Item 1.01 Entry into a Material Definitive
Agreement
On September 20, 2018, we closed
the acquisition of Two JS LLC, dba The Big Tomato, a Colorado limited liability company. (“Big T” or “Big
Tomato”). The effective date of this acquisition was September 17, 2018.
To acquire the Big T we issued
an aggregate of 1,933,329 shares of our common stock to the Big T members in exchange for 100% of their issued and
outstanding member interests, representing approximately 7% of our issued and outstanding stock following the closing. We
also paid approximately $307,000 for inventory in cash, including the assumption of approximately $250,000 in inventory
account payable.
The transaction was undertaken as a reverse
triangular merger, wherein we formed a wholly owned subsidiary company, which merged with and into Big T. As a result, Big T is
now a wholly owned subsidiary of our Company. The transaction did not result in a change in our current management.
Business of The Big Tomato
Two JS LLC, dba The Big Tomato operates
a retail location in Aurora, CO. It has been a leading supplier of hydroponics & indoor gardening supplies in Denver, Colorado
and the surrounding communities since May 2001. It has established a reputation as a store that is fully stocked, has great pricing
and has a very knowledgeable staff. It has continued to provide thousands of indoor gardeners and commercial growers with top quality
hydroponic supplies at the best prices. The store maintains an extremely large inventory of hydroponic and gardening supplies.
BigTomato’s new website, TheBigTomato.com was created for the discriminating indoor gardener who is looking for reliable
gardening help and customer service while at the same time enjoying the great savings on the products they want to purchase. The
website is supported by the company’s brick-and-mortar store located in Aurora, Colorado. Every sales staff member is an
experienced grower that is trained to service customers and answer any questions. Products include indoor gardening products, grow
boxes, grow lights, hydroponic systems, ballasts, bulbs, nutrients and additives, and other high-end hydroponic items.
Our Operations after the Big Tomato Acquisition
Our current
business activities will remain but are expected to be enhanced by our entrance into the retail market. Our directors and executive
officers will remain as they consist currently.
Employees
As a result of the acquisition of Big Tomato
we anticipate that we will add a total of seven (7) full time new employees, including a manager and six retail employees. None
of their employees is represented by a labor union or a collective bargaining agreement. Big Tomato consider its relations
with its employees to be good.
Financial Statements of Big Tomato’s
There is no requirement for Big Tomato’s
to provide us with an independent audited financial statement for the prior two fiscal years and any interim periods because the
aggregate value of this acquisition is less than 20% of our current assets. We intend to consolidate their financial statements
into our Form 10-Q report for the nine months ended September 30, 2018.