Annual report pursuant to Section 13 and 15(d)

Correction of Error in Previously Reported Consolidated Financial Statements

v3.21.1
Correction of Error in Previously Reported Consolidated Financial Statements
12 Months Ended
Dec. 31, 2020
Correction of Error in Previously Reported Consolidated Financial Statements [Abstract]  
CORRECTION OF ERROR IN PREVIOUSLY REPORTED CONSOLIDATED FINANCIAL STATEMENTS
18. CORRECTION OF ERROR IN PREVIOUSLY REPORTED CONSOLIDATED FINANCIAL STATEMENTS

 

Revision

 

During the fourth quarter of 2020, we identified amounts presented in our inventory and costs of sales reported in prior years that required revision. The revised amounts resulted from an accumulation of errors related to rebates issued from vendors.  We determined these errors accumulated in 2019 and prior years. Retained earnings as of January 1, 2019, was also revised to reflect the impact of the error on prior periods. The impact of the error for periods prior 2019 was $525,786.

 

Pursuant to the guidance of Staff Accounting Bulletin No. 99, Materiality, we concluded that the errors were not material to any of our prior year consolidated financial statements. The accompanying consolidated balance sheet and income statement as of December 31, 2019 includes a cumulative revision relating to this error.

 

This revision did not have any material effect on income from operations, net income, or cash flows. This revision had no effect on our cash balances.

 

The following table compares previously reported balances, adjustments, and revised balances as of December 31, 2019.

 

The revised consolidated financial statements for the year ended December 31, 2019 with the adjustment is detailed below.

 

    December 31, 2019  
    As Previously Reported     Adjustment     Revised  
ASSETS                  
Current assets:                  
Cash and cash equivalents   $ 12,979,444             $ 12,979,444  
Accounts receivable, net    

2,953,921

             

2,953,921

 
Notes receivable, net    

1,037,541

             

1,037,541

 
Inventory     22,659,357       (1,082,748 )     21,576,609  
Prepaids and other current assets     2,549,559               2,549,559  
Total current assets     42,171,822              

41,097,074

 
                         
Property and equipment, net     3,340,616               3,340,616  
Operating leases right-of-use assets, net     7,628,591               7,628,591  
Notes receivable    

463,747

             

463,747

 
Intangible assets, net     233,280               233,280  
Goodwill     17,798,932               17,798,932  
Other assets     377,364               377,364  
TOTAL ASSETS   $ 72,022,352             $ 70,939,604  
                         
LIABILITIES & STOCKHOLDERS' EQUITY                        
Current liabilities:                        
Accounts payable   $ 6,024,750               6,024,750  
Payroll and payroll tax liabilities     1,072,142               1,072,142  
Customer deposits     2,503,785               2,503,785  
Sales tax payable     533,656               533,656  
Current maturities of right-of-use assets     1,836,700               1,836,700  
Current portion of long-term debt     110,231               110,231  
Total current liabilities     12,081,264               12,081,264  
                         
Operating leases right-of-use assets, net of current maturities     5,807,266               5,807,266  
Long-term debt, net of current portion     242,079               242,079  
Total liabilities     18,130,609               18,130,609  
                         
Stockholders' Equity:                        
Common stock; $.001 par value; 100,000,000 shares 36,876,305 shares issued and outstanding as of December 31, 2019     36,876               36,876  
Additional paid-in capital     60,742,055               60,742,055  
Accumulated deficit     (6,887,188 )     (1,082,748 )     (7,969,936 )
Total stockholders' equity     53,891,743               52,808,995  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 72,022,352             $ 70,939,604  

 

    Year Ended December 31, 2019  
    As Previously Reported     Adjustment     Revised  
Sales   $ 79,733,568             $ 79,733,568  
Cost of sales     57,171,721       556,962       57,728,683  
Gross profit     22,561,847               22,004,885  
                         
Operating expenses:                        
Store operations     10,095,422               10,095,422  
General and administrative     3,172,019               3,172,019  
Share based compensation     2,490,535               2,490,535  
Depreciation and amortization     1,044,553               1,044,553  
Salaries and related expenses     3,619,197               3,619,197  
Total operating expenses     20,421,726               20,421,726  
                         
Net income from operations     2,140,121               1,583,159  
                         
Other income (expense):                        
Miscellaneous income (expense)     (4,545 )             (4,545 )
Interest income     144,725               144,725  
Interest expense     (401,497 )             (401,497 )
Total non-operating income (expense), net     (261,317 )             (261,317 )
                         
Net income before taxes     1,878,804               1,321,842  
                         
Provision for income taxes     0               0  
                         
Net income   $ 1,878,804               1,321,842  
                         
Net income per share, basic   $ 0.06             $ 0.04  
Net income per share, diluted   $ 0.06             $ 0.04  
                         
Weighted average shares outstanding, basic     32,833,594               32,833,594  
Weighted average shares outstanding, diluted     33,910,154              

33,910,154

 

 

    For The Year Ended December 31, 2019  
Cash Flows from Operating Activities:   As Previously Reported     Adjustment     Revised  
Net income   $ 1,878,804       (556,962 )   $ 1,321,842  
Adjustments to reconcile net income to net cash used in operating Activities:                     -  
Depreciation and amortization     1,044,553               1,044,553  
Provision for doubtful accounts receivable     172,135               172,135  
Inventory valuation reserve     429,126               429,126  
Amortization of debt discount     356,306               356,306  
Stock based compensation     2,490,535               2,490,535  
Other     (66,536 )             (66,536 )
Changes in operating assets and liabilities:                     -  
(Increase) decrease in:                     -  
Accounts receivable     (3,764,947 )             (3,764,947 )
Inventory     (10,482,014 )     556,962       (9,925,052 )
Prepaid expenses and other assets     (2,061,701 )             (2,061,701 )
Increase (decrease) in:                     -  
Accounts payable and accrued liabilities     4,165,188               4,165,188  
Operating leases     15,375               15,375  
Customer deposits     1,987,747               1,987,747  
Income taxes     -               -  
Payroll and payroll tax liabilities     154,471               154,471  
Sales taxes payable     341,698               341,698  
Net Cash and Cash Equivalents (Used In) Operating Activities     (3,339,260 )             (3,339,260 )
Cash Flows from Investing Activities:                        
Assets acquired in business combinations     (9,458,743 )             (9,458,743 )
Purchase of property and equipment     (2,232,812 )             (2,232,812 )
Purchase of goodwill and other intangibles     (119,125 )             (119,125 )
Net Cash and Cash Equivalents (Used In) Investing Activities     (11,810,680 )             (11,810,680 )
Cash Flows from Financing Activities:                        
Principal payments on long term debt     (460,129 )             (460,129 )
Stock redemptions     -               -  
Proceeds from the sales of common stock and exercise of warrants and options, net of expenses     13,949,532               13,949,532  
Net Cash and Cash Equivalents Provided by Financing Activities     13,489,403               13,489,403  
                         
Net Increase(decrease) in Cash and Cash Equivalents     (1,660,537 )             (1,660,537 )
Cash and Cash Equivalents at Beginning of year     14,639,981               14,639,981  
Cash and Cash Equivalents at End of year   $ 12,979,444             $ 12,979,444