Quarterly report pursuant to Section 13 or 15(d)

Acquisitions

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Acquisitions
9 Months Ended
Sep. 30, 2018
Acquisitions [Abstract]  
ACQUISITIONS
11. 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 )