(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
( | ||||||||||||||
(Address of principal executive offices) | (Zip Code) | (Registrant’s telephone number, including area code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Large accelerated filer | o | Accelerated filer | o | ||||||||
x | Smaller reporting company | ||||||||||
Emerging growth company |
Item No. | Page No. | |||||||
September 30, 2023 | December 31, 2022 | ||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash | $ | $ | |||||||||
Accounts receivable, net | |||||||||||
Contract receivables | |||||||||||
Prepaid expenses and other assets | |||||||||||
Total current assets | |||||||||||
Non-current assets: | |||||||||||
Property and equipment, net | |||||||||||
Operating lease right of use assets, net | |||||||||||
Investments | |||||||||||
Goodwill | |||||||||||
Intangible assets, net | |||||||||||
Total non-current assets | |||||||||||
Total assets | $ | $ | |||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | $ | |||||||||
Accrued expenses | |||||||||||
Contract liabilities | |||||||||||
Customer deposits | |||||||||||
Contingent consideration | |||||||||||
Promissory notes | |||||||||||
Operating lease liabilities | |||||||||||
Total current liabilities | |||||||||||
Non-current liabilities: | |||||||||||
Operating lease liabilities | |||||||||||
Deferred tax liability | |||||||||||
Total non-current liabilities | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies (note 10) | |||||||||||
Stockholders’ equity | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
Additional paid-in capital | |||||||||||
Treasury shares, cost basis: | ( | ( | |||||||||
Accumulated deficit | ( | ( |
Total stockholders’ equity | |||||||||||
Total liabilities and stockholders’ equity | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Equipment systems | $ | $ | $ | $ | |||||||||||||||||||
Services | |||||||||||||||||||||||
Construction design-build | |||||||||||||||||||||||
Other | |||||||||||||||||||||||
Total revenues and other income | |||||||||||||||||||||||
Cost of revenues: | |||||||||||||||||||||||
Equipment systems | |||||||||||||||||||||||
Services | |||||||||||||||||||||||
Construction design-build | |||||||||||||||||||||||
Other | |||||||||||||||||||||||
Total cost of revenues | |||||||||||||||||||||||
Gross profit | |||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||
Stock-based compensation | |||||||||||||||||||||||
Intangible asset amortization | |||||||||||||||||||||||
Business development | |||||||||||||||||||||||
Total operating expenses | |||||||||||||||||||||||
Loss from operations | ( | ( | ( | ( | |||||||||||||||||||
Non-operating income (expense): | |||||||||||||||||||||||
Interest expense | ( | ( | ( | ( | |||||||||||||||||||
Interest income | |||||||||||||||||||||||
Write-down of investment | ( | ( | ( | ( | |||||||||||||||||||
Contingent consideration | ( | ||||||||||||||||||||||
Loss on settlement | ( | ||||||||||||||||||||||
Other income (expense) | ( | ( | ( | ( | |||||||||||||||||||
Total non-operating income (expense) | ( | ( | ( | ( | |||||||||||||||||||
Loss before income taxes | ( | ( | ( | ( | |||||||||||||||||||
Income tax benefit | |||||||||||||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Comprehensive loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Loss per share - basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Weighted average shares - basic and diluted |
Common Stock | Additional Paid-in Capital | Accumulated Deficit | Treasury Stock | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||||||||||||||
Balance, December 31, 2022 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
Stock grant program vesting | ( | — | — | ||||||||||||||||||||||||||||||||
Stock issued for contingent consideration | — | — | |||||||||||||||||||||||||||||||||
Net loss | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Balance, March 31, 2023 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
Stock grant program vesting | ( | — | — | ||||||||||||||||||||||||||||||||
Stock issued for contingent consideration | — | — | |||||||||||||||||||||||||||||||||
Net loss | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Balance, June 30, 2023 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
Stock grant program vesting | ( | — | — | ||||||||||||||||||||||||||||||||
Stock issued for contingent consideration | — | — | |||||||||||||||||||||||||||||||||
Net loss | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Balance, September 30, 2023 | $ | $ | $ | ( | $ | ( | $ |
Common Stock | Additional Paid-in Capital | Accumulated Deficit | Treasury Stock | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||||||||||||||
Balance, December 31, 2021 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
Treasury stock | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Stock exercised | — | — | |||||||||||||||||||||||||||||||||
Stock issued with exercise of warrants | ( | — | — | ||||||||||||||||||||||||||||||||
Net Loss | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Balance, March 31, 2022 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
Stock issuance related to acquisition | — | — | |||||||||||||||||||||||||||||||||
Net Loss | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Balance, June 30, 2022 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
Treasury stock | — | — | — | — | ( | ) | ( | ||||||||||||||||||||||||||||
Stock grant program vesting | ( | — | — | ||||||||||||||||||||||||||||||||
Net loss | — | — | — | ( | ) | — | ( | ||||||||||||||||||||||||||||
Balance, September 30, 2022 | $ | $ | $ | ( | $ | ( | $ |
Nine Months Ended September 30, | |||||||||||
2023 | 2022 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net loss | $ | ( | ( | ||||||||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Deferred income tax benefit | ( | ( | |||||||||
Stock-based compensation expense | |||||||||||
Impairment of investment | |||||||||||
Change in fair value of contingent consideration | |||||||||||
Other, net | ( | ||||||||||
Changes in operating assets and liabilities (net of acquired amounts): | |||||||||||
Accounts receivable and contract receivables | ( | ||||||||||
Prepaid expenses and other assets and property and equipment | |||||||||||
Accounts payable, contract liabilities, and accrued expenses | ( | ||||||||||
Change in contingent consideration from indemnification | ( | ||||||||||
Operating lease liability | ( | ( | |||||||||
Customer deposits | ( | ( | |||||||||
Net cash used in operating activities | ( | ( | |||||||||
Cash flows from investing activities: | |||||||||||
Sale of investment | |||||||||||
Business combinations, net of cash acquired | ( | ||||||||||
Purchases of property and equipment | ( | ( | |||||||||
Net cash provided by (used in) investing activities | ( | ||||||||||
Cash flows from financing activities: | |||||||||||
Proceeds from issuance of common stock | |||||||||||
Repurchase of common stock | ( | ||||||||||
Additions to promissory notes | |||||||||||
Repayment of finance lease ROU liability | ( | ( | |||||||||
Payments to settle contingent consideration | ( | ||||||||||
Repayment of promissory notes | ( | ||||||||||
Net cash used in financing activities | ( | ( | |||||||||
Net change in cash | ( | ( | |||||||||
Cash at beginning of period | |||||||||||
Cash at end of period | $ | $ | |||||||||
Supplemental cash flow information: | |||||||||||
Cash paid for interest | $ | $ | |||||||||
Net cash paid for income taxes | $ | $ | |||||||||
Supplemental disclosure of non-cash investing and financing activities: | |||||||||||
Stock issued for acquisitions | $ | $ | |||||||||
Operating lease right of use assets and liabilities extension | $ | $ |
Purchase price | $ | ||||
Allocation of purchase price: | |||||
Accounts receivable, net | $ | ||||
Right of use asset | $ | ||||
Property and equipment | $ | ||||
Goodwill | $ | ||||
Intangible assets | $ | ||||
Accrued expenses | $ | ( | |||
Right of use liability | $ | ( |
Purchase Price | $ | ||||
Allocation of Purchase Price: | |||||
Cash | $ | ||||
Accounts receivable, net | $ | ||||
Contract receivables | $ | ||||
Prepayments and other assets | $ | ||||
Property and equipment | $ | ||||
Right of use asset | $ | ||||
Goodwill | $ | ||||
Intangible assets | $ | ||||
Accrued expenses | $ | ( | |||
Contract liabilities | $ | ( | |||
Right of use liability | $ | ( | |||
Deferred tax liability | $ | ( |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Equipment systems | $ | $ | $ | $ | |||||||||||||||||||
Services | |||||||||||||||||||||||
Construction design-build | |||||||||||||||||||||||
Other | |||||||||||||||||||||||
Total revenues and other income | |||||||||||||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( |
CEA | Commercial | Total | |||||||||||||||||||||||||||||||||
For the three months ended September 30, | For the three months ended September 30, | For the three months ended September 30, | |||||||||||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||||||||||
Equipment systems | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Services | |||||||||||||||||||||||||||||||||||
Construction design-build | |||||||||||||||||||||||||||||||||||
Other | |||||||||||||||||||||||||||||||||||
Total revenues and other income | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Relative percentage | % | % | % | % | % | % |
CEA | Commercial | Total | |||||||||||||||||||||||||||||||||
For the nine months ended September 30, | For the nine months ended September 30, | For the nine months ended September 30, | |||||||||||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||||||||||
Equipment systems | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Services | |||||||||||||||||||||||||||||||||||
Construction design-build | |||||||||||||||||||||||||||||||||||
Other | |||||||||||||||||||||||||||||||||||
Total revenues and other income | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Relative percentage | % | % | % | % | % | % |
September 30, 2023 | December 31, 2022 | ||||||||||
Contract assets: | |||||||||||
Revenue recognized in excess of amounts paid or payable (contract receivables) to the Company on uncompleted contracts (contract asset), excluding retainage | $ | $ | |||||||||
Retainage included in contract assets due to being conditional on something other than solely passage of time | |||||||||||
Total contract assets | $ | $ | |||||||||
September 30, 2023 | December 31, 2022 | ||||||||||
Contract liabilities: | |||||||||||
Payments received or receivable (contract receivables) in excess of revenue recognized on uncompleted contracts (contract liability) | $ | $ | |||||||||
Retainage included in contract liabilities due to being conditional on something other than solely passage of time | |||||||||||
Total contract liabilities | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Revenues - Cloud 9 | $ | $ | $ | $ | |||||||||||||||||||
Revenues - Potco | |||||||||||||||||||||||
Revenues - CEA Consortium | $ | $ | $ | $ | |||||||||||||||||||
Total revenues from related party transactions | $ | $ | $ | $ |
September 30, 2023 | December 31, 2022 | ||||||||||
Accounts receivable - Cloud 9 | $ | $ | |||||||||
Accounts receivable - Potco | |||||||||||
Accounts receivable - CEA Consortium | $ | $ | |||||||||
Total accounts receivable due from related party transactions | $ | $ |
September 30, 2023 | December 31, 2022 | ||||||||||
Vendor prepayments | $ | $ | |||||||||
Prepaid services and fees | |||||||||||
Inventories | |||||||||||
Other assets | |||||||||||
Total Prepaid expenses and other assets | $ | $ |
September 30, 2023 | December 31, 2022 | ||||||||||
Computers and technology equipment | $ | $ | |||||||||
Furniture and fixtures | |||||||||||
Leasehold improvements | |||||||||||
Vehicles | |||||||||||
Software | |||||||||||
Research and development | |||||||||||
Other equipment | |||||||||||
Accumulated depreciation | ( | ( | |||||||||
Total Property and equipment, net | $ | $ |
Edyza | XS Financial | Total | ||||||||||||||||||
Balances as of December 31, 2022 | $ | $ | $ | |||||||||||||||||
Paid-in-kind interest | ||||||||||||||||||||
Impairment | $ | $ | ( | ( | ||||||||||||||||
Sale of investment | $ | $ | ( | ( | ||||||||||||||||
Balances as of September 30, 2023 | $ | $ | $ |
As of September 30, 2023 | |||||||||||||||||
Cost | Accumulated Amortization | Net Book Value | |||||||||||||||
Finite-lived intangible assets: | |||||||||||||||||
Customer relationships | $ | $ | ( | $ | |||||||||||||
Trademarks and trade names | ( | ||||||||||||||||
Backlog and other | ( | ||||||||||||||||
Total finite-lived intangible assets: | ( | ||||||||||||||||
Indefinite-lived intangible assets: | |||||||||||||||||
Trade name | — | ||||||||||||||||
Total indefinite-lived intangible assets | — | ||||||||||||||||
Total intangible assets, net | $ | $ | ( | $ |
As of December 31, 2022 | |||||||||||||||||
Cost | Accumulated Amortization | Net Book Value | |||||||||||||||
Finite-lived intangible assets: | |||||||||||||||||
Customer relationships | $ | $ | ( | $ | |||||||||||||
Trademarks and trade names | ( | ||||||||||||||||
Backlog and other | ( | ||||||||||||||||
Total finite-lived intangible assets: | ( | ||||||||||||||||
Indefinite-lived intangible assets: | |||||||||||||||||
Trade name | — | ||||||||||||||||
Total indefinite-lived intangible assets | — | ||||||||||||||||
Total intangible assets, net | $ | $ | ( | $ |
For the years ending December 31, | Estimated Future Amortization Expense | |||||||
Remainder of 2023 | $ | |||||||
2024 | ||||||||
2025 | ||||||||
2026 | ||||||||
2027 | ||||||||
Thereafter | ||||||||
Total estimated future amortization expense | $ |
September 30, 2023 | December 31, 2022 | ||||||||||
Accrued operating expenses | $ | $ | |||||||||
Accrued wages and related expenses | |||||||||||
Accrued 401(k) | |||||||||||
Accrued sales tax payable | |||||||||||
Total accrued expenses | $ | $ |
September 30, 2023 | December 31, 2022 | ||||||||||
Operating lease liabilities related to right of use assets | $ | $ | |||||||||
Less current operating lease liabilities | ( | ( | |||||||||
Non-current operating lease liabilities | $ | $ |
For the years ending December 31, | Minimum Lease Payments | |||||||
Remainder of 2023 | $ | |||||||
2024 | ||||||||
2025 | ||||||||
2026 | ||||||||
2027 | ||||||||
Thereafter | ||||||||
Total minimum lease payments | ||||||||
Less: Amount representing interest | ( | |||||||
Net lease obligations | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
Company Customer Number | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||
C000001462 | * | * | * | % | ||||||||||||||||||||||
C000001140 | * | * | * | % | ||||||||||||||||||||||
C000002187 | % | * | % | * | ||||||||||||||||||||||
C000001696 | * | % | * | * | ||||||||||||||||||||||
C000002345 | % | * | * | * | ||||||||||||||||||||||
C000002463 | % | * | % | * | ||||||||||||||||||||||
*Amounts less than 10% |
Company Customer Number | September 30, 2023 | December 31, 2022 | ||||||||||||
C000002151 | * | % | ||||||||||||
C000002187 | % | % | ||||||||||||
C000002345 | % | * | ||||||||||||
*Amounts less than 10% |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
Company Vendor Number | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||
V000001029 | * | * | * | % | ||||||||||||||||||||||
V000002425 | % | * | * | * | ||||||||||||||||||||||
V000002275 | * | * | % | * | ||||||||||||||||||||||
V000002290 | % | * | * | * | ||||||||||||||||||||||
V000001326 | * | % | * | * | ||||||||||||||||||||||
V000002452 | % | * | % | * | ||||||||||||||||||||||
*Amounts less than 10% |
Company Vendor Number | September 30, 2023 | December 31, 2022 | ||||||||||||
V000001910 | * | % | ||||||||||||
V000002452 | % | * | ||||||||||||
V000002275 | % | * | ||||||||||||
*Amounts less than 10% |
Number of Shares | |||||
Grants of RSUs unvested as of December 31, 2022 | |||||
Grants of RSUs | |||||
Forfeiture/cancelled | ( | ||||
Grants of RSUs vested and issued | ( | ||||
Grants of RSUs unvested as of September 30, 2023 |
Number of Shares | Weighted Average Remaining Life (Years) | Weighted Average Exercise Price | |||||||||||||||
Stock options outstanding as of December 31, 2022 | $ | ||||||||||||||||
Issued | $ | ||||||||||||||||
Forfeited | ( | $ | |||||||||||||||
Exercised | $ | ||||||||||||||||
Stock options outstanding as of September 30, 2023 | $ | ||||||||||||||||
Stock options exercisable as of September 30, 2023 | $ |
Number of Shares | Weighted Average Remaining Life (Years) | Weighted Average Exercise Price | |||||||||||||||
Warrants outstanding as of December 31, 2022 | $ | ||||||||||||||||
Exercised | $ | ||||||||||||||||
Expired | ( | $ | |||||||||||||||
Warrants outstanding as of September 30, 2023 | $ | ||||||||||||||||
Warrants exercisable as of September 30, 2023 | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Net loss (GAAP) | $ | (3,367,788) | $ | (8,660,783) | $ | (13,955,770) | $ | (11,096,304) | |||||||||||||||
Interest expense | 39,928 | 7,088 | 158,134 | 22,270 | |||||||||||||||||||
Interest income | (19,461) | (94,200) | (167,652) | (221,329) | |||||||||||||||||||
Federal and state income tax (benefit) expense | (48,383) | (73,654) | (167,481) | (258,166) | |||||||||||||||||||
Depreciation and amortization | 372,969 | 526,750 | 1,201,201 | 1,116,585 | |||||||||||||||||||
EBITDA (non-GAAP) | (3,022,735) | (8,294,799) | $ | (12,931,568) | $ | (10,436,944) | |||||||||||||||||
Non-recurring legal fees | 284,641 | 205,486 | 769,252 | 276,246 | |||||||||||||||||||
Contingent consideration - change in fair value | — | — | 160,232 | — | |||||||||||||||||||
Contingent consideration - DVO acquisition | 78,181 | — | 204,878 | — | |||||||||||||||||||
One time business development expenses | — | 3,299,864 | — | 3,299,864 | |||||||||||||||||||
Reduction in force costs | 31,987 | — | 334,540 | — | |||||||||||||||||||
One-time employee expenses | — | 670,095 | — | 787,691 | |||||||||||||||||||
Impairment loss | 258,492 | 1,710,358 | 258,492 | 1,710,358 | |||||||||||||||||||
Loss on settlement | — | — | 1,500,000 | — | |||||||||||||||||||
Retention incentive | 300,000 | 942,000 | — | ||||||||||||||||||||
Stock-based compensation | 722,647 | 96,767 | 1,824,835 | 1,860,767 | |||||||||||||||||||
Transaction costs | 29,141 | 39,182 | 91,079 | 258,111 | |||||||||||||||||||
Adjusted EBITDA (non-GAAP) | $ | (1,317,646) | $ | (2,273,047) | $ | (6,846,260) | $ | (2,243,907) |
September 30, 2023 | |||||||||||||||||||||||
CEA | Commercial | Total | Relative Percentage | ||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Equipment systems | $ | 2 | $ | — | $ | 2 | 2 | % | |||||||||||||||
Services | 1 | 4 | 5 | 6 | % | ||||||||||||||||||
Construction design-build (1) | 53 | 24 | 77 | 92 | % | ||||||||||||||||||
Total backlog | $ | 56 | $ | 28 | $ | 84 | 100 | % | |||||||||||||||
Relative percentage | 67 | % | 33 | % | 100 | % | |||||||||||||||||
Note: Percentages may not add up due to rounding. | |||||||||||||||||||||||
(1) During the second quarter of 2023, a cannabis cultivation project that was actively in production began to face some uncertainty with funding. The Company is in close contact with the client, but felt it prudent to remove this active contract from reported backlog until the client's funding source is solidified. The drop in backlog is predominantly tied to this project. |
December 31, 2022 | |||||||||||||||||||||||
CEA | Commercial | Total | Relative Percentage | ||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Equipment systems | $ | 5 | $ | — | $ | 5 | 5 | % | |||||||||||||||
Services | 4 | 2 | 6 | 6 | % | ||||||||||||||||||
Construction design-build | 67 | 15 | 82 | 88 | % | ||||||||||||||||||
Total backlog | $ | 76 | $ | 17 | $ | 93 | 100 | % | |||||||||||||||
Relative percentage | 82 | % | 18 | % | 100 | % | |||||||||||||||||
Note: Percentages may not add up due to rounding. |
Exhibit No. | Exhibit Description | |||||||
3.1 | ||||||||
3.2 | ||||||||
3.3 | ||||||||
3.4 | ||||||||
10.1 | ||||||||
10.2 | ||||||||
10.3 | ||||||||
10.4 | ||||||||
31.1 | ||||||||
31.2 | ||||||||
32.1 | ||||||||
101.INS | Inline XBRL Instance Document | |||||||
101.SCH | Inline XBRL Schema Document | |||||||
101.CAL | Inline XBRL Calculation Linkbase Document | |||||||
101.DEF | Inline XBRL Definition Linkbase Document | |||||||
101.LAB | Inline XBRL Label Linkbase Document | |||||||
101.PRE | Inline XBRL Presentation Linkbase Document | |||||||
104 | Cover Page Interactive Data File (Embedded within the Inline XBRL document) |
URBAN-GRO, INC. | ||||||||
By: | /s/ Bradley Nattrass | |||||||
Bradley Nattrass | ||||||||
Chairperson of the Board of Directors and Chief Executive Officer | ||||||||
(Principal Executive Officer) | ||||||||
By: | /s/ Richard Akright | |||||||
Richard A. Akright | ||||||||
Chief Financial Officer | ||||||||
(Principal Financial Officer) | ||||||||
(Principal Accounting Officer) |
Dated: November 9, 2023 | /s/ Bradley Nattrass | ||||
Bradley Nattrass | |||||
Chairperson of the Board of Directors and Chief Executive Officer |
Dated: November 09, 2023 | /s/ Richard A. Akright | ||||
Richard A. Akright | |||||
Chief Financial Officer |
Dated: November 09, 2023 | /s/ Bradley Nattrass | ||||
Bradley Nattrass | |||||
Chairperson of the Board of Directors and Chief Executive Officer | |||||
Dated: November 09, 2023 | /s/ Richard A. Akright | ||||
Richard A. Akright | |||||
Chief Financial Officer |
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) - $ / shares |
Sep. 30, 2023 |
Dec. 31, 2022 |
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Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.10 | $ 0.10 |
Preferred stock, shares authorized (in shares) | 3,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 30,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 13,120,413 | 12,220,593 |
Common stock, shares outstanding (in shares) | 11,670,580 | 10,770,760 |
Treasury shares, cost basis (in shares) | 1,449,833 | 1,449,833 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (unaudited) - USD ($) |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
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Revenues: | ||||
Total revenues and other income | $ 20,934,323 | $ 12,368,293 | $ 56,537,252 | $ 49,702,659 |
Total cost of revenues | 18,077,605 | 9,775,697 | 47,964,054 | 38,706,102 |
Gross profit | 2,856,718 | 2,592,596 | 8,573,198 | 10,996,557 |
Operating expenses: | ||||
General and administrative | 5,000,846 | 5,792,418 | 17,974,049 | 14,758,506 |
Stock-based compensation | 722,647 | 96,767 | 1,824,835 | 1,860,767 |
Intangible asset amortization | 241,832 | 304,339 | 816,015 | 773,063 |
Business development | 0 | 3,299,864 | 0 | 3,299,864 |
Total operating expenses | 5,965,325 | 9,493,388 | 20,614,899 | 20,692,200 |
Loss from operations | (3,108,607) | (6,900,792) | (12,041,701) | (9,695,643) |
Non-operating income (expense): | ||||
Interest expense | (39,928) | (7,088) | (158,134) | (22,270) |
Interest income | 19,461 | 94,200 | 167,652 | 221,329 |
Write-down of investment | (258,492) | (1,710,358) | (258,492) | (1,710,358) |
Contingent consideration | 0 | 0 | (160,232) | 0 |
Loss on settlement | 0 | 0 | (1,500,000) | 0 |
Other income (expense) | (28,605) | (210,399) | (172,344) | (147,528) |
Total non-operating income (expense) | (307,564) | (1,833,645) | (2,081,550) | (1,658,827) |
Loss before income taxes | (3,416,171) | (8,734,437) | (14,123,251) | (11,354,470) |
Income tax benefit | 48,383 | 73,654 | 167,481 | 258,166 |
Net loss | (3,367,788) | (8,660,783) | (13,955,770) | (11,096,304) |
Comprehensive loss | $ (3,367,788) | $ (8,660,783) | $ (13,955,770) | $ (11,096,304) |
Loss per share – basic (in dollars per share) | $ (0.29) | $ (0.81) | $ (1.29) | $ (1.05) |
Loss per share – diluted (in dollars per share) | $ (0.29) | $ (0.81) | $ (1.29) | $ (1.05) |
Weighted average shares – basic (in shares) | 11,649,790 | 10,674,796 | 10,859,820 | 10,577,453 |
Weighted average shares – diluted (in shares) | 11,649,790 | 10,674,796 | 10,859,820 | 10,577,453 |
Equipment systems | ||||
Revenues: | ||||
Total revenues and other income | $ 3,043,659 | $ 3,879,272 | $ 10,575,367 | $ 31,024,187 |
Total cost of revenues | 2,766,116 | 3,212,285 | 9,287,704 | 26,132,828 |
Services | ||||
Revenues: | ||||
Total revenues and other income | 2,898,739 | 2,839,338 | 9,403,968 | 9,505,396 |
Total cost of revenues | 1,768,164 | 1,796,968 | 5,715,548 | 4,677,887 |
Construction design-build | ||||
Revenues: | ||||
Total revenues and other income | 14,813,486 | 5,384,267 | 36,068,435 | 8,301,588 |
Total cost of revenues | 13,413,067 | 4,570,506 | 32,605,681 | 7,263,206 |
Other | ||||
Revenues: | ||||
Total revenues and other income | 178,439 | 265,416 | 489,482 | 871,488 |
Total cost of revenues | $ 130,258 | $ 195,938 | $ 355,121 | $ 632,181 |
ORGANIZATION, ACQUISITIONS, AND LIQUIDITY |
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Organization, Consolidation, Business Combination, And Presentation Of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ORGANIZATION, ACQUISITIONS, AND LIQUIDITY | ORGANIZATION, ACQUISITIONS, AND LIQUIDITY Organization urban-gro, Inc. (“we,” “us,” “our,” the “Company,” or “urban-gro”) is an integrated professional services and design-build firm. We offer value-added architectural, engineering, and construction management solutions to the Controlled Environment Agriculture (“CEA”), industrial, healthcare, and other commercial sectors. Innovation, collaboration, and a commitment to sustainability drive our team to provide exceptional customer experiences. To serve our horticulture clients, we engineer, design and manage the construction of indoor CEA facilities and then integrate complex environmental equipment systems into those facilities. Through this work, we create high-performance indoor cultivation facilities for our clients to grow specialty crops, including leafy greens, vegetables, herbs, and plant-based medicines. Our custom-tailored approach to design, construction, procurement, and equipment integration provides a single point of accountability across all aspects of indoor growing operations. We also help our clients achieve operational efficiency and economic advantages through a full spectrum of professional services and programs focused on facility optimization and environmental health. Further, we serve a broad range of commercial and governmental entities, providing them with planning, consulting, architectural, engineering and construction design-build services for their facilities. We aim to work with our clients from the inception of their project in a way that provides value throughout the life of their facility. We are a trusted partner and advisor to our clients and offer a complete set of engineering and managed services complemented by a vetted suite of select cultivation equipment systems. Acquisitions DVO Effective October 31, 2022, the Company entered into an agreement with Dawson Van Orden, Inc. ("Seller" or "DVO") and DVO's shareholders (the "DVO Shareholders") to acquire substantially all of the operating assets and liabilities of DVO, a Texas based engineering firm with significant experience in indoor CEA. The purchase price of $6.1 million, after working capital adjustments, was comprised of (i) $1.2 million in cash, (ii) a $3.8 million Seller's promissory note, and (iii) $1.1 million of the Company's common stock. The Seller's promissory note was initially to be paid out over four quarters beginning in January 2023. In the third quarter of 2023, a portion of that quarter’s note payment was extended to the first quarter of 2024. The Seller’s promissory note balances as of September 30, 2023, and December 31, 2022, were $1,446,375 and $3,832,682, respectively. The purchase price excludes up to $1.1 million of contingent consideration earnout that may become payable to the Seller dependent on the continued employment of the DVO Shareholders. The contingent consideration earnout is payable, at the Company’s discretion, in cash or shares of the Company’s common stock with the value of such shares being determined based upon the volume-weighted average price ("VWAP") of the Company’s common stock in the ten trading days prior to the end of the applicable quarter for which the quarterly gross profit is calculated. The Company accounted for the acquisition as follows:
Pro-forma disclosure of the DVO acquisition is not required as the historical results of DVO were not material to the Company's consolidated financial statements. Acquired goodwill from DVO represents the value expected to arise from organic growth and an opportunity to expand into a well-established market for the Company. Emerald Effective April 29, 2022, the Company acquired all of the issued and outstanding capital stock of Emerald Construction Management, Inc. (“Emerald”) from its shareholders (the “Emerald Sellers”). The purchase price of $7.7 million, after working capital adjustments, was comprised of (i) $3.4 million in cash, (ii) $2.5 million of the Company’s common stock, and (iii) $1.8 million of estimated contingent consideration earnout payable to the Emerald Sellers over the term of the earnout. The total contingent earnout payable to the Emerald Sellers is $2.0 million. Effective January 1, 2023, the terms of the contingent consideration earnout provisions were amended providing for the entire contingent consideration of up to $2.0 million to be earned based solely on the continued employment of the Emerald Sellers for a two-year period. This resulted in the Company recording additional contingent consideration expense of $160,232 in the first quarter of 2023. Per the amendment, the remaining contingent consideration earnout is payable quarterly, at the Company’s discretion, in cash or in shares of the Company’s common stock with the value of such shares being determined based upon the VWAP of the Company’s common stock in the ten trading days prior to the end of the applicable quarter. The Company accounted for the acquisition as follows:
The following pro-forma amounts reflect the Company’s results as if the acquisition of Emerald had occurred on January 1, 2022. These pro-forma amounts have been calculated after applying the Company’s accounting policies and adjusting the results of the acquisition to reflect the additional amortization of intangibles.
Acquired goodwill from Emerald represents the value expected to arise from organic growth and an opportunity for the Company to expand into a well-established market. Per the Emerald Acquisition Agreement and Plan of Merger (the “Emerald Acquisition Agreement”), when the Company acquired all of the issued and outstanding capital stock of Emerald, the Emerald Sellers indemnified the Company for any material liabilities, losses, and actions or inaction which took place prior to the acquisition and that were not disclosed as part of the transaction. To that end, a pre-acquisition Emerald project incurred a substantial loss that was not disclosed in the Emerald Acquisition Agreement. The majority shareholder of Emerald has agreed to indemnify the Company for the loss, which is currently estimated to be $2.3 million (the “Indemnified Loss”). In the second quarter of 2023, the Company offset $1.0 million of the Indemnified Loss against the total remaining contingent consideration and certain other liabilities owed to the majority shareholder of Emerald thereby resulting in a net amount due from the majority shareholder of Emerald to $1.3 million. Further, the Company has agreed to satisfy up to $1.2 million of the Indemnified Loss in the event a certain Emerald project is above a 7% profit margin, on a dollar for dollar basis. Liquidity and Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business within one year after the date the consolidated financial statements are available to be issued.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
9 Months Ended |
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Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Unaudited Condensed Consolidated Financial Statements The Company has prepared the accompanying condensed consolidated financial statements pursuant to the rules and regulations of the SEC for condensed financial reporting. The condensed consolidated financial statements are unaudited and, in the Company’s opinion, include all adjustments, consisting of normal recurring adjustments and accruals necessary for a fair presentation of the Company’s condensed consolidated balance sheets, condensed consolidated statements of operations and comprehensive loss, condensed consolidated statements of stockholders’ equity and condensed consolidated statements of cash flows for the periods presented. The results reported in these condensed consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted in accordance with regulations of the SEC. These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. Significant Accounting Policies For a detailed discussion about the Company’s significant accounting policies, refer to Note 2 — Summary of Significant Accounting Policies, in the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. During the nine months ended September 30, 2023, there were no material changes made to the Company’s significant accounting policies. Use of Estimates In preparing condensed consolidated financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of assets and liabilities at the date of the condensed consolidated financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates. Significant estimates include estimated revenues earned under construction design-build contracts; estimated useful lives and potential impairment of long-lived assets, intangibles and goodwill; inventory write-offs; allowance for deferred tax assets; and allowance for bad debt. Reclassification Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations. Balance Sheet Classifications The Company includes in current assets and liabilities the following amounts that are in connection with construction contracts that may extend beyond one year: contract assets and contract liabilities (including retainage invoiced to customers contingent upon anything other than the passage of time), capitalized costs to fulfill contracts, retainage payable to sub-contractors and accrued losses on uncompleted contracts. A one-year time period is used to classify all other current assets and liabilities when not otherwise prescribed by the applicable accounting principles. Contract Assets and Liabilities The timing between when the Company collects cash from its construction design-build customers can create a contract asset or contract liability. Refer to Note 3 - Revenue from Contracts with Customers for further discussion of the Company's contract assets and liabilities. Recently Issued Accounting Standards As of September 30, 2023, and through the filing of this report, no Accounting Standards Updates have been issued and not yet adopted that are applicable to the Company and that would have a material effect on the Company’s unaudited condensed consolidated financial statements and related disclosures.
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REVENUE FROM CONTRACTS WITH CUSTOMERS |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUE FROM CONTRACTS WITH CUSTOMERS | REVENUE FROM CONTRACTS WITH CUSTOMERS The Company recognizes revenue predominantly from the sale of equipment systems, services, construction design-build, and from other various immaterial contracts with customers from its CEA and Commercial sectors. The table below presents the revenue by source for the three and nine months ended September 30, 2023, and 2022:
Under Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, a performance obligation is a promise in a contract with a customer, to transfer a distinct good or service to the customer. Equipment systems contracts are lump sum contracts, which require the performance of some, or all, of the obligations under the contract for a specified amount. Service revenue contracts, which include both architectural and engineering designs, generally contain multiple performance obligations which can span across multiple phases of a project and are generally set forth in the contract as distinct milestones. The majority of construction design-build contracts have a single performance obligation, as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and, therefore, not distinct. Some contracts have multiple performance obligations, most commonly due to the contract covering multiple phases of the project life cycle (design and construction). The transaction price for service contracts and construction design-build contracts is allocated to each distinct performance obligation and recognized as revenue when, or as, each performance obligation is satisfied. When there are multiple performance obligations under the same service contract, the Company allocates the transaction price to each performance obligation based on the standalone selling price. In general, payment terms are fixed at the time of the contract and are not subject to discounts, incentives, payment bonuses, credits or penalties, unless negotiated in an amendment. When establishing the selling price to the customer, the Company uses various observable inputs. For equipment systems, the stand-alone selling price is determined by forecasting the expected costs of the products, and then adding in the appropriate margins established by management. For service revenues and construction design-build revenues, the Company estimates the selling price by reference to certain physical characteristics of the project, which include the facility size, the complexity of the design, and the mechanical systems involved, which are indicative of the scope and complexity for those services. Significant judgments are typically not required with respect to the determination of the transaction price based on the nature of the selling prices of the products and services delivered and the collectability of those amounts. Accordingly, the Company does not consider estimates of variable consideration to be constrained. The Company recognizes equipment systems, services, and construction design-build revenues when the performance obligation with the customer is satisfied. For satisfaction of equipment system revenues, the Company recognizes revenue when control of the promised good transfers to the customer, which predominately occurs at the time of shipment. For service revenues, satisfaction occurs as the services related to the distinct performance obligations are rendered or completed in exchange for consideration in an amount for which the Company is entitled. The time period between recognition and satisfaction of performance obligations is generally within the same reporting period; thus, there are no material unsatisfied or partially unsatisfied performance obligations for product or service revenues at the end of the reporting period. Construction design-build revenues are recognized as the Company's obligations are satisfied over time, using the ratio of project costs incurred to estimated total costs for each contract because of the continuous transfer of control to the customer as all of the work is performed at the customer’s site and, therefore, the customer controls the asset as it is being constructed. This continuous transfer of control to the customer is further supported by clauses in the contract that allow the customer to unilaterally terminate the contract for convenience, pay the Company for costs incurred plus a reasonable profit and take control of any work in process. This cost-to-cost measure is used for our construction design-build contracts because management considers it to be the best available measure of progress on these contracts. Contract modifications through change orders, claims and incentives are routine in the performance of the Company’s construction design-build contracts to account for changes in the contract specifications or requirements. In most instances, contract modifications are not distinct from the existing contract due to the significant integration of services provided in the contract and are accounted for as a modification of the existing contract and performance obligation. Either the Company or its customers may initiate change orders, which may include changes in specifications or designs, manner of performance, facilities, equipment, materials, sites and period of completion of the work. Change orders that are unapproved as to both price and scope are evaluated as claims. The Company considers claims to be amounts in excess of approved contract prices that the Company seeks to collect from its customers or others for customer-caused delays, errors in specifications and designs, contract terminations, change orders that are either in dispute or are unapproved as to both scope and price, or other causes of unanticipated additional contract costs. The timing of when the Company bills customers on long-term construction design-build contracts is generally dependent upon agreed-upon contractual terms, which may include milestone billings based on the completion of certain phases of the work, or when services are provided. When as a result of contingencies, billings cannot occur until after the related revenue has been recognized, the result is unbilled revenue which is included in contract assets. Additionally, when the Company receives advances or deposits from customers before revenue is recognized, the result is deferred revenue which is included in contract liabilities. Retainage subject to conditions other than the passage of time are included in contract assets and contract liabilities. Contract assets represent revenues recognized in excess of amounts paid or payable (contract receivables) to the Company on uncompleted contracts. Contract liabilities represent the Company’s obligation to perform on uncompleted contracts with customers for which the Company has received payment or for which contract receivables are outstanding. The following table provides information about contract assets and contract liabilities from contracts with customers:
Trade accounts receivable, net of allowance for doubtful accounts, balances from contracts with customers within the accompanying condensed consolidated balance sheets as of September 30, 2023, and December 31, 2022, were $15,237,726 and $12,466,180, respectively. Non-trade accounts receivable as of September 30, 2023, and December 31, 2022, were $3,103,763 and $2,914,112, respectively. Non-trade accounts receivable as of September 30, 2023, were comprised of the remaining Indemnified Loss receivable from the majority shareholder of Emerald further detailed in Note 1 – Organization, Acquisitions, and Liquidity and miscellaneous non-trade accounts receivable of $591,850. Non-trade accounts receivable as of December 31, 2022, were comprised of miscellaneous non-trade accounts receivable totaling $514,112 and non-trade accounts receivable related to litigation involving fraudulent wire transactions of $2,400,000. On March 27, 2023, the Company entered into an agreement to settle this litigation and received a cash payment of $2,400,000 on March 27, 2023. For equipment systems contracts, the Company’s predominant policy is to collect deposits from customers at the beginning of the contract and the balance of the contract payment prior to shipping. The Company does, in some cases, collect deposits or retainers as down payments on service contracts. Consumable products orders may be paid for in advance of shipment or for recurring customers with credit, payment terms of 30 days or less may be extended by the Company. Customer payments that have been collected prior to the performance obligation being recognized are recorded as customer deposit liabilities on the balance sheet. When the performance obligation is satisfied and all the criteria for revenue recognition are met, revenue is recognized. In certain situations when the customer has paid the deposit and services have been performed but the customer chooses not to proceed with the contract, the Company is entitled to keep the deposit and recognize revenue.
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RELATED PARTY TRANSACTIONS |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS A director of the Company is an owner of Cloud 9 Support, LLC (“Cloud 9”) and Potco LLC (“Potco”). Cloud 9 purchases materials from the Company for use with its customers and Potco purchases equipment from the Company for use in its cultivation facility. Another director of the Company is working on a vertical farming innovation model with a group of CEA experts (“the CEA Consortium”). The CEA Consortium contracts services from the Company related to their business model. The table below presents the revenues for these related party entities for the three and nine months ended September 30, 2023, and 2022:
The table below presents the accounts receivable from these related party entities as of September 30, 2023, and December 31, 2022:
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PREPAID EXPENSES AND OTHER ASSETS |
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Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PREPAID EXPENSES AND OTHER ASSETS | PREPAID EXPENSES AND OTHER ASSETS Prepaid expenses and other assets are comprised of prepayments paid to vendors to initiate orders, prepaid services and fees, inventories, and other assets. These amounts are summarized as follows:
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PROPERTY AND EQUIPMENT, NET |
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PROPERTY AND EQUIPMENT, NET | PROPERTY AND EQUIPMENT, NET Property and equipment balances are summarized as follows:
Depreciation expense totaled $131,137 and $222,411 for the three months ended September 30, 2023, and 2022, respectively, and totaled $385,186 and $343,524 for the nine months ended September 30, 2023, and 2022, respectively.
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INVESTMENTS |
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INVESTMENTS | INVESTMENTS The components of investments as of September 30, 2023, and December 31, 2022, are summarized as follows:
Edyza The Company has a strategic investment in Edyza, Inc. (“Edyza”), a hardware and software technology company that enables dense sensor networks in agriculture, healthcare, and other environments that require precise micro-climate monitoring. The Company measures this investment at cost, less any impairment changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. During the third quarter of 2022, the Company fully impaired this investment, resulting in an impairment expense of $1.7 million. The Company determined that the intent and ability to retain its investment for a period of time sufficient to allow for any anticipated recovery had passed, causing an “other than temporary loss”. The Company will continue to monitor any future changes to this impairment and seek to recover any remaining value of its 19.5% ownership. XS Financial On October 30, 2021, the Company participated in a convertible note offering of Xtraction Services, Inc., a/k/a XS Financial Inc. (CSE: XSF) (OTCQB: XSHLF) ("XSF"), a specialty finance company providing CAPEX financing solutions, including equipment leasing, to CEA companies in the United States. The Company invested $2.5 million of a total $43.5 million raised by XSF. Prior to any Nasdaq listing, the investment incurs 9.5% interest payable, of which, 7.5% is cash interest and 2.0% is interest paid in kind. Subsequent to any Nasdaq listing by XSF, the investment incurs 8.0% cash interest. The debt was to mature on October 28, 2023, with a one-year option at the sole discretion of XSF to extend the maturity date. In addition, the Company received 1,250,000 warrants denominated in Canadian dollars ("C$") with a C$0.45 exercise price as subject to the warrant instrument. No value was attributed to the warrants at the time of the investment. In August 2023, the Company entered into an agreement to sell back its investment to XSF for $2.3 million and cancel the warrants. The Company received the $2.3 million in proceeds on August 30, 2023. In connection with the agreement to sell the investment, the Company recorded an impairment loss of $0.3 million.
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GOODWILL & INTANGIBLE ASSETS |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL & INTANGIBLE ASSETS | GOODWILL & INTANGIBLE ASSETS Goodwill The Company has recorded goodwill in conjunction with the acquisitions it has completed. The goodwill balances as of September 30, 2023, and December 31, 2022, were $15.6 million and $15.6 million, respectively. Goodwill is not amortized. The Company did not record any impairment charges related to goodwill for the three or nine months ended September 30, 2023, and 2022. Intangible Assets Other Than Goodwill Intangible assets as of September 30, 2023, and December 31, 2022, consisted of the following:
Amortization expense for intangible assets totaled $241,832 and $304,339 for the three months ended September 30, 2023, and 2022, respectively, and totaled $816,015 and $773,063 for the nine months ended September 30, 2023, and 2022, respectively. The estimated future amortization expense for intangible assets subject to amortization as of September 30, 2023, is summarized below:
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ACCRUED EXPENSES |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCRUED EXPENSES | ACCRUED EXPENSES Accrued expenses are summarized as follows:
Accrued sales tax payable is comprised of amounts due to various states and Canadian provinces.
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OPERATING LEASE LIABILITIES AND COMMITMENTS AND CONTINGENCIES |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OPERATING LEASE LIABILITIES AND COMMITMENTS AND CONTINGENCIES | OPERATING LEASE LIABILITIES AND COMMITMENTS AND CONTINGENCIES The Company has eight operating office lease liabilities and one finance office lease liability with an imputed annual interest rate of 8.0%. Five of the leases were assigned to the Company in connection with its various acquisitions. The remaining lease terms range from less than a year to 6 years, as of September 30, 2023. The following is a summary of operating lease liabilities:
The following is a schedule showing total future minimum lease payments:
From time to time, the Company is involved in routine litigation that arises in the ordinary course of business. There are no ongoing legal proceedings for which management believes the ultimate outcome would have a material adverse effect on the Company’s results of operations and cash flows. On August 11, 2023, the Company entered into a settlement agreement (the “Settlement Agreement”) with Crest Ventures, LLC (“Crest”) and Andrew Telsey to settle all claims in the litigation filed in the District Court for Arapahoe County, Colorado, Case No. 2021CV31301. Pursuant to the Settlement Agreement, the Company paid $1,500,000 to Crest on September 7, 2023. In connection with this settlement, the Company recorded a loss in the second quarter of 2023 of $1,500,000 in accordance with GAAP related to loss contingencies.
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OPERATING LEASE LIABILITIES AND COMMITMENTS AND CONTINGENCIES | OPERATING LEASE LIABILITIES AND COMMITMENTS AND CONTINGENCIES The Company has eight operating office lease liabilities and one finance office lease liability with an imputed annual interest rate of 8.0%. Five of the leases were assigned to the Company in connection with its various acquisitions. The remaining lease terms range from less than a year to 6 years, as of September 30, 2023. The following is a summary of operating lease liabilities:
The following is a schedule showing total future minimum lease payments:
From time to time, the Company is involved in routine litigation that arises in the ordinary course of business. There are no ongoing legal proceedings for which management believes the ultimate outcome would have a material adverse effect on the Company’s results of operations and cash flows. On August 11, 2023, the Company entered into a settlement agreement (the “Settlement Agreement”) with Crest Ventures, LLC (“Crest”) and Andrew Telsey to settle all claims in the litigation filed in the District Court for Arapahoe County, Colorado, Case No. 2021CV31301. Pursuant to the Settlement Agreement, the Company paid $1,500,000 to Crest on September 7, 2023. In connection with this settlement, the Company recorded a loss in the second quarter of 2023 of $1,500,000 in accordance with GAAP related to loss contingencies.
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RISKS AND UNCERTAINTIES |
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Risks and Uncertainties [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RISKS AND UNCERTAINTIES | RISKS AND UNCERTAINTIES Concentration Risk The table below shows customers who account for 10% or more of the Company’s total revenues and 10% or more of the Company’s accounts receivable for the periods presented: Customers exceeding 10% of revenue
Customers exceeding 10% of accounts receivable
The table below shows vendors who account for 10% or more of the Company’s total purchases and 10% or more of the Company’s accounts payable for the periods presented: Vendors exceeding 10% of purchases
Vendors exceeding 10% of accounts payable
Foreign Exchange Risk Although our revenues and expenses are expected to be predominantly denominated in United States dollars, we may be exposed to currency exchange fluctuations. Recent events in the global financial markets have been coupled with increased volatility in the currency markets. Fluctuations in the exchange rate between the U.S. dollar, the Canadian dollar, the Euro, and the currency of other regions in which we may operate may have a material adverse effect on our business, financial condition and operating results. We may, in the future, establish a program to hedge a portion of our foreign currency exposure with the objective of minimizing the impact of adverse foreign currency exchange movements. However, even if we develop a hedging program, it may not mitigate currency risks.
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STOCK-BASED COMPENSATION |
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Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Based on the vesting schedule of the grants of restricted stock units (“RSU” or “RSUs”) and options, stock-based compensation expense totaled $722,647 and $96,767 for the three months ended September 30, 2023, and 2022, respectively, and totaled $1,824,835 and $1,860,767 for the nine months ended September 30, 2023, and 2022, respectively. The Company has adopted the 2021 Omnibus Stock Incentive Plan, as amended (the “Omnibus Incentive Plan”), which provides for the issuance of incentive stock options, grants of RSUs, and stock-based awards to employees, directors, and consultants of the Company to reward and attract employees and compensate the Company’s Board of Directors (the “Board”) and vendors when applicable. The Omnibus Incentive Plan is administered by the Company's Board. Grants of RSUs under the Omnibus Incentive Plan are valued at no less than the market price of the stock on the date of grant. The fair value of the options is calculated using the Black-Scholes pricing model based on the estimated market value of the underlying common stock at the valuation measurement date, the remaining contractual term of the options, risk-free interest rate and expected volatility of the price of the underlying common stock of 100%. There is a moderate degree of subjectivity involved when estimating the value of stock options with the Black-Scholes option pricing model as the assumptions used are moderately judgmental. Grants of RSUs and stock options are sometimes offered as part of an employment offer package, to ensure continuity of service or as a reward for performance. Grants of RSUs and stock options typically require a 1-to-3-year period of continued employment or service performance before the grant of RSUs or stock options vest. No cash flow effects are anticipated for grants of RSUs or stock options. The following schedule shows grants of RSU activity for the nine months ended September 30, 2023:
As of September 30, 2023, the Company has $1.5 million in unrecognized stock-based compensation expense related to these grants of RSUs. The following schedule shows stock option activity for the nine months ended September 30, 2023.
As of September 30, 2023, the Company has $0.1 million in unrecognized stock-based compensation expense related to these stock options. The aggregate intrinsic value of the options outstanding and exercisable as of September 30, 2023, is $0.
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STOCKHOLDERS’ EQUITY |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCKHOLDERS’ EQUITY | STOCKHOLDERS’ EQUITY On May 24, 2021, the Board authorized a stock repurchase program to purchase up to $5.0 million of the currently outstanding shares of the Company’s common stock, over a period of 12 months through open market purchases, in compliance with Rule 10b-18 under the Securities Exchange Act of 1934. On January 18, 2022, the Board authorized a $2.0 million increase to the stock repurchase program, to a total of $7.0 million. On February 2, 2022, the Board authorized an additional $1.5 million increase to the stock repurchase, to a total of $8.5 million. On September 12, 2022, the Board authorized an additional $2.0 million increase to the stock repurchase, to a total of $10.5 million. In total, the Company has repurchased 1,099,833 shares of common stock at an average price per share of $8.25 for a total of $9.1 million, under this program. During the nine months ended September 30, 2023, the Company did not repurchase shares of common stock. During the nine months ended September 30, 2022, the Company repurchased 419,088 shares of common stock at an average price per share of $9.02, for a total price of $3.8 million under this program. As of September 30, 2023, we have $1.4 million remaining under the repurchase program. In February 2021, the Company repurchased 350,000 shares of common stock with an average price per share of $8.50, for a total of $3.0 million, outside of any stock repurchase or publicly announced program. WARRANTSThe following table shows warrant activity for the nine months ended September 30, 2023.
The aggregate intrinsic value of the warrants outstanding and exercisable as of September 30, 2023, is $0.
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WARRANTS |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
WARRANTS | STOCKHOLDERS’ EQUITY On May 24, 2021, the Board authorized a stock repurchase program to purchase up to $5.0 million of the currently outstanding shares of the Company’s common stock, over a period of 12 months through open market purchases, in compliance with Rule 10b-18 under the Securities Exchange Act of 1934. On January 18, 2022, the Board authorized a $2.0 million increase to the stock repurchase program, to a total of $7.0 million. On February 2, 2022, the Board authorized an additional $1.5 million increase to the stock repurchase, to a total of $8.5 million. On September 12, 2022, the Board authorized an additional $2.0 million increase to the stock repurchase, to a total of $10.5 million. In total, the Company has repurchased 1,099,833 shares of common stock at an average price per share of $8.25 for a total of $9.1 million, under this program. During the nine months ended September 30, 2023, the Company did not repurchase shares of common stock. During the nine months ended September 30, 2022, the Company repurchased 419,088 shares of common stock at an average price per share of $9.02, for a total price of $3.8 million under this program. As of September 30, 2023, we have $1.4 million remaining under the repurchase program. In February 2021, the Company repurchased 350,000 shares of common stock with an average price per share of $8.50, for a total of $3.0 million, outside of any stock repurchase or publicly announced program. WARRANTSThe following table shows warrant activity for the nine months ended September 30, 2023.
The aggregate intrinsic value of the warrants outstanding and exercisable as of September 30, 2023, is $0.
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INCOME TAXES |
9 Months Ended |
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Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXESThe Company has experienced cumulative losses for both book and tax purposes since inception. The potential future recovery of any tax assets that the Company may be entitled to due to these accumulated losses is uncertain and any tax assets that the Company may be entitled to have been fully reserved based on management’s current estimates. Management intends to continue maintaining a full valuation allowance on the Company’s deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. The deferred income tax benefit for the three and nine months ended September 30, 2023, and 2022 relates to the reduction in the deferred tax liability associated with the amortization of the intangible assets from the acquisitions of the 2WR Entities and Emerald. The Company records state income taxes paid during the year within the Other income (expense) financial statement line item. |
SUBSEQUENT EVENTS |
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Sep. 30, 2023 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTSNone. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Unaudited Condensed Consolidated Financial Statements | Unaudited Condensed Consolidated Financial StatementsThe Company has prepared the accompanying condensed consolidated financial statements pursuant to the rules and regulations of the SEC for condensed financial reporting. The condensed consolidated financial statements are unaudited and, in the Company’s opinion, include all adjustments, consisting of normal recurring adjustments and accruals necessary for a fair presentation of the Company’s condensed consolidated balance sheets, condensed consolidated statements of operations and comprehensive loss, condensed consolidated statements of stockholders’ equity and condensed consolidated statements of cash flows for the periods presented. The results reported in these condensed consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted in accordance with regulations of the SEC. |
Use of Estimates | Use of Estimates In preparing condensed consolidated financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of assets and liabilities at the date of the condensed consolidated financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates. Significant estimates include estimated revenues earned under construction design-build contracts; estimated useful lives and potential impairment of long-lived assets, intangibles and goodwill; inventory write-offs; allowance for deferred tax assets; and allowance for bad debt.
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Reclassification and Balance Sheet Classifications | Reclassification Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations. Balance Sheet Classifications The Company includes in current assets and liabilities the following amounts that are in connection with construction contracts that may extend beyond one year: contract assets and contract liabilities (including retainage invoiced to customers contingent upon anything other than the passage of time), capitalized costs to fulfill contracts, retainage payable to sub-contractors and accrued losses on uncompleted contracts. A one-year time period is used to classify all other current assets and liabilities when not otherwise prescribed by the applicable accounting principles.
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Contract Assets and Liabilities | Contract Assets and LiabilitiesThe timing between when the Company collects cash from its construction design-build customers can create a contract asset or contract liability. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards As of September 30, 2023, and through the filing of this report, no Accounting Standards Updates have been issued and not yet adopted that are applicable to the Company and that would have a material effect on the Company’s unaudited condensed consolidated financial statements and related disclosures.
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ORGANIZATION, ACQUISITIONS, AND LIQUIDITY (Tables) |
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Organization, Consolidation, Business Combination, And Presentation Of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Purchase Price Allocation | The Company accounted for the acquisition as follows:
The Company accounted for the acquisition as follows:
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Schedule of Pro Forma Information | The following pro-forma amounts reflect the Company’s results as if the acquisition of Emerald had occurred on January 1, 2022. These pro-forma amounts have been calculated after applying the Company’s accounting policies and adjusting the results of the acquisition to reflect the additional amortization of intangibles.
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REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables) |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Revenue, By Source | The table below presents the revenue by source for the three and nine months ended September 30, 2023, and 2022:
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Schedule of Contract Assets and Contract Liabilities from Contracts with Customers | The following table provides information about contract assets and contract liabilities from contracts with customers:
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RELATED PARTY TRANSACTIONS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Related Party Transactions on Financial Statements | The table below presents the revenues for these related party entities for the three and nine months ended September 30, 2023, and 2022:
The table below presents the accounts receivable from these related party entities as of September 30, 2023, and December 31, 2022:
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PREPAID EXPENSES AND OTHER ASSETS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Prepaid Expenses and Other Assets | These amounts are summarized as follows:
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PROPERTY AND EQUIPMENT, NET (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property and Equipment Balances | Property and equipment balances are summarized as follows:
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INVESTMENTS (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Investments | The components of investments as of September 30, 2023, and December 31, 2022, are summarized as follows:
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GOODWILL & INTANGIBLE ASSETS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Finite-Lived Intangible Assets | Intangible assets as of September 30, 2023, and December 31, 2022, consisted of the following:
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Schedule of Indefinite-Lived Intangible Assets | Intangible assets as of September 30, 2023, and December 31, 2022, consisted of the following:
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Schedule of Future Amortization Expenses of Intangible Assets | The estimated future amortization expense for intangible assets subject to amortization as of September 30, 2023, is summarized below:
|
ACCRUED EXPENSES (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Expenses | Accrued expenses are summarized as follows:
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OPERATING LEASE LIABILITIES AND COMMITMENTS AND CONTINGENCIES (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Operating Lease Liabilities | The following is a summary of operating lease liabilities:
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Schedule of Future Minimum Rental Payments for Operating Leases | The following is a schedule showing total future minimum lease payments:
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RISKS AND UNCERTAINTIES (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risks and Uncertainties [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedules of Concentration of Risks | The table below shows customers who account for 10% or more of the Company’s total revenues and 10% or more of the Company’s accounts receivable for the periods presented: Customers exceeding 10% of revenue
Customers exceeding 10% of accounts receivable
The table below shows vendors who account for 10% or more of the Company’s total purchases and 10% or more of the Company’s accounts payable for the periods presented: Vendors exceeding 10% of purchases
Vendors exceeding 10% of accounts payable
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STOCK-BASED COMPENSATION (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of RSU Grants Activity | The following schedule shows grants of RSU activity for the nine months ended September 30, 2023:
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||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock Option Activity | The following schedule shows stock option activity for the nine months ended September 30, 2023.
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WARRANTS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Warrant Activity | The following table shows warrant activity for the nine months ended September 30, 2023.
|
ORGANIZATION, ACQUISITIONS, AND LIQUIDITY - Schedule of Purchase Price Allocation (Details) - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
Oct. 31, 2022 |
Apr. 29, 2022 |
---|---|---|---|---|
Allocation of purchase price: | ||||
Goodwill | $ 15,572,050 | $ 15,572,050 | ||
DVO | ||||
Business Acquisition [Line Items] | ||||
Purchase price | $ 6,072,366 | |||
Allocation of purchase price: | ||||
Accounts receivable, net | 1,134,909 | |||
Right of use asset | 1,197,310 | |||
Property and equipment | 229,058 | |||
Goodwill | 3,444,926 | |||
Intangible assets | 1,276,000 | |||
Accrued expenses | (12,527) | |||
Right of use liability | $ (1,197,310) | |||
Emerald | ||||
Business Acquisition [Line Items] | ||||
Purchase price | $ 7,671,557 | |||
Allocation of purchase price: | ||||
Cash | 622,641 | |||
Accounts receivable, net | 2,666,811 | |||
Contract receivables | 494,456 | |||
Prepayments and other assets | 38,086 | |||
Right of use asset | 82,408 | |||
Property and equipment | 403,008 | |||
Goodwill | 4,135,006 | |||
Intangible assets | 3,659,000 | |||
Accrued expenses | (2,361,302) | |||
Contract liabilities | (1,071,399) | |||
Right of use liability | (82,408) | |||
Deferred tax liability | $ (914,750) |
REVENUE FROM CONTRACTS WITH CUSTOMERS - Schedule of Contract Assets and Liabilities (Details) - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Contract assets: | ||
Revenue recognized in excess of amounts paid or payable (contract receivables) to the Company on uncompleted contracts (contract asset), excluding retainage | $ 7,726,013 | $ 2,874,141 |
Retainage included in contract assets due to being conditional on something other than solely passage of time | 652,644 | 130,141 |
Total contract assets | 8,378,657 | 3,004,282 |
Contract liabilities: | ||
Payments received or receivable (contract receivables) in excess of revenue recognized on uncompleted contracts (contract liability) | 1,954,561 | 1,294,452 |
Retainage included in contract liabilities due to being conditional on something other than solely passage of time | 27,167 | 0 |
Total contract liabilities | $ 1,981,728 | $ 1,294,452 |
REVENUE FROM CONTRACTS WITH CUSTOMERS - Narrative (Details) - USD ($) |
Mar. 27, 2023 |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|---|
Revenue from Contract with Customer [Abstract] | |||
Trade accounts receivable | $ 15,237,726 | $ 12,466,180 | |
Non-trade accounts receivable | 3,103,763 | 2,914,112 | |
Non-trade accounts receivable, miscellaneous | $ 591,850 | 514,112 | |
Non-trade accounts receivable, legal settlement | $ 2,400,000 | ||
Cash payments received, settled litigation | $ 2,400,000 |
RELATED PARTY TRANSACTIONS - Schedule of Related Party Revenues (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Related Party Transaction [Line Items] | ||||
Total revenues from related party transactions | $ 20,934,323 | $ 12,368,293 | $ 56,537,252 | $ 49,702,659 |
Cloud 9 Support, PotCo LLC, And CEA Consortium | ||||
Related Party Transaction [Line Items] | ||||
Total revenues from related party transactions | 384,031 | 2,651 | 1,232,730 | 25,863 |
Revenues - Cloud 9 | ||||
Related Party Transaction [Line Items] | ||||
Total revenues from related party transactions | 0 | 1,571 | 462 | 13,383 |
Revenues - Potco | ||||
Related Party Transaction [Line Items] | ||||
Total revenues from related party transactions | 139,031 | 1,080 | 987,268 | 12,480 |
Revenues - CEA Consortium | ||||
Related Party Transaction [Line Items] | ||||
Total revenues from related party transactions | $ 245,000 | $ 0 | $ 245,000 | $ 0 |
RELATED PARTY TRANSACTIONS - Schedule of Related Party Accounts Receivable (Details) - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Related Party Transaction [Line Items] | ||
Total accounts receivable due from related party transactions | $ 18,341,489 | $ 15,380,292 |
Cloud 9 Support, PotCo LLC, And CEA Consortium | ||
Related Party Transaction [Line Items] | ||
Total accounts receivable due from related party transactions | 485,615 | 24,094 |
Accounts receivable - Cloud 9 | ||
Related Party Transaction [Line Items] | ||
Total accounts receivable due from related party transactions | 0 | 3,920 |
Accounts receivable - Potco | ||
Related Party Transaction [Line Items] | ||
Total accounts receivable due from related party transactions | 240,615 | 20,174 |
Accounts receivable - CEA Consortium | ||
Related Party Transaction [Line Items] | ||
Total accounts receivable due from related party transactions | $ 245,000 | $ 0 |
PREPAID EXPENSES AND OTHER ASSETS - Schedule of Prepaid Expenses and Other Assets (Details) - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Vendor prepayments | $ 1,564,039 | $ 2,459,389 |
Prepaid services and fees | 1,410,639 | 1,346,430 |
Inventories | 250,845 | 320,372 |
Other assets | 42,756 | 38,769 |
Total Prepaid expenses and other assets | $ 3,268,279 | $ 4,164,960 |
PROPERTY AND EQUIPMENT, NET - Narrative (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Property, Plant and Equipment [Abstract] | ||||
Depreciation | $ 131,137 | $ 222,411 | $ 385,186 | $ 343,524 |
INVESTMENTS - Schedule of Components of Investments (Details) - USD ($) |
1 Months Ended | 3 Months Ended | 9 Months Ended |
---|---|---|---|
Aug. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
|
Equity Securities, FV-NI, Cost [Roll Forward] | |||
Balances as of December 31, 2022 | $ 2,559,307 | ||
Paid-in-kind interest | 25,657 | ||
Impairment | (258,492) | ||
Sale of investment | (2,326,472) | ||
Balances as of September 30, 2023 | 0 | ||
Edyza | |||
Equity Securities, FV-NI, Cost [Roll Forward] | |||
Balances as of December 31, 2022 | 0 | ||
Paid-in-kind interest | 0 | ||
Impairment | $ (1,700,000) | 0 | |
Sale of investment | 0 | ||
Balances as of September 30, 2023 | 0 | ||
XS Financial | |||
Equity Securities, FV-NI, Cost [Roll Forward] | |||
Balances as of December 31, 2022 | 2,559,307 | ||
Paid-in-kind interest | 25,657 | ||
Impairment | (258,492) | ||
Sale of investment | $ (2,300,000) | (2,326,472) | |
Balances as of September 30, 2023 | $ 0 |
GOODWILL & INTANGIBLE ASSETS - Narrative (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | |||||
Goodwill | $ 15,572,050 | $ 15,572,050 | $ 15,572,050 | ||
Goodwill, impairment | 0 | $ 0 | 0 | $ 0 | |
Intangible asset amortization | $ 241,832 | $ 304,339 | $ 816,015 | $ 773,063 |
GOODWILL & INTANGIBLE ASSETS - Schedule of Future Amortization Expenses of Intangible Assets (Details) - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Remainder of 2023 | $ 250,010 | |
2024 | 959,788 | |
2025 | 959,788 | |
2026 | 918,205 | |
2027 | 693,555 | |
Thereafter | 825,035 | |
Net Book Value | $ 4,606,381 | $ 5,422,396 |
ACCRUED EXPENSES - Schedule of Accrued Expenses (Details) - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Payables and Accruals [Abstract] | ||
Accrued operating expenses | $ 571,739 | $ 515,858 |
Accrued wages and related expenses | 1,724,528 | 639,614 |
Accrued 401(k) | 25,235 | 262,599 |
Accrued sales tax payable | 1,752,596 | 1,778,890 |
Total accrued expenses | $ 4,074,098 | $ 3,196,961 |
OPERATING LEASE LIABILITIES AND COMMITMENTS AND CONTINGENCIES - Schedule of Operating Lease Liabilities (Details) - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Leases [Abstract] | ||
Operating lease liabilities related to right of use assets | $ 2,264,585 | $ 2,645,598 |
Less current operating lease liabilities | (598,447) | (600,816) |
Non-current operating lease liabilities | $ 1,666,138 | $ 2,044,782 |
OPERATING LEASE LIABILITIES AND COMMITMENTS AND CONTINGENCIES - Schedule of Future Minimum Lease Payments (Details) - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Leases [Abstract] | ||
Remainder of 2023 | $ 203,836 | |
2024 | 754,076 | |
2025 | 573,133 | |
2026 | 404,751 | |
2027 | 346,812 | |
Thereafter | 335,903 | |
Total minimum lease payments | 2,618,511 | |
Less: Amount representing interest | (353,926) | |
Net lease obligations | $ 2,264,585 | $ 2,645,598 |
STOCK-BASED COMPENSATION - Schedule of RSU Grant Activity (Details) - Restricted Stock Units (RSUs) |
9 Months Ended |
---|---|
Sep. 30, 2023
shares
| |
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Grants of RSUs unvested, beginning balance (in shares) | 494,859 |
Grants of RSUs (in shares) | 524,609 |
Forfeiture/cancelled (in shares) | (11,291) |
Grants of RSUs vested and issued (in shares) | (437,928) |
Grants of RSUs unvested, ending balance (in shares) | 570,249 |
STOCKHOLDERS’ EQUITY (Details) - USD ($) |
1 Months Ended | 9 Months Ended | 28 Months Ended | |||||
---|---|---|---|---|---|---|---|---|
May 24, 2021 |
Feb. 28, 2021 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 12, 2022 |
Feb. 02, 2022 |
Jan. 18, 2022 |
|
Equity [Abstract] | ||||||||
Stock repurchase program, authorized amount (up to) | $ 5,000,000 | $ 10,500,000 | $ 8,500,000 | $ 7,000,000 | ||||
Stock repurchase program, period in force | 12 months | |||||||
Stock repurchase program, increased authorized amount | $ 2,000,000 | $ 1,500,000 | $ 2,000,000 | |||||
Stock repurchased (in shares) | 350,000 | 0 | 419,088 | 1,099,833 | ||||
Stock repurchased, average price per share (in dollars per share) | $ 8.50 | $ 9.02 | $ 8.25 | |||||
Stock repurchased during period | $ 3,000,000 | $ 3,800,000 | $ 9,100,000 | |||||
Stock repurchase program, amount remaining under program | $ 1,400,000 | $ 1,400,000 |
WARRANTS - Schedule of Warrant Activity (Details) - $ / shares |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2023 |
Dec. 31, 2022 |
|
Number of Shares | ||
Warrants outstanding, beginning balance (in shares) | 311,499 | |
Exercised (in shares) | 0 | |
Expired (in shares) | (1,000) | |
Warrants outstanding, ending balance (in shares) | 310,499 | 311,499 |
Warrants exercisable (in shares) | 310,499 | |
Weighted Average Remaining Life (Years) | ||
Warrants outstanding, beginning of period | 2 years 1 month 6 days | 2 years 9 months 18 days |
Exercised | 0 years | |
Expired | 0 years | |
Warrants outstanding, end of period | 2 years 1 month 6 days | 2 years 9 months 18 days |
Warrants exercisable, end of period | 2 years 1 month 6 days | |
Weighted Average Exercise Price | ||
Warrants outstanding, beginning balance (in dollars per share) | $ 12.32 | |
Exercised (in dollars per share) | 0 | |
Expired (in dollars per share) | 6.00 | |
Warrants outstanding, ending balance (in dollars per share) | 12.34 | $ 12.32 |
Warrants exercisable (in dollars per share) | $ 12.34 |
WARRANTS - Narrative (Details) |
Sep. 30, 2023
USD ($)
|
---|---|
Equity [Abstract] | |
Warrants, outstanding, intrinsic value | $ 0 |
Warrants, exercisable, intrinsic value | $ 0 |
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