0001213900-16-016228.txt : 20160819 0001213900-16-016228.hdr.sgml : 20160819 20160818180205 ACCESSION NUMBER: 0001213900-16-016228 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 59 CONFORMED PERIOD OF REPORT: 20160630 FILED AS OF DATE: 20160819 DATE AS OF CHANGE: 20160818 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GrowGeneration Corp. CENTRAL INDEX KEY: 0001604868 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-BUILDING MATERIALS, HARDWARE, GARDEN SUPPLY [5200] IRS NUMBER: 465008129 STATE OF INCORPORATION: CO FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-207889 FILM NUMBER: 161841689 BUSINESS ADDRESS: STREET 1: 503 N. MAIN ST. STREET 2: SUITE 740 CITY: PUEBLO STATE: CO ZIP: 81003 BUSINESS PHONE: 914-924-1235 MAIL ADDRESS: STREET 1: 503 N. MAIN ST. STREET 2: SUITE 740 CITY: PUEBLO STATE: CO ZIP: 81003 FORMER COMPANY: FORMER CONFORMED NAME: EasyLife, Corp. DATE OF NAME CHANGE: 20140404 10-Q 1 f10q0616_growgeneration.htm QUARTERLY REPORT

 

 

U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

Form 10-Q

 

Quarterly Report Under

the Securities Exchange Act of 1934

 

For Quarter Ended: June 30, 2016

 

Commission File Number: 333-207889

 

GROWGENERATION CORPORATION

 

(Exact name of small business issuer as specified in its charter)

 

Colorado   46-5008129
(State of other jurisdiction of incorporation)   (IRS Employer ID No.)

 

503 North Main Street, Suite 740

Pueblo, Colorado 81003

(Address of principal executive offices)

 

800-935-8420

(Issuer’s Telephone Number)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes ☐  No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☐  No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer Accelerated filer
       
Non-accelerated filer Smaller reporting company þ
(Do not check if a smaller reporting company)      

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐    No þ

 

As of August 18, 2016, there were 10,053,548 shares of the registrant’s common stock issued and outstanding.

 

 

 

 

 


TABLE OF CONTENTS

 

PART I.

FINANCIAL INFORMATION

 

    Page No.
     
Item 1. Unaudited Interim Consolidated Financial Statements 1
  Consolidated Balance Sheet as of June 30, 2016 (unaudited) and December 31, 2015 1
  Consolidated Statements of Operations for the three and six months ended June 30, 2016 and June 30, 2015 (Unaudited) 2
  Consolidated Statements of Cash Flows for the three and six months ended June 30, 2016 and June 30, 2015 (Unaudited) 3
  Consolidated Statement of Changes in Stockholders’ Equity for the three and six months ended June 30, 2016 (unaudited) 4
  Notes to Unaudited Consolidated Financial Statements 5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 13
Item 3. Quantitative and Qualitative Disclosures About Market Risk 18
Item 4. Controls and Procedures 18
     
PART II
OTHER INFORMATION
     
Item 1. Legal Proceedings 19
Item 1A.  Risk Factors 19
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 19
Item 3. Defaults Upon Senior Securities 19
Item 4. Mine Safety Disclosures 19
Item 5. Other Information 19
Item 6. Exhibits 19
  Signatures 20

 

 

 

 

PART I – FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

GROWGENERATION CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

 

   June 30, 2013   December 31, 2015 
   (unaudited)     
ASSETS          
Current Assets          
Cash and cash equivalents  $450,828   $699,417 
Accounts receivable, net of allowance of $6,500   147,520    37,554 
Employee Advances   3,848    2,950 
Inventory   2,150,280    1,311,639 
Prepaid Expenses   3,303    17,036 
Total Current Assets   2,755,779    2,068,596 
Fixed Assets          
Furniture and Equipment   487,881    291,241 
Accumulated Depreciation   (41,028)   (20,005)
Total Fixed Assets, Net   446,853    271,236 
Other Assets          
Security Deposits   27,990    27,230 
Goodwill   243,000    243,000 
Total Other Assets   270,990    270,230 
           
TOTAL ASSETS  $3,473,622   $2,610,062 
           
LIABILITIES & STOCKHOLDERS' EQUITY          
Current Liabilities          
Accounts Payable  $445,024   $292,078 
Short term borrowings   72,041    56,184 
Customer Deposits   10,863    18,410 
Payroll Liabilities   59,534    43,925 
Sales Tax Payable   36,537    22,093 
Current portion long-term debt   22,789    5,866 
Total Current Liabilities   646,788    438,556 
Long Term Liabilities          
RMT-2005 Mitsubishi   28,042      
Wells Fargo Equipment - Forklift   26,776      
Hitachi Capital America Corp   21,124    23,999 
Less current portion long-term debt   (22,789)   (5,866)
Total Long Term Liabilities   53,153      
Total Liabilities   699,941    456,689 
Stockholders' equity          
Common stock .001 par value, 100,000,000 shares authorized; 10,048,548 shares issued and
outstanding at June 30, 2016
   10,049    8,968 
Additional Paid In Capital   3,704,568    2,862,816 
Accumulated deficit   (940,936)   (718,411)
Total Equity   2,773,681    2,153,373 
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY  $3,473,622   $2,610,062 

 

See Notes to the Unaudited Consolidated Financial Statements.

 

 1 

 

 

GROWGENERATION CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2016 AND 2015

(Unaudited)

 

   Three Months
Ended
June 30,
2016
   Three Months
Ended
June 30,
2015
   Six Months
Ended
June 30,
2016
   Six Months
Ended
June 30,
2015
 
                 
REVENUES                
Sales  $1,906,998   $813,408   $3,448,597   $1,408,859 
Cost of sales   (1,337,093)   (551,347)   (2,386,993)   (938,524)
Gross profit   569,905    262,061    1,061,604    470,335 
EXPENSES                    
Advertising and promotion   21,518    6,553    26,803    18,514 
Alarm and security   672    602    2,114    1,154 
Automobile expense   12,735    3,744    16,155    5,675 
Bad debt expense   3,409    -    3,688    - 
Bank service charges   5,516    1,926    9,481    3,417 
Cash (over) short   (984)   807    315    660 
Credit card fees   12,726    6,777    23,513    11,434 
Computer and internet expenses   5,484    1,657    10,373    3,018 
Depreciation expense   11,121    2,890    21,023    5,140 
Donations   -    -    500    - 
Dues and subscriptions   99    -    99    45 
Insurance expense   5,216    1,908    9,255    3,816 
Interest expense   1,113    -    1,665    - 
Finance charges   106    1,110    172    1,110 
Janitorial expense   135    -    611    162 
Licenses & permits   1,935    266    4,680    323 
Meals and entertainment   12,454    5,628    19,515    9,604 
Office supplies   5,612    2,024    15,856    5,956 
Stock compensation   98,000    -    98,000    - 
Stock option compensation   -    -    86,333    - 
Officer salary   93,950    26,500    157,850    73,000 
Salary and wages other   201,259    87,315    392,779    159,828 
Payroll tax and benefits   27,125    11,254    53,127    24,172 
Postage and delivery   2,265    183    2,904    486 
Accounting & audit fees   19,000    10,480    35,000    15,820 
Legal fees   12,126    10,000    20,326    10,000 
Commissions & other professional fees   33,800    -    35,000    - 
Rent expense   68,833    21,000    128,792    38,900 
Repairs and maintenance   3,886    2,305    7,769    2,727 
Supplies   7,193    994    10,541    1,373 
Telephone expense   7,876    3,045    13,966    5,834 
Training   20    300    1,419    300 
Travel expense   26,660    13,308    49,601    18,901 
Utilities   12,726    6,316    24,906    14,261 
Total expense   713,586    228,892    1,284,131    435,630 
Net ordinary income (loss)   (143,681)   33,169    (222,527)   34,705 
Other income (expense)                    
Other Income                    
Startup costs   -    (2,592)   -    (11,220)
Net Income (Loss) before income taxes   (143,681)   30,577    (222,527)   23,485 
Federal income tax expense   -    -    -    - 
State income tax expense   -    -    -    - 
Income Tax Benefit   -    -    -    - 
Net Income (Loss)  $(143,681)  $30,577   $(222,527)  $23,485 
                     
Loss per common share  $(0.015)  $(0.008)  $(0.020)  $(0.008)

 

See Notes to the Unaudited Consolidated Financial Statements. 

 2 

 

 

GROWGENERATION CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2016 AND 2015

(Unaudited) 

 

   Three Months
Ended
June 30,
2016
   Three Months
Ended
June 30,
2015
   Six Months
Ended
June 30,
2016
   Six Months
Ended
June 30,
2015
 
Cash Flows from Operating Activities:                
Net income (loss)  $(143,681)  $30,577   $(222,525)  $23,485 
Adjustments to reconcile net income to net cash provided by operating activities:                    
Stock & Option compensation   98,000    -    184,333    - 
Commissions   35,000    -    35,000    - 
Depreciation and amortization   11,121    2,890    21,023    5,140 
Bad debt expense   3,409    -    3,688    - 
Deferred income taxes   -    -    -    - 
Inventory market value reserve   -    -    (9,873)   - 
(Increase) decrease in:                    
Accounts receivable   (36,795)   (11,221)   (113,654)   (28,138)
Employee advances   45    -    (898)   - 
Inventory   (254,368)   (251,590)   (828,768)   (463,089)
Prepaid expenses   5,776    (681)   13,734    3,241 
Security deposits   -    (2,500)   (760)   (2,500)
Increase (decrease) in:                    
Accounts payable   (150,813)   (75,667)   152,947    90,439 
Customer deposits   (14,472)   7,361    (7,548)   4,073 
Payroll liabilities   2,246    (5,821)   15,609    8,845 
Sales tax payable   5,435    2,014    14,444    6,192 
Net Cash Flow Used by Operating Activities   (439,097)   (304,638)   (743,248)   (352,312)
                     
Cash Flows from Investing Activities:                    
Acquisition of furniture and equipment   (67,401)   (53,450)   (196,640)   (67,825)
Net Cash Flow Used by Investing Activities   (67,401)   (53,450)   (196,640)   (67,825)
                     
Cash Flows from Financing Activities:                    
Short term borrowings   (19,780)   9,439    15,856    33,907 
Proceeds from long-term debt   28,042    -    56,569    - 
Principal payments on long-term debt   (2,766)   -    (4,626)   - 
Issuance of common stock   301,500    270,000    623,500    360,000 
Net Cash Flow Provided by Financing Activities   306,996    279,439    691,299    393,907 
                     
Net Decrease in Cash and Cash Equivalents   199,502   78,649    248,589   26,230
                     
Cash and Cash Equivalents at Beginning of period   650,330    162,979    699,417    110,559 
                     
Cash and Cash Equivalents at End of period  $450,828   $84,330   $450,828   $84,329 
                     
Supplemental Information:                    
Interest paid during period  $1,113   $-   $1,666   $- 
Taxes paid during period  $-   $-   $-   $- 

 

See Notes to the Unaudited Financial Statements.

 

 3 

 

 

GROWGENERATION CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2016

(Unaudited) 

 

           Additional   Retained   Total 
   Common Stock   Paid-In   Earnings   Stockholders' 
   Shares   Amount   Capital   (Deficit)   Equity 
                     
Balances, December 31, 2015   8,967,834   $8,968   $2,862,816   $(718,411)  $2,153,373 
                          
Issuance of common stock at $.70 per share   460,000    460    289,340    -    289,800 
                          
Warrants issued at $.70 per share             32,200    -    32,200 
                          
Stock option expense   -    -    86,333    -    86,333 
                          
Net (loss)   -    -    -    (78,844)  $(78,844)
                          
Balances, March 31, 2016   9,427,834   $9,428   $3,270,689   $(797,255)  $2,482,862 
                          
Issuance of common stock at $.70 per share   430,714    431    270,919    -    271,350 
                          
Warrants issued at $.70 per share             30,150    -    30,150 
                          
Issuance of common stock at $.70 per share (Commission to Broker)   50,000    50    31,450    -    31,500 
                          
Warrants issued at $.70 per share (Commission to Broker)             3,500    -    3,500 
                          
Stock compensation at $.70 per share   140,000    140    97,860    -    98,000 
                          
Net (loss)   -    -    -    (143,681)  $(143,681)
                          
Balances, June 30, 2016   10,048,548   $10,049   $3,704,568   $(940,936)  $2,773,681 

 

See Notes to the Unaudited Financial Statements.

 

 4 

 

 

GrowGeneration Corporation and Subsidiaries

Notes to the Unaudited Consolidated Financial Statements

June 30, 2016

 

1. NATURE OF OPERATIONS

 

GrowGeneration Corp (the “Company”) was incorporated on March 6, 2014 in Colorado under the name of Easylife and changed its name to GrowGeneration Corp. It maintains its principal office in Pueblo, Colorado.

 

GrowGeneration Corp is engaged in the business of owning and operating retail hydroponic stores through wholly owned subsidiaries. It currently owns Grow Generation Pueblo Corp. which operates retail hydroponic stores in Colorado located in Pueblo, Canon City, Trinidad, Conifer, Colorado Springs and Denver; and Grow Generation California Corp. which operates a retail store in Santa Rosa California. The Company today owns and operates 10 stores and is actively engaged in seeking to acquire additional hydroponic retail stores. The Company’s financial statement has been prepared in accordance with generally accepted accounting principles.

 

The accompanying unaudited consolidated financial statements have been prepared in accordance with instructions for Form 10-Q and, therefore, do not include all disclosures necessary for a complete presentation of the financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP). However, all adjustments that are, in the opinion of management, necessary for the fair presentation of the interim financial statements have been included. Such adjustments were of a normal recurring nature. The results of operations for the six months period ended June 30, 2016 are not necessarily indicative of the results that may be expected for the entire year or any other interim period.

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation and Consolidation

 

The Company’s financial statements are prepared on the accrual method of accounting. The accounting and reporting policies of the Company conform to generally accepted accounting principles (GAAP). The consolidated financial statements of the Company included the accounts of GrowGeneration Pueblo Corp. Intercompany balances and transactions are eliminated in consolidation.

 

Use of Estimates

 

Management uses estimates and assumptions in preparing these financial statements in accordance with generally accepted accounting principles. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported revenues and expenses during the reporting period. Actual results could vary from the estimates that were used.

 

Revenue Recognition

 

Revenue on product sales is recognized upon delivery or shipment. Customer deposits/layaway sales are not reported as income until final payment is received and the merchandise is delivered.

 

Accounts Receivable

 

Accounts receivable are stated at the amount the Company expects to collect from balances outstanding at June 30, 2016. Based on the Company's assessment of the credit history with customers having outstanding balances and current relationships with them. At June 30, 2016, the Company established an allowance for doubtful accounts of $6,500.

 

 5 

 

 

GrowGeneration Corporation and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
June 30, 2016

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

Property and Equipment

 

Expenditures for maintenance and repairs are charged against operations. Renewals and betterment that materially extend the life of the asset are capitalized. Depreciation of property and equipment is provided on the straight-line method for financial reporting purposes at rates based on the following estimated useful lives:

 

     Estimated Lives
  Vehicle  5 years
  Furniture and fixtures  5-7 years
  Computers and equipment  3-5 years
  Leasehold improvements  10 years

 

For federal income tax purposes, depreciation is computed using the accelerated cost recovery system and the modified accelerated cost recovery system.

 

Income Taxes

 

The Company accounts for income taxes in accordance with FASB ACS 740, Income Taxes, which requires the recognition of deferred income taxes for differences between the basis of assets and liabilities for financial statement and income tax purposes. The differences related principally to depreciation of property and equipment, reserve for obsolete inventory and bad debt. Deferred tax assets and liabilities represent the future tax consequence for those differences, which will either be deductible or taxable when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for operating losses that are available to offset future taxable income. Valuation allowances are established to reduce deferred tax assets to the amount expected to be realized.

 

The Company adopted the provisions of FASB ACS 740-10-25, which prescribes a recognition threshold and measurement attribute for the recognition and measurement of tax positions taken or expected to be taken in income tax returns. FASB ASC 740-10-25 also provides guidance on recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, and accounting for interest and penalties associated with tax positions. The Company’s tax returns are subject to tax examinations by U.S. federal and state authorities until respective statute of limitation. Currently, the 2015 and 2014 tax years are open and subject to examination by taxing authorities. However, the Company is not currently under audit nor has the Company been contacted by any of the taxing authorities. The Company does not have any accrual for uncertain tax positions as of June 30, 2016. It is not anticipated that unrecognized tax benefits would significantly increase or decrease within 12 month of the reporting date.

 

 6 

 

 

GrowGeneration Corporation and Subsidiaries

Notes to the Unaudited Consolidated Financial Statements

June 30, 2016

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

Presentation of Sales Taxes

 

The Company is required to collect sales tax for the State of Colorado, State of California, City of Pueblo, City of Canon City, City of Colorado Springs, Pueblo County and Fremont County, Jefferson County, El Paso County, City & County of Denver, City of Santa Rosa ranging from 3.9% to 8.25% on the Company's sales to nonexempt customers. The Company collects that sales tax from customers and remits the entire amount to the corresponding taxing authorities. The Company's accounting policy is to exclude the tax collected and remitted from revenue and cost of sales.

 

Advertising

 

The Company expenses all advertising and promotional costs when incurred. Advertising and promotional expense for the six months ending June 30, 2016 amounted to $26,803.

 

Freight and Shipping

 

It is the Company's policy to classify freight and shipping costs as part of cost of sales. Total freight and shipping costs for the six months ending June 30, 2016 was $21,505.

 

Cash and Cash Equivalents

 

For purposes of the statement of cash flows, the Company considers all unrestricted highly liquid investments with a maturity of three months or less when acquired to be cash equivalents.

 

Goodwill

 

Goodwill represents the excess of acquisition costs over the fair value of net tangible and intangible assets acquired in connection with an acquisition. The Company accounts for goodwill in accordance with the provisions of FASB Accounting Standards Update (ASU) 2014-02, Intangibles – Goodwill and Other (Topic 350) Accounting for Goodwill. provisions of FASB Accounting Standards Update (ASU) 2014-02, Intangibles – Goodwill and Other (Topic 350) Accounting for Goodwill. In accordance with FASB ASC Topic 350 for Intangibles – Goodwill and Other, goodwill is not amortized but is reviewed for potential impairment on an annual basis, or if events or circumstances indicate a potential impairment, at the reporting unit level. The Company’s review for impairment includes an assessment of qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value, including goodwill. If it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value, including goodwill, the first step of the two-step quantitative goodwill impairment test is performed, which compares the fair value of the reporting unit with its carrying amounts, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired. However, if the carrying amount of the reporting unit exceeds its fair value, an additional procedures must be performed. That additional procedure compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. An impairment loss is recorded to the extent that the carrying amount of goodwill exceeds its implied fair value. The carrying value of goodwill is tested for impairment at least annually.

 

Inventory

 

Inventory consists primarily of gardening supplies and materials and is recorded at the lower of cost (first-in, first-out method) or market.

 

3. RECENT ACCOUNTING PRONOUNCEMENTS

 

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which provides guidance for revenue recognition. ASU 2014-09 will supersede and replace nearly all existing U.S. GAAP revenue recognition guidance. ASU 2014-09 establishes a new control-based revenue recognition model, changes the basis for deciding when revenue is recognized over time or at a point of time, provides new and more detailed guidance on specific topics and expands and improves disclosures about revenue. The guidance in ASU 2014-09 is effective for public entities for annual reporting periods beginning after December 15, 2016. Non public entities are required to apply the guidance for annual periods beginning after December 15, 2017. Early application is not permitted for public entities. The Company is currently evaluating the impact the adoption of ASU 2014-09 will have on the Company's financial statements and disclosures.

 

 7 

 

 

GrowGeneration Corporation and Subsidiaries

Notes to the Unaudited Consolidated Financial Statements

June 30, 2016

 

4. LEASE COMMITMENTS

 

On March 1, 2016 the Company entered into a three year lease for 4,498 square feet of retail space and opened its 9th store located in Denver Colorado at a monthly rate of $3,650.

 

The Company leases its store facilities under operating leases ranging from $850 to $5,600 per month. The following is a schedule of future minimum rental payments required under the term of the operating leases as of June 30, 2016:

 

  12 months Ending June 30,  Amount 
  2017  $267,940 
  2018   208,989 
  2019   141,917 
  2020   86,720 
  2021   16,800 
  Thereafter   - 
     $722,366 

 

Rent expense under all operating leases for the six months ending June 30, 2016 and 2015 was $128,792 and $38,900, respectively.

 

5. OTHER COMMITMENTS

 

Effective May 2014, the Company entered into employment agreements with its CEO and President. The agreements require payment of monthly wages and benefits. These agreements expire May 2017.

 

In April 2015, the Company acquired approximately $30,000 of inventory at cost from Green Growers, Inc., a retail store located in Canon City, Colorado. In connection therewith, the Company engaged the CEO of Green Growers, Inc., as a sales consultant for a period of two years. The agreement requires a base fee of $1,200 per month during the first year and $600 per month during the second year, together with incentive compensation for any new business he generates, in a n amount equal to 25% of the gross profit on all such goods and services generated. In addition, the Company issued this consultant 10,000 five (5) year options, exercisable at a price of $0.60 per share as additional compensation under his consulting agreement.

 

In June 2015, the Company acquired approximately $68,000 of inventory at cost from Happy Grow Lucky, Inc., a retail store located in Conifer, CO. In connection therewith, the Company engaged the two principals as sales consultants for a period of one year. The agreement requires monthly payment of $840 together with incentive compensation for any new business generated, in an amount equal to 25% of the gross profit on all such goods and services that they generate. In addition, we executed a new three year lease for the premises in Conifer, CO at a rate of $2,400 per month.

 

On October 8, 2015, the Company completed an inventory purchase of approximately $169,000 of inventory and $25,000 of fixed assets from Sweet Leaf Hydroponics Inc., a retail store located in Santa Rosa, CA. In connection therewith, the Company engaged one of the principals as a sales consultant for a period of one year. The agreement requires compensation of 25% of the gross profits for any new business generated.

 

 8 

 

 

GrowGeneration Corporation and Subsidiaries

Notes to the Unaudited Consolidated Financial Statements

June 30, 2016

 

5. OTHER COMMITMENTS (Continued)

 

On November 28, 2015, the Company acquired $35,000 of inventory of Greenhouse Tech, Inc., a retail store located in Colorado Springs, CO. The Company hired the principal of Greenhouse Tech, Inc. as a sales consultant for 1 year at $13 per hour and 20% of the gross profits on all sales generated by the sales consultant.

 

6. LONG-TERM DEBT

 

  Long term debt is as follows:  June 30, 2016 
       
  8.0%, Hitachi Capital, payable $631.13 monthly beginning September 2015 through August 2019, secured by delivery equipment with a book value of $29,508  $21,124 
        
  3.5%, Wells Fargo Equipment Finance, payable $518.96 monthly beginning April 2016 through March 2021, secured by warehouse equipment with a book value of $28,527   26,776 
        
  10.926%, RMT Equipment, payable 1154.79 monthly beginning June 2016 through October 2018, security be delivery equipment with a book value of $37,523   28,042 
        
     $75,942 
  Less Current Maturities   (22,789)
  Total Long-Term Debt  $53,153 

 

Future Debt Maturities – A schedule of expected debt payments and the portion allocated to principal follows:

 

  Twelve Months Ending June 30,  Total
Payment
   Allocated to
Principal
 
  2017  $27,778   $22,789 
  2018   27,778    24,795 
  2019   17,646    17,149 
  2020   9,383    9,012 
  2021   2,259    2,197 
     $84,844   $75,942 

 

7. STOCK OPTIONS

 

On March 6, 2014, the Company’s Board of Directors (the “Board”) approved the 2014 Equity Incentive stock plan pursuant to which the Company may grant incentive and non-statutory options to employees, nonemployee members of the Board, consultants and other independent advisors who provide services to the Corporation. The maximum shares of common stock which may be issued over the term of the plan shall not exceed 2,500,000 shares. Awards under this plan are made by the Board or a committee of the Board. Options under the plan are to be issued at the market price of the stock on the day of the grant except to those issued to holders of 10% or more of the Company’s common stock which is required to be issued at a price not less than 110% of the fair market value on the day of the grant. Each option is exercisable at such time or times, during such period and for such numbers of shares shall be determined by the Plan Administrator. However, no option shall have a term in excess of 5 years from the date of grant.

 

 9 

 

 

GrowGeneration Corporation and Subsidiaries

Notes to the Unaudited Consolidated Financial Statements

June 30, 2016

 

7. STOCK OPTIONS (Continued)

 

On March 6, 2014, the Company issued 650,000 options to its CEO, Darren Lampert, issued 400,000 options to its CFO, Irwin Lampert, issued 400,000 options to its President, Michael Salaman and issued 200,000 options to its COO, Jason Dawson exercisable at prices between $.60 and $.66 cents per share. On May 12, 2014, the Company issued 50,000 options to its director, Jody Kane and on May 14, 2014, the company issued 50,000 options to its director, Stephen Aiello, exercisable at prices between $.60 and $.66 cents per share. On July 7, 2014, the Company issued 100,000 options to 8 of its employees, exercisable at prices between $.60 and $.66 cents per share. On April 15, 2015, the Company issued 10,000 options to sales consultant Duane Nunez and on October 8, 2015, the Company issued 25,000 options to sales consultant Troy Sowers. The options vest 1/3 immediately, 1/3 one year after date of issuance and 1/3 two years after date of issuance. Compensation expense recorded for the three months ended June 30, 2016 was $86,333. Each stock option is estimated as of the date of grant using a Black-Scholes Merton option valuation model that uses the assumptions noted in the table below. To address the lack of historical volatility data for the Company, expected volatility is based on the volatilities of peer companies.

 

As of June 30, 2016, there were 1,872,000 options issued and outstanding under the plan.

 

  Expected volatility   141.26%
  Expected dividends   0.00 
  Expected term   3 years 
  Risk-free rate   2.0%

 

A summary of option activity as of June 30, 2016:

 

  Options  Shares   Weight Average Exercise Price   Weighted-Average Remaining Contractual Term
  Outstanding at December 31, 2015   1,885,000   $0.62   3 years
  Granted   -    -    
  Exercised   -    -    
  Forfeited or expired   -    -    
  Outstanding at March 31, 2016   1,885,000   $0.62   3 years
  Granted   -    -    
  Exercised   -    -    
  Forfeited or expired   (13,000)   -    
  Outstanding at June 30, 2016   1,872,000   $0.62   3 years

 

 10 

 

 

GrowGeneration Corporation and Subsidiaries

Notes to the Unaudited Consolidated Financial Statements

June 30, 2016

 

7. STOCK OPTIONS (Continued)

 

A summary of the status of the Company’s nonvested shares as of June 30, 2016 and changes during the three months then ended March 31, 2016 and June 30, 2016 is presented below:

 

  Nonvested shares  Shares   Weighted-
Average
Fair Market Value
 
  Nonvested at December 31, 2015   639,999   $0.14 
  Granted   -      
  Vested   (616,667)   0.14 
  Forfeited   -    - 
  Outstanding at March 31, 2016   23,332   $0.14 
             
  Granted   -      
  Vested   (10,332)   0.14 
  Forfeited   (13,000)   - 
  Outstanding at June 30, 2016   -   - 

 

8. STOCK PURCHASE WARRANTS

 

During the three months ended June 30, 2016, the Company granted 430,714 warrants to investors in a private placement of common shares and 50,000 warrants were issued to “Selling Agents” for private placement of common stock. During the three months ending March 31, 2016, the Company granted 460,000 warrants to investors in a private placement of common shares. In the months of September and December 2015, the Company granted 2,465,001 warrants to investors in a private placement of common shares. These warrants are exercisable for a period of five years with an exercise price of $.70. In October 2015, 142,800 warrants were issued to “Selling Agents” for private placement of common stock. Each warrant is estimated as of the date of grant using a Black-Scholes Merton warrant valuation model that uses the assumptions noted in the table below. To address the lack of historical volatility data for the Company, expected volatility is based on the volatilities of peer companies.

 

A summary of the status of the Company’s outstanding stock warrants as of June 30, 2016 is as follows:

 

         Weighted-
Average
    Weighted-
Average
 
     Shares   Exercise
Price
    Fair Market
Value
 
  Outstanding December 31, 2015   2,607,801   $0.70  $ 0.07  
  Granted   460,000    0.70    0.07  
  Exercised   -    -    -  
  Forfeited   -    -    -  
  Outstanding at March 31, 2016   3,067,801   $0.70  $ 0.07  
                   
  Granted   480,714    0.70    0.07  
  Exercised   -    -    -  
  Forfeited   -    -    -  
  Outstanding at June 30, 2016   3,548,515   $0.70  $ 0.07

 

 11 

 

 

GrowGeneration Corporation and Subsidiaries

Notes to the Unaudited Consolidated Financial Statements

June 30, 2016

 

9. STOCKHOLDERS’ EQUITY

 

Common Stock

 

The Company’s current Certificate of Incorporation authorizes the Company to issued 100,000,000 shares of common stock, par value $0.001 per share. As of June 30, 2016 there were 10,048,548 shares of common stock outstanding. The number of shares of common stock outstanding as of June 30, 2016 does not include (i) 3,548,515 shares of common stock issuable upon the exercise of warrants; (ii) shares of our common stock issuable upon the exercise of 1,872,000 outstanding stock options.

 

On January 4, 2016, the Company offered for sale 3,000,000 units at $.70, with gross proceeds of $2,100,000. Each unit consists of one share of common stock and one warrant to purchase one share of common stock at an exercise price of $.70 per share. The warrants have a five year life for gross proceeds of $2,100,000.

 

On March 31, 2016, the Company sold 460,000 units to four accredited investors at a price of $.70 per unit, with each unit consisting of one share of common stock and one warrant to purchase one share of common stock at an exercise price of $.70 per share. The warrants have a five year life for gross proceeds of $322,000.

 

On April 29, 2016, the Company closed on the 2016 private placement, to which they sold 890,714 units to 10 accredited investors at a price of $.70 per unit, with each unit consisting of one share of common stock and on warrant to purchase one share of common stock at an exercise price of $.70 per share. The warrants have a five year life for gross proceeds of $623,500.

 

As of June 30, 2016, the Company has a total of 10,048,548 shares of common stock outstanding, 3,548,515 warrants exercised at $.70 per share and 1,872,000 stock options.

 

10. EARNINGS PER SHARE

 

The following table sets forth the composition of the weighted average shares (denominator) used in the basic and dilutive earnings per share computation for the three months ended June 30, 2016, the year ended December 31, 2015 and for the period from inception March 6, 2014 through December 31, 2014.

 

     Three Months Ended
June 30,
2016
   Year Ended December 31,
2015
 
  Net Loss  $(222,527)  $(528,756)
             
  Weighted average share outstanding basic   9,481,405    6,563,271 
  Effect of dilutive common stock equivalents          
  Adjusted weighted average shares  outstanding-dilutive   9,481,405    6,563,271 
  Basic loss per share  $(.02)  $(.08)
  Dilutive loss per share  $(.02)  $(.08)

 

The effective of the 1,872,000 stock option and the 3,548,515 of warrants outstanding as of June 30, 2016 is antidilutive and therefore not presented in the above table.

 

11. SUBSEQUENT EVENTS

 

On July 15, 2016 the company entered into a new lease agreement for its Canon City, Colorado location. The Canon City Store completed its move to its new location on July 25, 2016. The new store is approximately 4427 square feet. The lease agreement requires monthly payments of $3,689.17 beginning October 15, 2016 through October 14, 2022 with annual increase of 3%.

 

On July 19, 2016 the Company entered into a 2 year lease agreement for its tenth retail store in Fairplay, Colorado. The Company plans to begin operations in Fairplay, Colorado on August 1, 2016. The lease agreement requires monthly rental payments of $2,170 through July 31, 2018.

 

 12 

 

  

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion should be read in conjunction with our consolidated financial statements and notes thereto included herein. In connection with, and because we desire to take advantage of, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding certain forward looking statements in the following discussion and elsewhere in this report and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission (the “SEC”). Forward looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward looking statements made by, or on our behalf. We disclaim any obligation to update forward looking statements, except as required by law.

 

OVERVIEW

 

GrowGeneration Corp.’s mission is to become one of the largest retail hydroponic and organic specialty gardening retail outlets in the United States. Today, GrowGeneration owns and operates a chain of 9 retail hydroponic/gardening stores in Colorado and one (1) in California. GrowGeneration Corp operates its retail hydroponic stores through wholly owned subsidiaries. It currently owns Grow Generation Pueblo Corp. which operates retail hydroponic stores in Colorado located in Pueblo, Canon City, Trinidad, Conifer, Colorado Springs and Denver; and Grow Generation California Corp. which operates a retail store in Santa Rosa California. The Company today owns and operates 10 stores and is actively engaged in seeking to acquire additional hydroponic retail stores. On July 15, 2016 the company entered into a new lease agreement for its Canon City, Colorado location

 

Our increase in sales to date has been fueled by opening new stores and by frequent and higher dollar transactions in our stores from commercial growers, individual home growers, and gardeners. We expect to continue to experience sales growth over the next few years in existing stores and by increasing the number of stores that we operate, which will depend on our ability to increase our capital. Our growth is likely to come from three distinct channels: establishing new stores in high-value markets, acquiring existing stores with strong customer bases and strong operating histories, building a business to business sales team and the creation of a branded e-commerce portal at www.GrowGeneration.com.

 

Our stores sell thousands of products, such as organic nutrients and soils, advanced lighting technology, state of the art hydroponic and aquaponic equipment, and other products needed to grow indoors and outdoors. Our strategy is to target two distinct verticals; namely i) professional growers, and ii) smaller growers who require a local store to fulfill their daily and weekly growing needs. We are of the belief that our retail outlets provide a superior level of customer service to our customers through a well trained staff.

 

On February 15, 2015, we opened our first non-acquired GrowGeneration store in Trinidad, Colorado. This store is 3,000 square feet and was initially stocked with $100,000 in inventory. Our lease obligation is $1,000 per month for the next 3 years.

 

In April 2015, we acquired approximately $30,000 of inventory at cost from Green Growers, Inc., a retail store located in Canon City, Colorado. In connection therewith, we engaged the CEO of Green Growers, Inc. as a sales consultant for a period of two years. We pay this individual a base fee of $1,200 per month during the first year and $600 per month during the second year of his consulting agreement, together with incentive compensation for any new business he generates, in an amount equal to 25% of the gross profit on all such business. We also issued this consultant 10,000 three (3) year options, exercisable at a price of $.60 per share, as additional compensation under his consulting agreement.

 

In June 2015, we acquired approximately $68,000 of inventory at cost from Happy Grow Lucky, Inc., a retail store located in Conifer, Colorado. In connection therewith, we engaged the 2 principals as sales consultants for a period of one year. We will pay each sales consultant $420 per month, together with incentive compensation for any new business they generate, in an amount equal to 25% of the gross profit of such business. In addition, we executed a new 3 year lease for the premises in Conifer, Colorado. at a rate of $2,400 per month.

 

On September 1, 2015, we signed a 5 year lease, at a rate of $3,780 to open our Colorado Springs, Colorado store.

 

 13 

 

 

On October 28, 2015, we purchase approximately $169,000 of inventory, at cost, from Sweet Leaf Hydroponics Inc., a retail store located in Santa Rosa, California. In connection therewith, we also acquired some equipment from the seller for $25,000. We have entered into a one-year agreement with one of the principals to act as a sales consultant for us for a period of one year, at a cost of $1,000 per month. We executed a two year lease with the landlord of Sweet Leaf Hydroponics Inc. for $5,300 per month through December 2017. We also issued this consultant 25,000 three (3) year options, exercisable at a price of $.60 per share, as additional compensation under his consulting agreement.

 

On November 28, 2015, the Company acquired $35,000 of inventory of Greenhouse Tech Inc., a retail store located in Colorado. The Company engaged the principal of Greenhouse Tech as a sales consultant for 1 year, at $13 per hour and 20% of the gross profits on all sales generated by sales consultant.

 

On March 1, 2016, we signed a 3 year lease, at a rate of $3,650 for the first year, 4,498 square feet, located in Denver, Colorado.

 

On July 15, 2016 the company entered into a new lease agreement for its Canon City, Colorado location. The Canon City Store completed its move to its new location on July 25, 2016. The new store is approximately 4427 square feet.

 

On July 19, 2016 the Company entered into a 2 year lease agreement for its tenth retail store in Fairplay, Colorado. The Company plans to begin operations in Fairplay, Colorado on August 1, 2016.

 

RESULTS OF OPERATIONS

 

Comparison of the three months ended June 30, 2015 to June 30, 2016

 

The following table presents certain consolidated statement of operations information and presentation of that data as a percentage of change from year-to-year.

 

   Three Months Ended 
June 30,
2015
   Three Months Ended June 30,
2016
   $ Variance 
Net revenue  $813,408   $1,906,998   $1,093,590 
Cost of goods sold   551,347    1,337,093    785,746 
Gross profit   262,061    569,905    307,844 
General and administrative expenses   228,892    713,586    484,694 
Operating income (loss)   33,169    (143,681)   (176,850)
Other income (expense)   (2,592)   -    2,592 
(Loss) before income taxes   30,577    (143,681)   (174,258)
Income taxes - current benefit (expense)   -    -    - 
Net (loss)  $30,577   $(143,681)  $(174,258)

 

Revenue

 

Net revenue for the three months ended June 30, 2016 increased $1,093,590 to $1,906,998 as compared to $813,408 for the three months ended June 30, 2015. The increase was due to revenue from the retail stores that we acquired and opened during that period and the growth from our existing stores.

 

Cost of Goods Sold

 

Cost of sales for the three months ended June 30, 2016 increased $785,746 to $1,337,093 as compared to $551,347 for the three months ended June 30, 2015. The increase was due to increased sales.

 

Gross profit was $569,905 for the three months June 30, 2016 as compared to $262,061 for the three months ended June 30, 2015.

 

General and Administrative Expenses

 

General and administrative expenses for the three months ended June 30, 2016 increased $484,694 to $713,586 as compared to $228,892 for the three months ended June 30, 2015. The increase was due mainly to increased payroll expenses, professional fees,broker commissions, travel expense and stock based compensation related to stock option grants and stock compensation for stock issued to employees.

 

 14 

 

 

Non-cash general and administrative expenses for the three months ended June 30, 2016 totaled $147,530, with (i) depreciation of $11,121 (ii) stock option compensation and commissions of $133,000, and (iii) bad debt expense of $3,409.

 

Net (Loss)

 

Net loss for the three months ended June 30, 2016 was $(143,681) as compared to a net income of $30,577 for the three months ended June 30, 2015. The increase in loss was primarily due to the increase in stock based compensation, payroll expenses,broker commission and professional fees as well as the expenses of the opening of new stores.

 

Operating Activities

 

Net cash used in operating activities for the three months was $439,097. This amount was primarily related to increases of inventory of $254,368, accounts receivable of $36,795 and decreases in accounts payable of $150,813 and customer deposits of 14,472 offset by non-cash expenses of $147,530 consisting of $133,000 stock option compensation,broker commissions, and depreciation of $11,121 and $3,409 bad debt expense.

 

Comparison of the six months ended June 30, 2015 to June 30, 2016

 

The following table presents certain consolidated statement of operations information and presentation of that data as a percentage of change from year-to-year.

 

   Six Months Ended 
June 30,
2015
   Six Months Ended June 30,
2016
   $ Variance 
Net revenue  $1,408,859   $3,448,597   $2,039,738 
Cost of goods sold   938,525    2,386,993    1,448,468 
Gross profit   470,334    1,061,604    591,270 
General and administrative expenses   435,630    1,284,131    848,501 
Operating income (loss)   34,705    (222,527)   (257,232)
Other income (expense)   (11,220)   -    11,220 
(Loss) before income taxes   23,485    (222,527)   (246,012)
Income taxes - current benefit (expense)   -    -    - 
Net (loss)  $23,485   $(222,527)  $(246,012)

 

Revenue

 

Net revenue for the six months ended June 30, 2016 increased $2,039,738 to $3,448,597 as compared to $1,408,859 for the six months ended June 30, 2015. The increase was due to revenue from the retail stores that we acquired and opened during that period and the growth from our existing stores.

 

Cost of Goods Sold

 

Cost of sales for the six months ended June 30, 2016 increased $1,448,468 to $2,386,993 as compared to $938,525 for the six months ended June 30, 2015. The increase was due to increased sales.

 

Gross profit was $1,061,604 for the six months ended June 30, 2016 as compared to $470,334 for the six months ended June 30, 2015.

 

General and Administrative Expenses

 

General and administrative expenses for the six months ended June 30, 2016 increased $848,501 to $1,284,131 as compared to $435,630 for the six months ended June 30, 2015. The increase was due mainly to increased payroll expenses, professional fees,broker commissions, travel expense,expenses incurred in the opening of new stores and stock based compensation related to stock option grants and stock compensation for stock issued to employees.

 

Non-cash general and administrative expenses for the six months ended June 30, 2016 totaled $244,044, with (i) depreciation of $21,023 (ii) stock option compensation and broker commissions of $219,333, and (iii) bad debt expense of $3,688.

 

 15 

 

 

Net (Loss)

 

Net loss for the six months ended June 30, 2016 was $222,527 as compared to a net income of $23,485 for the six months ended June 30, 2015. The increase in loss was primarily due to the increase in stock based compensation, payroll expenses,broker commissions, expenses incurred in the opening of new stores and professional fees..

 

Operating Activities

 

Net cash used in operating activities for the six months ended June 30, 2016 was $743,248. This amount was primarily related to an increase of inventory of $828,768 and accounts receivable of $113,653 offset by increases in account payable of $152,947, payroll and sales tax liabilities of $30,053 and non-cash expenses of $244,044 consisting of $219,333 stock option compensation and commissions, and depreciation of $21,023 and $3,688 bad debt expense.

 

LIQUIDITY AND CAPITAL RESOURCES

 

As at the date of this filing, we had cash of approximately $300,000. We had cash of $699,417 as of December 31, 2015 and a net working capital of approximately $1,630,040.

 

We will need to obtain additional financing in the future to continue to acquire and open new stores. We have financed our operations through the issuance of the sale of common stock.

 

Financing Activities

 

2014 Private Placement 

 

In March 2014, we raised $600,000 from the sale of 1,000,000 shares of our common stock to seventeen (17) accredited investors, at a price of $.60 per share. All securities sold in the 2014 Private Placement were arranged by officers and directors and no commissions or other remuneration was paid to any person in connection with such sales. Proceeds from this sale were utilized to effect the acquisition of the assets of Southern Colorado Garden Supply Corp. (d/b/a Pueblo Hydroponics), which we completed on May 29, 2014, through our wholly-owned subsidiary, GrowGeneration Pueblo Corp., a Colorado corporation. The purchase price was $499,976, consisting of $243,000 in goodwill and $273,000 in inventory, $35,000 in fixed assets, $5,286 in accounts receivable and $1,320 in prepaid expenses offset by $57,275 in accounts payable and $355 in customer deposits.

 

2015 Private Placements

 

In April 2015, we raised $180,000 from the sale of 300,000 shares of our common stock to four (4) accredited investors, at a price of $.60 per share. All securities sold in this private placement were arranged by officers and directors and no commissions or other remuneration was paid to any person in connection with such sales. We used the proceeds raised in this offering for inventory purchases and working capital.

 

On March 12, 2015 we entered into an agreement with Cavu Securities LLC, a FINRA Member broker dealer (“Cavu”), pursuant to which we engaged Cavu on a non-exclusive basis to act as our lead placement agent for the sale of up to $4,200,000 of our units. Each unit was offered at a price of $.70 per unit. Each unit consisted of (i) one share of our common stock and (ii) one 5 year warrant to purchase one share of Common Stock at an exercise price of $0.70 per share. The units were offered and sold on a “best-effort” basis. On October 30, 2015, we closed the private placement with a total of 2,465,001 units sold and realized gross proceeds of $1,725,501. We paid Cavu total compensation for its services of (i) $73,295 in commissions; (ii) five-year warrants to purchase 142,800 shares of our common stock, at an exercise price equal to $0.70 per share; and (iii) 77,833 shares of our common stock.

 

2016 Private Placement

 

On April 29, 2016, the Company sold 890,714 units to 10 accredited investors at a price of $0.70 per unit, with each unit consisting of one share of common stock and one warrant to purchase one share of common stock at an exercise price of $.70 per share. The warrants have a five year life for gross proceeds of $623,500. We paid Cavu, our placement agent, a total compensation for its services of (i) five-year warrants to purchase 50,000 shares of our common stock, at an exercise price equal to $0.70 per share; and (ii) 50,000 shares of our common stock.

 

Our contractual cash obligations as of June 30, 2016 are summarized in the table below:

 

Contractual Cash Obligations  Total   Less Than 1 Year   1-3 Years   3-5 Years   Greater Than 5 Years 
Operating leases  $772,366    267,940    350,096    103,520   $             - 
Note payable   75,942    22,789    41,944    11,209    - 
   $848,308    290,729    392,040    114,729   $- 

 

 16 

 

 

OFF-BALANCE SHEET ARRANGEMENTS

 

We do not have any off-balance sheet arrangements (as that term is defined in Item 303 of Regulation S-K) that are reasonably likely to have a current or future material effect on our financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.

 

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

 

The application of GAAP involves the exercise of varying degrees of judgment. On an ongoing basis, we evaluate our estimates and judgments based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

 

Cash and Cash Equivalents - We classify highly liquid temporary investments with an original maturity of three months or less when purchased as cash equivalents. The Company maintains cash balances at various financial institutions. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. At June , 2016 all deposit balances were fully insured by the FDIC. We have not experienced any losses in such accounts and management believes it is not exposed to any significant risk for cash on deposit.

 

Accounts Receivable and Revenue - Revenue is recognized on the sale of a product when the product is shipped, which is when the risk of loss transfers to our customers, the fee is fixed and determinable, and collection of the sale is reasonably assured. A product is not shipped without an order from the customer and the completion of credit acceptance procedures. The majority of our sales are cash or credit card; however, we occasionally extend terms to our customers. Accounts receivable are reviewed periodically for collectability.

 

Inventories - Inventories are recorded on a first in first out basis. Inventory consists of raw materials, purchased finished goods and components held for resale. Inventory is valued at the lower of cost or market. The reserve for obsolete inventory was $13,500 at December 31, 2014 and $52,000 at December 31, 2015.

 

Property and Equipment - Property and equipment are stated at cost. Assets acquired held under capital leases are initially recorded at the lower of the present value of the minimum lease payments discounted at the implicit interest rate (8% for assets currently held under capital lease) or the fair value of the asset. Major improvements and betterments are capitalized. Maintenance and repairs are expensed as incurred. Depreciation is computed using the straight-line method over an estimated useful life based on the particular asset. Assets acquired under capital lease are depreciated over the lesser of the useful life or the lease term. At the time of retirement or other disposition of property and equipment, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in the consolidated statements of operations.

 

Goodwill and Intangible Assets - We evaluate the carrying value of goodwill, intangible assets, and long-lived assets during the fourth quarter of each year and between annual evaluations if events occur or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount. Such circumstances could include, but are not limited to (1) a significant adverse change in legal factors or in business climate, (2) unanticipated competition, (3) an adverse action or assessment by a regulator, (4) continued losses from operations, (5) continued negative cash flows from operations, and (6) the suspension of trading of the Company’s securities. When evaluating whether goodwill is impaired, we compare the fair value of the reporting unit to which the goodwill is assigned to the reporting unit’s carrying amount, including goodwill. The fair value of the reporting unit is estimated using a combination of the income, or discounted cash flows, approach and the market approach, which utilizes comparable companies’ data. If the carrying amount of a reporting unit exceeds its fair value, then the amount of the impairment loss must be measured. The impairment loss would be calculated by comparing the implied fair value of reporting unit goodwill to its carrying amount. In calculating the implied fair value of reporting unit goodwill, the fair value of the reporting unit is allocated to all of the other assets and liabilities of that unit based on their fair values. The excess of the fair value of a reporting unit over the amount assigned to its other assets and liabilities is the implied fair value of goodwill.

 

The result of our 2015 annual goodwill impairment testing validates that the value of the goodwill has not been impaired as of December 31, 2015. The Company based its testing on the following factors:

 

1. Our stores which we purchased in 2014 began operations in 2008;

2. The stores grew from 1-4 stores from 2008-2014 and at the end of 2015, we had 8 total stores;

3. A loyal customer base expanded in 2015;

4. A list of reliable suppliers are all in good standing; and

5. Our business is growing and expanding.

 

 17 

 

 

Long Lived Assets – We reviews our long-lived assets for impairment annually or when changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Long-lived assets under certain circumstances are reported at the lower of carrying amount or fair value. Assets to be disposed of and assets not expected to provide any future service potential to the Company are recorded at the lower of carrying amount or fair value (less the projected cost associated with selling the asset). To the extent carrying values exceed fair values, an impairment loss is recognized in operating results.

 

Fair Value Measurements and Financial Instruments - ASC Topic 820 defines fair value, establishes a framework for measuring fair value, establishes a three-level valuation hierarchy for disclosure of fair value measurement and enhances disclosure requirements for fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:

 

Level 1 - Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

 

Level 2 - Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

 

Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

 

The carrying value of cash, accounts receivable, investment in a related party, accounts payables, accrued expenses, due to related party, notes payable, and convertible notes approximates their fair values due to their short-term maturities.

 

Derivative financial instruments - We evaluate all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. For stock-based derivative financial instruments, the Company uses a weighted average Black-Scholes-Merton option pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within twelve months of the balance sheet date.

 

Stock Based Compensation – We have share-based compensation plans under which employees, consultants, suppliers and directors may be granted restricted stock, as well as options and warrants to purchase shares of our common stock at the fair market value at the time of grant. Stock-based compensation cost to employees is measured by us at the grant date, based on the fair value of the award, over the requisite service period under ASC 718. For options issued to employees, we recognize stock compensation costs utilizing the fair value methodology over the related period of benefit.  Grants of stock to non-employees and other parties are accounted for in accordance with the ASC 505.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

We are a smaller reporting company and are not required to provide the information under this item pursuant to Regulation S-K.

  

ITEM 4. CONTROLS AND PROCEDURES.

 

Evaluation of Disclosure Controls and Procedures

 

Management maintains “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

 

In connection with the preparation of this Quarterly Report on Form 10-Q, an evaluation was carried out by management, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2016.

 

Based on that evaluation, management concluded, that our disclosure controls and procedures were effective as of June 30, 2016 in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

 

Changes in Internal Controls over Financial Reporting

 

As of the end of the period covered by this report, there have been no changes in the internal controls over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting subsequent to the date of management’s last evaluation.

 

 18 

 

 

PART II. OTHER INFORMATION

 

Item 1. Legal Proceedings

 

We are not currently a party to any legal proceeding, nor are we aware of any threatened actions.

 

Item 1A. Risk Factors

 

As a smaller reporting company, we are not required to provide the information required by this Item.

 

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

Item 3. Defaults upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information

 

None.

 

Item 6. Exhibits

 

The following exhibits are included and filed with this report.

 

Exhibit   Exhibit Description
31.1   Rule 13a-14(a)/15d-14(a) certification of Chief Executive Officer  
31.2   Rule 13a-14(a)/15d-14(a) certification of principal financial and accounting officer  
32.1   Section 1350 certification of Chief Executive Officer  
32.2   Section 1350 certification of principal financial and accounting officer  
101.INS   XBRL Instance Document  
101.SCH   XBRL Taxonomy Extension Schema Document  
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document  
101.LAB   XBRL Taxonomy Extension Label Linkbase Document  
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document  
101.DEF   XBRL Taxonomy Extension Definition Linkbase Definition  

 

 19 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized on August 18, 2016.

 

  GrowGeneration Corporation
     
  By: /s/ Darren Lampert
    Darren Lampert, Chief Executive Officer
(Principal Executive Officer)
     
  By: /s/ Irwin Lampert
    Irwin Lampert, Chief Financial Officer
(Principal Accounting Officer and Principal Financial Officer) 

 

 

20

 

 

EX-31.1 2 f10q0616ex31i_growgener.htm CERTIFICATION

Exhibit 31.1

 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Darren Lampert, certify that:

 

1.          I have reviewed this Form 10-Q of GrowGeneration Corporation;

 

2.          Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.          Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods present in this report;

 

4.          The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the registrant and have:

 

(a)        Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)        Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principals;

 

(c)        Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)        Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.          The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a)        All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b)        Any fraud, whether or not material, that involved management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

August 18, 2016 By: /s/ Darren Lampert
    Darren Lampert, Chief Executive Officer
(Principal Executive Officer)

 

 

EX-31.2 3 f10q0616ex31ii_growgener.htm CERTIFICATION

Exhibit 31.2

 

CERTIFICATION OF CHIEF FINANCIAL OFFICER
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Irwin Lampert, certify that:

 

1.          I have reviewed this Form 10-Q of GrowGeneration Corporation;

 

2.          Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.          Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods present in this report;

 

4.          The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the registrant and have:

 

(a)        Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)        Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principals;

 

(c)        Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)        Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.          The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a)        All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b)        Any fraud, whether or not material, that involved management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

August 18, 2016 By: /s/ Irwin Lampert
    Irwina Lampert, Chief Financial Officer
(Principal Financial Officer)

 

EX-32.1 4 f10q0616ex32i_growgener.htm CERTIFICATION

Exhibit 32.1

 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the accompanying Quarterly Report on Form 10-Q of GrowGeneration Corporation (the “Company”) for the fiscal quarter ending June 30, 2016, I, Darren Lampert, Chief Executive Officer of the Company, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge and belief, that:

 

1.          Such Quarterly Report on Form 10-Q for the fiscal quarter ending June 30, 2016, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2.          The information contained in such Quarterly Report on Form 10-Q for the fiscal quarter ending June 30, 2016, fairly presents, in all material respects, the financial condition and results of operations of GrowGeneration Corporation.

 

August 18, 2016 By: /s/ Darren Lampert
    Darren Lampert, Chief Executive Officer
(Principal Executive Officer)

 

EX-32.2 5 f10q0616ex32ii_growgener.htm CERTIFICATION

Exhibit 32.2

 

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the accompanying Quarterly Report on Form 10-Q of GrowGeneration Corporation (the “Company”) for the fiscal quarter ending June 30, 2016, I, Irwin Lampert, Chief Financial Officer of the Company, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge and belief, that:

 

1.          Such Quarterly Report on Form 10-Q for the fiscal quarter ending June 30, 2016, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2.          The information contained in such Quarterly Report on Form 10-Q for the fiscal quarter ending June 30, 2016, fairly presents, in all material respects, the financial condition and results of operations of GrowGeneration Corporation.

 

August 18, 2016 By: /s/ Irwin Lampert
    Irwin Lampert, Chief Financial Officer
(Principal Financial Officer)

 

 

 

 

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Document and Entity Information - shares
6 Months Ended
Jun. 30, 2016
Aug. 18, 2016
Document and Entity Information [Abstract]    
Entity Registrant Name GrowGeneration Corp.  
Entity Central Index Key 0001604868  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Document Type 10-Q  
Document Period End Date Jun. 30, 2016  
Document Fiscal Year Focus 2016  
Document Fiscal Period Focus Q2  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   10,053,548
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Consolidated Balance Sheet - USD ($)
Jun. 30, 2016
Dec. 31, 2015
Current Assets    
Cash and cash equivalents $ 450,828 $ 699,417
Accounts receivable, net of allowance of $6,500 147,520 37,554
Employee Advances 3,848 2,950
Inventory 2,150,280 1,311,639
Prepaid Expenses 3,303 17,036
Total Current Assets 2,755,779 2,068,596
Fixed Assets    
Furniture and Equipment 487,881 291,241
Accumulated Depreciation (41,028) (20,005)
Total Fixed Assets, Net 446,853 271,236
Other Assets    
Security Deposits 27,990 27,230
Goodwill 243,000 243,000
Total Other Assets 270,990 270,230
TOTAL ASSETS 3,473,622 2,610,062
Current Liabilities    
Accounts Payable 445,024 292,078
Short term borrowings 72,041 56,184
Customer Deposits 10,863 18,410
Payroll Liabilities 59,534 43,925
Sales Tax Payable 36,537 22,093
Current portion long-term debt 22,789 5,866
Total Current Liabilities 646,788 438,556
Long Term Liabilities    
Less current portion long-term debt (22,789) (5,866)
Total Long Term Liabilities 53,153  
Total Liabilities 699,941 456,689
Stockholders' equity    
Common stock .001 par value, 100,000,000 shares authorized; 10,048,548 shares issued and outstanding at June 30, 2016 10,049 8,968
Additional Paid In Capital 3,704,568 2,862,816
Accumulated deficit (940,936) (718,411)
Total Equity 2,773,681 2,153,373
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY 3,473,622 2,610,062
RMT-2005 Mitsubishi    
Long Term Liabilities    
Long-term Debt 28,042  
Wells Fargo Equipment - Forklift    
Long Term Liabilities    
Long-term Debt 26,776  
Hitachi Capital America Corp    
Long Term Liabilities    
Long-term Debt $ 21,124 $ 23,999
XML 14 R3.htm IDEA: XBRL DOCUMENT v3.5.0.2
Consolidated Balance Sheet (Parenthetical)
Jun. 30, 2016
USD ($)
$ / shares
shares
Statement of Financial Position [Abstract]  
Allowance for accounts receivable | $ $ 6,500
Common stock, par value | $ / shares $ 0.001
Common stock, shares authorized 100,000,000
Common stock, shares issued 10,048,548
Common stock, shares outstanding 10,048,548
XML 15 R4.htm IDEA: XBRL DOCUMENT v3.5.0.2
Consolidated Statement of Operations (Unaudited) - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
REVENUES        
Sales $ 1,906,998 $ 813,408 $ 3,448,597 $ 1,408,859
Cost of sales (1,337,093) (551,347) (2,386,993) (938,524)
Gross profit 569,905 262,061 1,061,604 470,335
EXPENSES        
Advertising and promotion 21,518 6,553 26,803 18,514
Alarm and security 672 602 2,114 1,154
Automobile expense 12,735 3,744 16,155 5,675
Bad debt expense 3,409 3,688
Bank service charges 5,516 1,926 9,481 3,417
Cash (over) short (984) 807 315 660
Credit card fees 12,726 6,777 23,513 11,434
Computer and internet expenses 5,484 1,657 10,373 3,018
Depreciation expense 11,121 2,890 21,023 5,140
Donations 500
Dues and subscriptions 99 99 45
Insurance expense 5,216 1,908 9,255 3,816
Interest expense 1,113 1,665
Finance charges 106 1,110 172 1,110
Janitorial expense 135 611 162
Licenses & permits 1,935 266 4,680 323
Meals and entertainment 12,454 5,628 19,515 9,604
Office supplies 5,612 2,024 15,856 5,956
Stock compensation 98,000 98,000
Stock option compensation 86,333
Officer salary 93,950 26,500 157,850 73,000
Salary and wages other 201,259 87,315 392,779 159,828
Payroll tax and benefits 27,125 11,254 53,127 24,172
Postage and delivery 2,265 183 2,904 486
Accounting & audit fees 19,000 10,480 35,000 15,820
Legal fees 12,126 10,000 20,326 10,000
Commissions & other professional fees 33,800 35,000
Rent expense 68,833 21,000 128,792 38,900
Repairs and maintenance 3,886 2,305 7,769 2,727
Supplies 7,193 994 10,541 1,373
Telephone expense 7,876 3,045 13,966 5,834
Training 20 300 1,419 300
Travel expense 26,660 13,308 49,601 18,901
Utilities 12,726 6,316 24,906 14,261
Total expense 713,586 228,892 1,284,131 435,630
Net ordinary income (loss) (143,681) 33,169 (222,527) 34,705
Other income (expense)        
Other Income
Startup costs (2,592) (11,220)
Net Income (Loss) before income taxes (143,681) 30,577 (222,527) 23,485
Federal income tax expense
State income tax expense
Income Tax Benefit
Net Income (Loss) $ (143,681) $ 30,577 $ (222,527) $ 23,485
Loss per common share $ (0.015) $ (0.008) $ (0.020) $ (0.008)
XML 16 R5.htm IDEA: XBRL DOCUMENT v3.5.0.2
Consolidated Statement of Cash Flows (Unaudited) - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Cash Flows from Operating Activities:        
Net income (loss) $ (143,681) $ 30,577 $ (222,527) $ 23,485
Adjustments to reconcile net income to net cash provided by operating activities:        
Stock & Option compensation 98,000 98,000
Commissions 35,000 35,000
Depreciation and amortization 11,121 2,890 21,023 5,140
Bad debt expense 3,409 3,688
Deferred income taxes
Inventory market value reserve (9,873)
(Increase) decrease in:        
Accounts receivable (36,795) (11,221) (113,654) (28,138)
Employee advances 45 (898)
Inventory (254,368) (251,590) (828,768) (463,089)
Prepaid expenses 5,776 (681) 13,734 3,241
Security deposits (2,500) (760) (2,500)
Increase (decrease) in:        
Accounts payable (150,813) (75,667) 152,947 90,439
Customer deposits (14,472) 7,361 (7,548) 4,073
Payroll liabilities 2,246 (5,821) 15,609 8,845
Sales tax payable 5,435 2,014 14,444 6,192
Net Cash Flow Used by Operating Activities (439,097) (304,638) (743,248) (352,312)
Cash Flows from Investing Activities:        
Acquisition of furniture and equipment (67,401) (53,450) (196,640) (67,825)
Net Cash Flow Used by Investing Activities (67,401) (53,450) (196,640) (67,825)
Cash Flows from Financing Activities:        
Short term borrowings (19,780) 9,439 15,856 33,907
Proceeds from long-term debt 28,042 56,569
Principal payments on long-term debt (2,766) (4,626)
Issuance of common stock 301,500 270,000 623,500 360,000
Net Cash Flow Provided by Financing Activities 306,996 279,439 691,299 393,907
Net Decrease in Cash and Cash Equivalents 199,502 78,649 248,589 26,230
Cash and Cash Equivalents at Beginning of period 650,330 162,979 699,417 110,559
Cash and Cash Equivalents at End of period 450,828 84,329 450,828 84,329
Supplemental Information:        
Interest paid during period 1,113 1,666
Taxes paid during period
XML 17 R6.htm IDEA: XBRL DOCUMENT v3.5.0.2
Consolidated Statement of Changes in Stockholders' Equity (Unaudited) - USD ($)
Total
Common Stock
Additional Paid-In Capital
Retained Earnings (Deficit)
Beginning Balances at Dec. 31, 2015 $ 2,153,373 $ 8,968 $ 2,862,816 $ (718,411)
Beginning Balance, shares at Dec. 31, 2015   8,967,834    
Issuance of common stock at $.70 per share 289,800 $ 460 289,340
Issuance of common stock at $.70 per share, shares   460,000    
Warrants issued at $.70 per share 32,200 32,200
Stock option expense 86,333 86,333
Net (loss) (78,844) (78,844)
Ending Balance at Mar. 31, 2016 2,482,862 $ 9,428 3,270,689 (797,255)
Ending Balance, shares at Mar. 31, 2016   9,427,834    
Issuance of common stock at $.70 per share 271,350 $ 431 270,919
Issuance of common stock at $.70 per share, shares   430,714    
Warrants issued at $.70 per share 30,150 30,150
Issuance of common stock at $.70 per share (Commission to Broker) 31,500 $ 50 31,450
Issuance of common stock at $.70 per share (Commission to Broker), shares   50,000    
Warrants issued at $.70 per share (Commission to Broker) 3,500 3,500
Stock compensation at $.70 per share 98,000 $ 140 97,860
Stock compensation at $.70 per share, shares   140,000    
Net (loss) (143,681) (143,681)
Ending Balance at Jun. 30, 2016 $ 2,773,681 $ 10,049 $ 3,704,568 $ (940,936)
Ending Balance, shares at Jun. 30, 2016   10,048,548    
XML 18 R7.htm IDEA: XBRL DOCUMENT v3.5.0.2
Consolidated Statement of Changes in Stockholders' Equity (Parenthetical) (Unaudited) - $ / shares
Jun. 30, 2016
Mar. 31, 2016
Statement of Stockholders' Equity [Abstract]    
Issuance of common stock per share $ 0.70 $ 0.70
Stock issued during period per share (Commission to Broker) 0.70  
Warrant issued per share 0.70 $ 0.70
Warrant issued for commission per share 0.70  
Stock compensation per share $ 0.70  
XML 19 R8.htm IDEA: XBRL DOCUMENT v3.5.0.2
Nature of Operations
6 Months Ended
Jun. 30, 2016
Nature of Operations [Abstract]  
NATURE OF OPERATIONS
1. NATURE OF OPERATIONS

 

GrowGeneration Corp (the “Company”) was incorporated on March 6, 2014 in Colorado under the name of Easylife and changed its name to GrowGeneration Corp. It maintains its principal office in Pueblo, Colorado.

 

GrowGeneration Corp is engaged in the business of owning and operating retail hydroponic stores through wholly owned subsidiaries. It currently owns Grow Generation Pueblo Corp. which operates retail hydroponic stores in Colorado located in Pueblo, Canon City, Trinidad, Conifer, Colorado Springs and Denver; and Grow Generation California Corp. which operates a retail store in Santa Rosa California. The Company today owns and operates 10 stores and is actively engaged in seeking to acquire additional hydroponic retail stores. The Company’s financial statement has been prepared in accordance with generally accepted accounting principles.

 

The accompanying unaudited consolidated financial statements have been prepared in accordance with instructions for Form 10-Q and, therefore, do not include all disclosures necessary for a complete presentation of the financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP). However, all adjustments that are, in the opinion of management, necessary for the fair presentation of the interim financial statements have been included. Such adjustments were of a normal recurring nature. The results of operations for the six months period ended June 30, 2016 are not necessarily indicative of the results that may be expected for the entire year or any other interim period.

XML 20 R9.htm IDEA: XBRL DOCUMENT v3.5.0.2
Summary of Significant Accounting Policies
6 Months Ended
Jun. 30, 2016
Summary of Significant Accounting Policies [Abstract]  
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation and Consolidation

 

The Company’s financial statements are prepared on the accrual method of accounting. The accounting and reporting policies of the Company conform to generally accepted accounting principles (GAAP). The consolidated financial statements of the Company included the accounts of GrowGeneration Pueblo Corp. Intercompany balances and transactions are eliminated in consolidation.

 

Use of Estimates

 

Management uses estimates and assumptions in preparing these financial statements in accordance with generally accepted accounting principles. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported revenues and expenses during the reporting period. Actual results could vary from the estimates that were used.

 

Revenue Recognition

 

Revenue on product sales is recognized upon delivery or shipment. Customer deposits/layaway sales are not reported as income until final payment is received and the merchandise is delivered.

 

Accounts Receivable

 

Accounts receivable are stated at the amount the Company expects to collect from balances outstanding at June 30, 2016. Based on the Company's assessment of the credit history with customers having outstanding balances and current relationships with them. At June 30, 2016, the Company established an allowance for doubtful accounts of $6,500.

 

Property and Equipment

 

Expenditures for maintenance and repairs are charged against operations. Renewals and betterment that materially extend the life of the asset are capitalized. Depreciation of property and equipment is provided on the straight-line method for financial reporting purposes at rates based on the following estimated useful lives:

 

      Estimated Lives
  Vehicle   5 years
  Furniture and fixtures   5-7 years
  Computers and equipment   3-5 years
  Leasehold improvements   10 years

 

For federal income tax purposes, depreciation is computed using the accelerated cost recovery system and the modified accelerated cost recovery system.

 

Income Taxes

 

The Company accounts for income taxes in accordance with FASB ACS 740, Income Taxes, which requires the recognition of deferred income taxes for differences between the basis of assets and liabilities for financial statement and income tax purposes. The differences related principally to depreciation of property and equipment, reserve for obsolete inventory and bad debt. Deferred tax assets and liabilities represent the future tax consequence for those differences, which will either be deductible or taxable when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for operating losses that are available to offset future taxable income. Valuation allowances are established to reduce deferred tax assets to the amount expected to be realized.

 

The Company adopted the provisions of FASB ACS 740-10-25, which prescribes a recognition threshold and measurement attribute for the recognition and measurement of tax positions taken or expected to be taken in income tax returns. FASB ASC 740-10-25 also provides guidance on recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, and accounting for interest and penalties associated with tax positions. The Company’s tax returns are subject to tax examinations by U.S. federal and state authorities until respective statute of limitation. Currently, the 2015 and 2014 tax years are open and subject to examination by taxing authorities. However, the Company is not currently under audit nor has the Company been contacted by any of the taxing authorities. The Company does not have any accrual for uncertain tax positions as of June 30, 2016. It is not anticipated that unrecognized tax benefits would significantly increase or decrease within 12 month of the reporting date.

 

Presentation of Sales Taxes

 

The Company is required to collect sales tax for the State of Colorado, State of California, City of Pueblo, City of Canon City, City of Colorado Springs, Pueblo County and Fremont County, Jefferson County, El Paso County, City & County of Denver, City of Santa Rosa ranging from 3.9% to 8.25% on the Company's sales to nonexempt customers. The Company collects that sales tax from customers and remits the entire amount to the corresponding taxing authorities. The Company's accounting policy is to exclude the tax collected and remitted from revenue and cost of sales.

 

Advertising

 

The Company expenses all advertising and promotional costs when incurred. Advertising and promotional expense for the six months ending June 30, 2016 amounted to $26,803.

 

Freight and Shipping

 

It is the Company's policy to classify freight and shipping costs as part of cost of sales. Total freight and shipping costs for the six months ending June 30, 2016 was $21,505.

 

Cash and Cash Equivalents

 

For purposes of the statement of cash flows, the Company considers all unrestricted highly liquid investments with a maturity of three months or less when acquired to be cash equivalents.

 

Goodwill

 

Goodwill represents the excess of acquisition costs over the fair value of net tangible and intangible assets acquired in connection with an acquisition. The Company accounts for goodwill in accordance with the provisions of FASB Accounting Standards Update (ASU) 2014-02, Intangibles – Goodwill and Other (Topic 350) Accounting for Goodwill. provisions of FASB Accounting Standards Update (ASU) 2014-02, Intangibles – Goodwill and Other (Topic 350) Accounting for Goodwill. In accordance with FASB ASC Topic 350 for Intangibles – Goodwill and Other, goodwill is not amortized but is reviewed for potential impairment on an annual basis, or if events or circumstances indicate a potential impairment, at the reporting unit level. The Company’s review for impairment includes an assessment of qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value, including goodwill. If it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value, including goodwill, the first step of the two-step quantitative goodwill impairment test is performed, which compares the fair value of the reporting unit with its carrying amounts, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired. However, if the carrying amount of the reporting unit exceeds its fair value, an additional procedures must be performed. That additional procedure compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. An impairment loss is recorded to the extent that the carrying amount of goodwill exceeds its implied fair value. The carrying value of goodwill is tested for impairment at least annually.

 

Inventory

 

Inventory consists primarily of gardening supplies and materials and is recorded at the lower of cost (first-in, first-out method) or market.

XML 21 R10.htm IDEA: XBRL DOCUMENT v3.5.0.2
Recent Accounting Pronouncements
6 Months Ended
Jun. 30, 2016
Recent Accounting Pronouncements [Abstract]  
RECENT ACCOUNTING PRONOUNCEMENTS
3. RECENT ACCOUNTING PRONOUNCEMENTS

 

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which provides guidance for revenue recognition. ASU 2014-09 will supersede and replace nearly all existing U.S. GAAP revenue recognition guidance. ASU 2014-09 establishes a new control-based revenue recognition model, changes the basis for deciding when revenue is recognized over time or at a point of time, provides new and more detailed guidance on specific topics and expands and improves disclosures about revenue. The guidance in ASU 2014-09 is effective for public entities for annual reporting periods beginning after December 15, 2016. Non public entities are required to apply the guidance for annual periods beginning after December 15, 2017. Early application is not permitted for public entities. The Company is currently evaluating the impact the adoption of ASU 2014-09 will have on the Company's financial statements and disclosures.

XML 22 R11.htm IDEA: XBRL DOCUMENT v3.5.0.2
Lease Commitments
6 Months Ended
Jun. 30, 2016
Lease Commitments [Abstract]  
LEASE COMMITMENTS
4.LEASE COMMITMENTS

 

On March 1, 2016 the Company entered into a three year lease for 4,498 square feet of retail space and opened its 9th store located in Denver Colorado at a monthly rate of $3,650.

 

The Company leases its store facilities under operating leases ranging from $850 to $5,600 per month. The following is a schedule of future minimum rental payments required under the term of the operating leases as of June 30, 2016:

 

 12 months Ending June 30, Amount 
 2017 $267,940 
 2018  208,989 
 2019  141,917 
 2020  86,720 
 2021  16,800 
 Thereafter  - 
   $722,366 

 

Rent expense under all operating leases for the six months ending June 30, 2016 and 2015 was $128,792 and $38,900, respectively.

XML 23 R12.htm IDEA: XBRL DOCUMENT v3.5.0.2
Other Commitments
6 Months Ended
Jun. 30, 2016
Other Commitments [Abstract]  
OTHER COMMITMENTS
5.OTHER COMMITMENTS

 

Effective May 2014, the Company entered into employment agreements with its CEO and President. The agreements require payment of monthly wages and benefits. These agreements expire May 2017.

 

In April 2015, the Company acquired approximately $30,000 of inventory at cost from Green Growers, Inc., a retail store located in Canon City, Colorado. In connection therewith, the Company engaged the CEO of Green Growers, Inc., as a sales consultant for a period of two years. The agreement requires a base fee of $1,200 per month during the first year and $600 per month during the second year, together with incentive compensation for any new business he generates, in a n amount equal to 25% of the gross profit on all such goods and services generated. In addition, the Company issued this consultant 10,000 five (5) year options, exercisable at a price of $0.60 per share as additional compensation under his consulting agreement.

 

In June 2015, the Company acquired approximately $68,000 of inventory at cost from Happy Grow Lucky, Inc., a retail store located in Conifer, CO. In connection therewith, the Company engaged the two principals as sales consultants for a period of one year. The agreement requires monthly payment of $840 together with incentive compensation for any new business generated, in an amount equal to 25% of the gross profit on all such goods and services that they generate. In addition, we executed a new three year lease for the premises in Conifer, CO at a rate of $2,400 per month.

 

On October 8, 2015, the Company completed an inventory purchase of approximately $169,000 of inventory and $25,000 of fixed assets from Sweet Leaf Hydroponics Inc., a retail store located in Santa Rosa, CA. In connection therewith, the Company engaged one of the principals as a sales consultant for a period of one year. The agreement requires compensation of 25% of the gross profits for any new business generated.

  

On November 28, 2015, the Company acquired $35,000 of inventory of Greenhouse Tech, Inc., a retail store located in Colorado Springs, CO. The Company hired the principal of Greenhouse Tech, Inc. as a sales consultant for 1 year at $13 per hour and 20% of the gross profits on all sales generated by the sales consultant.

XML 24 R13.htm IDEA: XBRL DOCUMENT v3.5.0.2
Long-Term Debt
6 Months Ended
Jun. 30, 2016
Long-Term Debt [Abstract]  
LONG-TERM DEBT
6. LONG-TERM DEBT

 

  Long term debt is as follows:   June 30, 2016  
         
  8.0%, Hitachi Capital, payable $631.13 monthly beginning September 2015 through August 2019, secured by delivery equipment with a book value of $29,508   $ 21,124  
           
  3.5%, Wells Fargo Equipment Finance, payable $518.96 monthly beginning April 2016 through March 2021, secured by warehouse equipment with a book value of $28,527     26,776  
           
  10.926%, RMT Equipment, payable 1154.79 monthly beginning June 2016 through October 2018, security be delivery equipment with a book value of $37,523     28,042  
           
      $ 75,942  
  Less Current Maturities     (22,789 )
  Total Long-Term Debt   $ 53,153  

 

Future Debt Maturities – A schedule of expected debt payments and the portion allocated to principal follows:

 

  Twelve Months Ending June 30,   Total
Payment
    Allocated to
Principal
 
  2017   $ 27,778     $ 22,789  
  2018     27,778       24,795  
  2019     17,646       17,149  
  2020     9,383       9,012  
  2021     2,259       2,197  
      $ 84,844     $ 75,942  
 
XML 25 R14.htm IDEA: XBRL DOCUMENT v3.5.0.2
Stock Options
6 Months Ended
Jun. 30, 2016
Stock Options [Abstract]  
STOCK OPTIONS
7. STOCK OPTIONS

 

On March 6, 2014, the Company’s Board of Directors (the “Board”) approved the 2014 Equity Incentive stock plan pursuant to which the Company may grant incentive and non-statutory options to employees, nonemployee members of the Board, consultants and other independent advisors who provide services to the Corporation. The maximum shares of common stock which may be issued over the term of the plan shall not exceed 2,500,000 shares. Awards under this plan are made by the Board or a committee of the Board. Options under the plan are to be issued at the market price of the stock on the day of the grant except to those issued to holders of 10% or more of the Company’s common stock which is required to be issued at a price not less than 110% of the fair market value on the day of the grant. Each option is exercisable at such time or times, during such period and for such numbers of shares shall be determined by the Plan Administrator. However, no option shall have a term in excess of 5 years from the date of grant.

 

On March 6, 2014, the Company issued 650,000 options to its CEO, Darren Lampert, issued 400,000 options to its CFO, Irwin Lampert, issued 400,000 options to its President, Michael Salaman and issued 200,000 options to its COO, Jason Dawson exercisable at prices between $.60 and $.66 cents per share. On May 12, 2014, the Company issued 50,000 options to its director, Jody Kane and on May 14, 2014, the company issued 50,000 options to its director, Stephen Aiello, exercisable at prices between $.60 and $.66 cents per share. On July 7, 2014, the Company issued 100,000 options to 8 of its employees, exercisable at prices between $.60 and $.66 cents per share. On April 15, 2015, the Company issued 10,000 options to sales consultant Duane Nunez and on October 8, 2015, the Company issued 25,000 options to sales consultant Troy Sowers. The options vest 1/3 immediately, 1/3 one year after date of issuance and 1/3 two years after date of issuance. Compensation expense recorded for the three months ended June 30, 2016 was $86,333. Each stock option is estimated as of the date of grant using a Black-Scholes Merton option valuation model that uses the assumptions noted in the table below. To address the lack of historical volatility data for the Company, expected volatility is based on the volatilities of peer companies.

 

As of June 30, 2016, there were 1,872,000 options issued and outstanding under the plan.

 

  Expected volatility     141.26 %
  Expected dividends     0.00  
  Expected term     3 years  
  Risk-free rate     2.0 %

 

A summary of option activity as of June 30, 2016:

 

  Options   Shares     Weight Average Exercise Price     Weighted-Average Remaining Contractual Term
  Outstanding at December 31, 2015     1,885,000     $ 0.62     3 years
  Granted     -       -      
  Exercised     -       -      
  Forfeited or expired     -       -      
  Outstanding at March 31, 2016     1,885,000     $ 0.62     3 years
  Granted     -       -      
  Exercised     -       -      
  Forfeited or expired     (13,000 )     -      
  Outstanding at June 30, 2016     1,872,000     $ 0.62     3 years

 

A summary of the status of the Company’s nonvested shares as of June 30, 2016 and changes during the three months then ended March 31, 2016 and June 30, 2016 is presented below:

 

  Nonvested shares   Shares     Weighted-
Average 
Fair Market Value
 
  Nonvested at December 31, 2015     639,999     $ 0.14  
  Granted     -          
  Vested     (616,667 )     0.14  
  Forfeited     -       -  
  Outstanding at March 31, 2016     23,332     $ 0.14  
                   
  Granted     -          
  Vested     (10,332 )     0.14  
  Forfeited     (13,000 )     -  
  Outstanding at June 30, 2016     -     -  
 
XML 26 R15.htm IDEA: XBRL DOCUMENT v3.5.0.2
Stock Purchase Warrants
6 Months Ended
Jun. 30, 2016
Stock Purchase Warrants [Abstract]  
STOCK PURCHASE WARRANTS
8. STOCK PURCHASE WARRANTS

 

During the three months ended June 30, 2016, the Company granted 430,714 warrants to investors in a private placement of common shares and 50,000 warrants were issued to “Selling Agents” for private placement of common stock. During the three months ending March 31, 2016, the Company granted 460,000 warrants to investors in a private placement of common shares. In the months of September and December 2015, the Company granted 2,465,001 warrants to investors in a private placement of common shares. These warrants are exercisable for a period of five years with an exercise price of $.70. In October 2015, 142,800 warrants were issued to “Selling Agents” for private placement of common stock. Each warrant is estimated as of the date of grant using a Black-Scholes Merton warrant valuation model that uses the assumptions noted in the table below. To address the lack of historical volatility data for the Company, expected volatility is based on the volatilities of peer companies.

 

A summary of the status of the Company’s outstanding stock warrants as of June 30, 2016 is as follows:

 

            Weighted-
Average
    Weighted-
Average
 
      Shares     Exercise 
Price
    Fair Market
Value
 
  Outstanding December 31, 2015     2,607,801     $ 0.70   $ 0.07  
  Granted     460,000       0.70     0.07  
  Exercised     -       -     -  
  Forfeited     -       -     -  
  Outstanding at March 31, 2016     3,067,801     $ 0.70   $ 0.07  
                         
  Granted     480,714       0.70     0.07  
  Exercised     -       -     -  
  Forfeited     -       -     -  
  Outstanding at June 30, 2016     3,548,515     $ 0.70   $ 0.07
XML 27 R16.htm IDEA: XBRL DOCUMENT v3.5.0.2
Stockholders' Equity
6 Months Ended
Jun. 30, 2016
Stockholders' Equity [Abstract]  
STOCKHOLDERS' EQUITY
9. STOCKHOLDERS’ EQUITY

 

Common Stock

 

The Company’s current Certificate of Incorporation authorizes the Company to issued 100,000,000 shares of common stock, par value $0.001 per share. As of June 30, 2016 there were 10,048,548 shares of common stock outstanding. The number of shares of common stock outstanding as of June 30, 2016 does not include (i) 3,548,515 shares of common stock issuable upon the exercise of warrants; (ii) shares of our common stock issuable upon the exercise of 1,872,000 outstanding stock options.

 

On January 4, 2016, the Company offered for sale 3,000,000 units at $.70, with gross proceeds of $2,100,000. Each unit consists of one share of common stock and one warrant to purchase one share of common stock at an exercise price of $.70 per share. The warrants have a five year life for gross proceeds of $2,100,000.

 

On March 31, 2016, the Company sold 460,000 units to four accredited investors at a price of $.70 per unit, with each unit consisting of one share of common stock and one warrant to purchase one share of common stock at an exercise price of $.70 per share. The warrants have a five year life for gross proceeds of $322,000.

 

On April 29, 2016, the Company closed on the 2016 private placement, to which they sold 890,714 units to 10 accredited investors at a price of $.70 per unit, with each unit consisting of one share of common stock and on warrant to purchase one share of common stock at an exercise price of $.70 per share. The warrants have a five year life for gross proceeds of $623,500.

 

As of June 30, 2016, the Company has a total of 10,048,548 shares of common stock outstanding, 3,548,515 warrants exercised at $.70 per share and 1,872,000 stock options.

XML 28 R17.htm IDEA: XBRL DOCUMENT v3.5.0.2
Earnings Per Share
6 Months Ended
Jun. 30, 2016
Earnings Per Share [Abstract]  
EARNINGS PER SHARE
10. EARNINGS PER SHARE

 

The following table sets forth the composition of the weighted average shares (denominator) used in the basic and dilutive earnings per share computation for the three months ended June 30, 2016, the year ended December 31, 2015 and for the period from inception March 6, 2014 through December 31, 2014.

 

      Three Months Ended 
June 30,
2016
    Year Ended December 31,
2015
 
  Net Loss   $ (222,527 )   $ (528,756 )
                   
  Weighted average share outstanding basic     9,481,405       6,563,271  
  Effect of dilutive common stock equivalents                
  Adjusted weighted average shares  outstanding-dilutive     9,481,405       6,563,271  
  Basic loss per share   $ (.02 )   $ (.08 )
  Dilutive loss per share   $ (.02 )   $ (.08 )

 

The effective of the 1,872,000 stock option and the 3,548,515 of warrants outstanding as of June 30, 2016 is antidilutive and therefore not presented in the above table.

XML 29 R18.htm IDEA: XBRL DOCUMENT v3.5.0.2
Subsequent Events
6 Months Ended
Jun. 30, 2016
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS
11. SUBSEQUENT EVENTS

 

On July 15, 2016 the company entered into a new lease agreement for its Canon City, Colorado location. The Canon City Store completed its move to its new location on July 25, 2016. The new store is approximately 4427 square feet. The lease agreement requires monthly payments of $3,689.17 beginning October 15, 2016 through October 14, 2022 with annual increase of 3%.

 

On July 19, 2016 the Company entered into a 2 year lease agreement for its tenth retail store in Fairplay, Colorado. The Company plans to begin operations in Fairplay, Colorado on August 1, 2016. The lease agreement requires monthly rental payments of $2,170 through July 31, 2018.

XML 30 R19.htm IDEA: XBRL DOCUMENT v3.5.0.2
Summary of Significant Accounting Policies (Policies)
6 Months Ended
Jun. 30, 2016
Summary of Significant Accounting Policies [Abstract]  
Basis of Presentation and Consolidation

Basis of Presentation and Consolidation

 

The Company’s financial statements are prepared on the accrual method of accounting. The accounting and reporting policies of the Company conform to generally accepted accounting principles (GAAP). The consolidated financial statements of the Company included the accounts of GrowGeneration Pueblo Corp. Intercompany balances and transactions are eliminated in consolidation.

Use of Estimates

Use of Estimates

 

Management uses estimates and assumptions in preparing these financial statements in accordance with generally accepted accounting principles. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported revenues and expenses during the reporting period. Actual results could vary from the estimates that were used.

Revenue Recognition

Revenue Recognition

 

Revenue on product sales is recognized upon delivery or shipment. Customer deposits/layaway sales are not reported as income until final payment is received and the merchandise is delivered.

Accounts Receivable

Accounts Receivable

 

Accounts receivable are stated at the amount the Company expects to collect from balances outstanding at June 30, 2016. Based on the Company's assessment of the credit history with customers having outstanding balances and current relationships with them. At June 30, 2016, the Company established an allowance for doubtful accounts of $6,500.

Property and Equipment

Property and Equipment

 

Expenditures for maintenance and repairs are charged against operations. Renewals and betterment that materially extend the life of the asset are capitalized. Depreciation of property and equipment is provided on the straight-line method for financial reporting purposes at rates based on the following estimated useful lives:

 

   Estimated Lives
 Vehicle 5 years
 Furniture and fixtures 5-7 years
 Computers and equipment 3-5 years
 Leasehold improvements 10 years

 

For federal income tax purposes, depreciation is computed using the accelerated cost recovery system and the modified accelerated cost recovery system.

Income Taxes

Income Taxes

 

The Company accounts for income taxes in accordance with FASB ACS 740, Income Taxes, which requires the recognition of deferred income taxes for differences between the basis of assets and liabilities for financial statement and income tax purposes. The differences related principally to depreciation of property and equipment, reserve for obsolete inventory and bad debt. Deferred tax assets and liabilities represent the future tax consequence for those differences, which will either be deductible or taxable when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for operating losses that are available to offset future taxable income. Valuation allowances are established to reduce deferred tax assets to the amount expected to be realized.

 

The Company adopted the provisions of FASB ACS 740-10-25, which prescribes a recognition threshold and measurement attribute for the recognition and measurement of tax positions taken or expected to be taken in income tax returns. FASB ASC 740-10-25 also provides guidance on recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, and accounting for interest and penalties associated with tax positions. The Company’s tax returns are subject to tax examinations by U.S. federal and state authorities until respective statute of limitation. Currently, the 2015 and 2014 tax years are open and subject to examination by taxing authorities. However, the Company is not currently under audit nor has the Company been contacted by any of the taxing authorities. The Company does not have any accrual for uncertain tax positions as of June 30, 2016. It is not anticipated that unrecognized tax benefits would significantly increase or decrease within 12 month of the reporting date.

Presentation of Sales Taxes

Presentation of Sales Taxes

 

The Company is required to collect sales tax for the State of Colorado, State of California, City of Pueblo, City of Canon City, City of Colorado Springs, Pueblo County and Fremont County, Jefferson County, El Paso County, City & County of Denver, City of Santa Rosa ranging from 3.9% to 8.25% on the Company's sales to nonexempt customers. The Company collects that sales tax from customers and remits the entire amount to the corresponding taxing authorities. The Company's accounting policy is to exclude the tax collected and remitted from revenue and cost of sales.

Advertising

Advertising

 

The Company expenses all advertising and promotional costs when incurred. Advertising and promotional expense for the six months ending June 30, 2016 amounted to $26,803.

Freight and Shipping

Freight and Shipping

 

It is the Company's policy to classify freight and shipping costs as part of cost of sales. Total freight and shipping costs for the six months ending June 30, 2016 was $21,505.

Cash and Cash Equivalents

Cash and Cash Equivalents

 

For purposes of the statement of cash flows, the Company considers all unrestricted highly liquid investments with a maturity of three months or less when acquired to be cash equivalents.

Goodwill

Goodwill

 

Goodwill represents the excess of acquisition costs over the fair value of net tangible and intangible assets acquired in connection with an acquisition. The Company accounts for goodwill in accordance with the provisions of FASB Accounting Standards Update (ASU) 2014-02, Intangibles – Goodwill and Other (Topic 350) Accounting for Goodwill. provisions of FASB Accounting Standards Update (ASU) 2014-02, Intangibles – Goodwill and Other (Topic 350) Accounting for Goodwill. In accordance with FASB ASC Topic 350 for Intangibles – Goodwill and Other, goodwill is not amortized but is reviewed for potential impairment on an annual basis, or if events or circumstances indicate a potential impairment, at the reporting unit level. The Company’s review for impairment includes an assessment of qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value, including goodwill. If it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value, including goodwill, the first step of the two-step quantitative goodwill impairment test is performed, which compares the fair value of the reporting unit with its carrying amounts, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired. However, if the carrying amount of the reporting unit exceeds its fair value, an additional procedures must be performed. That additional procedure compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. An impairment loss is recorded to the extent that the carrying amount of goodwill exceeds its implied fair value. The carrying value of goodwill is tested for impairment at least annually.

Inventory

Inventory

 

Inventory consists primarily of gardening supplies and materials and is recorded at the lower of cost (first-in, first-out method) or market.

XML 31 R20.htm IDEA: XBRL DOCUMENT v3.5.0.2
Summary of Significant Accounting Policies (Tables)
6 Months Ended
Jun. 30, 2016
Summary of Significant Accounting Policies [Abstract]  
Schedule of property and equipment
   Estimated Lives
 Vehicle 5 years
 Furniture and fixtures 5-7 years
 Computers and equipment 3-5 years
 Leasehold improvements 10 years
XML 32 R21.htm IDEA: XBRL DOCUMENT v3.5.0.2
Lease Commitments (Tables)
6 Months Ended
Jun. 30, 2016
Lease Commitments [Abstract]  
Schedule of future minimum rental payments under operating leases

 

 12 months Ending June 30, Amount 
 2017 $267,940 
 2018  208,989 
 2019  141,917 
 2020  86,720 
 2021  16,800 
 Thereafter  - 
   $722,366
XML 33 R22.htm IDEA: XBRL DOCUMENT v3.5.0.2
Long-Term Debt (Tables)
6 Months Ended
Jun. 30, 2016
Long-Term Debt [Abstract]  
Schedule of long term debt
  June 30, 2016 
     
 8.0%, Hitachi Capital, payable $631.13 monthly beginning September 2015 through August 2019, secured by delivery equipment with a book value of $29,508 $21,124 
      
 3.5%, Wells Fargo Equipment Finance, payable $518.96 monthly beginning April 2016 through March 2021, secured by warehouse equipment with a book value of $28,527  26,776 
      
 10.926%, RMT Equipment, payable 1154.79 monthly beginning June 2016 through October 2018, security be delivery equipment with a book value of $37,523  28,042 
      
   $75,942 
 Less Current Maturities  (22,789)
 Total Long-Term Debt $53,153 
Schedule of expected debt payments
 Twelve Months Ending June 30, Total
Payment
  Allocated to
Principal
 
 2017 $27,778  $22,789 
 2018  27,778   24,795 
 2019  17,646   17,149 
 2020  9,383   9,012 
 2021  2,259   2,197 
   $84,844  $75,942 
XML 34 R23.htm IDEA: XBRL DOCUMENT v3.5.0.2
Stock Options (Tables)
6 Months Ended
Jun. 30, 2016
Stock Options [Abstract]  
Schedule of options issued and outstanding under the plan
 Expected volatility  141.26%
 Expected dividends  0.00 
 Expected term  3 years 
 Risk-free rate  2.0%
Summary of option activity

 

  Options   Shares     Weight Average Exercise Price     Weighted-Average Remaining Contractual Term
  Outstanding at December 31, 2015     1,885,000     $ 0.62     3 years
  Granted     -       -      
  Exercised     -       -      
  Forfeited or expired     -       -      
  Outstanding at March 31, 2016     1,885,000     $ 0.62     3 years
  Granted     -       -      
  Exercised     -       -      
  Forfeited or expired     (13,000 )     -      
  Outstanding at June 30, 2016     1,872,000     $ 0.62     3 years
 
Summary of company's nonvested shares

 

  Nonvested shares   Shares     Weighted-
Average 
Fair Market Value
 
  Nonvested at December 31, 2015     639,999     $ 0.14  
  Granted     -          
  Vested     (616,667 )     0.14  
  Forfeited     -       -  
  Outstanding at March 31, 2016     23,332     $ 0.14  
                   
  Granted     -          
  Vested     (10,332 )     0.14  
  Forfeited     (13,000 )     -  
  Outstanding at June 30, 2016     -     -  
 
XML 35 R24.htm IDEA: XBRL DOCUMENT v3.5.0.2
Stock Purchase Warrants (Tables)
6 Months Ended
Jun. 30, 2016
Stock Purchase Warrants [Abstract]  
Schedule of outstanding stock warrants

            Weighted-
Average
    Weighted-
Average
 
      Shares     Exercise 
Price
    Fair Market
Value
 
  Outstanding December 31, 2015     2,607,801     $ 0.70   $ 0.07  
  Granted     460,000       0.70     0.07  
  Exercised     -       -     -  
  Forfeited     -       -     -  
  Outstanding at March 31, 2016     3,067,801     $ 0.70   $ 0.07  
                         
  Granted     480,714       0.70     0.07  
  Exercised     -       -     -  
  Forfeited     -       -     -  
  Outstanding at June 30, 2016     3,548,515     $ 0.70   $ 0.07

XML 36 R25.htm IDEA: XBRL DOCUMENT v3.5.0.2
Earnings Per Share (Tables)
6 Months Ended
Jun. 30, 2016
Earnings Per Share [Abstract]  
Schedule of weighted average shares (denominator) used in the basic and dilutive earnings per share

      Three Months Ended 
June 30,
2016
    Year Ended December 31,
2015
 
  Net Loss   $ (222,527 )   $ (528,756 )
                   
  Weighted average share outstanding basic     9,481,405       6,563,271  
  Effect of dilutive common stock equivalents                
  Adjusted weighted average shares  outstanding-dilutive     9,481,405       6,563,271  
  Basic loss per share   $ (.02 )   $ (.08 )
  Dilutive loss per share   $ (.02 )   $ (.08 )
XML 37 R26.htm IDEA: XBRL DOCUMENT v3.5.0.2
Summary of Significant Accounting Policies (Details)
6 Months Ended
Jun. 30, 2016
Vehicle [Member]  
Property, Plant and Equipment [Line Items]  
Property and equipment, estimated lives 5 years
Furniture and fixtures [Member] | Maximum [Member]  
Property, Plant and Equipment [Line Items]  
Property and equipment, estimated lives 7 years
Furniture and fixtures [Member] | Minimum [Member]  
Property, Plant and Equipment [Line Items]  
Property and equipment, estimated lives 5 years
Computers and equipment [Member] | Maximum [Member]  
Property, Plant and Equipment [Line Items]  
Property and equipment, estimated lives 5 years
Computers and equipment [Member] | Minimum [Member]  
Property, Plant and Equipment [Line Items]  
Property and equipment, estimated lives 3 years
Leasehold improvements [Member]  
Property, Plant and Equipment [Line Items]  
Property and equipment, estimated lives 10 years
XML 38 R27.htm IDEA: XBRL DOCUMENT v3.5.0.2
Summary of Significant Accounting Policies (Details Textual) - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Summary of Significant Accounting Policies (Textual)        
Allowance for doubtful accounts $ 6,500   $ 6,500  
Sales tax description     The Company is required to collect sales tax for the State of Colorado, State of California, City of Pueblo, City of Canon City, City of Colorado Springs, Pueblo County and Fremont County, Jefferson County, El Paso County, City & County of Denver, City of Santa Rosa ranging from 3.9% to 8.25% on the Company's sales to nonexempt customers.  
Freight and shipping cost     $ 21,505  
Advertising and promotion $ 21,518 $ 6,553 $ 26,803 $ 18,514
XML 39 R28.htm IDEA: XBRL DOCUMENT v3.5.0.2
Lease Commitments (Details)
Jun. 30, 2016
USD ($)
Lease Commitments [Abstract]  
2017 $ 267,940
2018 208,989
2019 141,917
2020 86,720
2021 16,800
Thereafter
Total $ 722,366
XML 40 R29.htm IDEA: XBRL DOCUMENT v3.5.0.2
Lease Commitments (Details Textual)
3 Months Ended 6 Months Ended
Mar. 01, 2016
USD ($)
Squarefeet
Jun. 30, 2016
USD ($)
Jun. 30, 2015
USD ($)
Jun. 30, 2016
USD ($)
Jun. 30, 2015
USD ($)
Lease Commitments (Textual)          
Square feet of retail space | Squarefeet 4,498        
Payments for rent $ 3,650        
Rent expense under operating leases   $ 68,833 $ 21,000 $ 128,792 $ 38,900
Leases under operating leases       $ 128,792 $ 38,900
Leases, description       On March 1, 2016 the Company entered into a three year lease for 4,498 square feet of retail space  
Maximum [Member]          
Lease Commitments (Textual)          
Rent expense under operating leases       $ 5,600  
Minimum [Member]          
Lease Commitments (Textual)          
Rent expense under operating leases       $ 850  
XML 41 R30.htm IDEA: XBRL DOCUMENT v3.5.0.2
Other Commitments (Details) - USD ($)
1 Months Ended 6 Months Ended
Oct. 08, 2015
Nov. 28, 2015
Jun. 30, 2015
Apr. 30, 2015
Jun. 30, 2016
Other Commitments (Textual)          
Employment agreements expiration date         May 31, 2017
Green Growers, Inc. [Member]          
Other Commitments (Textual)          
Inventory cost       $ 30,000  
Monthly payment made       1,200  
Monthly payment made during second year       $ 600  
Options issued and exercisable       10,000  
Exercise price       $ 0.60  
Options exercisable term       5 years  
Gross profit compensation description       25% of the gross profit on all such goods and services generated.  
Number of sales consultant period       2 years  
Happy Grow Lucky, Inc. [Member]          
Other Commitments (Textual)          
Inventory cost     $ 68,000    
Monthly payment made     840    
Lease acquisition costs     $ 2,400    
Gross profit compensation description     25% of the gross profit on all such goods and services that they generate.    
Number of sales consultant period     1 year    
Sweet Leaf Hydroponics Inc. [Member]          
Other Commitments (Textual)          
Inventory cost $ 169,000        
Purchase of fixed assets $ 25,000        
Gross profit compensation description 25% of the gross profits for any new business generated.        
Greenhouse Tech Inc [Member]          
Other Commitments (Textual)          
Inventory cost   $ 35,000      
Gross profit compensation description   The Company hired the principal of Greenhouse Tech, Inc. as a sales consultant for 1 year at $13 per hour and 20% of the gross profits on all sales generated by the sales consultant.      
XML 42 R31.htm IDEA: XBRL DOCUMENT v3.5.0.2
Long-Term Debt (Details) - USD ($)
Jun. 30, 2016
Dec. 31, 2015
Debt Instrument [Line Items]    
Less current portion long-term debt $ (22,789) $ (5,866)
Total Long-Term Debt 53,153  
Hitachi Capital [Member]    
Debt Instrument [Line Items]    
Total Payments 21,124 $ 23,999
Wells Fargo Equipment Finance [Member]    
Debt Instrument [Line Items]    
Total Payments 26,776  
RMT Equipment [Member]    
Debt Instrument [Line Items]    
Total Payments 28,042  
Debt [Member]    
Debt Instrument [Line Items]    
Total Payments $ 75,942  
XML 43 R32.htm IDEA: XBRL DOCUMENT v3.5.0.2
Long-Term Debt (Details 1) - USD ($)
Jun. 30, 2016
Dec. 31, 2015
Debt Instrument [Line Items]    
Total $ 22,789 $ 5,866
Total Payment [Member]    
Debt Instrument [Line Items]    
2017 27,778  
2018 27,778  
2019 17,646  
2020 9,383  
2021 2,259  
Total 84,844  
Allocated to Principal [Member]    
Debt Instrument [Line Items]    
2017 22,789  
2018 24,795  
2019 17,149  
2020 9,012  
2021 2,197  
Total $ 75,942  
XML 44 R33.htm IDEA: XBRL DOCUMENT v3.5.0.2
Long-Term Debt (Details Textual)
6 Months Ended
Jun. 30, 2016
USD ($)
8.0%, Hitachi Capital [Member]  
Debt Instrument [Line Items]  
Long term debt, monthly payment $ 631.13
Long term debt maturity date, description Beginning September 2015 through August 2019.
Long-term debt, book value $ 29,508
3.5%, Wells Fargo Equipment Finance [Member]  
Debt Instrument [Line Items]  
Long term debt, monthly payment $ 518.96
Long term debt maturity date, description Beginning April 2016 through March 2021.
Long-term debt, book value $ 28,527
10.926%, RMT Equipment [Member]  
Debt Instrument [Line Items]  
Long term debt, monthly payment $ 1,154.79
Long term debt maturity date, description Beginning June 2016 through October 2018.
Long-term debt, book value $ 37,523
XML 45 R34.htm IDEA: XBRL DOCUMENT v3.5.0.2
Stock Options (Details)
6 Months Ended
Jun. 30, 2016
Stock Options [Abstract]  
Expected volatility 141.26%
Expected dividends 0.00%
Expected term 3 years
Risk-free rate 2.00%
XML 46 R35.htm IDEA: XBRL DOCUMENT v3.5.0.2
Stock Options (Details 1) - Options [Member] - $ / shares
3 Months Ended 12 Months Ended
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Outstanding Shares - Beginning balance 1,885,000 1,885,000  
Shares, Granted  
Shares, Exercised  
Shares, Forfeited or expired (13,000)  
Outstanding Shares - Ending balance 1,872,000 1,885,000 1,885,000
Outstanding Weighted Average Exercise Price - Beginning Balance $ 0.62 $ 0.62  
Weighted Average Exercise Price, Granted  
Weighted Average Exercise Price, Exercised  
Weighted Average Exercise Price - Option Forfeited or expired  
Outstanding Weighted Average Exercise Price - Ending Balance $ 0.62 $ 0.62 $ 0.62
Outstanding Weighted-Average Remaining Contractual Term 3 years 3 years 3 years
XML 47 R36.htm IDEA: XBRL DOCUMENT v3.5.0.2
Stock Options (Details 2) - Nonvested [Member] - $ / shares
3 Months Ended
Jun. 30, 2016
Mar. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Nonvested shares - Beginning Balance 23,332 639,999
Shares, Granted
Shares, Vested (10,332) (616,667)
Shares, Forfeited (13,000)
Outstanding shares - Ending Balance 23,332
Weighted - Average Fair Market Value - Nonvested Beginning Balance $ 0.14 $ 0.14
Weighted - Average Fair Market Value, Vested 0.14 0.14
Weighted - Average Fair Market Value, Forfeited
Weighted - Average Fair Market Value - Nonvested Ending Balance   $ 0.14
XML 48 R37.htm IDEA: XBRL DOCUMENT v3.5.0.2
Stock Options (Details Textual)
3 Months Ended 6 Months Ended
Jul. 07, 2014
Employees
$ / shares
shares
May 14, 2014
$ / shares
shares
Mar. 06, 2014
$ / shares
shares
Jun. 30, 2016
USD ($)
Jun. 30, 2015
USD ($)
Jun. 30, 2016
USD ($)
Jun. 30, 2015
USD ($)
Oct. 08, 2015
shares
Apr. 15, 2015
shares
May 12, 2014
shares
Stock Options (Textual)                    
Stock issued over the term of the plan     2,500,000              
Description of stock options           Options under the plan are to be issued at the market price of the stock on the day of the grant except to those issued to holders of 10% or more of the Company's common stock which is required to be issued at a price not less than 110% of the fair market value on the day of the grant. Each option is exercisable at such time or times, during such period and for such numbers of shares shall be determined by the Plan Administrator. However, no option shall have a term in excess of 5 years from the date of grant.        
Stock option compensation | $       $ 86,333      
Vesting period           The options vest 1/3 immediately, 1/3 one year after date of issuance and 1/3 two years after date of issuance.        
Darren Lampert (CEO) [Member]                    
Stock Options (Textual)                    
Options issued     650,000              
Irwin Lampert (CFO) [Member]                    
Stock Options (Textual)                    
Options issued     400,000              
Michael Salaman (President) [Member]                    
Stock Options (Textual)                    
Options issued     400,000              
Jason Dawson (COO) [Member]                    
Stock Options (Textual)                    
Options issued     200,000              
Jason Dawson (COO) [Member] | Minimum [Member]                    
Stock Options (Textual)                    
Options exercise price | $ / shares     $ 0.60              
Jason Dawson (COO) [Member] | Maximum [Member]                    
Stock Options (Textual)                    
Options exercise price | $ / shares     $ 0.66              
Jody Kane (Director) [Member]                    
Stock Options (Textual)                    
Options issued                   50,000
Stephen Aiello (Director) [Member]                    
Stock Options (Textual)                    
Options issued   50,000                
Stephen Aiello (Director) [Member] | Minimum [Member]                    
Stock Options (Textual)                    
Options exercise price | $ / shares   $ 0.60                
Stephen Aiello (Director) [Member] | Maximum [Member]                    
Stock Options (Textual)                    
Options exercise price | $ / shares   $ 0.66                
Employees [Member]                    
Stock Options (Textual)                    
Options issued 100,000                  
Number of employees | Employees 8                  
Employees [Member] | Minimum [Member]                    
Stock Options (Textual)                    
Options exercise price | $ / shares $ 0.60                  
Employees [Member] | Maximum [Member]                    
Stock Options (Textual)                    
Options exercise price | $ / shares $ 0.66                  
Duane Nunez (Sales consultant) [Member]                    
Stock Options (Textual)                    
Options issued                 10,000  
Troy Sowers (Sales consultant) [Member]                    
Stock Options (Textual)                    
Options issued               25,000    
XML 49 R38.htm IDEA: XBRL DOCUMENT v3.5.0.2
Stock Purchase Warrants (Details) - Stock Warrant [Member] - $ / shares
3 Months Ended
Jun. 30, 2016
Mar. 31, 2016
Stock Purchase Warrants [Line Items]    
Outstanding Shares - Beginning balance 3,067,801 2,607,801
Shares, Granted 480,714 460,000
Shares, Exercised
Shares, Forfeited
Outstanding Shares - Ending balance 3,548,515 3,067,801
Outstanding Weighted Average Exercise Price - Beginning Balance $ 0.70 $ 0.70
Weighted Average Exercise Price, Granted 0.70 0.70
Weighted Average Exercise Price, Exercised
Weighted Average Exercise Price, Forfeited
Outstanding Weighted Average Exercise Price - Ending Balance 0.70 0.70
Outstanding Weighted-Average Fair Market Value - Beginning balance 0.07 0.07
Weighted-Average Fair Market Value, Granted 0.07 0.07
Weighted-Average Fair Market Value, Exercised
Weighted-Average Fair Market Value, Forfeited
Outstanding Weighted-Average Fair Market Value - Ending balance $ 0.07 $ 0.07
XML 50 R39.htm IDEA: XBRL DOCUMENT v3.5.0.2
Stock Purchase Warrants (Details Textual) - Private Placement [Member] - $ / shares
1 Months Ended 3 Months Ended
Dec. 31, 2015
Sep. 30, 2015
Jun. 30, 2016
Mar. 31, 2016
Oct. 31, 2015
Stock Purchase Warrants (Textual)          
Granted warrants to investors 2,465,001 2,465,001 430,714 460,000  
Warrants issued to "Selling Agents"     50,000   142,800
Warrants exercisable period 5 years 5 years 5 years 5 years  
Warrants exercise price $ 0.70 $ 0.70 $ 0.70 $ 0.70  
XML 51 R40.htm IDEA: XBRL DOCUMENT v3.5.0.2
Stockholders' Equity (Details) - USD ($)
1 Months Ended 3 Months Ended
Apr. 29, 2016
Jan. 04, 2016
Mar. 31, 2016
Jun. 30, 2016
Stockholders' Equity [Textual]        
Common stock, par value       $ 0.001
Common stock, shares authorized       100,000,000
Common stock, shares outstanding       10,048,548
Outstanding stock warrants       3,548,515
Stock options outstanding       1,872,000
Warrant term   5 years 5 years  
Issuance of shares   3,000,000 460,000  
Shares issued, per share   $ 0.70 $ 0.70  
Gross proceeds from issuance or sale of equity   $ 2,100,000 $ 322,000  
Common stock and warrant, description   Each unit consists of one share of common stock and one warrant to purchase one share of common stock at an exercise price of $.70 per share. Each unit consisting of one share of common stock and one warrant to purchase one share of common stock at an exercise price of $.70 per share.  
Private placement to 10 accredited investors [Member]        
Stockholders' Equity [Textual]        
Warrant term 5 years      
Issuance of shares 890,714      
Shares issued, per share $ 0.70      
Gross proceeds from issuance or sale of equity $ 623,500      
Common stock and warrant, description Each unit consisting of one share of common stock and on warrant to purchase one share of common stock at an exercise price of $.70 per share.      
XML 52 R41.htm IDEA: XBRL DOCUMENT v3.5.0.2
Earnings Per Share (Details) - $ / shares
3 Months Ended 12 Months Ended
Jun. 30, 2016
Dec. 31, 2015
Earnings Per Share [Abstract]    
Net Loss $ (222,527) $ (528,756)
Weighted average share outstanding basic 9,481,405 6,563,271
Effect of dilutive common stock equivalents    
Adjusted weighted average shares outstanding-dilutive 9,481,405 6,563,271
Basic loss per share $ (0.02) $ (0.08)
Dilutive loss per share $ (0.02) $ (0.08)
XML 53 R42.htm IDEA: XBRL DOCUMENT v3.5.0.2
Earnings Per Share (Details Textual)
6 Months Ended
Jun. 30, 2016
USD ($)
Earnings per share (Textual)  
Stock option $ 1,872,000
Warrants outstanding $ 3,548,515
XML 54 R43.htm IDEA: XBRL DOCUMENT v3.5.0.2
Subsequent Events (Details)
1 Months Ended
Jul. 15, 2016
USD ($)
Squarefeet
Mar. 01, 2016
USD ($)
Jul. 19, 2016
USD ($)
Subsequent Event [Line Items]      
Monthly rental payments   $ 3,650  
Subsequent Event [Member] | Canon City Store, Colorado [Member]      
Subsequent Event [Line Items]      
Store occupying space | Squarefeet 4,427    
Monthly rental payments $ 3,689.17    
Annual increase rate of monthly payment 3.00%    
Lease agreement expiration period Beginning October 15, 2016 through October 14, 2022.    
Subsequent Event [Member] | Fairplay, Colorado [Member]      
Subsequent Event [Line Items]      
Monthly rental payments     $ 2,170
Lease agreement, term     2 years
Lease agreement expiration period     Through July 31, 2018.
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