”). Pursuant to the Amending Agreement, Cloud 9 agreed to extend the maturity date of the Promissory Note 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 Lender under the Credit Agreement; or (b) which is the Maturity Date of the Credit Agreement. As part of the Amending Agreement, the Company issued 100,000 shares of Common Stock to James Lowe as designee of Cloud 9. |
4. Prepayments and Advances
4. Prepayments and Advances | 6 Months Ended |
Jun. 30, 2020 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Prepayments and Advances | NOTE 4 – PREPAYMENTS AND 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: June 30, December 31, 2020 2019 Vendor prepayments $ 1,238,763 $ 1,070,788 Prepaid services and fees 192,260 187,912 Deferred financing asset (See Note 9 - Debt) 679,069 – Other assets 6,391 20,028 Prepayments and other assets $ 2,116,483 $ 1,278,728 |
5. Investments
5. Investments | 6 Months Ended |
Jun. 30, 2020 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investments | NOTE 5 – INVESTMENTS The components of investments are summarized as follows: June 30, 2020 December 31, Investment in Edyza $ 1,710,358 $ 1,710,358 Investment in TGH – 310,000 $ 1,710,358 $ 2,020,358 In January 2020, the Company and Total Grow Holdings, LLC (d/b/a/ Total Grow Control, LLC) (“TGH”), entered into an agreement whereby TGH agreed to purchase the Company’s remaining investment in TGH in consideration for a short-term note due April 24, 2020 in the amount of $200,000 and a long-term note due in a lump sum on January 27, 2025 in the amount of $110,000 with interest of 4.0% payable annually in arrears. Per the terms of the agreement, the Company retains its ownership interest in TGH until the $200,000 short-term note is repaid. As of the date of this report, TGH has not made any payments on the short-term note and the Company has retained its ownership interest in TGH. TGH is now in default of both the short-term and the long-term notes payable and the Company is aggressively pursuing collection of the total of both notes. As of June 30, 2020, the Company has fully impaired its investment in TGH, recording an impairment loss of $310,000 for the three and six month periods ended June 30, 2020. |
6. Goodwill
6. Goodwill | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | NOTE 6 – GOODWILL The Company recorded goodwill in conjunction with the acquisition of Impact on March 7, 2019. The goodwill balance as of June 30, 2020 and December 31, 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 periods ended June 30, 2020 and 2019. |
7. Accrued Expenses
7. Accrued Expenses | 6 Months Ended |
Jun. 30, 2020 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | NOTE 7 – ACCRUED EXPENSES Accrued expenses are summarized as follows: June 30, December 31, 2020 2019 Accrued operating expenses $ 967,398 $ 854,056 Accrued wages and related expenses 409,300 487,327 Accrued interest expense 58,889 – Accrued sales tax payable 508,716 345,458 $ 1,944,303 $ 1,686,841 Accrued sales tax payable is comprised of prior period sales tax payable to various states for 2015 through 2020. The Company has set up payment plans with the various taxing agencies to relieve the obligation. The payment plans require monthly payments in various amounts over a period of 12 months. |
8. Notes Payable
8. Notes Payable | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Notes Payable | NOTE 8 – NOTES PAYABLE The following is a summary of notes payable excluding related party notes payable: June 30, 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 3,000 shares of Common Stock. Beginning in April 2020, the Company is making monthly payments in the amount of $10,000. $ 50,000 $ 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 3,000 shares of Common Stock. Beginning in April 2020, the Company is making monthly payments in the amount of $10,000. 70,000 100,000 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 matures 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. 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 loan at any time without payment of any premium. 1,020,600 – Total 1,140,600 2,812,709 Less current maturities (120,000 ) (2,812,709 ) Long Term $ 1,020,600 $ – |
9. Debt
9. Debt | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Debt | NOTE 9 – DEBT The Company's total borrowings as of June 30, 2020 and December 31, 2019 consisted of the following: June 30, December 31, 2020 2019 Revolving Facility $ 3,412,957 $ – Term Loan, net of $339,534 unamortized debt issuance costs 1,660,466 – Total 5,073,423 – Less current debt due within one year (5,073,423 ) – 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 will 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 will be 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 “Maturity Date”). The Facilities will bear interest at the annual rate established and designated by the Bank of Nova Scotia as the prime rate, plus 11% per annum (13.5% as of June 30, 2020). Accrued interest on the outstanding principal amount of the Facilities will be due and payable monthly in arrears, on the last business day of each month, and on the Maturity Date. The Revolving Facility may 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 will be 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. The Company incurred $1,222,323 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 estimated market value of the underlying common stock. 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 a period of 24 months based on management’s assessment that it is more likely than not that the Credit Agreement will be in place for a total period of 24 months. As of June 30, 2020, there were $679,069 and $339,534 of unamortized debt issuance costs remaining related to the Revolving Facility and Term Loan, respectively. The Company recorded interest expense of $664,343 and $249,117 in the accompanying condensed consolidated statements of operations for the six months ended June 30, 2020 and 2019, respectively, of which $203,720 and $0 respectively, was amortization of debt issuance costs. The Company recorded interest expense of $365,709 and $149,146 in the accompanying condensed consolidated statements of operations for the three months ended June 30, 2020 and 2019, respectively, of which $152,790 and $0 respectively, was amortization of debt issuance costs. |
10. Unit Offering
10. Unit Offering | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Unit Offering | NOTE 10 – UNIT OFFERING Effective January 9, 2019, the Company executed a letter agreement with an exclusive placement agent in connection with a private placement offering. Beginning in March 2019, the placement agent initiated an offering (the “Offering”) of up to $6,000,000 from the sale of Units, with each Unit consisting of a $1,000 Convertible Debenture (the “Debentures” or a “Debenture”) and Common Stock Purchase Warrants (the “Warrants”) exercisable to purchase 207.46 shares of Common Stock at $3.00 per share for a period of two years from the purchase date. The Debentures were due May 31, 2021 and bear interest at 8%, compounded annually, with interest due at maturity. The Debentures, plus any accrued but unpaid interest, were to automatically convert for no additional consideration into Common Shares at a conversion price of $2.41 per share upon the occurrence of a liquidity event. A liquidity event means: (a) the date on which the Company’s Common Stock is listed for trading on a recognized stock exchange in either Canada or the United States; and (b) securities issued pursuant to the Offering, including the Common Stock underlying both the conversion right included in the Debentures and underlying the Warrants, have been duly qualified by a registration statement in the United States, allowing the securities to be freely tradeable pursuant to the U.S. securities laws, or a prospectus in Canada. The 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 1,102,513 Common Shares at $2.41 per share. The Warrants contain a mandatory exercise provision if the weighted average share price of the Company’s Common Stock exceeds $5.00 per share for a period of five consecutive days. As of June 30, 2020, no warrants had been exercised. |
11. Risks and Uncertainties
11. Risks and Uncertainties | 6 Months Ended |
Jun. 30, 2020 | |
Risks and Uncertainties [Abstract] | |
Risks and Uncertainties | NOTE 11 – RISKS AND UNCERTAINTIES Concentration Risk During the six months ended June 30, 2020, 18% of the Company’s total purchases were from one vendor. During the six months ended June 30, 2019, 12% of the Company’s total purchases were from one vendor. During the three months ended June 30, 2020, 22% of the Company’s total purchases were from one vendor. During the three months ended June 30, 2019, 10% of the Company’s total purchases were from one vendor. During the six months ended June 30, 2020 and 2019, one customer represented 17% and 22% of total revenue, respectively. During the three months ended June 30, 2020 and 2019, one customer represented 25% and 16% of total revenue, respectively. At June 30, 2020 one customer represented 8% of total outstanding receivables. At December 31, 2019, one customer represented 15% and another represented 11% of total outstanding accounts receivables. Coronavirus Pandemic The recent 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. Most recently, 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 has caused a significant economic slowdown it appears increasingly likely that it could cause a global recession, which could be of an unknown duration and could have had 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 customer-centric sales and project management activities. The duration and likelihood of success of this workforce reduction are uncertain. If this downsizing effort does not meet our expectations, or additional capital is not available, we may not be able to continue our operations. 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 customers 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 customers. If our customers 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. |
12. Stock-Based Compensation
12. Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | NOTE 12 – STOCK BASED COMPENSATION Stock based compensation expense for the six months ended June 30, 2020 and 2019 was $992,549 and 1,097,137, respectively, based on the vesting schedule of the stock grants and options. Stock based compensation expense for the three months ended June 30, 2020 and 2019 was $559,504 and $508,440, respectively, based on the vesting schedule of the stock grants and options. No cash flow effects 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 (the “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 fair value of the options is calculated using the Black-Scholes pricing model based on the estimated market value of the underlying common stock at the valuation measurement date $0.90, the remaining contractual term of the options of 10 years, risk-free interest rate of 2.75% and expected volatility of the price of the underlying common stock of 100%. In May 2019, the Company adopted a new equity incentive plan, authorizing an aggregate of 3,500,000 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. There is a moderate degree of subjectivity involved when estimating the value of the options with the Black Scholes option pricing model as the assumptions used are moderately judgmental. Stock options and stock grants are sometimes offered as part of an employment offer package, to ensure continuity of service or as a reward for performance. Stock Grants: The following table shows stock grant activity for the six months ended June 30, 2020: Grants outstanding as of December 31, 2019 412,501 Grants awarded 786,666 Forfeiture/Cancelled (268,334 ) Grants vested (129,166 ) Grants outstanding as of June 30, 2020 801,667 The following table summarizes stock grant vesting periods: Number of Unrecognized stock compensation Year Ending Shares expense December 31, 188,333 $ 292,728 2020 513,334 215,451 2021 100,000 33,333 2022 801,667 $ 541,512 Stock Options: The following table shows stock option activity for the six months ended June 30, 2020: Number of Weighted Average Remaining Weighted Average Stock options outstanding as of December 31, 2019 1,702,167 9.21 $ 1.21 Issued 2,395,000 9.58 $ 1.00 Exercised – – – Expired 97,500 9.13 $ 1.30 Stock options outstanding at June 30, 2020 3,999,667 9.40 $ 1.06 Stock options exercisable at June 30, 2020 1,151,621 8.89 $ 1.13 The following table summarizes stock option vesting periods under the stock options plans: Number of Unrecognized stock compensation Year Ending Shares expense December 31, 1,052,081 $ 848,945 2020 1,065,631 882,833 2021 730,334 573,603 2022 2,848,046 $ 2,305,381 |
13. Shareholder's Equity
13. Shareholder's Equity | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Shareholder's Equity | NOTE 13 – SHAREHOLDERS’ EQUITY In March 2020, an executive left the Company and returned 100,000 common shares as part of the related separation agreement. The Company retired the shares and reduced its issued and outstanding stock by 100,000 shares. |
14. Warrants
14. Warrants | 6 Months Ended |
Jun. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Warrants | NOTE 14 – WARRANTS Warrants are immediately exercisable upon issuance. The following table shows warrant activity for the six months ended June 30, 2020. Number of shares Weighted Average Exercise Price Warrants outstanding as of December 31, 2019 692,034 $ 2.88 Issued in conjunction with debt 124,481 $ 2.41 Warrants outstanding as of June 30, 2020 816,515 $ 2.81 Warrants exercisable as of June 30, 2020 816,515 $ 2.81 The weighted-average life of the warrants is 1.6 years. The aggregate intrinsic value of the warrants outstanding and exercisable at June 30, 2020 is $0. |
15. Subsequent Events
15. Subsequent Events | 6 Months Ended |
Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 15 – SUBSEQUENT EVENTS Management has assessed and determined that no significant subsequent events are to be disclosed according to ASC 855. |
1. Organization and Acquisiti_2
1. Organization and Acquisitions, Business Plan, and Liquidity (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Acquisition of Impact Engineering | Purchase Price $ 1,000,000 Allocation of Purchase Price: Cash $ 49,742 Accounts receivable, net $ 93,811 Goodwill $ 902,067 Accrued expenses $ 45,620 |
4. Prepayments and Advances (Ta
4. Prepayments and Advances (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of prepaid balances | The prepaid balances are summarized as follows: June 30, December 31, 2020 2019 Vendor prepayments $ 1,238,763 $ 1,070,788 Prepaid services and fees 192,260 187,912 Deferred financing asset (See Note 9 - Debt) 679,069 – Other assets 6,391 20,028 Prepayments and other assets $ 2,116,483 $ 1,278,728 |
5. Investments (Tables)
5. Investments (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Cost Method Investments | The components of investments are summarized as follows: June 30, 2020 December 31, Investment in Edyza $ 1,710,358 $ 1,710,358 Investment in TGH – 310,000 $ 1,710,358 $ 2,020,358 |
7. Accrued Expenses (Tables)
7. Accrued Expenses (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses | Accrued expenses are summarized as follows: June 30, December 31, 2020 2019 Accrued operating expenses $ 967,398 $ 854,056 Accrued wages and related expenses 409,300 487,327 Accrued interest expense 58,889 – Accrued sales tax payable 508,716 345,458 $ 1,944,303 $ 1,686,841 |
8. Notes Payable (Tables)
8. Notes Payable (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of notes payable | June 30, 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 3,000 shares of Common Stock. Beginning in April 2020, the Company is making monthly payments in the amount of $10,000. $ 50,000 $ 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 3,000 shares of Common Stock. Beginning in April 2020, the Company is making monthly payments in the amount of $10,000. 70,000 100,000 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 matures 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. 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 loan at any time without payment of any premium. 1,020,600 – Total 1,140,600 2,812,709 Less current maturities (120,000 ) (2,812,709 ) Long Term $ 1,020,600 $ – |
9. Debt (Tables)
9. Debt (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of debt | The Company's total borrowings as of June 30, 2020 and December 31, 2019 consisted of the following: June 30, December 31, 2020 2019 Revolving Facility $ 3,412,957 $ – Term Loan, net of $339,534 unamortized debt issuance costs 1,660,466 – Total 5,073,423 – Less current debt due within one year (5,073,423 ) – Total long-term debt $ – $ – |
12. Stock-Based Compensation (T
12. Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of stock grant activity | The following table show stock grant activity for the six months ended June 30, 2020: Grants outstanding as of December 31, 2019 412,501 Grants awarded 786,666 Forfeiture/Cancelled (268,334 ) Grants vested (129,166 ) Grants outstanding as of June 30, 2020 801,667 |
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, 188,333 $ 292,728 2020 513,334 215,451 2021 100,000 33,333 2022 801,667 $ 541,512 |
Schedule of stock option activity | The following table shows stock option activity for the six months ended June 30, 2020: Number of Weighted Average Remaining Weighted Average Stock options outstanding as of December 31, 2019 1,702,167 9.21 $ 1.21 Issued 2,395,000 9.58 $ 1.00 Exercised – – – Expired 97,500 9.13 $ 1.30 Stock options outstanding at June 30, 2020 3,999,667 9.40 $ 1.06 Stock options exercisable at June 30, 2020 1,151,621 8.89 $ 1.13 |
Schedule of stock option vesting periods | The following table summarizes stock option vesting periods under the stock options plans: Number of Unrecognized stock compensation Year Ending Shares expense December 31, 1,052,081 $ 848,945 2020 1,065,631 882,833 2021 730,334 573,603 2022 2,848,046 $ 2,305,381 |
14. Warrants (Tables)
14. Warrants (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of warrant activity | The following table shows warrant activity for the six months ended June 30, 2020. Number of shares Weighted Average Exercise Price Warrants outstanding as of December 31, 2019 692,034 $ 2.88 Issued in conjunction with debt 124,481 $ 2.41 Warrants outstanding as of June 30, 2020 816,515 $ 2.81 Warrants exercisable as of June 30, 2020 816,515 $ 2.81 |
1. Organization and Acquisiti_3
1. Organization and Acquisitions, Business Plan, and Liquidity (Details) - USD ($) | 2 Months Ended | ||
Mar. 07, 2019 | Jun. 30, 2020 | Dec. 31, 2019 | |
Allocation of Purchase Price | |||
Goodwill | $ 902,067 | $ 902,067 | |
Impact Engineering [Member] | |||
Purchase price | $ 1,000,000 | ||
Allocation of Purchase Price | |||
Cash | 49,742 | ||
Accounts receivable, net | 93,811 | ||
Goodwill | 902,067 | ||
Accrued expenses | $ 45,620 |
1. Organization and Acquisiti_4
1. Organization and Acquisitions, Business Plan, and Liquidity (Details Narrative) - USD ($) | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||
Accumulated deficit | $ (20,156,227) | $ (16,890,626) | ||||
Working capital | (8,539,859) | |||||
Stockholders' Equity | $ (6,604,564) | $ (5,594,498) | $ (5,008,334) | $ (2,985,163) | $ (3,480,545) | $ (3,826,551) |
3. Related Party Transactions (
3. Related Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Related party receivables | $ 64,348 | $ 64,348 | $ 49,658 | |||
Related party payables | 0 | 0 | 24,972 | |||
Bravo and Enviro-Glo [Member] | ||||||
Related party purchases | 0 | $ 2,296 | 0 | $ 4,728 | ||
Related party receivables | 0 | 0 | 0 | |||
Related party payables | 0 | 0 | 8,570 | |||
Cloud 9 [Member] | ||||||
Related party receivables | 64,348 | 64,348 | 49,659 | |||
Related party payables | 0 | 0 | $ 16,402 | |||
Related party cost of services | 0 | 469 | 0 | 15,322 | ||
Related party sales | $ 114,285 | $ 96,615 | $ 247,157 | $ 196,600 | ||
James Lowe [Member] | ||||||
Proceeds from related party | $ 1,000,000 | |||||
Debt maturity date | Dec. 31, 2019 | |||||
Debt stated interest | 9.00% | |||||
Options granted | 30,000 | |||||
Stock Options Issued for loan term revisions, shares | 100,000 |
4. Prepayments and Advances (De
4. Prepayments and Advances (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Prepayments and advances | $ 2,116,483 | $ 1,278,728 |
Vendor Prepayments [Member] | ||
Prepayments and advances | 1,238,763 | 1,070,788 |
Prepaid Services and Fees [Member] | ||
Prepayments and advances | 192,260 | 187,912 |
Deferred Financing Asset [Member] | ||
Prepayments and advances | 679,069 | 0 |
Other Assets [Member] | ||
Prepayments and advances | $ 6,391 | $ 20,028 |
5. Investments (Details)
5. Investments (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Investments | $ 1,710,358 | $ 2,020,358 |
Edyza [Member] | ||
Investments | 1,710,358 | 1,710,358 |
Total Grow [Member] | ||
Investments | $ 0 | $ 310,000 |
5. Investments (Details Narrati
5. Investments (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Apr. 24, 2020 | |
Impairment of investment | $ 310,000 | $ 0 | $ 310,000 | $ 0 | |
TGH Short-term receivable [Member] | |||||
Note receivable | $ 100,000 | ||||
TGH Long-term receivable [Member] | |||||
Note receivable | $ 200,000 | ||||
Total Grow [Member] | |||||
Impairment of investment | $ 310,000 |
6. Goodwill (Details Narrative)
6. Goodwill (Details Narrative) - USD ($) | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | Mar. 07, 2019 | |
Goodwill | $ 902,067 | $ 902,067 | ||
Impact Engineering [Member] | ||||
Goodwill | $ 902,067 | |||
Goodwill impairment | $ 0 | $ 0 |
7. Accrued Expenses (Details)
7. Accrued Expenses (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Accrued expenses | $ 1,944,303 | $ 1,686,841 |
Accrued Operating Expenses [Member] | ||
Accrued expenses | 967,398 | 854,056 |
Accrued Wages and Related Expenses [Member] | ||
Accrued expenses | 409,300 | 487,327 |
Accrued Interest [Member] | ||
Accrued expenses | 58,889 | 0 |
Accrued Sales Tax Payable [Member] | ||
Accrued expenses | $ 508,716 | $ 345,458 |
8. Notes Payable (Details)
8. Notes Payable (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Notes payable | $ 1,140,600 | $ 2,812,709 |
Notes payable, current maturities | (120,000) | (2,812,709) |
Notes payable, long term | 1,020,600 | 0 |
Note Payable 1 [Member] | ||
Notes payable | 50,000 | 80,000 |
Note Payable 2 [Member] | ||
Notes payable | 70,000 | 100,000 |
Note Payable 3 [Member] | ||
Notes payable | 0 | 2,000,000 |
Note Payable 4 [Member] | ||
Notes payable | 0 | 632,709 |
Note Payable 5 [Member] | ||
Notes payable | $ 1,020,600 | $ 0 |
8. Notes Payable (Details Narra
8. Notes Payable (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Repayment of note payable | $ 2,686,522 | $ 340,934 |
Note Payable 1 [Member] | ||
Debt interest rate | 9.00% | |
Debt maturity date | Mar. 31, 2020 | |
Stock issued in consideration for extending due date of note, shares | 3,000 | |
Periodic payment frequency | monthly | |
Periodic payments | $ 10,000 | |
Note Payable 2 [Member] | ||
Debt interest rate | 9.00% | |
Debt maturity date | Mar. 31, 2020 | |
Stock issued in consideration for extending due date of note, shares | 3,000 | |
Periodic payment frequency | monthly | |
Periodic payments | $ 10,000 | |
Note Payable 3 [Member] | ||
Repayment of note payable | 2,000,000 | |
Note Payable 4 [Member] | ||
Repayment of note payable | $ 632,709 | |
Note Payable 5 [Member] | ||
Debt interest rate | 1.00% |
9. Debt (Details)
9. Debt (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Total debt | $ 5,073,423 | $ 0 |
Less: current debt due within one yar | (5,073,423) | 0 |
Total long-term debt | 0 | 0 |
Revolving Facility [Member] | ||
Total debt | 3,412,957 | 0 |
Term Loan [Member] | ||
Total debt | $ 1,660,466 | $ 0 |
9. Debt (Details Narrative)
9. Debt (Details Narrative) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Feb. 21, 2020USD ($) | Feb. 21, 2020CAD ($) | |
Revolving Facility [Member] | ||||||
Credit line maximum amount | $ 2,000,000 | |||||
Unamortized debt issuance costs | $ 679,069 | $ 679,069 | ||||
Revolving Facility [Member] | C A D [Member] | ||||||
Credit line maximum amount | $ 2,700,000 | |||||
Term Loan [Member] | ||||||
Credit line maximum amount | 4,000,000 | |||||
Unamortized debt issuance costs | 339,534 | $ 339,534 | ||||
Term Loan [Member] | C A D [Member] | ||||||
Credit line maximum amount | $ 5,400,000 | |||||
Credit Agreement [Member] | ||||||
Credit line interest rate | Bank of Nova Scotia prime rate plus 13.5% | |||||
Debt issuance costs | 1,222,323 | |||||
Interest expense | 365,709 | $ 149,146 | $ 664,343 | $ 249,117 | ||
Credit Agreement [Member] | Amortization of Debt Issuance Costs [Member] | ||||||
Interest expense | $ 152,790 | $ 0 | $ 203,720 | $ 0 | ||
Credit Agreement [Member] | Common Stock and Warrant Issuances [Member] | ||||||
Debt issuance costs | $ 66,822 |
10. Unit Offering (Details Narr
10. Unit Offering (Details Narrative) - USD ($) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Proceeds from convertible debt | $ 0 | $ 2,565,000 | |
Unit Offering [Member] | |||
Debt converted, amount converted | $ 2,565,000 | ||
Debt converted, interest converted | $ 92,037 | ||
Debt converted, shares issued | 1,102,513 | ||
Proceeds from convertible debt | $ 2,565,000 | ||
Warrants exercised | 0 |
11. Risks and Uncertainties (De
11. Risks and Uncertainties (Details Narrative) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Product Concentration Risk [Member] | One Vendor [Member] | |||||
Concentration risk percentage | 22.00% | 10.00% | 18.00% | 12.00% | |
One Customer [Member] | Sales Revenue Net [Member] | |||||
Concentration risk percentage | 25.00% | 16.00% | 17.00% | 22.00% | |
One Customer [Member] | Accounts Receivable [Member] | |||||
Concentration risk percentage | 8.00% | 15.00% | |||
Another Customer [Member] | Accounts Receivable [Member] | |||||
Concentration risk percentage | 11.00% |
12. Stock Compensation (Details
12. Stock Compensation (Details - Grant activity) - Common Stock Grants [Member] | 6 Months Ended |
Jun. 30, 2020shares | |
Common stock grants, beginning balance | 412,501 |
Common stock grants, awards | 786,666 |
Common stock grants, forfeiture/cancelled | (268,334) |
Common stock grants, vested | (129,166) |
Common stock grants, ending balance | 801,667 |
12. Stock Compensation (Detai_2
12. Stock Compensation (Details - Grant vesting periods) - Common Stock Grants [Member] | 6 Months Ended |
Jun. 30, 2020USD ($)shares | |
Common stock grants non vested | shares | 801,667 |
Unrecognized stock compensation expense | $ | $ 541,512 |
Grant 1 [Member] | |
Common stock grants non vested | shares | 188,333 |
Unrecognized stock compensation expense | $ | $ 292,728 |
Vesting period | 1 year |
Grant 2 [Member] | |
Common stock grants non vested | shares | 513,334 |
Unrecognized stock compensation expense | $ | $ 215,451 |
Vesting period | 2 years |
Grant 3 [Member] | |
Common stock grants non vested | shares | 100,000 |
Unrecognized stock compensation expense | $ | $ 33,333 |
Vesting period | 3 years |
12. Stock Compensation (Detai_3
12. Stock Compensation (Details - Option activity) - Options [Member] - $ / shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Stock options outstanding, beginning balance | 1,702,167 | |
Stock options issued | 2,395,000 | |
Stock options exercised | 0 | |
Stock options expired | 97,500 | |
Stock options outstanding, ending balance | 3,999,667 | 1,702,167 |
Stock options exercisable | 1,151,621 | |
Weighted average remaining life, outstanding | 9 years 4 months 24 days | 9 years 2 months 16 days |
Weighted average remaining life, issued | 9 years 6 months 29 days | |
Weighted average remaining life, expired | 9 years 1 month 16 days | |
Weighted average remaining life, exercisable | 8 years 10 months 21 days | |
Weighted average exercise price, outstanding | $ 1.21 | |
Weighted average exercise price, issued | 1 | |
Weighted average exercise price, expired | 1.30 | |
Weighted average exercise price, outstanding | 1.06 | $ 1.21 |
Weighted average exercise price, exercisable | $ 1.13 |
12. Stock Compensation (Detai_4
12. Stock Compensation (Details - Options vesting schedule) - Options [Member] - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Stock options non vested | 2,848,046 | |
Unrecognized stock compensation expense | $ 2,305,381 | |
Vesting period | 9 years 4 months 24 days | 9 years 2 months 16 days |
Options 1 [Member] | ||
Stock options non vested | 1,052,081 | |
Unrecognized stock compensation expense | $ 848,945 | |
Vesting period | 1 year | |
Options 2 [Member] | ||
Stock options non vested | 1,065,631 | |
Unrecognized stock compensation expense | $ 882,833 | |
Vesting period | 2 years | |
Options 3 [Member] | ||
Stock options non vested | 730,334 | |
Unrecognized stock compensation expense | $ 573,603 | |
Vesting period | 3 years |
12. Stock Compensation (Detai_5
12. Stock Compensation (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Stock based compensation expense | $ 559,904 | $ 508,440 | $ 992,549 | $ 1,097,137 |
New Equity Incentive Plan [Member] | ||||
Stock authorized for issuance | 3,500,000 | 3,500,000 |
13. Shareholder's Equity (Detai
13. Shareholder's Equity (Details Narrative) | 6 Months Ended |
Jun. 30, 2020shares | |
Executive [Member] | |
Stock returned and retired | 100,000 |
14. Warrants (Details)
14. Warrants (Details) - Warrants [Member] | 6 Months Ended |
Jun. 30, 2020$ / sharesshares | |
Warrants outstanding, beginning balance | shares | 692,034 |
Warrants issued | shares | 124,481 |
Warrants outstanding, ending balance | shares | 816,515 |
Warrants exercisable, end of period | shares | 816,515 |
Weighted average exercise price, beginning | $ / shares | $ 2.88 |
Weighted average exercise price, issued | $ / shares | 2.41 |
Weighted average exercise price, ending | $ / shares | 2.81 |
Weighted average exercise price, exercisable | $ / shares | $ 2.81 |
14. Warrants (Details Narrative
14. Warrants (Details Narrative) - Warrants [Member] | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Aggregate intrinsic value of warrants outstanding | $ 0 |
Aggregate intrinsic value of warrants exercisable | $ 0 |
Weighted average life of warrants | 1 year 7 months 6 days |