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ACQUISITIONS
 3 Months Ended
Mar. 31, 2022
Business Combination and Asset Acquisition [Abstract]  
ACQUISITIONS ACQUISITIONS
 
Our acquisition strategy is primarily to acquire (i) well established profitable hydroponic garden centers in markets where the Company does not have a market presence or in markets where it is increasing its market presence; and (ii) proprietary brands and private label brands. The Company accounts for acquisitions in accordance with ASC 805 “Business Combinations.” Assets acquired and liabilities assumed are recorded in the accompanying Condensed Consolidated Balance Sheets at their estimated fair values, as of the acquisition date. For all acquisitions, the preliminary allocation of purchase price was based upon the preliminary valuation, and the Company's estimates and assumptions are subject to change within the measurement period as valuations are finalized, not to exceed one year from the acquisition date. The Company has made adjustments to the preliminary valuations of the acquisitions based on valuation analyses prepared by independent third-party valuation consultants. During the three months ended March 31, 2022 our measurement period adjustments included increasing goodwill by $1.3 million offset with intangible assets. As a result of these measurement period adjustments, we made an insignificant reduction in amortization expense. All acquisition costs are expensed as incurred and recorded in general and administrative expenses in the Condensed Consolidated Statements of Operations.
 
Acquisitions during the three months ended March 31, 2022
 
On February 1, 2022, the Company purchased all of the assets of Horticultural Rep Group, Inc. (“HRG”), a specialty marketing and sales organization of horticultural products based in Ogden, Utah. The total consideration for the purchase of HRG was approximately $13.4 million, including $6.8 million in cash and common stock valued at $5.7 million. The Asset Purchase Agreement also provides for an indemnity holdback to be settled in common stock of the Company valued at $0.9 million. Acquired goodwill represents the value expected to rise from organic growth and an opportunity to expand into a well-established market for the Company. HRG is included in our Distribution and other segment. The Company's preliminary estimates of fair values of the net assets acquired are based on the information that was available at the date of the acquisition, and the Company is continuing to evaluate the underlying inputs and assumptions used in its valuations.
The table below represents the allocation of the purchase price to the acquired net assets during the three months ended March 31, 2022.

 HRG
Inventory$4,170 
Prepaids and other current assets76 
Furniture and equipment148 
Operating lease right of use asset666 
Operating lease liability(666)
Customer relationships2,430 
Trademark496 
Non-compete255 
Goodwill5,816 
Total$13,391 

The table below represents the consideration paid for the net assets acquired in business combinations.

 HRG
Cash$6,806 
Indemnity stock holdback875 
Common stock5,710 
Total$13,391 

The following table discloses the date of the acquisition noted above and the revenue and earnings included in the Condensed Consolidated Statement of Operations for the period ended March 31, 2022.
 HRG
Acquisition dateFebruary 1, 2022
Revenue3,436 
Net Income— 


The following represents the pro forma Condensed Consolidated Statement of Operations as if the acquisition had been included in the consolidated results of the Company for the entire period for the three months ended March 31, 2022 and 2021.

Three Months EndedThree Months Ended
 March 31, 2022 (Unaudited)March 31, 2021 (Unaudited)
Revenue$83,603 $93,458 
Net income$(5,176)$6,147 

Acquisitions during the three months ended March 31, 2021

On January 25, 2021, the Company purchased all of the assets of Indoor Garden & Lighting, Inc, a two-store chain of hydroponic and equipment and indoor gardening supply stores serving the Seattle and Tacoma, Washington area. The total consideration for the purchase of Garden & Lighting was approximately $1.7 million, including $1.2 million in cash and common stock valued at approximately $0.5 million. Acquired goodwill of approximately $0.7 million represents the value expected to rise from organic growth and an opportunity to expand into a well-established market for the Company. Indoor Garden & Lighting, Inc. is included in our Retail segment.
 
On February 1, 2021, the Company purchased all of the assets of J.A.R.B., Inc d/b/a Grow Depot Maine, a two-store chain in Auburn and Augusta, Maine. The total consideration for the purchase of Grow Depot Maine was approximately $2.1 million, including $1.7 million in cash and common stock valued at approximately $0.4 million. Acquired goodwill of approximately $0.9 million represents the value expected to rise from organic growth and an opportunity to expand into a well-established market for the Company. Grow Depot Maine is included in our Retail segment.

On February 15, 2021, the Company purchased all of the assets of Grow Warehouse LLC, a four-store chain of hydroponic and organic garden stores in Colorado (3) and Oklahoma (1). The total consideration for the purchase of Grow Warehouse LLC was approximately $17.8 million, including $8.1 million in cash and common stock valued at approximately $9.7 million. Acquired goodwill of approximately $11.1 million represents the value expected to rise from organic growth and an opportunity to expand into a well-established market for the Company. Grow Warehouse LLC is included in our Retail segment.
 
On February 22, 2021, the Company purchased all of the assets of San Diego Hydroponics & Organics, a four-store chain of hydroponic and organic garden stores in San Diego, California. The total consideration for the purchase of San Diego Hydroponics was approximately $9.3 million, including $4.8 million in cash and common stock valued at approximately $4.5 million. Acquired goodwill of approximately $5.7 million represents the value expected to rise from organic growth and an opportunity to expand into a well-established market for the Company. San Diego Hydroponics & Organics is included in our Retail segment.
 
On March 12, 2021, the Company purchased all of the assets of Charcoir Corporation, which sells an RHP-certified growing medium made from the highest-grade coconut fiber. The total consideration for the purchase of Charcoir was approximately $16.4 million, including $9.9 million in cash and common stock valued at approximately $6.5 million. Acquired goodwill of approximately $6.1 million represents the value expected to rise from organic growth and an opportunity to expand into a well-established distribution market for the Company of a proprietary brand. Charcoir is included in our Distribution and other segment.
 
On March 15, 2021, the Company purchased all of the assets of 55 Hydroponics, a hydroponic and organic superstore located in Santa Ana, California. The total consideration for the purchase of 55 Hydroponics was approximately $6.5 million, including $5.4 million in cash and common stock valued at approximately $1.1 million. Acquired goodwill of approximately $3.9 million represents the value expected to rise from organic growth and an opportunity to expand into a well-established market for the Company. 55 Hydroponics is included in our Retail segment.
 
On March 15, 2021, the Company purchased all of the assets of Aquarius, a hydroponic and organic garden store in Springfield, Massachusetts. The total consideration for the purchase of Aquarius was approximately $3.6 million, including $2.4 million in cash and common stock valued at approximately $1.2 million. Acquired goodwill of approximately $1.7 million represents the value expected to rise from organic growth and an opportunity to expand into a well-established market for the Company. Aquarius is included in our Retail segment.
 
On March 19, 2021, the Company purchased all of the assets of Agron, LLC, an online seller of growing equipment. The total consideration for the purchase of Agron was approximately $11.3 million, including $6 million in cash and common stock valued at approximately $5.3 million. Acquired goodwill of approximately $8.7 million represents the value expected to rise from organic growth and an opportunity to expand into a well-established e-commerce market for the Company targeting the commercial customer. Agron is included in our E-commerce segment.
The table below represents the allocation of the purchase price to the acquired net assets during the three months ended March 31, 2021.

 AgronAquarius55 HydroCharcoirSan Diego HydroGrow WarehouseGrow Depot MaineIndoor GardenTotal
Inventory$— $957 $780 $839 $1,400 $2,450 $326 $372 $7,124 
Prepaids and other current assets46 12 29 534 36 30 3 — 690 
Furniture and equipment29 63 50 — 315 250 25 94 826 
Liabilities— — — — — (169)— — (169)
Operating lease right of use asset98 108 861 — 1,079 641 92 137 3,016 
Operating lease liability(98)(108)(861)— (1,079)(641)(92)(137)(3,016)
Customer relationships832 339 809 5,712 605 1,256 549 210 10,312 
Trade name1,530 485 870 1,099 1,192 2,748 344 353 8,621 
Non-compete139 — 26 — 6 94 36 2 303 
Intellectual property— — — 2,065 — — — — 2,065 
Goodwill8,673 1,702 3,915 6,119 5,728 11,120 866 661 38,784 
Total$11,249 $3,558 $6,479 $16,368 $9,282 $17,779 $2,149 $1,692 $68,556 
 
The table below represents the consideration paid for the net assets acquired in business combinations.

 AgronAquarius55 HydroCharcoirSan Diego HydroGrow WarehouseGrow
Depot Maine		Indoor GardenTotal
Cash$5,973 $2,331 $5,347 $9,902 $4,751 $8,100 $1,738 $1,165 $39,307 
Common stock5,276 1,227 1,132 6,466 4,531 9,679 411 527 $29,249 
Total$11,249 $3,558 $6,479 $16,368 $9,282 $17,779 $2,149 $1,692 $68,556 
  
The following table discloses the date of the acquisitions noted above and the revenue and earnings included in the consolidated income statement for the period ended March 31, 2021.
 
 AgronAquarius55 HydroCharcoirSan Diego HydroGrow WarehouseGrow Depot MaineIndoor GardenTotal
Acquisition date
3/19/20213/15/20213/15/20213/12/20212/22/20212/15/20212/1/20211/25/2021
Revenue$230 $185 $328 $276 $1,001 $2,168 $993 $805 $5,986 
Net Income$22 $16 $32 $101 $117 $294 $205 $118 $905 
 
The following table discloses the pro forma consolidated statement of operations as if the acquisition had been included in the consolidated results of the Company for the three months ended March 31, 2021.

Three Months Ended March 31, 2021
 (Unaudited)
Revenue$99,095 
Net income$7,403