| ACQUISITIONS |
The Company accounts for acquisitions in accordance with ASC 805 “Business Combinations.” Assets acquired and liabilities assumed are recorded in the accompanying consolidated balance sheets at their estimated fair values, as of the acquisition date. For all acquisitions, the preliminary allocation of the purchase price was based upon a preliminary valuation, and the Company’s estimates and assumptions are subject to change within the measurement period as valuations are finalized. The table below represents the allocation of the preliminary purchase price to the acquired net assets.
| |
|
|
East Coast Hydro |
|
|
Humboldt Depot |
|
|
Superior Growers Supply |
|
|
Central Coast Garden |
|
|
Santa Rosa Hydro |
|
|
Heavy Gardens |
|
|
Total |
|
| |
Inventory |
|
$ |
1,002,300 |
|
|
$ |
389,800 |
|
|
$ |
517,950 |
|
|
$ |
254,900 |
|
|
$ |
1,500,000 |
|
|
$ |
- |
|
|
$ |
3,664,950 |
|
| |
Prepaids and other current assets |
|
|
30,200 |
|
|
|
6,800 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
37,000 |
|
| |
Furniture and equipment |
|
|
45,600 |
|
|
|
30,000 |
|
|
|
50,000 |
|
|
|
4,600 |
|
|
|
100,000 |
|
|
|
- |
|
|
|
230,200 |
|
| |
Goodwill |
|
|
1,341,400 |
|
|
|
654,000 |
|
|
|
540,250 |
|
|
|
136,400 |
|
|
|
4,884,500 |
|
|
|
433,000 |
|
|
|
7,989,550 |
|
| |
Total |
|
$ |
2,419,500 |
|
|
$ |
1,080,600 |
|
|
$ |
1,108,200 |
|
|
$ |
395,900 |
|
|
$ |
6,484,500 |
|
|
$ |
433,000 |
|
|
$ |
11,921,700 |
|
The table below represents the consideration paid for the net assets acquired in business combinations.
| |
|
|
East Coast Hydro |
|
|
Humboldt Depot |
|
|
Superior Growers Supply |
|
|
Central Coast Garden |
|
|
Santa Rosa Hydro |
|
|
Heavy Gardens |
|
|
Total |
|
| |
Cash |
|
$ |
1,201,200 |
|
|
$ |
896,600 |
|
|
$ |
817,950 |
|
|
$ |
257,000 |
|
|
$ |
2,425,000 |
|
|
$ |
150,000 |
|
|
$ |
5,747,750 |
|
| |
Assumption of payables |
|
|
66,300 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
66,300 |
|
| |
Seller financing |
|
|
600,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
415,000 |
|
|
|
72,000 |
|
|
|
1,087,000 |
|
| |
Common stock |
|
|
552,000 |
|
|
|
184,000 |
|
|
|
290,250 |
|
|
|
138,900 |
|
|
|
3,644,500 |
|
|
|
211,000 |
|
|
|
5,020,650 |
|
| |
Total |
|
$ |
2,419,500 |
|
|
$ |
1,080,600 |
|
|
$ |
1,108,200 |
|
|
$ |
395,900 |
|
|
$ |
6,484,500 |
|
|
$ |
433,000 |
|
|
$ |
11,921,700 |
|
The following table discloses the date of the acquisitions noted above and the revenue and earnings included in the consolidated income statement from the date of acquisition to the period ended September 30, 2018
| |
|
|
East Coast Hydro |
|
|
Humboldt Depot |
|
|
Superior Growers Supply |
|
|
Central Coast Garden |
|
|
Santa Rosa Hydro |
|
|
Heavy Gardens |
|
|
Total |
|
| |
Acquisition date |
|
|
1/23/2018 |
|
|
|
1/30/2018 |
|
|
|
4/12/2018 |
|
|
|
6/8/2018 |
|
|
|
7/13/2018 |
|
|
|
9/14/2018 |
|
|
|
|
|
| |
Revenue |
|
$ |
3,450,600 |
|
|
$ |
2,030,200 |
|
|
$ |
1,926,400 |
|
|
$ |
498,000 |
|
|
$ |
1,594,900 |
|
|
$ |
121,500 |
|
|
$ |
9,621,600 |
|
| |
Earnings |
|
$ |
613,000 |
|
|
$ |
147,600 |
|
|
$ |
178,200 |
|
|
$ |
56,000 |
|
|
$ |
165,300 |
|
|
$ |
5,800 |
|
|
$ |
1,165,900 |
|
The following represents the proforma consolidated income statement as if the acquisitions had been included in the consolidated results of the Company for the entire period for the nine months ended September 30, 2017.
Pro forma consolidated income statement
| |
|
|
September 30,
2017 |
|
| |
Revenue |
|
$ |
31,450,000 |
|
| |
Earnings |
|
$ |
(337,900 |
) |
|