UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, ~~2019~~2020

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from _________ to _________

Commission file number: 000-55802

~~H/CELL ENERGY~~VISION HYDROGEN CORPORATION

(Exact name of registrant as specified in its charter)

Nevada		47-4823945
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

~~3010 LBJ Freeway, Suite 1200 Dallas, TX 75234~~95 Christopher Columbus Drive, 16^th Floor, Jersey City, NJ 07302

(Address of principal executive offices) (zip code)

~~(972) 888-6009~~(551) 298-3600

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ~~Yes☒~~Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒.

Securities registered pursuant to Section 12(b) of the Act: None.

As of ~~November 12, 2019,~~October 30, 2020, there were ~~7,694,024~~397,576 shares of registrant’s common stock outstanding.

~~H/CELL ENERGY~~VISION HYDROGEN CORPORATION

INDEX

PART I.	FINANCIAL INFORMATION

	ITEM 1.	Financial Statements

		Condensed consolidated balance sheets as of September 30, ~~2019~~2020 (unaudited) and December 31, ~~2018~~2019	3

		Condensed consolidated statements of operations for the three and nine months ended September 30, ~~2019~~2020 and ~~2018~~2019 (unaudited)	4

		Condensed consolidated ~~statement~~statements of stockholders’ equity (deficit) for the three and nine months ended September 30, ~~2019~~2020 and ~~2018~~2019 (unaudited)	55-6

		Condensed consolidated statements of cash flows for the nine months ended September 30, ~~2019~~2020 and ~~2018~~2019 (unaudited)	7

		Notes to condensed consolidated financial statements (unaudited)	~~8-23~~8

	ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	~~24-30~~22

	ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	3125

	ITEM 4.	Controls and Procedures	3125

PART II.	OTHER INFORMATION

	ITEM 1.	Legal Proceedings	3226
	ITEM 1A.	Risk Factors	3226
	ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3226
	ITEM 3.	Defaults Upon Senior Securities	3226
	ITEM 4.	Mine Safety Disclosures	3226
	ITEM 5.	Other Information	3226
	ITEM 6.	Exhibits	3226

	SIGNATURES		3327

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

~~H/CELL ENERGY~~VISION HYDROGEN CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30, 2020			December 31, 2019
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	54,840		$	25,059
Prepaid expenses		16,830			4,079
Other current assets		35,000
Current assets held for sale		-			1,093,444
Total current assets		106,670			1,122,582

Security deposits and other non-current assets		150			600
Deferred offering cost		-			130,072
Investment in Volt H2		175,000			-
Non-current assets held for sale		-			2,215,177
Total non-current assets		175,150			2,345,849

Total assets	$	281,820		$	3,468,431

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities
Accounts payable and accrued expenses	$	9,833		$	157,484
Sales and withholding tax payable		-			2,552
Current convertible note payable		-			80,500
Loan payable		20,000			-
Loan payable – related party		580,232			-
Accrued interest – related party		7,809			-
Current liabilities held for sale		-			1,131,193
Total current liabilities		617,874			1,371,729

Noncurrent liabilities
Non-current liabilities held for sale		-			1,199,984
Total noncurrent liabilities		-			1,199,984

Total liabilities		617,874			2,571,713

Commitments and contingencies

Stockholders’ equity (deficit)
Preferred stock - $0.0001 par value; 5,000,000 shares authorized; 0 shares issued and outstanding		-			-
Common stock - $0.0001 par value; 100,000,000 shares authorized; 397,576 and 386,276 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively		40			39
Additional paid-in capital		3,059,846			2,970,419
Accumulated deficit		(3,395,940	)		(2,073,740	)
Total stockholders’ equity (deficit)		(336,054	)		896,718

TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY	$	281,820		$	3,468,431

September 30, 2019 December 31, 2018
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 242,389 $ 359,134
Accounts receivable 1,019,524 1,087,381
Prepaid expenses 19,763 16,282
Current right of use asset 85,807 -
Costs and earnings in excess of billings 3,709 45,478
Total current assets 1,371,192 1,508,275

Property and equipment, net 464,075 476,436
Security deposits and other non-current assets 31,109 32,530
Deferred tax asset 50,000 50,000
Customer lists, net 68,282 83,645
Deferred offering cost 133,797 -
Right of use asset 139,607 -
Goodwill 1,373,621 1,373,621

Total assets $ 3,631,683 $ 3,524,507

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities
Accounts payable and accrued expenses $ 746,081 $ 891,354
Current line of credit 303,526 -
Billings in excess of costs and earnings 44,301 195,331
Sales and withholding tax payable 50,072 59,857
Current equipment notes payable 41,358 38,991
Current operating lease liability 85,807 -
Current finance lease payable 73,842 65,265
Current convertible notes payable – related party, net of discounts 257,659 -
Income tax payable 33,134 48,643
Total current liabilities 1,635,780 1,299,441

Noncurrent liabilities
Line of credit - 28,359
Lease operating liability 141,171 -
Earn out payable 204,383 190,736
Finance leases 268,269 232,876
Equipment notes payable 76,159 121,038
Convertible notes payable – related party, net of discounts 155,442 29,122
Total noncurrent liabilities 845,424 602,131

Total liabilities 2,481,204 1,901,572

Commitments and contingencies

Stockholders’ equity
Preferred stock - $0.0001 par value; 5,000,000 shares authorized;
0 shares issued and outstanding - -
Common stock - $0.0001 par value; 25,000,000 shares authorized;
7,694,024 and 7,586,024 shares issued and outstanding
as of September 30, 2019 and December 31, 2018, respectively 769 758
Additional paid-in capital 2,950,136 2,983,476
Accumulated deficit (1,724,028 ) (1,285,764 )
Accumulated other comprehensive loss (76,398 ) (75,535 )
Total stockholders’ equity 1,150,479 1,622,935

TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY $ 3,631,683 $ 3,524,507

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

~~H/CELL ENERGY~~VISION HYDROGEN CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS – OTHER COMPREHENSIVE INCOME

(UNAUDITED)

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,						For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2019			2018			2019			2018			2020			2019			2020			2019

Revenue
Construction income	$	1,701,365		$	1,830,992		$	5,333,559		$	5,535,352
Related party		-			8,499			-			40,288
Sales													$	-		$	-		$	-		$	-
Total revenue		1,701,365			1,839,491			5,333,559			5,575,640			-			-			-			-

Cost of goods sold
Direct costs		1,241,630			1,438,669			3,747,390			3,901,125			-			-			-			-
Direct costs – related party		-			9,019			-			40,636
Total cost of goods sold		1,241,630			1,447,688			3,747,390			3,941,761			-			-			-			-

Gross profit		459,735			391,803			1,586,169			1,633,879			-			-			-			-

Operating expenses
General and administrative expenses		555,682			607,125			1,794,191			1,850,140			45,043			83,166			214,800			359,858
Management fees – related party		21,500			19,500			60,500			58,500			33,750			21,500			63,750			60,500
Total operating expenses		577,182			626,625			1,854,691			1,908,640			78,793			104,666			278,550			420,358

Loss from operations		(117,447	)		(234,822	)		(268,522	)		(274,761	)		(78,793	)		(104,666	)		(278,550	)		(420,358	)
											-
Other expenses
Interest expense		11,801			7,544			23,892			21,636			-			-			47,289			-
Interest expense – related party		64,065			19,877			158,220			52,768			8,312			64,065			46,655			158,220
Change in fair value earn-out		4,704			4,290			13,647			11,028			-			4,704			4,875			13,647
(Gain) loss on fixed asset disposal		(8,614	)		795			(26,017	)		4,149
Total other expenses		71,956			32,506			169,742			78,553			8,312			68,769			98,819			171,867

Net loss from continuing operations													$	(87,105	)	$	(173,435	)	$	(377,369	)	$	(592,225	)

Net income (loss) from discontinued operations (including loss on disposal of $789,425)														-			(31,204	)		(944,831	)		153,098

Net loss	$	(189,403	)	$	(267,328	)	$	(438,264	)	$	(364,342	)	$	(87,105	)	$	(204,639	)	$	(1,322,200	)	$	(439,127	)

Other comprehensive income (loss), net

Foreign currency translation adjustment		(15,236	)		(7,828	)		(863	)		(40,657	)

Comprehensive loss	$	(204,639	)	$	(275,126	)	$	(439,127	)	$	(404,999	)

Earnings (loss) per share
Loss per share (continuing operations)
Basic													$	(0.22	)	$	(0.46	)	$	(0.96	)	$	(1.56	)
Diluted													$	(0.22	)	$	(0.46	)	$	(0.96	)	$	(1.56	)
Earnings (loss) per share (discontinued operations)
Basic	$	(0.03	)	$	(0.04	)	$	(0.06	)	$	(0.05	)	$	0.00		$	(0.08	)	$	(2.40	)	$	0.40
Diluted	$	(0.03	)	$	(0.04	)	$	(0.06	)	$	(0.05	)	$	0.00		$	(0.08	)	$	(2.40	)	$	0.40
Weighted average common shares outstanding
Basic		7,574,247			7,586,024			7,596,286			7,469,307			397,576			378,712			392,974			379,814
Diluted		7,574,247			7,586,024			7,596,286			7,469,307			397,576			378,712			392,974			379,814

~~The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.~~

~~H/CELL ENERGY CORPORATION~~

~~CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY~~

~~FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND SEPTEMBER 30, 2018~~

~~(UNAUDITED)~~

Common Stock Preferred Stock Additional Accumulated
Accumulated
Other Total
Number of
Shares Amount Number of
shares Amount Paid-In
Capital Income
(Deficit) Comprehensive Income (Loss) Stockholders’ Equity
Beginning, January 1, 2019 7,586,024 $ 758           - $ - $ 2,983,476 $ (1,285,764 ) $ (75,535 ) $ 1,622,935

Stock-based compensation - - - - 8,562 - - 8,562

Share donation 35,000 4 - - 23,446 - - 23,450

Beneficial conversion feature - - - - 97,500 - - 97,500

Foreign currency translation adjustment - - - - - - 18,612 18,612

Debt extinguishment - - - - (216,460 ) - - (216,460 )

Net loss - - - - - (143,638 ) - (143,638 )

Ending, March 31, 2019 7,621,024 $ 762 - $ - $ 2,896,524 $ (1,429,402 ) $ (56,923 ) $ 1,410,961

Stock-based compensation - - - - 2,074 - - 2,074

Foreign currency translation adjustment - - - - - - (4,239 ) (4,239 )

Net loss - - - - - (105,223 ) - (105,223 )

Ending, June 30, 2019 7,621,024 $ 762 - $ - $ 2,898,598 $ (1,534,625 ) $ (61,162 ) $ 1,303,573

Stock-based compensation - - - - 4,456 - - 4,456

Cancelled shares (35,000 ) (4 ) - - (23,450 ) - - (23,454 )

Commitment shares 30,000 3 - - 45,000 - - 45,003

Equity financing (net proceeds)
78,000

8

-

-

25,532

-

-

25,540

Foreign currency translation adjustment - - - - - - (15,236 ) (15,236 )

Net loss - - -      - - (189,403 ) - (189,403 )

Ending September 30, 2019 7,694,024 $ 769 - $ - $ 2,950,136 $ (1,724,028 ) $ (76,398 ) $ 1,150,479
~~The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.~~
Common Stock Preferred Stock Additional Accumulated
Accumulated
Other
Total
Number of
Shares Amount Number of
shares Amount Paid-In
Capital Income
(Deficit) Comprehensive Income (Loss) Stockholders’ Equity
Beginning, January 1, 2018 7,041,579 $ 704         - - $ 1,335,656 $ (731,754 ) $ (28,810 ) $ 575,796

Issuance of common stock February 2018, PVBJ Acquisition 444,445 44 - - 1,183,516 - - 1,183,560

Stock-based compensation - - - - 17,148 - - 17,148

Beneficial conversion feature - - - - 395,000 - - 395,000

Foreign currency translation adjustment - - - - - - (10,259 ) (10,259 )

Net loss - - - - - (110,969 ) - (110,969 )

Ending, March 31, 2018 7,486,024 $ 748 - $ - $ 2,931,320 $ (842,723 ) $ (39,069 ) $ 2,050,276

Stock-based compensation - - - - 17,149 - - 17,149

Issuance of common stock April 2018, Stock Options 100,000 10 - - 990 - - 1,000

Foreign currency translation adjustment - - - - - - (22,570 ) (22,570 )

Net income - - - - - 13,955 - 13,955

Ending, June 30, 2018 7,586,024 $ 758 - $ - $ 2,949,459 $ (828,768 ) $ (61,639 ) $ 2,059,810

Stock-based compensation - - - - 17,545 - - 17,545

Foreign currency translation adjustment - - - - - - (7,828 ) (7,828 )

Net loss
- - - - - (267,328 ) - (267,328 )
Ending September 30, 2018 7,586,024 $ 758 - $        - $ 2,967,004 $ (1,096,096 ) $ (69,467 ) $ 1,802,199
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6 4

VISION HYDROGEN CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019
(UNAUDITED)
Common Stock Preferred Stock

Number of
Shares
Amount
Number of
shares
Amount
Additional
Paid-In
Capital
Accumulated Deficit
Total
Stockholders’ Equity

Beginning January 1, 2019 379,302 $       38           - $        - $ 2,984,196 $ (1,361,299 ) $            1,622,935

Stock-based compensation - - - - 8,562 - 8,562
Share donation 1,750 - - - 23,446 - 23,446

Beneficial conversion feature - - - - 97,500 - 97,500

Debt extinguishment - - - - (216,460 ) - (216,460 )

Net loss - - - - - (125,026 ) (125,026 )

Ending March 31, 2019 381,052 $ 38 - $ - $ 2,897,244 $ (1,486,325 ) $ 1,410,957

Stock-based compensation - - - - 2,074 - 2,074

Net loss - - - - - (109,462 ) (109,462 )

Ending June 30, 2019 381,052 $ 38 - $ - $ 2,899,318 $ (1,595,787 ) $ 1,303,569

Stock-based compensation - - - - 4,456 - 4,456

Cancelled shares (1,750 ) - - - (23,450 ) - (23,450 )

Commitment shares 1,500 - - - 45,000 - 45,000

Equity financing 3,900 - - - 25,533 - 25,533

Net loss - - - - - (204,639 ) (204,639 )

Ending September 30, 2019 384,702 $ 38 - $ - $ 2,950,857 $ (1,800,426 ) $ 1,150,469
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
VISION HYDROGEN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020
(UNAUDITED)

Common Stock
Preferred Stock

Number of
Shares
Amount
Number of
shares
Amount
Additional
Paid-In
Capital
Accumulated Deficit
Total
Stockholders’ Equity (Deficit)

Beginning January 1, 2020 386,276 $       39       -        - $ 2,970,419 $ (2,073,740 ) $        896,718

Stock-based compensation - - - - 7,993 - 7,993

Equity financing 3,150 - - - 19,833 - 19,833

Debt extinguishment - - - - 39,954 - 39,954

Net loss - - - - - (271,787 ) (271,787 )

Ending March 31, 2020 389,426 $ 39 - $ - $ 3,038,199 $ (2,345,527 ) $ 692,711

Stock-based compensation - - - - - - -

Equity financing 3,150 - - - 6,187 - 6,187

Share conversion 5,000 1 - - 15,460 - 15,461

Net loss - - - - - (963,308 ) (963,308 )

Ending June 30, 2020 397,576 $ 40 - $ - $ 3,059,846 $ (3,308,835 ) $ (248,949 )

Net loss
- - - - - (87,105 ) (87,105 )
Ending September 30, 2020 397,576 $ 40 - $ - $ 3,059,846 $ (3,395,940 ) $ (336,054 )
6
~~H/CELL ENERGY~~VISION HYDROGEN CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
For the Nine Months Ended September 30,
2019 2018

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss $ (438,264 ) $ (364,342 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 256,864 99,498
Stock-based compensation 15,092 51,821
(Gain) loss on sale of assets (25,458 ) 4,149
Change in fair value contingent consideration 13,647 11,028
Change in operating assets and liabilities:
Change in operating right of use asset (233,558 ) -
Change in operating lease liability 235,179 -
Accounts and retainage receivable 41,908 (456,672 )
Prepaid expenses and other costs (2,852 ) (9,121 )
Costs in excess of billings 41,277 (26,786 )
Accounts payable and accrued expenses (132,237 ) 311,906
Billings in excess of costs (149,072 ) (30,246 )

Net cash used in operating activities (377,474 ) (408,765 )

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of fixed assets (123,241 ) (13,909 )
Cash acquired in business acquisition - 30,408
Security deposits (373 ) (13,898 )
Proceeds from disposition of property and equipment 124,779 5,534

Net cash provided by investing activities 1,165 8,135

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issuance of convertible debt 147,500 395,000
Net proceeds from line of credit 263,093 251,065
Repayments on capital leases (44,113 ) (42,123 )
Repayments on notes payable (35,671 ) (36,229 )
Repayments on long-term debt - (225,903 )
Legal fees associated with financing (90,000 ) -
Gross proceeds from equity financing 26,746 -
Proceeds related to stock option exercises - 1,000

Net cash provided by financing activities 267,555 342,810

Net decrease in cash and cash equivalents (108,754 ) (57,820 )

Effect of foreign currency translation on cash (7,991 ) (66,644 )

Cash and cash equivalents - beginning of period 359,134 455,700

Cash and cash equivalents - end of period $ 242,389 $ 331,236

Supplemental disclosure of non-cash investing and financing activities

Common stock issued for acquisition of business $ - $ 1,177,779
Fair value of net assets acquired in business combination $ - $ 2,056,344
Beneficial conversion feature $ 190,000 $ 378,232
Vehicle leases $
120,413
$ -
Stock issued for deferred financing fee
$
45,000
$ -
Reclassification of deferred financing fee to additional paid in capital $ 1,206 $ -
For the Nine Months Ended September 30,
2020 2019
CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss from continuing operations $ (377,369 ) $ (592,225 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 50,462 133,684
Stock-based compensation 7,993 15,092
Change in fair value contingent consideration 4,875 13,647
Change in operating assets and liabilities:
Other long-term asset 94,180 -
Prepaid expenses and other costs (12,750 ) 5,285
Accounts payable and accrued expenses (173,853 ) 101,934

Net cash used in in operating activities – continuing operations (406,462 ) (322,583 )
Net cash provided by (used in) operating activities – discontinued operations 128,054 (54,891 )
Net cash used in operating activities (278,408 ) (377,474 )

CASH FLOWS FROM INVESTING ACTIVITIES

Investment in Volt (175,000 )
Cash disposed of in disposition of subsidiaries (322,101 ) -

Net cash used in investing activities – continuing operations (497,101 ) -
Net cash used in investing activities – discontinued operations (21,031 ) 1,165
Net cash used in investing activities (518,132 ) 1,165
��
CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from PPP notes payable 20,000 -
Proceeds from related party debt 580,232 -
Proceeds from issuance of convertible debt 75,000 147,500
Legal fees associated with financing - (90,000 )
Repayment of convertible debt (90,000 ) -
Proceeds from equity financing 26,008 26,746

Net cash provided by financing activities – continuing operations 611,240 84,246
Net cash provided by (used in) financing activities – discontinued operations (22,243 ) 183,308
Net cash provided by financing activities 588,997 267,554

Net decrease in cash and cash equivalents (207,543 ) (108,755 )

Effect of foreign currency translation on cash (15,237 ) (7,991 )

Cash and cash equivalents - beginning of period 277,620 359,134
Cash and cash equivalents - end of period $ 54,840 $ 242,389
Supplemental disclosure of non-cash investing and financing activities
Beneficial conversion feature $ - $ 190,000

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7
~~H/CELL ENERGY~~VISION HYDROGEN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, ~~2019~~2020 AND ~~2018~~2019 (UNAUDITED)

1. ORGANIZATION AND LINE OF BUSINESS

~~H/Cell Energy~~Vision Hydrogen Corporation (the “Company”) was incorporated in the state of Nevada on August 17, ~~2015. The Company,~~2015 and is based in ~~Dallas, Texas, is a company whose~~Jersey City, New Jersey. The Company’s principal operations consist of designing and installing clean energy systems with a focus on hydrogen energy. Effective January 31, 2017, the Company acquired The Pride Group (QLD) Pty Ltd, an Australian company (“Pride”)~~. Founded in 1997, Pride is~~, a provider of security systems integration for ~~a variety of~~ customers in the government and commercial sector, and has launched a new clean energy systems division to focus on the Asia-Pacific high growth renewable energy ~~market in Asia-Pacific. The new clean energy division has generated some revenue and has begun to bid a number of projects.~~market. On February 1, 2018, the Company acquired PVBJ Inc. (“PVBJ”) ~~for 444,445 shares of the Company’s common stock with a fair value of $1,177,779 and $221,800 in earn-out liability.~~ Established in 2008, PVBJ is ~~well recognized for~~engaged in the business of the design, installation, maintenance, and emergency service of environmental systems both in residential and commercial markets. ~~PVBJ is now expanding into clean energy systems.~~

~~The~~During the three and nine months ended September 2020, the Company ~~has developed a~~took significant steps to transition its hydrogen energy ~~system~~business to focus on hydrogen production on a scaled production plant model. During the period, the Company disposed of its interests in both PVBJ and Pride (See Note 16 ‘Discontinued Operations’) in order to facilitate this transition. As part of the disposition the Company agreed to provide certain post-closing support to both PVBJ and Pride through Q3 2020. On August 12, 2020, pursuant to a Seed Capital Subscription Agreement, the Company made an equity investment into VoltH2 Holdings AG (“VoltH2”), a Swiss corporation developing scalable green hydrogen production projects primarily in Europe. VoltH2 is currently developing a 25MW green hydrogen production site near Vlissingen, Netherlands. The investment was for ~~residential~~a total purchase price $175,000, representing a 17.5% equity interest in VoltH2.
Effective September 30, 2020 the Company moved its principal office from Dallas, Texas to Jersey City, New Jersey.
On September 29, 2020, Vision Hydrogen Corporation (f/k/a H/Cell Energy Corporation) filed an amendment to and ~~commercial use designed to create electricity. This system uses renewable energy as~~restatement of its source for hydrogen production. It functions as a self-sustaining clean energy system using hydrogen and fuel cell technology. It can be configured as an off grid solution for all electricity needs or it can be connectedArticles of Incorporation with the Secretary of State of the State of Nevada. Pursuant to the ~~grid~~Amendment, the Company (i) changed its name from H/Cell Energy Corporation to ~~generate energy credits. Its production~~Vision Hydrogen Corporation (ii) effectuated a one-for-twenty (1:20) reverse split of ~~electricity is truly eco-friendly, as it is not produced by~~ the ~~use~~issued and outstanding shares of ~~fossil fuels. It is a revolutionary green-energy concept that is safe, renewable, self-sustaining~~common stock of the Company without changing the par value of the stock and ~~cost effective.~~(iii) increased its authorized shares of common stock from 25,000,000 to 100,000,000. The Amendment took effect on October 6, 2020. All share and per share amounts for the common stock have been retroactively restated to give effect to the reverse split.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The Company’s condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and following the requirements of the Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. These interim financial statements have been prepared on the same basis as the Company’s annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair statement of the Company’s financial information. These interim results are not necessarily indicative of the results to be expected for the year ending December 31, ~~2019~~2020 or any other interim period or for any other future year. These unaudited condensed ~~consolidated~~ financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, ~~2018,~~2019, included in the Company’s ~~2018~~2019 Annual Report on Form 10-K filed with the SEC. As of September 30, 2020, the Company no longer consolidates Pride or PVBJ as they have been divested and the financials presented are just of Vision Hydrogen. Results from Pride and PVBJ have been recast in the current period and comparative periods in discontinued operations. The balance sheet as of December 31, ~~2018~~2019 has been derived from audited financial statements at that date but does not include all of the information required by U.S. GAAP for complete financial statements.

On October 6 2020, Vision Hydrogen Corporation effectuated a one-for-twenty (1:20) reverse split of the issued and outstanding shares of common stock of the Company without changing the par value of the stock and increased its authorized shares of common stock from 25,000,000 to 100,000,000 which is presented on the current period financial statements.
8
VISION HYDROGEN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020 AND 2019 (UNAUDITED)
Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable in the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Reclassification

Certain prior period amounts have been reclassified to conform to current period ~~presentation.~~presentation specifically as it relates to the reclassification of assets, liabilities, operating results, cash flows and the accumulated comprehensive loss as a result of the Company’s disposition of interests in our PVBJ and Pride subsidiaries.

Accounts Receivable

Accounts receivable are recorded when invoices are issued and are presented in the balance sheet net of the allowance for doubtful accounts. The allowance for doubtful accounts is estimated based on the Company’s historical losses, the existing economic conditions in the construction industry, and the financial stability of its customers. Accounts are written off as uncollectible after collection efforts have failed. In addition, the Company does not generally charge interest on past-due accounts or require collateral. AtAs of September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, there was no allowance for doubtful accounts required.
8

~~H/CELL ENERGY CORPORATION~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2019 AND 2018 (UNAUDITED)~~
Goodwill and Finite-Lived Intangible Assets

Goodwill represents the excess of the aggregate of the following (1) consideration transferred, (2) the fair value of any non-controlling interest in the acquiree, and (3) if the business combination is achieved in stages, the acquisition-date fair value of our previously held equity interest in the acquiree over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. Identifiable intangible assets consist primarily of customer lists and relationships, non-compete agreements and ~~technology based~~technology-based intangibles and other contractual agreements. The Company amortizes finite lived identifiable intangible assets over five years, on a straight-line basis to their estimated residual values and periodically reviews them for impairment. Total goodwill and identifiable intangible assets comprised ~~40%~~0% of the Company’s consolidated total assets ~~at each~~as of September 30, ~~2019~~2020 and 41% as of December 31, ~~2018.~~2019.

The Company uses the acquisition method of accounting for all business combinations and does not amortize goodwill. Goodwill is tested for possible impairment annually during the fourth quarter of each fiscal year or more frequently if events or changes in circumstances indicate that the asset might be impaired. The Company has the option to perform a qualitative assessment to determine if an impairment is more likely than not to have occurred. If the Company can support the conclusion that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company would not need to perform the two-step impairment test for that reporting unit. If the Company cannot support such a conclusion or the Company does not elect to perform the qualitative assessment, then the first step of the goodwill impairment test is used to identify potential impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill. If the estimated fair value of the reporting unit exceeds its carrying amount, its goodwill is not impaired, and the second step of the impairment test is not necessary. If the carrying amount of the reporting unit exceeds its estimated fair value, then the second step of the goodwill impairment test must be performed. The second step of the goodwill impairment test compares the implied fair value of the reporting unit goodwill with its carrying amount to measure the amount of impairment, if any. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. If the carrying amount of the reporting unit goodwill exceeds the implied fair value of that goodwill, an impairment is recognized in an amount equal to that excess.

~~The Company performed its annual impairment test for PVBJ in December of 2018. Based on the results of the qualitative testing, there was no impairment.~~
As of September 30, ~~2019,~~2020, the Company had ~~recorded~~no goodwill and has included the write-off of goodwill in the ~~amount of $1,373,621 related to the PVBJ acquisition. The performance~~calculation of the ~~Company’s fiscal 2018 impairment analysis did not result in an impairment~~loss on disposal of ~~the Company’s goodwill.~~PVBJ (see Discontinued Operations Note 16).
9
VISION HYDROGEN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020 AND 2019 (UNAUDITED)

Comprehensive ~~Income (Loss)~~Loss

Comprehensive ~~income (loss)~~loss consists of two components, net ~~income (loss)~~loss and other comprehensive ~~income (loss).~~loss. The Company’s other comprehensive ~~income (loss)~~loss is comprised of foreign currency translation adjustments. The balance of accumulated other comprehensive loss is zero as of September 30, 2020 due to the disposition of Pride on May 18, 2020.

~~Foreign~~ Currency Translation

The Company translates its foreign subsidiary’s assets and liabilities denominated in foreign currencies into U.S. dollars at current rates of exchange as of the balance sheet date and income and expense items at the average exchange rate for the reporting period. Translation adjustments resulting from exchange rate fluctuations are recorded in accumulated other comprehensive income. The Company records gains and losses from changes in exchange rates on transactions denominated in currencies other than each reporting location’s functional currency in net income (loss) for each period. Items included in the financial statements of each entity in the group are measured using the currency of the primary economic environment in which the entity operates (“functional currency”).

The functional and reporting currency of the Company is the United States Dollar (“U.S. Dollar”). The financial records of Australia based Pride ~~located in Australia,~~ is maintained in the local currency, the Australian Dollar (AUD$), which is also its functional currency.
~~H/CELL ENERGY CORPORATION~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER~~For the three and nine months ended September 30, ~~2019 AND 2018 (UNAUDITED)~~
2020, the Company recorded no other comprehensive loss. For the three and nine months ended September 30, 2019, the Company recorded other comprehensive loss of $15,236 and $863, respectively, in the condensed consolidated financial statements. ~~For the three~~The balance of comprehensive loss and ~~nine months ended~~accumulated comprehensive loss has been reclassified to discontinued operations as of September 30, ~~2018,~~2020 due to the disposition of Pride on May 18, 2020.
Investments
The Company follows Accounting Standards Codification (“ASC”) 321-10-35-2 “Equity Securities without Readily Determinable Fair Values, to account for its ownership interest in noncontrolled entities. Under this guidance, equity securities that do not have readily determinable fair values (i.e., non-marketable equity securities and do not qualify for the practical expedient to determine the fair value at net asset value (“NAV”) are not required to be accounted for under the equity method are typically carried at cost (i.e., cost method investments) less accumulated impairment. Investments of this nature are initially recorded ~~other comprehensive loss~~at cost. Income is recorded for dividends received that are distributed from net accumulated earnings of the noncontrolled entity subsequent to the date of investment. Dividends received in excess of earnings subsequent to the date of investment are considered a ~~translation loss~~return of ~~$7,828~~investment and ~~$40,657, respectively,~~are recorded as reductions in the ~~condensed consolidated financial statements.~~cost of the investment. Investments are written down only when there is clear evidence that a decline in value that is other than temporary has occurred
Revenue Recognition

~~On January 1, 2018, the~~The Company ~~adopted~~recognizes revenue in accordance with Accounting Standard Update (“ASU”) ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”) using the modified retrospective method applied to those contracts which were not completed as of December 31, 2017. Results for reporting periods beginning January 1, 2018 are presented under ASU 2014-09, while prior period amounts are not adjusted and continue to be reported under the accounting standards in effect for the prior period.

Under ASU 2014-09 requirements, the Company recognizes revenue from the installation or construction of projects and service or ~~short term~~short-term projects over time using the cost-based input method. The Company accounts for a contract when: (i) it has approval and commitment from both parties, (ii) the rights of the parties are identified, (iii) payment terms are identified, (iv) the contract has commercial substance, and (v) collectability of consideration is probable. The Company considers the start of a project to be when the above criteria have been met and the Company either has written authorization from the customer to proceed or an executed contract. A detailed breakdown of the ~~five step~~five-step process is as follows:

Identify the Contract with a Customer

The Company ~~receives~~used to receive almost all of its contracts from only two sources, referrals, or government bids. In a referral, a client that the Company has an ongoing business relationship with refers the Company to perform services. In a government bid, the Company applies to perform services for public projects. The contracts have a pattern of being stand-alone contracts.

Identify the Performance Obligations in the Contract

The performance obligation of the Company is to perform a contractually agreed upon task for the customer. If the contract is stated to provide only contractual ~~service,~~services, then the ~~service is~~services are considered the only performance obligation. If the contractual ~~service includes~~services include design and or engineering in addition to the contract, it is considered a single performance obligation.
VISION HYDROGEN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020 AND 2019 (UNAUDITED)

Determine the Transaction Price

The nature of the industry involves a number of uncertainties that can affect the current state of the contract. Variable considerations are the estimates made due to a contract modification in the contractual service. Change orders, claims, extras, or back charges are common in contractual services activity as a form of variable consideration. If there is going to be a contract modification, judgment by management will need to be made to determine if the variable consideration is enforceable. The following factors are considered in determining if the variable consideration is enforceable:

1. The customer’s written approval of the scope of the change order;
2. Current contract language that indicates clear and enforceable entitlement relating to the change order;
3. Separate documentation for the change order costs that are identifiable and reasonable; orand
4. The Company’s favorable experience in negotiating change orders, especially as it relates to the specific type of contract and change order being evaluated

Once the Company receives a contract, it generates a budget of projected costs ~~is generated~~ for the contract based on the contract price. If the scope of the contract during the contractual period needs to be modified, the Company typically files a change order. The Company does not continue to perform services until the change modification is agreed upon with documentation by both the Company and the customer. There are few times that claims, extras, or back charges are included in the contract.

Allocate the Transaction Price to the Performance Obligations in the Contract

If there are multiple performance obligations to the contract, the costs must be allocated appropriately and consistently to each performance obligation. In the Company’s experience, usually only one performance obligation is stated per contract. If there are multiple services provided for one customer, the Company has a policy of splitting out the services over multiple contracts.
~~H/CELL ENERGY CORPORATION~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2019 AND 2018 (UNAUDITED)~~

Recognize Revenue When (or As) the Entity Satisfies a Performance Obligations

The Company uses the total costs incurred on the project relative to the total expected costs to satisfy the performance obligation. The input method involves measuring the resources consumed, labor hours expended, costs incurred, time lapsed, or machine hours used relative to the total expected inputs to the satisfaction of the performance obligation. Costs incurred prior to actual contract (i.e. design, engineering, procurement of material, etc.) should not be recognized as the client does not have control of the good/service provided. When the estimate on a contract indicates a loss or claims against costs incurred reduce the likelihood of recoverability of such costs, the Company records the entire estimated loss in the period the loss becomes known. Project contracts typically provide for a schedule of billings or invoices to the customer based on the Company’s job to date percentage of completion of specific tasks inherent in the fulfillment of its performance obligation(s). The schedules for such billings usually do not precisely match the schedule on which costs are incurred. As a result, contract revenue recognized in the statement of operations can and usually does differ from amounts that can be billed or invoiced to the customer at any point during the contract. Amounts by which cumulative contract revenue recognized on a contract as of a given date exceed cumulative billings and unbilled receivables to the customer under the contract ~~represent contract assets and~~ are reflected as a current asset in the Company’s balance sheet under the captions “Costs and estimated earnings in excess of billings” and “Unbilled accounts receivable.” Amounts by which cumulative billings to the customer under a contract as of a given date exceed cumulative contract revenue recognized on the contract are reflected as a current liability in the Company’s balance sheet under the caption “Billings in excess of costs and estimated earnings.”

~~Disaggregated Revenue~~
~~For the three and nine months ended September 30, 2019 and 2018, revenues from contracts with customers summarized by Geography and Revenue Stream were as follows:~~
Three Months Ended
September 30, 2019 September 30, 2018
United States – Service $ 730,419 $ 672,989
Australia – Service 379,696 447,047
United States – Contract - -
Australia – Contract 591,250 719,455
Total $ 1,701,365 $ 1,839,491
Nine Months Ended
September 30, 2019 September 30, 2018
United States – Service $ 1,992,444 $ 1,746,486
Australia – Service 1,529,652 1,505,660
United States – Contract 160,000 -
Australia – Contract 1,651,463 2,323,494
Total $ 5,333,559 $ 5,575,640
Cash and Cash Equivalents

Cash and cash equivalents ~~includes~~include cash in bank and money market funds as well as other highly liquid investments with an original maturity of three months or less. The Company had no cash equivalents as of September 30, ~~2019~~2020 or December 31, ~~2018.~~2019.
11
VISION HYDROGEN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020 AND 2019 (UNAUDITED)

Stock-Based Compensation

The Company recognizes expense for its stock-based compensation based on the fair value of the awards at the time they are granted. We estimate the value of stock option awards on the date of grant using the Black-Scholes model. The determination of the fair value of stock-based payment awards on the date of grant is affected by our stock price as well as assumptions regarding a number of complex and subjective variables. These variables include our expected stock price volatility over the term of the awards, expected term, risk-free interest rate ~~expected dividends~~ and expected ~~forfeiture rates.~~dividends. The ~~forfeiture rate~~impact of forfeitures is ~~estimated using historical option cancellation information, adjusted for anticipated changes~~recorded in ~~expected exercise and employment termination behavior.~~the period in which they occur. Our outstanding awards do not contain market or performance conditions.
~~H/CELL ENERGY CORPORATION~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2019 AND 2018 (UNAUDITED)~~
~~Income Taxes~~
~~The Company uses the asset and liability method of accounting for income taxes pursuant to Financial Accounting Standard Board (“FASB”) Accounting Standards Codification (“ASC”) 740,~~~~Income Taxes~~(“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets, including tax loss and credit carryforwards, and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. The components of the deferred tax assets and liabilities are individually classified as current and non-current based on their characteristics. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized.
The determination of the Company’s provision for income taxes requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. Significant judgment is required in assessing the timing and amounts of deductible and taxable items and the probability of sustaining uncertain tax positions. The benefits of uncertain tax positions are recorded in the Company’s financial statements only after determining a more-likely-than-not probability that the uncertain tax positions will withstand challenge, if any, from taxing authorities. When facts and circumstances change, the Company reassesses these probabilities and records any changes in the financial statements as appropriate. Accrued interest and penalties related to income tax matters are classified as a component of income tax expense.
The Company recognizes and measures its unrecognized tax benefits in accordance with ASC 740. Under that guidance, management assesses the likelihood that tax positions will be sustained upon examination based on the facts, circumstances and information, including the technical merits of those positions, available at the end of each period. The measurement of unrecognized tax benefits is adjusted when new information is available, or when an event occurs that requires a change.
~~The Company did not identify any material uncertain tax positions. The Company did not recognize any interest or penalties for unrecognized tax benefits.~~
The federal income tax returns of the Company are subject to examination by the IRS, generally for the three years after they are filed. The Company’s 2018, 2017 and 2016 income tax returns are still open for examination by the taxing authorities.

Fair Value of Financial Instruments

~~Except for the Company’s earn-out liability, the~~The carrying value of cash and cash equivalents, accounts payable and accrued liabilities, and short-term borrowings, as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments. All other significant financial assets, financial liabilities and equity instruments of the Company are either recognized or disclosed in the financial statements together with other information relevant for making a reasonable assessment of future cash flows, interest rate risk and credit risk. Where practicable the fair values of financial assets and financial liabilities have been determined and disclosed; otherwise only available information pertinent to fair value has been disclosed.The Company classifies and discloses assets and liabilities carried at fair value in one of the following three categories:

●[  ] Level 1—quoted prices in active markets for identical assets and liabilities;

●[  ] Level 2—observable ~~market based~~market-based inputs or unobservable inputs that are corroborated by market data; and

●[  ] Level 3—significant unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

~~H/CELL ENERGY CORPORATION~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2019 AND 2018 (UNAUDITED)~~
~~The table below presents a reconciliation of the~~There were no fair value measurements as of ~~the Company’s contingent earn-out obligations that use significant unobservable inputs (Level 3).~~
Balance at December 31, 2018 $ 190,736
Payments -
Adjustments to fair value 13,647
Balance at September 30, 2019 $ 204,383
The Company values earn-out obligations using a probability weighted discounted cash flow method. This fair value measurement is based on significant unobservable inputs in the market and thus represents a Level 3 measurement within the fair value hierarchy. This analysis reflects the contractual terms of the purchase agreements (e.g., minimum and maximum payments, length of earn-out periods, manner of calculating any amounts due, etc.) and utilizes assumptions with regard to future cash flows, probabilities of achieving such future cash flows and a discount rate. The contingent earn-out obligations are measured at fair value each reporting period and changes in estimates of fair value are recognized in earnings.September 30, 2020.

Net Income (Loss) Per Common Share

The Company computes basic net income (loss) per share by dividing net income (loss) per share available to common stockholders by the weighted average number of common shares outstanding for the period and excludes the effects of any potentially dilutive securities. Diluted earnings per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive securities into common stock using the ~~“treasury stock” and/or~~ “if converted” ~~methods~~method as applicable. The computation of diluted loss per share excludes dilutive securities because their inclusion would be anti-dilutive. Dilutive securities for the periods presented are as follows:

Three Months Ended Nine Months Ended
September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019

Options to purchase common stock 0 21,250 0 21,250
Convertible debt       0 55,000     0 55,000
Totals 0 76,250 0 76,250
September 30, 2019 December 31, 2018

Options to purchase common stock 543,375 131,250
Convertible debt 1,100,000 800,000
Totals 1,643,375 931,250
Please refer to Note 10 for a discussion of the decrease for the three and nine months ended September 30, 2020 compared to September 30, 2019.
12
VISION HYDROGEN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020 AND 2019 (UNAUDITED)

3. RELATED PARTY TRANSACTIONS
The Company’s former office space during the year ended December 31, 2018 consisted of approximately 800 square feet, which was donated to it from one of its executive officers. There was no lease agreement and the Company paid no rent.
~~In April 2018, Rezaul Karim a former director exercised 100,000 options.~~
In September 2018, the Company entered into a contract with Steve Mullane, the Executive General Manager of Pride, for a solar installation. The system installation was complete as of September 30, 2018, however one change order of $686 was deducted to the cost of the job amount in October 2018. Costs incurred were $9,019 along with revenue of $8,499 for each of the three and nine months ended September 30, 2018.
In June 2016, the Company entered into a contract with Rezaul Karim, one of its former directors, for the installation of an HC-1 system. The system installation was complete as of September 30, 2018. The system installation generated $8,499 and $40,288 of revenue for the three and nine months ended September 30, 2018. The Company subcontracted the installation of the system to Renewable Energy Holdings LLC (“REH”), a company owned by Mike Strizki, one of the Company’s executive officers. James Strizki, one of the Company’s executive officers, is vice president of operations at REH. There was $9,019 and $40,636 of costs for the three and nine months ended September 30, 2018, respectively.

The Company has entered into agreements to indemnify its directors and executive officers, in addition to the indemnification provided for in the Company’s articles of incorporation and bylaws. These agreements, among other things, provide for indemnification of the Company’s directors and executive officers for certain expenses (including attorneys’ fees), judgments, fines and settlement amounts incurred by any such person in any action or proceeding, including any action by or in the right of the Company, arising out of such person’s services as a director or executive officer of the Company, any subsidiary of the Company or any other company or enterprise to which the person provided services at the Company’s request. The Company believes that these provisions and agreements are necessary to attract and retain qualified persons as directors and executive officers.
~~H/CELL ENERGY CORPORATION~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2019 AND 2018 (UNAUDITED)~~

There was ~~$21,500~~$33,750 and ~~$19,500~~$21,500 of management fees expensed for the three months ended September 30, ~~2019~~2020 and ~~2018,~~2019, respectively, to Turquino Equity LLC (Turquino”), a former significant shareholder, ~~wholly-owned by the Chief Executive Officer~~ and ~~Chief Financial Officer,~~$63,750 and $60,500 ~~and $58,500~~ for ~~each of~~ the nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, respectively.

On January 2, 2018 the Company entered into a securities purchase agreement with two of its directors, pursuant to which the Company sold an aggregate principal amount of $400,000 in 12% Convertible Debentures (“2018 Debentures”).Onand February 8, 2019, the Company and ~~the holders of the 2018 Debentures entered into amendments (the “Amendments”~~Andrew Hidalgo (“Hidalgo”) ~~to the 2018 Debentures.~~The 2018 Debentures, together with any accrued and unpaid interest, become due and payable on January 2, 2020 (the “2020 Maturity Date”). Interest on the 2018 Debentures accrues at the rate of 12% per annum from January 2, 2018 through the date of the Amendments, and 10% per annum subsequent to the date of the Amendments, payable monthly in cash, beginning on February 1, 2018 and through the 2020 Maturity Date. The 2018 Debentures are convertible into common stock at, completed a conversion price of $0.50 per share at the discretion of the holder, with special provisions applying to any holder whose conversion would result in the holder beneficially owning more than 4.99% of the Company’s common stock. In connection with this convertible note payable, the Company recorded a $395,000 discount on debt, related to the beneficial conversion feature of the note to be amortized over the life of the note using the effective interest method, or until the note is converted or repaid.
~~On August 21, 2018, PVBJ entered into a loan and security agreement (the “Credit Agreement”) with Thermo Communications Funding, LLC (“Thermo”). The Credit~~Convertible Debenture Agreement provides for a revolving line of credit in an amount not to exceed $350,000, which is evidenced by a promissory note issued by PVBJ to Thermo (the “Note”). Pursuant to the Credit Agreement, PVBJ granted a security interest to Thermo in all of its assets. In addition, pursuant to a limited recourse guaranty, Andrewwhereby Hidalgo, the Company’s Chief Executive Officer, ~~personally guaranteed the repayment~~lent us an aggregate of ~~the Credit Agreement under certain conditions.~~
$275,000 (the “Hidalgo Notes”). On January 2, 2018 and February 8, 2019, the Company and Michael Doyle (“Doyle”), a then director of the Company, completed a Convertible Debenture Agreement whereby Doyle lent the Company an aggregate of $275,000 (the “Doyle Notes”).
May 18, 2020 Purchase and Sale Agreement
On May 18, 2020, the Company’s Board of Directors authorized the Company, in accordance to Nevada Statute 78.565, to complete and execute the May 18, 2020 Purchase and Sale Agreement between the Company and Turquino providing for the Company’s sale of 100% of Pride’s outstanding stock Pride to Turquino in return for Turquino’s assumption of the Hidalgo Notes and the Doyle Notes and the debt obligations and accrued interest related thereto (the “Agreement”). In conjunction therewith, Hidalgo and Doyle assigned the Notes to Turquino, at which time Turquino became responsible for the debt obligations upon the Notes. The Company has no further note obligations to Hidalgo or Doyle, and it reduced its debt by approximately $600,000 or 65% of the corporate debt obligations. Pursuant to Nevada Statute Section 78.565, approval of the Agreement only required the approval of the board of directors and did not require shareholder approval. The Company obtained a valuation of the fair market value of Pride from an independent third party which valued Pride at $425,000. The Agreement provides that the Parties mutually release one another and discharge and release the other party (and their respective current and former officers, directors, employees, shareholders, note holders, attorneys, assigns, agents, representatives, predecessors and successors in interest), from any and all claims, demands, obligations, or causes of action. Hidalgo, our Chief Executive Officer, and a managing member of Turquino, is a related party in connection with the Exchange Agreement, the Notes, and the Agreement.
On June 19, 2020, the Company entered into a ~~securities purchase agreement~~Promissory Note with ~~two~~Judd Brammah, a director of ~~its directors, pursuant to which~~ the Company, ~~sold an aggregate~~for a principal amount up to $230,332 bearing interest with interest at 6% per annum. The entire principal and interest upon the Promissory Note are due on June 19, 2021. The proceeds from the note was used to pay accrued expenses of $150,000 in 10% Convertible Debentures (“2019 Debentures”). The 2019 Debentures, together with any accrued and unpaid interest, become due and payable on February 8, 2021 (the “2021 Maturity Date”). Interest on the ~~2019 Debentures accrues~~Company.
Effective July 17, 2020, Judd Brammah lent the Company $50,000 at ~~the rate of 10%~~6% per annum payable ~~monthly in cash, beginning~~ on ~~March 1, 2019 and through~~ the 2021 Maturity Date. The 2019 Debentures are convertible into common stock at a conversion price of $0.50 per share at the discretion of the holder, with special provisions applying to any holder whose conversion would result in the holder beneficially owning more than 4.99% of the Company’s common stock. In connection with this convertible note payable,due date, June 19, 2021. Effective July 22, 2020, Judd Brammah lent the Company ~~recorded a $97,500 discount~~$299,900 at 6% per annum payable on ~~debt, related to~~ the ~~beneficial conversion feature~~due date of ~~the note to be amortized over the life of the note using the effective interest method, or until the note is converted or repaid.~~June 19, 2021.

4. SIGNIFICANT CONCENTRATIONS OF CREDIT RISK

Cash is maintained at an authorized deposit-taking institution (bank) incorporated in both the United States and Australia and is insured by the U.S. Federal Deposit Insurance Corporation and Australian Securities & Investments Commission up to $250,000 and approximately $186,000 ~~USD~~ in total, respectively. AtAs of September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, the balance was fully covered under the $250,000 threshold in the United States. In Australia, the balance ~~did not exceed the threshold at September 30, 2019 and exceeded the threshold by $133,578~~was $10,563 over at December 31, ~~2018.~~2019 which is included in current assets held for sale on the balance sheet.
VISION HYDROGEN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020 AND 2019 (UNAUDITED)

Credit risk for trade accounts is concentrated as well because substantially all of the balances are receivable from entities located within certain geographic regions. To reduce credit risk, the Company performs ongoing credit evaluations of its customers’ financial conditions but does not generally require collateral. ~~In addition, at~~There were no accounts receivable as of September 30, 2020. As of December 31, 2019, ~~approximately 22%~~one of the Company’s accounts receivable was due from ~~two unrelated customers~~one customer at ~~12% and 10%. At December 31, 2018,~~ approximately ~~20% of~~13%, which is included in current assets held for sale on the ~~Company’s accounts receivable was due from two unrelated customers, each at 10%.~~
~~H/CELL ENERGY CORPORATION~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2019 AND 2018 (UNAUDITED)~~balance sheet.

5. MAJOR CUSTOMERS

Due to the sale of Pride and PVBJ the Company had no major customers for the three or nine months ended September 30, 2020. During ~~each of~~ the three and nine months ended September 30, 2019, there were two unrelated customers with a concentration of 10% or higher of the ~~Company's~~Company’s revenue at 16% and 11%, and 13% and 10%, respectively. There was one customer with a concentration of 10% or higher, at 20%, for the three months ended September 30, 2018, and three customers for the nine months ended September 30, 2018 at 16%, 14% and 11%.

6. UNCOMPLETED CONTRACTS

Costs, estimated earnings, and billings on uncompleted contracts are summarized as follows atas of September 30, ~~2019~~2020 and December 31, ~~2018:~~2019:

September 30, 2019 December 31, 2018 September 30, 2020 December 31, 2019
Costs incurred on uncompleted contracts $ 547,935 $ 811,173 $ - $ 465,686
Estimated earnings 240,403 469,109         - 454,132
Costs and estimated earnings earned on uncompleted contracts 788,338 1,280,282 - 919,818
Billings to date 882,179 1,265,475 - 750,769
Costs and estimated earnings in excess of billings on uncompleted contracts (93,481 ) 14,807 - 169,049
Costs and earnings in excess of billings on completed contracts 53,249 (164,660 ) - (190,102 )
$ (40,592 ) $ (149,853 ) $ - $ (21,053 )

Costs in excess of billings $ 3,709 $ 45,478 $ - $ 26,045
Billings in excess of cost (44,301 ) (195,331 ) - (47,098 )
$ (40,592 ) $ (149,853 ) $ - $ (21,053 )

7. LEASES
Operating Leases

~~For leases with a term~~As of ~~12 months or less,~~September 30, 2020, the Company ~~is permitted to make an accounting policy election by class~~had no operating leases. As of ~~underlying asset not to recognize lease assets and lease liabilities, and we recognize lease expense for such leases on a straight-line basis over the lease term.~~
The Company previously entered into two leases for office space in Woombye and Brisbane, Queensland, Australia, both which expired in April 2018. The Company signed new leases in January 2019 for a Dallas, Texas shared office space, which ends in December 2019, and February 2018 for new office space in Kunda Park, Queensland Australia, which started in May 2018 and expires in May 2023. The Company also renewed the Brisbane office space for one year, starting in May 2018.
~~On March 25,~~31, 2019 the Company ~~signed a lease for new office space~~had $87,897 in Brisbane, which has a fixed 3% increase annually expiring in March 2025 which includes a renewal period of three years that management is reasonably certain will be exercised. The Company analyzed this lease and determined that this agreement meets the definition of a lease under ASU 2016-02 as it provides management with the exclusive right to direct the use of and obtain substantially all of the economic benefits from the identified leased asset, which is the office space. Management also analyzed the terms of this arrangement and concluded it should be classified as ancurrent operating lease as none of the criteria were met for finance lease classification. As there was only one identified asset, no allocation of the lease payments was deemed necessary. Management did not incur any initial direct costs associated with this lease. As of the commencement date, which was March 25, 2019, a right of use assetliability and $137,071 in non-current operating lease liability ~~of $130,736 was recorded~~which have been re-classed to discontinued operations on the condensed consolidated balance ~~sheet based~~sheet.
Finance Leases
As of September 30, 2020, the Company had no finance leases. As of December 31, 2019 the Company had $75,743 in current finance leases and $307,804 in non-current finance leases which have been re-classed to discontinued operations on the ~~present value~~balance sheet.
8. CONTRACT BACKLOG
As of ~~payments in the lease agreement. Per review of the lease agreement, there was no variable terms identified and there is no implicit rate stated. Therefore,~~September 30, 2020, the Company ~~determined~~had no contract backlog. As of December 31, 2019, the ~~present value~~Company had a contract backlog approximating $551,850, with anticipated direct costs to completion approximating $454,132.
9. GOODWILL AND OTHER INTANGIBLES
The Company has no goodwill or other intangibles as of September30, 2020. As of December 31, 2019, the ~~future minimum lease payments based~~Company had $1,373,621 in goodwill and $83,645 in other intangibles which has been re-classed to discontinued operations on the incremental borrowing rate of the Company. The incremental borrowing rate was determined to be 10%, as this is the rate which represents the incremental borrowing rate for the Company, on a collateralized basis, in a similar economic environment with similar payment terms.balance sheet.
14
~~H/CELL ENERGY~~VISION HYDROGEN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, ~~2019~~2020 AND ~~2018 (UNAUDITED)~~
~~On July 1,~~ 2019 the Company signed a lease for the previously month-to-month office space in Downingtown, PA. Per review of the lease, the term is less than 12 months, therefore, the Company has elected to treat this lease as an operating lease and recognize lease expense on a straight-line basis.
~~The future minimum payments on operating leases for each of the next five years and in the aggregate amount to the following:~~
2019 $ 15,225
2020 62,491
2021 63,615
2022 64,425
2023 38,542
Thereafter 36,937
Total lease payments 281,235
Less: present value discount (54,257 )
Total operating lease liabilities $ 226,978
The weighted-average remaining term of the Company’s operating leases was 4.5 years and the weighted-average discount rate used to measure the present value of the Company’s operating lease liabilities was 9.69% as of September 30, 2019.
Right of use assets represent the right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease right of use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease right of use asset also excludes lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
In determining the discount rate to use in calculating the present value of lease payments, the Company estimates the rate of interest it would pay on a collateralized loan with the same payment terms as the lease by utilizing bond yields traded in the secondary market to determine the estimated cost of funds for the particular tenor.
~~Finance Leases~~
At September 30, 2019, the Company had 13 finance leases with an aggregate net book value of $342,111. The obligations are payable in monthly installments ranging from approximately $503 to $1,578 with interest rates from 3.0% to 5.57% per annum. The leases are secured by the related equipment. Approximate payments to be made on these finance lease obligations are as follows:
2019 $ 21,346
2020 85,387
2021 75,741
2022 66,445
2023 68,455
Thereafter 55,686
Finance lease obligation 373,060
Less: amounts representing interest 30,949
Current maturities of capital lease obligations 73,842

Finance lease obligations, non-current $ 268,269
16
~~H/CELL ENERGY CORPORATION~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2019 AND 2018~~ (UNAUDITED)

8. ~~DEBT~~
~~Long-term debt consisted of the following:~~
~~Equipment Notes Payable~~
September 30, 2019 December 31, 2018
Note payable with monthly payments of $716, including interest at 6.50% per annum through November 2020. $ - $ 18,707
Note payable with monthly payments of $615, including interest at 6.80% per annum through August 2021. 13,220 18,383
Note payable with monthly payments of $1,294, including interest at 14.72% per annum through March 2023. 41,306 50,072
Note payable with monthly payments of $1,063, including interest at 5.76% per annum through April 2021. 11,834 18,539

Note payable with monthly payments of $983, including interest at 4.90% per annum through August 2024. 51,157 -
Note payable with monthly payments of $947 including interest at 6.14% per annum through December 2024. $ - $ 54,328
Total: $ 117,517 $ 160,029
Total current portion: (41,358 ) (38,991 )
Total non-current portion: $ 76,159 $ 121,038
~~As of September 30, 2019, approximate principal payments to be made on these debt obligations are as follows:~~
Year ending December 31: Amount
2019 (remainder) $ 8,308
2020 33,561
2021 26,065
2022 19,479
2023 24,283
Thereafter 5,821
Notes payable obligation 117,517
~~Convertible Note Payable~~
On January 2, 2018, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with two of its directors, pursuant to which the Company sold an aggregate principal amount of $400,000 in 12% Convertible Debentures (“Debentures”), convertible into shares of the Company’s common stock at a conversion price of $0.75 per share. The Debentures, together with any accrued and unpaid interest, become due and payable on January 2, 2020 (the “Maturity Date”). Interest on the Debentures accrues at the rate of 12% per annum, payable monthly in cash, beginning on February 1, 2018 and through the Maturity Date. The Debentures are convertible into common stock at a conversion price of $0.75 per share at the discretion of the holder, with special provisions applying to any holder whose conversion would result in the holder beneficially owning more than 4.99% of the Company’s common stock.
In connection with this convertible note payable, the Company recorded a $395,000 discount on debt, related to the beneficial conversion feature of the note to be amortized over the life of the note using the effective interest method, or until the note is converted or repaid.
~~H/CELL ENERGY CORPORATION~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2019 AND 2018 (UNAUDITED)~~
On February 8, 2019, the Debentures were amended to reduce the interest rate to 10% and reduce the conversion price to $0.50 (the “Revised Debentures”), providing the issuance of an additional 266,667 shares upon conversion. In conjunction with these amendments, the convertible note was re-evaluated in accordance with ASC 470-50 -~~Debt Modifications and Extinguishments~~(“ASC 470”), and it was determined that the change in terms resulted in a substantial modification to the beneficial conversion feature. As a result, the carrying value of the Debentures at the time of the transaction, along with the related beneficial conversion feature, were derecognized and the Revised Debentures were recorded at present value, resulting in a loss on debt extinguishment of $269,793.Of this amount, $53,333 represented the historical beneficial conversion feature and has been treated as a debt discount and is being amortized over the life of the Revised Debentures using the effective interest method.~~As the holders of the Debentures are related parties to the Company,ASC 470~~provides for treatment as a capital contribution, whereby the related extinguishment loss will instead be recorded within the Company’s Additional Paid in Capital balance. In connection with the Revised Debentures, the Company incurred $2,500 of legal fees and recorded a $160,000 beneficial conversion feature, both of which are recorded as a discount on debt and amortized over the life of the note using the effective interest method, or until the note is converted or repaid.
For the three and nine months ended September 30, 2019, the Company incurred interest expense of $75,866 and $182,112, respectively. $41,559 related to the amortization of the 2018 Debentures debt discount and $8,685 for the 2019 Debentures debt discount for the three months ended September 30, 2019 and $99,594 related to the amortization of the 2018 Debentures and $20,981 for the 2019 Debentures for the nine months ended September 30, 2019. $7,778 and $19,113 related to interest for the Thermo credit line for the three and nine months ended September 30, 2019, respectively. For the three months ended September 30, 2018, the Company incurred interest expense of $19,877, of which $7,877 related to the amortization of the discount. For the nine months ended September 30, 2018, the Company incurred interest expense of $52,768, of which $14,268 related to the amortization of the 2018 Debentures debt discount.~~$3,003 related to interest for the Thermo credit line for each of the three and nine months ended September 30, 2018.~~
9. ~~CONTRACT BACKLOG~~
As of September 30, 2019, the Company had a contract backlog approximating $312,466, with anticipated direct costs to complete approximating $240,403. At December 31, 2018, the Company had a contract backlog approximating $583,392, with anticipated direct costs to completion approximating $452,884.
10. ~~GOODWILL AND OTHER INTANGIBLES~~
~~The tables below present a reconciliation of the Company’s goodwill and intangibles:~~
~~Goodwill~~
Balance at December 31, 2018 $ 1,373,621
Adjustments -
Balance at September 30, 2019 $ 1,373,621
~~Intangibles – customer list~~
Balance at December 31, 2018 $ 83,645
Amortization 15,363
Balance at September 30, 2019 $ 68,282
The customer list original useful life of the asset was $102,422. The balance at September 30, 2019 was $68,282 and will be amortized at $5,121 every quarter until December 31, 2022. The remaining $1,707 will be amortized in January 2023.
18
~~H/CELL ENERGY CORPORATION~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2019 AND 2018 (UNAUDITED)~~
~~11.~~ STOCK OPTIONS AWARDS AND GRANTS

A summary of the stock option activity and related information for the 2016 Incentive Stock Option Plan from December 31, ~~2018~~2019 to September 30, ~~2019~~2020 is as follows:

Shares Weighted-
Average
Exercise Price
Weighted-
Average
Remaining
Contractual Term
Aggregate
Intrinsic Value Shares Weighted-
Average
Exercise Price Weighted-Average
Remaining
Contractual Term Aggregate
Intrinsic Value
Outstanding at December 31, 2018 955,000 0.29 2.40 488,000
Outstanding at December 31, 2019 34,925 $ 6.20 2.40 $ 216,535
Grants 65,000 0.95 2.63 - - - - -
Exercised - - - - - - - -
Canceled (21,500 ) 0.05 - - (34,925 ) (6.20 ) (2.40 ) -
Outstanding at September 30, 2019 998,500 $ 0.31 4.15 -
Exercisable at September 30, 2019 425,000 $ 0.01 1.44 $ 176,375
Outstanding at September 30, 2020 - $ 0.00 - -
Exercisable at September 30, 2020 - $ 0.00 - -

The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based on options with an exercise price less than the Company’s weighted average grant date stock price of ~~$0.3958~~$7.916 per share, which would have been received by the option holders had those option holders exercised their options as of that date.

Option valuation models require the input of highly subjective assumptions. The fair value of stock-based payment awards was estimated using the Black-Scholes option model with a volatility figure derived from an index of historical stock prices of comparable entities until sufficient data exists to estimate the volatility using the Company’s own historical stock prices. Management determined this assumption to be a more accurate indicator of value.

The Company accounts for the expected life of options based on the contractual life of options for non-employees. For incentive options granted to employees, the Company accounts for the expected life in accordance with the “simplified” method, which is used for “plain-vanilla” options, as defined in the accounting standards codification. The risk-free interest rate was determined from the implied yields of U.S. Treasury zero-coupon bonds with a remaining life consistent with the expected term of the options. The fair value of stock-based payment awards was estimated using the Black-Scholes pricing model.

As of September 30, ~~2019,~~2020, there was ~~$40,635 of~~no unrecognized compensation ~~expense.~~expense as all option holders had their options forfeited through the sale of Pride and PVBJ. As of December 31, ~~2018,~~2019, there was ~~$56,745~~$32,642 of unrecognized compensation expense.

~~12.~~11. SEGMENT INFORMATION

~~Our~~The Company’s business iswas organized into two reportable segments: renewable systems integration revenue and non-renewable systems integration revenue. ~~The reporting segments follow~~Due to the ~~same accounting policies used~~sale of both Pride and PVBJ (See Note 16) the Company operates in only one reportable segment. Please refer to Note 16 for further detail and Management’s Discussion and Analysis for further detail.
12. INCOME TAX
For the ~~preparation of~~three and nine months ended September 30, 2020 and 2019, the ~~Company’s unaudited condensed consolidated financial statements.~~Company did not record any income tax expense or benefit.

September 30, 2019 December 31, 2018
Assets by Segment
Renewable systems integration $ 1,646,461 $ 1,540,423
Non-renewable systems integration 1,985,222 1,984,084
$ 3,631,683 $ 3,524,507
~~H/CELL ENERGY~~VISION HYDROGEN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, ~~2019~~2020 AND ~~2018~~2019 (UNAUDITED)

In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law in March 2020. The ~~following represents selected information~~CARES Act lifts certain deduction limitations originally imposed by the Tax Cuts and Jobs Act of 2017 (“2017 Tax Act”). Corporate taxpayers may carryback net operating losses (NOLs) originating between 2018 and 2020 for up to five years, which was not previously allowed under the 2017 Tax Act. The CARES Act also eliminates the 80% of taxable income limitations by allowing corporate entities to fully utilize NOL carryforwards to offset taxable income in 2018, 2019 or 2020. Taxpayers may generally deduct interest up to the sum of 50% of adjusted taxable income plus business interest income (30% limit under the 2017 Tax Act) for 2019 and 2020. The CARES Act allows taxpayers with alternative minimum tax credits to claim a refund in 2020 for the ~~Company’s reportable segments~~entire amount of the credits instead of recovering the credits through refunds over a period of years, as originally enacted by the 2017 Tax Act. In addition, the CARES Act raises the corporate charitable deduction limit to 25% of taxable income and makes qualified improvement property generally eligible for 15-year cost-recovery and 100% bonus depreciation. The enactment of the CARES Act did not result in any material adjustments to our income tax provision for the three and nine months ended September 30, ~~2019 and 2018.~~
For the Three Months Ended For the Nine Months Ended
September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
Revenue by segment
Renewable systems integration $ 45,921 $ 8,499 $ 172,156 $ 40,288
Non-renewable system integration 1,655,444 1,830,992 5,161,403 5,535,352
1,701,365 $ 1,839,491 $ 5,333,559 $ 5,575,640

Cost of sales by segment
Renewable systems integration $ 29,466 $ 9,019 $ 147,437 $ 40,636
Non-renewable system integration 1,212,164 1,438,669 3,599,953 3,901,125
$ 1,241,630 $ 1,447,688 $ 3,747,390 $ 3,941,761

Operating expenses
Renewable systems integration 104,666 $ 123,459 $ 420,358 $ 424,640
Non-renewable system integration 472,516 503,166 1,434,333 1,484,000
$ 577,182 $ 626,625 $ 1,854,691 $ 1,908,640
Operating (loss) income by segment
Renewable systems integration (88,211 ) $ (126,461 ) $ (395,639 ) $ (424,988 )
Non-renewable system integration (29,236 ) (108,361 ) 127,117 150,227
(117,447 ) $ (234,822 ) $ (268,522 ) $ (274,761 )
2020.The Company did not have a deferred tax asset as of September 30, 2020.

13. NOTE PAYABLE
QRIDA Loan
On ~~August 21, 2018, PVBJ~~May 6, 2020, the Company entered into a loan for $160,410 with the Queensland Rural and ~~security~~Industry Development Authority. The interest rate was 2.50% with a term of ten years. Through the disposition of Pride, the Company no longer has this loan as a liability on its balance sheet.
2019 Convertible Note Financing
On October 17, 2019, the Company entered into a securities purchase agreement with FirstFire Global Opportunities Fund LLC (“FirstFire”), an unrelated third party, pursuant to which it issued a $110,000 convertible note (the “2019 Note”) to FirstFire for gross proceeds of $100,000, with an original discount issuance of $10,000. The transaction closed on October 23, 2019 upon receipt of the funds from FirstFire. The Company incurred $5,000 of legal fees for the transaction. Both the legal fees and original issue discount are amortized over the life of the agreement.
On May 18, 2020, FirstFire converted $15,450 of the balance due for 5,000 shares.
2020 Convertible Note Financing
On January 15, 2020, the Company entered into a securities purchase agreement (the ~~“Credit~~“Purchase Agreement”) with ~~Thermo Communications Funding, LLC~~FirstFire, pursuant to which the Company issued a $85,250 principal amount convertible note for gross proceeds of $77,500, with an original discount issuance of $7,750. The transaction closed on January 16, 2020. The Company incurred $2,500 of legal fees for this transaction.
On June 18, 2020, the Company and FirstFire entered into a settlement agreement whereby both the 2019 and 2020 notes were cancelled and all remaining amounts due under the above notes were settled for $90,000 The Company has no further obligations with respect to any of the notes under terms of the First Fire Note settlement. The Notes were cancelled, and all remaining contractual obligations there under were extinguished under terms of a Settlement and Release Agreement which resulted in a gain on the income statement of $81,203 for the nine months ended September 30, 2020.
Paycheck Protection Program Loan
On May 5, 2020, the Company entered into a term note with Comerica Bank, with a principal amount of $20,000 pursuant to the Paycheck Protection Program (“~~Thermo”~~PPP Term Note”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The ~~Credit Agreement provides for a revolving line of credit in an amount not to exceed $350,000, which~~PPP Loan is evidenced by a promissory ~~note issued by PVBJ to Thermo (the “Note”). Pursuant to the Credit Agreement, PVBJ granted a security~~note. The PPP Term Note bears interest to Thermo in all of its assets. In addition, pursuant to a limited recourse guaranty, Andrew Hidalgo, the Company’s Chief Executive Officer personally guaranteed the repayment of the Credit Agreement under certain conditions. Pursuant to the terms of the Credit Agreement, the Company is permitted to borrow up to $350,000 under the revolving credit line, under a borrowing base equal to the lesser of (i) or 85% of Eligible Accounts (as defined in the Credit Agreement). Borrowings under the Credit Agreement may be used for working capital and to refinance certain existing debt of PVBJ. The Credit Agreement contains certain customary representations and warranties, affirmative and negative covenants, and events of default. Principal covenants include a debt service coverage ratio of not less than 1.15 to 1.0,at a fixed charge coverage ratio of not less than 1.15 to 1.0, and maintaining a tangible net worth of at least $150,000, excluding intercompany loans to H/Cell. The loan commitment shall expire on August 21, 2020. As of September 30, 2019, the Company was in compliance with these covenants and the facility was increased to $400,000 in August of 2019. The interest rate applicable to revolving loans under the Credit Agreement is prime plus 5.0%, subject to a minimum interestannual rate of ~~9.5%. The Company paid a loan commitment fee of $7,000, of which $3,500 was paid on closing, and $3,500 will be paid on~~1.00%, with the first ~~anniversary. The Company will also pay a monthly monitoring fee during the term~~six months of ~~the Credit Agreement of 0.33% of the average outstanding balance, payable monthly~~interest deferred. Beginning in ~~arrears. The Company may prepay the Note at any time and terminate the Credit Agreement. In the event that the Company terminates the Credit Agreement,~~November 2020, the Company will ~~pay Thermo an early termination fee~~make 18 equal ~~to 4%~~monthly payments of principal and interest with the pro rata portion, which pro rata portion is determined by multiplying $400,000 by the number of months prior to the second anniversary of the effective date of the Credit Agreement and then dividing that by 24.final payment due in April 2022. The ~~obligations of PVBJ under the Credit Agreement~~PPP Term Note may be accelerated upon the occurrence of an event of ~~default under~~default.
The PPP Term Note is unsecured and guaranteed by the ~~Credit Agreement,~~United States Small Business Administration. The Company may apply to Comerica Bank for forgiveness of the PPP Term Note, with the amount which ~~includes customary events~~may be forgiven equal to the sum of ~~default including, without limitation, payment defaults, defaults~~payroll costs, covered rent and mortgage obligations, and covered utility payments incurred by the Company during the eight-week period beginning upon receipt of PPP Term Note funds, calculated in accordance with the ~~performance~~terms of ~~affirmative and negative covenants,~~ the ~~inaccuracy~~CARES Act. At this time, the Company is not in a position to quantify the portion of ~~representations or warranties, cross-defaults, bankruptcy and insolvency related defaults, defaults relating to judgments, an ERISA reportable event occurs, a change of control and a change in~~ the ~~Company’s financial condition~~PPP Term Note that ~~could have a material adverse effect on the Company.As of September 30, 2019, funds totaling $96,474 were available for borrowing under the Credit Agreement.~~will be forgiven.

20 16

~~H/CELL ENERGY~~VISION HYDROGEN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020 AND 2019 ~~AND 2018~~ (UNAUDITED)
Director Related Party Note
On June 19, 2020, the Company entered into a promissory note with Judd Brammah, a director of the Company, for the principal amount up to $230,332 bearing interest at 6% per annum. The entire principal and interest upon the promissory note are due on June 19, 2021. As of September 30, 2020, $230,332 is due on this promissory note. The promissory note incurred interest expense of $3,456 and $3,872 for the three and nine months ended September 30, 2020, respectively.
Effective July 17, 2020, Judd Brammah lent the Company $50,000 at 6% per annum payable on the due date, June 19, 2021. The Company incurred interest expense of $615 for the three and nine months ended September 30, 2020. Effective July 22, 2020, Judd Brammah lent the Company $299,900 at 6% per annum payable on the due date of June 19, 2021. The Company incurred interest expense of $3,322 for the three and nine months ended September 30, 2020.

14. EQUITY PURCHASE AGREEMENT
~~Triton Funds~~

On March 12, 2019, the Company entered into an equity purchase agreement (the “Equity Purchase Agreement”) and a registration rights agreement ~~(the “Registration Rights Agreement”)~~ with an accredited investor (the “Investor”), pursuant to which the Investor has agreed to purchase from the Company up to $450,000 in shares (the “Shares”) of the Company’s common stock, subject to certain limitations and conditions set forth in the Equity Purchase Agreement.
Under the Equity Purchase Agreement, the Investor has the right, at any time, to purchase Shares by delivering the Company a purchase notice, specifying the number of Shares to be purchased. The purchase price for the Shares under the Equity Purchase Agreement will be 60% of the lowest closing price of the Company’s common stock in the five consecutive trading days preceding the Investor’s receipt of the Shares subject to such equity purchase.
In addition, the Investor has an obligation, to the extent it has not already made voluntary purchases, to purchase up to (i) $200,000 in Shares within 15 Trading Days (as defined in the Equity Purchase Agreement) after the effective date of the Registration Statement (as defined below) and (ii) $450,000 in Shares within 70 Trading Days after the effective date of the Registration Statement.
The Company has the right to reject any purchase notice from the Investor by delivering written notice of such rejection within one trading day after receipt. If the Company rejects any purchase notice, the Investor has no further obligations to purchase Shares under the Equity Purchase Agreement. The Company may terminate the Equity Purchase Agreement at any time by written notice to the Investor in the event of a material breach of the Equity Purchase Agreement by the Investor. In addition, the Equity Purchase Agreement will automatically terminate on the earliest of: (i) the date that the Investor has purchased $450,000 of Shares; (ii) 70 Trading Days after the effective date of the Registration Statement; or (iii) the date the Registration Statement is no longer effective.
The obligation of the Investor to purchase the Shares is subject to several conditions, including, among other thing, (i) that the Company has an effective registration statement with the SEC registering the Shares for resale, and (ii) that the purchase of the Shares shall not cause the Investor to own more than 9.99% of the outstanding shares of common stock. In connection with the Equity Purchase Agreement, the Company agreed to pay $15,000 of fees to the Investor, of which $10,000 was paid on execution of the Equity Purchase Agreement, and the remaining $5,000 will be paid on the first sale of Shares.
Pursuant to the Registration Rights Agreement, the Company is required to register the Shares on a registration statement (the “Registration Statement”) to be filed with the SEC within 15 calendar days after the Company filed its annual report for the fiscal year ended December 31, 2018. The Company timely filed the Registration Statement with the SEC.
Additionally, on March 12, 2019, the Company agreed to donate ~~35,000~~1,750 shares of common stock to the manager of the Investor. The Company recorded value of these shares at the market price and is included in general and administrative expenses.

On June 24, 2019, the Company provided written notice to the Investor that the Company elected to terminate the Equity Agreement, effective immediately. No Shares were sold pursuant to the Equity Purchase Agreement. On August 30, 2019, the ~~35,000~~1,750 donation shares were returned to the Company and canceled.
~~GHS Investments~~

On July 9, 2019, the Company entered into an equity financing agreement ~~(the “Purchase Agreement”) and a registration rights agreement (the “Registration Rights Agreement”)~~ with GHS Investments LLC ~~(“GHS”), pursuant to which GHS has agreed to purchase from~~(the “GHS Financing Agreement); in connection therewith, the Company filed a Form S-1 Registration Statement (the “S-1”) registering up to $3,000,000 in shares (the “Shares”) of the Company’s common stock, subject to certain limitations and conditions set forth in the Purchase Agreement. Additionally, the Company issued 30,000 shares to GHS as a commitment fee including in the balance sheet under deferred offering cost along with $90,000 in legal fees.
Under the Purchase Agreement, the Company has the right, from time to time at its sole discretion and subject to certain conditions, to direct GHS to purchase shares of common stock on any business day (a “Put”), provided that at least ten trading days has passed since the most recent Put. The purchase price of shares of common stock pursuant to the Purchase Agreement will be 80% of the lowest trading price of the common stock during the 10 trading days prior to the Put (the “Pricing Period”). Such sales of common stock by the Company, if any, may occur from time to time, at the Company’s option, over the 24-month period commencing35,000 Common Stock Shares, which S-1 was declared effective on July 31, 2019.
~~H/CELL ENERGY CORPORATION~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2019 AND 2018 (UNAUDITED)~~
~~The number of Shares that~~ On May 19, 2020, the Company ~~may direct GHS~~filed a Post-Effective Amendment No. 1 on Form S-1 amending the S-1 to ~~purchase per Put is limited by the average daily trading volume~~deregister all securities registered pursuant to said S-1, which as of the ~~common stock prior to~~date of such Amendment, 22,513 Common Stock Shares were unissued (the “Post Effective S-1”). The Post Effective S-1 was declared effective on May 21, 2020, at which time the ~~Put,~~Offering described in the S-1 was terminated, as ~~follows:~~
i. ~~If between zero (0) to fifteen thousand (15,000) Shares are traded on average per day during the Pricing Period, the relevant Put shall be capped to fifteen thousand (15,000) Shares;~~
~~ii.~~ ~~If between fifteen thousand and one (15,001) Shares to thirty thousand (30,000) Shares are traded on average per day, the relevant Put shall be capped to thirty thousand (30,000) Shares;~~
~~iii.~~ ~~If between thirty thousand and one (30,001) Shares to sixty thousand (60,000) Shares are traded on average per day, the relevant Put shall be capped to sixty thousand (60,000) Shares;~~
~~iv.~~ If between sixty thousand and one (60,001) Shares to one hundred and fifty thousand (150,000) Shares are traded on average per day, the relevant Put shall be capped to one hundred and fifty thousand (150,000) Shares; and
v. If the average daily traded volume for the Pricing Period is equal to or greater than one hundred fifty thousand and one (150,001) Shares, then the relevant Put shall be limited to an amount which equals two times (2x) the average daily volume for the Shares during the Pricing Period.
~~In all instances,~~well as the ~~Company may not sell shares of its common stock to GHS~~contractual obligations under the ~~Purchase Agreement if it would result in~~ GHS beneficially owning more than 4.99% of the Company’s common stock. In addition, no Put can be made in an amount that exceeds $400,000. The Company has sold an aggregate of 78,000 shares for proceeds of $26,746 during the three months ended September 30, 2019.Financing Agreement.

15. RECENT ACCOUNTING PRONOUNCEMENTS
In February 2016, the FASB issued ASU 2016-02 and issued subsequent amendments to the initial guidance thereafter. This ASU requires an entity to recognize a right of use asset and lease liability for all leases with terms of more than 12 months. Recognition, measurement and presentation of expenses will depend on classification of the underlying lease as either finance or operating. Similar modifications have been made to lessor accounting in-line with revenue recognition guidance. The amendments also require certain quantitative and qualitative disclosures about leasing arrangements. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. The new standard was effective for the Company on January 1, 2019. Entities are required to adopt ASU 2016-02 using a modified retrospective transition method. Full retrospective transition is prohibited. The guidance permits an entity to apply the standard’s transition provisions at either the beginning of the earliest comparative period presented in the financial statements or the beginning of the period of adoption (i.e., on the effective date). The Company adopted the new standard on its effective date.
The new standard provides several optional practical expedients in transition. The Company elected the ‘package of practical expedients’, which permits it not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs. The Company did not elect the use-of hindsight or the practical expedient pertaining to land easements; the latter not being applicable to it. The new standard also provides practical expedients for an entity’s ongoing accounting. The Company elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, the Company will not recognize right of use assets or lease liabilities, and this includes not recognizing right of use assets or lease liabilities for existing short-term leases of those assets in transition. The Company also elected the practical expedient not to separate lease and non-lease components for all of its leases in existence at December 31, 2018, which means all consideration that is fixed, or in-substance fixed, relating to the non-lease components will be captured as part of the Company’s lease components for balance sheet purposes. For the nine months ended September 30, 2019, the Company recognized additional lease liabilities of $261,047 with corresponding right of use assets of the same amount based on the present value of the remaining minimum rental payments for existing leases on its Condensed Consolidated Balance Sheets. See Note 7, “Leases,” above, for additional lease disclosures.
~~H/CELL ENERGY CORPORATION~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2019 AND 2018 (UNAUDITED)~~
In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). ASU 2017-04 eliminates Step 2 as part of the goodwill impairment test. The amount of the impairment charge to be recognized would now be the amount by which the carrying value exceeds the reporting unit’s fair value. The loss to be recognized cannot exceed the amount of goodwill allocated to that reporting unit. The amendments in ASU 2017-04 are effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The Company has elected to early adopt ASU 2017-04 as of January 1, 2018. The Company has applied the guidance related to ASU 2017-04 during its annual impairment test in the fourth quarter of 2018. An entity should apply the amendments in this update on a prospective basis. An entity is required to disclose the nature of and reason for the change in accounting principle upon transition. That disclosure should be provided in the first annual period and in the interim period within the entity initially adopts the amendments in this update. The Company elected to early adopt this standard in performing their 2018 impairment test.

In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (ASC 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”). ASU 2018-07 simplifies the accounting for nonemployee share-based payment transactions. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. The new standard ~~will become~~became effective for the Company beginning January 1, 2019, with early adoption permitted. The Company ~~is currently evaluating the impact of~~has adopted this standard and has no impact on its consolidated financial statements and disclosures.

In August 2018, the FASB issue ASU 2018-13, Fair Value Measurement (ASC 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. The new standard ~~will become~~became effective for the Company January 1, 2020, with early adoption permitted. The Company ~~is currently evaluating the impact of~~has adopted this standard and has no impact on its consolidated financial statements and disclosures.

In January 2020, the FASB issued ASU 2020-01, Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivative and Hedging (Topic 815), which clarifies the interaction of rules for equity securities, the equity method of accounting, and forward contracts and purchase options on certain types of securities. The guidance clarifies how to account for the transition into and out of the equity method of accounting when considering observable transactions under the measurement alternative. The ASU is effective for annual reporting periods beginning after December 15, 2020, including interim reporting periods within those annual periods, with early adoption permitted. The Company is currently evaluating the impact of the new guidance its consolidated financial statements.
VISION HYDROGEN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020 AND 2019 (UNAUDITED)
In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This ASU amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity’s own equity, and also improves and amends the related EPS guidance for both Subtopics. The ASU will be effective for annual reporting periods after December 15, 2021 and interim periods within those annual periods and early adoption is permitted. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.
16. DISCONTINUED OPERATIONS
Sale of PVBJ
On April 21, 2020, the Company’s Board of Directors authorized its resale of PVBJ pursuant to the following terms: (a) the outstanding $221,800 earn-out liability was used as consideration towards the purchase of PVBJ; (b) Paul Benis agreed to apply the remaining salary due to him, as prorated from the Closing Date to the expiration date of the Employment Agreement (January 31, 2021), to the purchase of PVBJ by Benis Holdings LLC as additional consideration thereof and (c) as additional consideration for the purchase of PVBJ by Benis Holdings LLC, PVBJ shall continue to be responsible for the line of credit (see below).
Sale of Pride
On May 18, 2020, the Company executed a Purchase and Sale Agreement with Turquino providing for its sale of 100% of Pride’s outstanding stock Pride to Turquino in return for Turquino’s assumption of the Hidalgo Notes and the Doyle Notes and the debt obligations and accrued interest related thereto (the “Agreement”). In conjunction therewith, Hidalgo and Doyle assigned the Notes to Turquino, at which time Turquino became responsible for the debt obligations upon the Notes. The Company has no further note obligations to Hidalgo or Doyle, and it reduced its debt by approximately $600,000 or 65% of the corporate debt obligations.
The gain/loss on discontinued operations consists of the following:
September 30, 2020
PVBJ
Proceeds on sale (earn-out payable exchange) $ 214,074
Less: net asset value (1,383,440 )
Loss on sale of assets $ (1,169,366 )

Pride
Proceeds on sale (debt forgiveness) $ 500,321
Less net asset value (120,380 )
Gain on sale of assets $ 379,941
VISION HYDROGEN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020 AND 2019 (UNAUDITED)
The results of discontinued operations are as follows:
Three months ended September 30, 2020 Three months ended September 30, 2019 Nine months ended September 30, 2020 Nine months ended September 30, 2019
PVBJ
Revenue
Sales $        - $ 730,419 $ 722,786 $ 2,152,444
Total revenue - 730,419 722,786 2,152,444

Cost of goods sold
Direct costs - 559,290 560,328 1,619,173
Total cost of goods sold $ - $ 559,290 $ 560,328 $ 1,619,173

Selling, general and administrative - 176,984 230,807 482,853

Net income (loss) for period $ - $ (5,855 ) $ (68,349 ) $ 50,418
Three months ended
September 30, 2020 Three months ended September 30, 2019 Nine months ended September 30, 2020 Nine months ended September 30, 2019
Pride
Revenue
Sales $        - $ 970,946 $ 1,474,460 $ 3,181,115
Total revenue - 970,946 1,474,460 3,181,115

Cost of goods sold
Direct costs - 682,340 1,121,121 2,128,218
Total cost of goods sold $ - $ 682,340 $ 1,121,121 $ 2,128,218

Selling, general and administrative - 313,955 440,396 950,216

Net income (loss) for period $ - $ (25,349 ) $ (87,057 ) $ 102,681
Gain (loss) from discontinued operations:
Results from discontinued operations $ - $ 31,204 $ (155,406 ) $ 153,098
Loss on disposal of assets - - (789,425 ) -
Loss from discontinued operations $ - $ 31,204 $ (944,831 ) $ 153,098
19
VISION HYDROGEN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020 AND 2019 (UNAUDITED)
The discontinued operations of the balance sheet as of December 31, 2019 are as follows:
Pride PVBJ

ASSETS
Current assets
Cash and cash equivalents $ 196,705 $ 55,856
Accounts receivable 449,530 354,129
Prepaid expenses 2,108 9,071
Costs and earnings in excess of billings 26,045 -
Total current assets 674,388 419,056

Property and equipment, net 90,847 387,391
Security deposits and other non-current assets 31,633 -
Deferred tax asset 46,000 -
Customer lists, net - 63,161
Right of use asset 222,524 -
Goodwill - 1,373,621
Total assets $ 1,065,392 $ 2,243,229

LIABILITIES

Current liabilities
Accounts payable and accrued expenses $ 450,545 $ 94,104
Billings in excess of costs and earnings 47,098 -
Sales and withholding tax payable 37,199 -
Current operating lease liability 87,897 -
Current equipment notes payable 17,782 9,653
Current line of credit - 269,746
Current finance lease payable - 75,743
Income tax payable 41,426 -
Total current liabilities 681,947 449,246

Noncurrent liabilities
Earn-out payable - 209,199
Lease operating liability 137,071 -
Finance leases - 307,804
Equipment notes payable 33,227 38,913
Convertible notes payable – related party, net of discounts 473,770 -
Total noncurrent liabilities 644,068 555,916
Total liabilities 1,326,015 1,005,162
December 31, 2019
Pride current assets $ 674,388
PVBJ current assets 419,056
Current assets of discontinued operations $ 1,093,444

Pride non-current assets $ 391,004
PVBJ non-current assets 1,824,173
Non-current assets of discontinued operations $ 2,215,177
December 31, 2019
Pride current liabilities $ 681,947
PVBJ current liabilities 449,246
Current liabilities of discontinued operations $ 1,131,193

Pride non-current liabilities $ 644,068
PVBJ non-current liabilities 555,916
Non-current liabilities of discontinued operations $ 1,199,984
20
VISION HYDROGEN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020 AND 2019 (UNAUDITED)
17. GOING CONCERN
At each reporting period, the Company evaluates whether there are conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. The Company’s evaluation entails analyzing prospective operating budgets and forecasts for expectations of the Company’s cash needs and comparing those needs to the current cash and cash equivalent balances. The Company is required to make certain additional disclosures if it concludes substantial doubt exists and it is not alleviated by the Company’s plans or when its plans alleviate substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements have been prepared assuming that the Company will continue as a going concern. This basis of accounting contemplates the recovery of the Company’s assets and the satisfaction of liabilities in the normal course of business. These consolidated financial statements do not include any adjustments to the specific amounts and classifications of assets and liabilities, which might be necessary should the Company be unable to continue as a going concern.
On March 11, 2020, the World Health Organization declared the novel strain of coronavirus (COVID-19), a global pandemic and recommended containment and mitigation measures worldwide. As of the date of this filing, the Company has sold its offices in the U.S. and Australia. The Company will continue to monitor the situation closely and it is possible that it will implement further measures. In light of the uncertainty as to the severity and duration of the pandemic, the impact on the Company’s revenues, profitability and financial position is uncertain at this time.
As reflected in the quarterly financial statements, the Company has a net loss of $1,322,200 and net operating cash used in continuing operations used of $406,462 for the nine months ended September 30, 2020. In addition, the Company is a start up in the renewable energy space and has generated no revenues to date.
Due to the sale of PVBJ and Pride, the Company has alleviated liabilities on its balance sheet such as the line of credit that was due in August 2020, earn out payable, and other notes and finance leases payables relating to vehicles. The Company also generated proceeds of $580,232 from a related party note. Management has evaluated the significance of these conditions and under these circumstances expects that its current cash resources, operating cash flows and ability to secure financing would be sufficient to sustain operations for a period greater than one year from the quarterly report issuance date.
18. INVESTMENTS
On August 12, 2020, pursuant to a Seed Capital Subscription Agreement, the Company made an equity investment of 175,000 shares into VoltH2 Holdings AG (“VoltH2”), a Swiss corporation developing scalable green hydrogen production projects primarily in Europe. VoltH2 is currently developing a 25MW green hydrogen production site near Vlissingen, Netherlands. The investment was for a total purchase price of $175,000, representing a 17.5% equity interest in VoltH2. Due to the lack of readily determinable fair value of VoltH2, and because this investment does not qualify for the practical expedient to determine fair value using NAV, this investment has been recorded at cost. The Company will continually evaluate the treatment of this investment each reporting period to determine if a fair value can be determined, and if so will reassess the accounting for this investment.
19. SUBSEQUENT EVENTS

On ~~October 17, 2019,~~September 29, 2020, Vision Hydrogen Corporation (f/k/a H/Cell Energy Corporation) filed an amendment to and restatement of its Articles of Incorporation with the Secretary of State of the State of Nevada. Pursuant to the Amendment, the Company ~~entered into~~(i) changed its name from H/Cell Energy Corporation to Vision Hydrogen Corporation (ii) effectuated a ~~securities purchase agreement (the “Purchase Agreement”) with FirstFire Global Opportunities Fund LLC (the “Investor”), an unrelated third party, pursuant~~one-for-twenty (1:20) reverse split of the issued and outstanding shares of common stock of the Company without changing the par value of the stock and (iii) increased its authorized shares of common stock from 25,000,000 to 100,000,000. The Amendment took effect on October 6, 2020.
Effective as of the opening of market trading on October 6, 2020, the Company’s common stock began trading under the symbol HCCCD for 20 business days to designate the Reverse Split, after which, the ticker symbol will change to VIHD.
On October 14, 2020, the Company ~~sold~~filed an S-1 registration statement offering up to a ~~$110,000 principal amount convertible note (the “Note”) to the Investor~~maximum of 12,500,000 shares of its common stock for gross proceeds of ~~$100,000, with an original discount issuance~~$2,500,000, before deduction of ~~$10,000.~~commissions and offering expenses. The ~~transaction closed~~registration statement was declared effective on October 23, ~~2019 upon receipt~~2020. As of the ~~funds from the Investor.~~
~~The Note will mature on October 17, 2020 and will bear interest at the rate~~date of 8% per annum, which interest will be payable on the maturity date or any redemption date and may be paid, in certain conditions, through the issuance of common shares, at the discretion of the Company. The Company shall make a monthly principal payment to the Investor of $6,000 on the 17^th day of each month, starting November 17, 2019. The Company also has the right, at any time, to repay all or a part of the Note, on at least one prior business days’ notice, in an amount equal to 115% of the principal being repaid, plus any accrued but unpaid interest on the principal amount being repaid.
The Note will be convertible into the Company’s common stock at a conversion price of $0.50 per share (the “Fixed Conversion Price”) at the discretion of the holder. At no time will the Investor be entitled to convert any portion of Convertible Note to the extent that after such conversion, the Investor (together with its affiliates) would beneficially own more than 4.99% of the Company’s outstanding common stock as of such date. The Note contains standard anti-dilution protection.
~~The Note includes customary event of default provisions, and provides for a default interest rate of 15%. Upon the occurrence of an event of default, the Investor may require~~this filing, the Company ~~to redeem all or~~has not sold any ~~portion of~~shares under the Note (including all accrued and unpaid interest), in cash, at a price equal to the product of (A) the amount to be redeemed multiplied by (B) 125%. In addition, upon an event of default, the conversion price would be the lower of (i) the Fixed Conversion Price or (ii) 75% of the lowest closing price of the Common Stock during the 10 trading days prior to the conversion date.registration statement.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations includes a number of forward-looking statements that reflect Management’s current views with respect to future events and financial performance. You can identify these statements by forward-looking words such as “may,” “will,” “expect,” “anticipate,” “believe,” “estimate” and “continue,” or similar words. Those statements include statements regarding the intent, belief or current expectations of us and members of our management team as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risk and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements.

Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the Securities and Exchange Commission. Important factors currently known to Management could cause actual results to differ materially from those in forward-looking statements. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in the future operating results over time. We believe that our assumptions are based upon reasonable data derived from and known about our business and operations. No assurances are made that actual results of operations or the results of our future activities will not differ materially from our assumptions. Factors that could cause differences include, but are not limited to, expected market demand for our products, fluctuations in pricing for materials, and competition.
Vision Hydrogen Corporation is referred to hereinafter as “we”, “our”, or “us”.

Business Overview

~~We were formed in August 2015~~The 2020 year has been challenging for us. Originally, we set out to expand upon the successful implementation of a hydrogen energy system used to completely power a residence or commercial property with clean energy so that it can run independent of the utility grid and also provide energy to the utility grid for monetary credits. This system uses renewable energy as its source for hydrogen production. It functions as a self-sustaining clean energy system using hydrogen and fuel cell technology. Its production of electricity is truly eco-friendly, as it is not produced by the use of fossil fuels. It is a revolutionary green-energy concept that is safe, renewable, self-sustaining and cost effective.
There are great benefits to hydrogen energy. The use of hydrogen as an energy source produces no carbon dioxide or other greenhouse gases. Unlike fossil fuels, the only emission from hydrogen is chemically pure water. Hydrogen can be extracted from water using renewable energy from the sun and unlike batteries, hydrogen can be stored indefinitely. There is no drilling, fracking or mining required to produce hydrogen. We believe it is safe and the most abundant and cleanest energy source on the planet. In addition to offering this self-sustaining clean energy system using hydrogen and fuel cell technology, we offer a number of renewable energy services, such as audits of energy consumption, review of energy/tax credits available, feasibility studies, solar/battery system installation, zoning/permitting analysis, site design/preparation and restoration, system startup, testing, commissioning, maintenance and interconnection applications.
~~We have succeeded in developing and installing~~ hydrogen energy systems for residential users. The original business plan, established in April 2016, focused on developing the market for residential off grid hydrogen energy systems while simultaneously acquiring companies that ~~are combined~~possessed technicians who could be trained in the design and deployment of these hydrogen energy systems.
In February 2020, we decided to adopt another approach in market development, which was to pursue the one market that was establishing momentum, hydrogen production on a plant size scale. Hydrogen production that can be transported for vehicles. In order to achieve our new strategic business model, we decided to sell both our subsidiaries because they were not producing enough profit and were not a strategic fit with ~~renewable solar~~our goal of developing the market for hydrogen energy ~~to produce clean electricity. We call~~systems. Further, the hydrogen energy ~~system~~market for residential users was not developing at all based on cost inefficiencies, and debt levels were beginning to impact us adversely.
Beginning in March 2020, the ~~HC-1. The HC-1 system functions~~following steps were undertaken to implement the business transition plan:
● March 2020 - Commenced discussions with investor regarding financing options for our company and strategic acquisitions.
● April 21, 2020 - Concluded the disposition of the PVBJ subsidiary
● May 2020 - Commenced discussions and diligence for an investment in a hydrogen production project in the Netherlands, known as Volt H2
● May 18, 2020 - Concluded the disposition of The Pride Group subsidiary
● July 2020 - Concluded 2nd and 3rd tranches of debt financing with proceeds earmarked for an investment in Volt H2.
● August 12, 2020 - Concluded acquisition of an equity interest in Volt H2
● October 6, 2020 – Changed the company name to Vision Hydrogen Corporation and effected a twenty-for-one reverse stock split of our outstanding common stock
With the initial investment into the hydrogen production market via Volt H2, the first step in transitioning our hydrogen business focus has been completed. We now will continue to operate the business in a ~~self-sustaining renewable energy system. It can be configured as an off grid solution for all your electricity needs or it can be connected~~manner that is aligned with our primary hydrogen business strategy.
Discontinued Operations
On April 21, 2020, our Board of Directors authorized our resale of PVBJ back to PVBJ pursuant to the ~~grid~~terms as follows: (a) Benis Holdings LLC applied the $221,800 earn-out liability as consideration towards the purchase of PVBJ; (b) Paul Benis applied the remaining salary due to ~~generate energy credits. It is~~him, as prorated from the Closing Date to the expiration date of the Employment Agreement (January 31, 2021), to the purchase of PVBJ by Benis Holdings LLC as additional consideration thereof, and we have no further salary obligation to Paul Benis, who resigned as our executive officer; and (c) as additional consideration for the purchase of PVBJ by Benis Holdings LLC, PVBJ continues to be responsible for the line of credit (refer to note 16).
On May 18, 2020, in accordance to Nevada Statute 78.565, we completed and executed the May 18, 2020 Purchase and Sale Agreement between us and Turquino providing for our sale of 100% of Pride’s outstanding stock Pride to Turquino in return for Turquino’s assumption of the Hidalgo Notes and the Doyle Notes and the debt obligations and accrued interest related thereto (the “Agreement”). In conjunction therewith, Hidalgo and Doyle assigned the Notes to Turquino, at which time Turquino became responsible for the debt obligations upon the Notes, we have no further note obligations to Hidalgo or Doyle, and we reduced our debt by approximately $600,000 or 65% of the corporate debt obligations. Pursuant to Nevada Statute Section 78.565, approval of the Agreement only required the approval of the board of directors and did not require shareholder approval. We obtained a ~~system comprised~~valuation of ~~solar, batteries, a hydrogen generator, a fuel cell~~the fair market value of Pride from an independent third party which valued Pride at $425,000. The Agreement provides that the Parties mutually release one another and discharge and release the other party (and their respective current and former officers, directors, employees, shareholders, note holders, attorneys, assigns, agents, representatives, predecessors and successors in interest), from any and all claims, demands, obligations, or causes of action. Hidalgo, our Chief Executive Officer, and a ~~hydrogen storage tank.~~managing member of Turquino, are related parties in connection with the Exchange Agreement, the Notes, and the Agreement.

When there is sunlight, the solar produce renewable energy that charges a bank of batteries. After the batteries are fully charged, the excess electricity is then combined with water through a hydrogen generator that extracts the hydrogen from the water in a gasified state, which is safely transferred to a tank and stored for later use. If the tank is full, excess electricity is sent from the batteries to the utility grid, which results in energy credits for the system owner. The electricity for the end user is always provided by the charged batteries. If there is no solar power to charge the batteries, the system keeps the batteries fully charged by using the hydrogen gas stored in the tank, which processed through a fuel cell, creates the electricity to charge the batteries. As the system is able to produce its own hydrogen gas, which keeps the tank full, it provides a continuous supply of clean energy and sustainability that is independent from the grid. Each HC-1 system is custom designed to accommodate the electrical loads for an end user. The system is completely scalable.
If a customer wishes to connect the system to the electrical grid in order to generate renewable energy credits, we obtain interconnection agreements from the local electric utility company. If the customer obtains authorization for interconnection to the utility grid, once the HC-1 system is operational, the HC-1 system owner can eliminate their electric bill and, if in a permissible state, can begin generating energy credits. In certain states, an end user receives one energy credit for each 1,000 kilowatt hours (kWh) produced through renewal energy. The customer sells these credits to a broker, who in turn sells the credits to a utility company so that the utility company can demonstrate their compliance with the regulatory obligations to reduce greenhouse gas emissions. The price per credit can vary depending on supply and demand. Many other states that may not offer an energy credit program, do offer other cash incentives for renewable energy systems.
On January 31, 2017, we acquired The Pride Group (QLD) Pty Ltd, an Australian company (“Pride”). Founded in 1997, Pride is a provider of security systems integration for a variety of customers in the government and commercial sector and has launched a new clean energy division to focus on the high growth renewable energy market in Asia-Pacific. On February 1, 2018, we acquired PVBJ Inc. (“PVBJ”). Established in 2008, PVBJ is a regionally recognized company that specializes in HVAC and refrigeration for commercial and residential customers. The services offered include design, installation, repair, maintenance and emergency services for environmental systems. PVBJ has a highly trained technical team that is experienced in all aspects of environmental systems. PVBJ covers the U.S. Mid-Atlantic market. PVBJ is also establishing a clean energy division so that it can offer hydrogen energy systems to its existing customer base.
September 30, 2020
PVBJ
Proceeds on sale (earn-out payable exchange) $ 214,074
Less: net asset value (1,383,440 )
Loss on disposal of assets $ (1,169,366 )

Pride
Proceeds on sale (debt forgiveness) $ 500,321
Less net asset value (120,380 )
Gain on disposal of assets $ 379,941

Current Operating Trends

Currently, a number of technicians are licensed to install our HC-1 systems in the Mid-Atlantic region of the U.S. and Australia. In addition to recently establishing a clean energy division, Pride is a highly regarded and established company that designs, installs and maintains a variety of technology products in the security systems market. Pride also provides annual maintenance programs which amount to approximately AUD $2 million per annum. Pride currently generates approximately half of its revenue from government contracts and the other half from the commercial sector. Pride is a certified and licensed security systems integrator for the Queensland Government and has various government contracts in place for installation, maintenance and project services.
PVBJ is well recognized for the design, installation, maintenance and emergency service of environmental systems both in residential and commercial markets. The subsidiary has a team of technicians that can install and service a variety of HVAC and refrigeration products. PVBJ is certified and licensed in multiple states and has developed an extensive customer base. PVBJ is now expanding into clean energy systems and employs technicians that are familiar with installing environmental systems requiring electrical, plumbing and gases, which is similar to the installation of an HC-1 system.
We intend to aggressively grow our business, both organically and through strategic acquisitions. Our goal is to acquire companies with the licenses and certifications to operate in various states and countries. This will allow us to expand the geographic areas in which we can install our systems. These acquired companies will also provide us with a consistent revenue stream, a customer base for marketing our systems and technicians that can be trained to install our products and services. Initially, we intend to focus on states or countries whose government supports a regulatory standard requiring its utility companies to increase their production of electricity from renewable energy sources. This overall approach is more cost effective than the protracted nature of opening an office, hiring staff and obtaining certifications to operate in a specific geographic area. As of the date of this quarterly report, we have no written agreements or understandings to acquire any companies and no assurances can be given that we will identify or successfully acquire any other companies.
Results of Continuing Operations

For the Three Months Ended September 30, ~~2019~~2020 and ~~2018~~2019

Revenue and Cost of Revenue

~~For~~We had no revenue or cost of revenue for the three months ended September 30, ~~2019, we had $1,701,365 of revenue~~2020 and ~~$1,241,630 of cost of revenue. We had $1,839,491 of revenue, of which $8,499 was related party,~~2019.
General and ~~$1,447,688 for cost of revenue during~~Administrative Expenses
During the three months ended September 30, ~~2018, of which $9,019 was related party.~~
For the Three Months Ended
September 30, 2019 September 30, 2018
Revenue by segment
Renewable systems integration $ 45,921 $ 8,499
Non-renewable system integration 1,655,444 1,830,992
$ 1,701,365 $ 1,839,491
25
~~General~~2020, our general and ~~Administrative Expenses~~administrative expenses were $78,793, including $33,750 in management disbursements, $12,500 in accounting fees, $10,220 in legal fees, $8,570 in dues and subscriptions, $5,000 in director fees, $4,709 in insurance and $4,044 in miscellaneous expenses.

During the three months ended September 30, 2019, our general and administrative expenses were ~~$577,182.~~ $104,666, ~~was related to the Renewable Systems Integration segment,~~ including ~~corporate expenses~~$4,460 of stock-based compensation, $37,500 ~~for~~of gross payroll, $21,500 of management disbursements, $14,950 of accounting fees, $12,000 of legal fees, $12,000 of investment banking fees, $5,271 in amortization, $5,000 of investor relations, ~~$4,460 of stock-based compensation,~~ $4,365 of dues and subscription fees, which pertained to transfer agent fees and OTC listing fees, $4,298 of liability insurance, $2,910 of payroll taxes and $3,862 of miscellaneous expenses, offset by a credit of $23,450 in share donations.

~~The Non-renewable Systems Integration segment~~We incurred ~~general and administrative~~$8,312 of other expenses ~~during~~for the three months ended September 30, ~~2019~~2020, made up of $472,516, including management and administrative salaries of $211,482 along with $133,754 of other various employee expenses, such as vacation/sick time, meals, training/safety, retirement benefits and auto allowance. In addition, various business and health insurance of $56,175, $25,636 of facilities rent and maintenance, $22,127 of office, telecommunications and internet and information technology costs, $6,223 of legal and accounting fees, and $17,119 of miscellaneous fees.
~~During the three months ended September 30, 2018, our general and administrative expenses were $626,625. $123,459 was~~interest expense – related to the Renewable Systems Integration segment, including corporate expenses of $37,490 of gross payroll, $19,500 of management disbursements, $17,524 of stock-based compensation, $12,000 of legal fees, $9,435 of dues and subscription fees, which pertained to transfer agent fees and OTC listing fees, $7,500 of accounting fees, $4,301 of liability insurance, $4,000 of investor relations, $2,999 of travel, $2,868 of payroll taxes, and $5,842 of miscellaneous expenses.
The Non-renewable Systems Integration segment incurred general and administrative expenses during the three months ended September 30, 2018 of $503,166, including management and administrative salaries of $208,588 along with $109,750 of other various employee expenses, such as vacation and sick time, and auto allowance. In addition, various business and health insurance of $52,056, $37,837 of professional fees related to acquisition costs and other legal fees, $32,598 of office and internet and information technology costs, $21,308 of facilities rent, $5,753 of 401(k) contributions, $4,244 of training, $3,601 of bank and finance charges, $3,323 of safety/environmental, $2,345 of dues and subscriptions, $2,054 of utilities and $19,889 of miscellaneous fees.party.

We incurred ~~$71,956~~$68,769 of other expenses for the three months ended September 30, 2019, including $64,065 of interest expense – related party ~~$11,801 of interest expense~~ and $4,704 change in fair value ~~earn-out offset by $8,614 gain on fixed asset disposal.~~
We incurred $32,506 of other expenses for the three months ended September 30, 2018, including $19,877 of interest expense – related party, $7,544 of interest expense and $4,290 change in fair value earn-out and $795 loss on fixed asset disposal.earn-out.

As a result of the foregoing, we had net losses of ~~$189,403~~$87,105 and ~~$267,328~~$204,639 for the three months ended September 30, ~~2019~~2020 and ~~2018,~~2019, respectively.

For the Nine Months Ended September 30, ~~2019~~2020 and ~~2018~~2019

Revenue and Cost of Revenue

~~For~~We had no revenue or cost of revenue for the nine months ended September 30,~~2019, we had $5,333,559 of revenue~~ 2020 and $3,747,390 of cost of revenue. For the nine months ended September 30, 2018, we had $5,575,640 of revenue, of which $40,288 was related party, and $3,941,761 of cost of revenue, of which $40,636 was related party.2019.

For the Nine Months Ended
September 30, 2019 September 30, 2018
Revenue by segment
Renewable systems integration $ 172,156 $ 40,288
Non-renewable system integration 5,161,403 5,535,352
$ 5,333,559 $ 5,575,640
26
General and Administrative Expenses
During the nine months ended September 30, 2020, our general and administrative expenses were $278,550, including $87,800 in accounting fees, $63,750 in management disbursements, $62,500 of gross payroll, $26,015 in dues and subscriptions, $25,220 in legal fees and $13,265 in miscellaneous expenses.

During the nine months ended September 30, 2019, our general and administrative expenses were ~~$1,854,691.~~ $420,358, ~~was related to the Renewable Systems Integration segment,~~ including ~~corporate expenses of~~ $112,500 of gross payroll, $83,251 of accounting fees related to audit and consulting costs, $60,500 of management distributions, $46,000 of legal fees, $20,148 of dues and subscription fees, which pertained to transfer agent, EDGAR fees and OTC Market annual listing fees, $20,000 for investment banking services, $15,813 of amortization of intangible assets, $15,096 of stock-based compensation, $11,840 of directors’ and officers’ insurance, $8,648 of payroll taxes, $6,156 of travel meals and transportation, $5,000 of investor relations and $15,406 of miscellaneous expenses.

~~The Non-renewable Systems Integration segment~~We incurred ~~general and administrative~~$98,819 of other expenses ~~during~~for the nine months ended September 30, ~~2019~~2020, including $47,289 in interest expense, $46,655 of ~~$1,434,333, including management administrative~~interest expense – related party and employee salaries of $684,035 along with $380,831 of other various employee expenses, such as vacation/sick time, meals, training/safety, retirement benefits and auto allowance. In addition, $147,565 of various insurances including employee health, $80,309 of facilities rent/maintenance and storage expense, $77,465 of telecommunications, internet, utilities and office expense, $11,723$4,875 change in ~~legal/accounting fees, $8,259 in marketing fees, $7,539 in dues and subscriptions, $5,974 in tools, $3,824 in licenses/permits and $26,809 in miscellaneous expenses.~~
During the nine months ended September 30, 2018, our general and administrative expenses were $1,908,640. $424,640 was related to the Renewable Systems Integration segment, including corporate expenses of $112,490 of gross payroll, $65,460 of accounting fees related to audit and consulting costs, $58,500 of management distributions, $51,821 of stock-based compensation, $51,050 of legal fees, $24,307 of dues and subscription fees, which pertained to transfer agent, EDGAR fees and OTC Market annual listing fees, $13,761 of directors’ and officers’ insurance, $12,517 of travel meals and transportation, $11,606 of amortization of intangible assets, $8,606 of payroll taxes, $4,000 of investor relations and $10,522 of miscellaneous expenses.
The Non-renewable Systems Integration segment incurred general and administrative expenses during the nine months ended September 30, 2018 of $1,484,000, including management administrative and employee` salaries of $721,717 along with $304,845 of other various employee expenses, such as vacation and sick time, and auto allowance of $42,415. In addition, $127,439 of various insurances including employee health, $77,775 of telecommunications, internet and office expense, $67,355 of facilities rent, $46,060 of legal fees associated with acquisition costs and various other legal expenses, $29,723 in tools, equipment purchases and facilities maintenance, $16,281 of 401(k) costs, $6,055 in safety/environmental, $5,915 in utilities, $3,461 in training, $5,725 of dues and subscriptions, $4,066 in income tax expense, $3,638 of bank charges, $3,344 in advertising and other miscellaneous fees of $18,186.fair value earn-out.

We incurred ~~$169,742~~$171,867 of other expenses for the nine months ended September 30, 2019, including $158,220 of interest expense – related party ~~$23,892 of interest expense~~ and $13,647 change in fair value ~~earn-out, offset by $26,017 gain on fixed asset disposal.~~
We incurred $89,581 of other expenses for the nine months ended September 30, 2018, including $52,768 of interest expense – related party, $21,636 of interest expense, $11,028 change in fair value earn-out and $4,149 loss on fixed asset disposal.earn-out.

As a result of the foregoing, we had net losses of ~~$438,264~~$1,317,325 and ~~$364,342~~$439,127 for the nine months ended September 30, 2020 and 2019, ~~and 2018,~~ respectively.
For discontinued operations please refer to note 16.

Liquidity and Capital Resources

As of September 30, ~~2019,~~2020, we had negative working capital of ~~$264,588~~$511,204, comprised of ~~$1,019,524 of accounts receivables, $242,389 of~~$54,840 in cash, $35,000 in other current assets and ~~cash equivalents, $85,807 of current right of use assets, $19,763 of~~$16,830 in prepaid expenses, ~~and $3,709 of costs in excess of billings~~ offset by ~~$746,081 of accounts payables and accrued expenses, $303,526~~$580,232 in ~~line of credit, $257,659 of current convertible notes~~loan payable – related party, ~~net~~$20,000 in loan payable, $9,833 of discount, $85,807 of current operating lease liability, $73,842 of current finance leases payable, $50,072 of sales and withholding tax payable, $44,301 of billings in excess of cost, $33,134 of income taxaccounts payable and ~~$41,358~~$7,809 in accrued interest. We also had other assets of ~~current notes payable~~$175,150, which ~~made up current liabilities at~~consisted of $175,000 investment in Volt, and $150 in security deposits.
For the nine months ended September 30, ~~2019. Other non-current assets included $1,373,621 in goodwill, $464,075~~2020, we used $406,462 of property and equipment, $139,607 of right of use asset, $133,797 in deferred offering cost, $68,282 of customer list, $50,000 of a deferred tax asset, and $31,109 of security deposits. Other non-current liabilities included $268,269 in finance leases, $204,383 of earn out payable, $141,171cash in operating ~~lease liability, $155,442~~activities, which represented our net loss from continuing operations of $377,369, $94,180 of other assets, $50,462 of amortization, $7,993 of stock-based compensation and $4,875 of change in ~~convertible notes~~fair value consideration, offset by $173,853 of change in accounts payable ~~– related party, net of discounts~~ and ~~$76,159 of equipment notes payable.~~$12,750 change in prepaid expenses.

For the nine months ended September 30, 2019, we used ~~$377,474~~$322,583 of cash in operating activities, which represented our net loss from continuing operations of ~~$438,264, $233,558~~$592,225, $133,684 of ~~change~~amortization, $101,934 in ~~operating right of use asset, $149,072 of billings in excess of cost, $132,237 of~~ accounts payable, ~~and accrued expenses, $25,458 of gain on sale of assets and $2,852 of prepaid expenses, offset by $256,864 of depreciation and amortization, $235,179 of change~~$15,092 in ~~operating lease liability, $41,908 of accounts and retainage receivable, $41,277 of costs in excess of billings, $15,092 of~~ stock-based compensation, ~~and~~ $13,647 inof change in fair value ~~contingent consideration.~~and $5,285 in prepaid expenses.
For the nine months ended September 30, ~~2018,~~2020, we used ~~$408,765 of~~$497,101 in cash in ~~operating~~investing activities due to the cash disposed of in the disposition of the two subsidiaries Pride and PVBJ and $175,000 in the investment in Volt.
There was no cash used or provided by from investing activities for the nine months ended September 30, 2019.
For the nine months ended September 30, 2020, we generated $611,240 in financing activities, which represented ~~our net loss~~$580,232 in proceeds from related party debt, $75,000 in proceeds from the issuance of ~~$364,342. $311,906 of changes~~convertible debt, $26,008 in ~~accounts~~proceeds from equity financing and $20,000 in proceeds from PPP notes payable, ~~$99,498 of depreciation and amortization, $51,821 of stock-based compensation $30,246 of billings in excess of cost, $11,028 of fair value changes, and $4,149 loss on fixed asset sales,~~ offset by ~~$456,672 of changes~~$90,000 in ~~accounts receivables, $9,121 of prepaid expenses and $26,786 of costs in excess of billings.~~
convertible debt repayment.
For the nine months ended September 30, 2019, we generated ~~$1,165 in investing activities relating to $124,779 of proceeds from the disposition of property and equipment, offset by the purchase of fixed assets of $123,241 and security deposits of $373.~~
For the nine months ended September 30, 2018, we generated $8,135 in investing activities relating to the purchase of fixed assets of $13,909 and security deposits of 13,898 offset by $30,408 of cash acquired in a business acquisition and $5,534 of proceeds from the disposition of property and equipment.
~~For the nine months ended September 30, 2019, we generated $267,555~~$84,246 in financing activities ~~relating to $263,093 of proceeds~~ from ~~line of credit, $147,500 for~~ the issuance of convertible debt for $147,500 and ~~$26,746 in gross~~ proceeds from equity financing of $26,746 offset by $90,000 in legal fees associated with ~~financing transactions, $44,113 in repayments on capital leases and $35,671 in repayments of notes payable.~~
For the nine months ended September 30, 2018, we generated $342,810 of cash provided by financing activities, which represented $395,000 proceeds from the issuance of convertible debt, $251,065 of proceeds from a line of credit and $1,000 from the exercise of stock options, offset by $225,903 of repayments on long term debt, $42,123 in repayments on capital leases and $36,229 of repayments of notes payable.financing.

In the future we expect to incur expenses related to compliance for being a public ~~company and travel related to visiting potential customer sites.~~company. We expect that our general and administrative expenses will increase as we expand our business development, add infrastructure, and incur additional costs related to being a public company, including incremental audit fees, investor relations programs and increased professional services.

Our future capital requirements will depend on a number of factors, including the progress of our sales and marketing of our services, the timing and outcome of potential acquisitions, the costs involved in operating as a public reporting company, the status of competitive services, the availability of financing and our success in developing markets for our services. ~~When we enter into contracts with customers, they will be required to make payments in tranches, including a payment after a contract is executed but prior to commencement of the project.~~ We believe our existing cash ~~together with revenue generated by operations,~~ will be sufficient to fund our operating expenses and capital equipment requirements for at least the next 12 months.

~~Other than a line of credit from Thermo Communications Funding, LLC (“Thermo”) and~~On October 14, 2020, we filed an equity purchase agreement with GHS Investments LLC (“GHS”) discussed below, we presently do not have any available credit, bank financing or other external sources of liquidity. We did not achieve net income from operations for the three or nine months ended September 30, 2019 or the year ended December 31, 2018 and our operations historically have not been a source of liquidity and we cannot be assured they will be in the near future. We may need to obtain additional capital in order to expand operations and fund our activities. Future financing may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. Even if we are able to raise the funds if required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. If additional financing is not available or is not available on acceptable terms, we may be required to delay, reduce the scope of or eliminate our marketing and business development services.
~~Credit Facility~~
On August 21, 2018, PVBJ entered into a loan and security agreement (the “Credit Agreement”) with Thermo. The Credit Agreement provides for a revolving line of credit in an amount not to exceed $350,000, which is evidenced by a promissory note issued by PVBJ to Thermo (the “Note”). Pursuant to the Credit Agreement, PVBJ granted a security interest to Thermo in all of its assets. In addition, pursuantS-1 registration statement offering up to a ~~limited recourse guaranty, Andrew Hidalgo, our Chief Executive Officer, personally guaranteed the repayment~~maximum of ~~the Credit Agreement under certain conditions.~~
Pursuant to the terms of the Credit Agreement, we are permitted to borrow up to $350,000 under the revolving credit line, under a borrowing base equal to the lesser of (i) or 85% of Eligible Accounts (as defined in the Credit Agreement). Borrowings under the Credit Agreement may be used for working capital and to refinance certain existing debt of PVBJ. The Credit Agreement contains certain customary representations and warranties, affirmative and negative covenants, and events of default. Principal covenants include a debt service coverage ratio of not less than 1.15 to 1.0, a fixed charge coverage ratio of not less than 1.15 to 1.0, and maintaining a tangible net worth of at least $150,000, excluding intercompany loans. As of September 30, 2019, we were in compliance with these covenants. The loan commitment was increased in August 2019 to $400,000.
The loan commitment shall expire on August 21, 2020. The interest rate applicable to revolving loans under the Credit Agreement is prime plus 5.0%, subject to a minimum interest rate of 9.5%. We paid a loan commitment fee of $7,000, of which $3,500 was paid on closing, and $3,500 will be paid on the first anniversary. We will also pay a monthly monitoring fee during the term of the Credit Agreement of 0.33% of the average outstanding balance, payable monthly in arrears.
We may prepay the Note at any time and terminate the Credit Agreement. In the event that we terminate the Credit Agreement, we will pay Thermo an early termination fee equal to 4% of the pro rata portion, which pro rata portion is determined by multiplying $350,000 by the number of months prior to the second anniversary of the effective date of the Credit Agreement and then dividing that by 24.
The obligations of PVBJ under the Credit Agreement may be accelerated upon the occurrence of an event of default under the Credit Agreement, which includes customary events of default including, without limitation, payment defaults, defaults in the performance of affirmative and negative covenants, the inaccuracy of representations or warranties, cross-defaults, bankruptcy and insolvency related defaults, defaults relating to judgments, an ERISA reportable event occurs, a change of control and a change in our financial condition that could have a material adverse effect on us.
~~As of September 30, 2019, we had outstanding borrowings of $303,526 under the Credit Agreement, the interest rate was 9.5%, andfunds totaling $96,474 were available for borrowing under the Credit Agreement.~~
~~2019 Convertible Debenture Financing~~
On February 8, 2019, we entered into a securities purchase agreement (the “2019 Purchase Agreement”) with two of our directors, pursuant to which we sold an aggregate principal amount of $150,000 in 10% Convertible Debentures (the “2019 Debentures”), convertible into12,500,000 shares of our common stock ~~at a conversion price of $0.50 per share.~~
The 2019 Debentures, together with any accrued and unpaid interest, become due and payable on February 8, 2021 (the “2021 Maturity Date”). Interest on the 2019 Debentures accrues at the rate of 10% per annum, payable monthly in cash, beginning on March 1, 2019 and on the 2021 Maturity Date. The 2019 Debentures are convertible into common stock at a conversion price of $0.50 per share at the discretion of the holder, with special provisions applying to any holder whose conversion would result in the holder beneficially owning more than 4.99% of our common stock.
~~2018 Convertible Debenture Financing~~
On January 2, 2018, we entered into a securities purchase agreement (the “2018 Purchase Agreement”) with two of our directors, pursuant to which we sold an aggregate principal amount of $400,000 in 12% Convertible Debentures (the “2018 Debentures”), convertible into shares of our common stock at a conversion price of $0.75 per share.
The 2018 Debentures, together with any accrued and unpaid interest, become due and payable on January 2, 2020 (the “2020 Maturity Date”). Interest on the 2018 Debentures accrues at the rate of 12% per annum, payable monthly in cash, beginning on February 1, 2018 and on the 2020 Maturity Date. The 2018 Debentures are convertible into common stock at a conversion price of $0.75 per share at the discretion of the holder, with special provisions applying to any holder whose conversion would result in the holder beneficially owning more than 4.99% of our common stock.
On February 8, 2019, we entered into amendments (the “Amendments”) with the holders of the 2018 Debentures. Pursuant to the Amendments, the conversion price of the 2018 Debentures was reduced from $0.75 to $0.50, and the interest rate on the 2018 Debentures was reduced from 12% to 10%.
~~Equity Financing Agreement~~
On July 9, 2019, we entered into an equity financing agreement (the “Purchase Agreement”) and a registration rights agreement (the “Registration Rights Agreement”) with GHS, pursuant to which GHS has agreed to purchase from us up to $3,000,000 in shares (the “Shares”) of our common stock, subject to certain limitations and conditions set forth in the Purchase Agreement. Additionally, we issued 30,000 shares to GHS as a commitment fee.
Under the Purchase Agreement, we have the right, from time to time at our sole discretion and subject to certain conditions, to direct GHS to purchase shares of common stock on any business day (a “Put”), provided that at least ten trading days has passed since the most recent Put. The purchase price of shares of common stock pursuant to the Purchase Agreement will be 80% of the lowest trading price of the common stock during the 10 trading days prior to the Put (the “Pricing Period”). Such sales of common stock by us, if any, may occur from time to time, at our option, over the 24-month period commencing on July 31, 2019.
~~The number of Shares that we may direct GHS to purchase per Put is limited by the average daily trading volume of the common stock prior to the Put, as follows:~~
i. ~~If between zero (0) to fifteen thousand (15,000) Shares are traded on average per day during the Pricing Period, the relevant Put shall be capped to fifteen thousand (15,000) Shares;~~
~~ii.~~ ~~If between fifteen thousand and one (15,001) Shares to thirty thousand (30,000) Shares are traded on average per day, the relevant Put shall be capped to thirty thousand (30,000) Shares;~~
~~iii.~~ ~~If between thirty thousand and one (30,001) Shares to sixty thousand (60,000) Shares are traded on average per day, the relevant Put shall be capped to sixty thousand (60,000) Shares;~~
~~iv.~~ If between sixty thousand and one (60,001) Shares to one hundred and fifty thousand (150,000) Shares are traded on average per day, the relevant Put shall be capped to one hundred and fifty thousand (150,000) Shares; and
v. If the average daily traded volume for the Pricing Period is equal to or greater than one hundred fifty thousand and one (150,001) Shares, then the relevant Put shall be limited to an amount which equals two times (2x) the average daily volume for the Shares during the Pricing Period.
In all instances, we may not sell shares of our common stock to GHS under the Purchase Agreement if it would result in GHS beneficially owning more than 4.99% of our common stock. In addition, no Put can be made in an amount that exceeds $400,000.
~~Convertible Note Financing~~
On October 17, 2019, we entered into a securities purchase agreement (the “Purchase Agreement”) with FirstFire Global Opportunities Fund LLC (the “Investor”), an unrelated third party, pursuant to which, we sold a $110,000 principal amount convertible note (the “Note”) to the Investor for gross proceeds of ~~$100,000, with an original discount issuance~~$2,500,000, before deduction of ~~$10,000 (the “Offering”).~~commissions and offering expenses. The ~~transaction closed~~registration statement was declared effective on October 23, ~~2019 upon receipt~~2020. As of the ~~funds from~~date of this filing, we have not sold any shares under the ~~Investor.~~
~~The Note~~registration statement, and there are no assurances that we will ~~mature on October 17, 2020 and will bear interest at the rate of 8% per annum, which interest will be payable on the maturity date~~sell any or ~~any redemption date and may be paid, in certain conditions, through the issuance of common shares, at our discretion. We shall make a monthly principal payment to the Investor of $6,000 on the 17~~^th ~~day of each month, starting November 17, 2019. We also have the right, at any time, to repay~~ all ~~or a part~~ of the ~~Note, on at least one prior business days’ notice, in an amount equal to 115% of the principal being repaid, plus any accrued but unpaid interest on the principal amount being repaid.~~
The Note will be convertible into our common stock at a conversion price of $0.50 per share (the “Fixed Conversion Price”) at the discretion of the holder. At no time will the Investor be entitled to convert any portion of Convertible Note to the extent that after such conversion, the Investor (together with its affiliates) would beneficially own more than 4.99% of our outstanding common stock as of such date. The Note contains standard anti-dilution protection.
The Note includes customary event of default provisions, and provides for a default interest rate of 15%. Upon the occurrence of an event of default, the Investor may require us to redeem all or any portion of the Note (including all accrued and unpaid interest), in cash, at a price equal to the product of (A) the amount to be redeemed multiplied by (B) 125%. In addition, upon an event of default, the conversion price would be the lower of (i) the Fixed Conversion Price or (ii) 75% of the lowest closing price of our common stock during the 10 trading days prior to the conversion date.shares.

Critical Accounting Policies

Please refer to Note 2 in the accompanying financial statements.

Recent Accounting Pronouncements

Please refer to Note 15 in the accompanying financial statements.
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required under Regulation S-K for “smaller reporting companies.”

ITEM 4 - CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 as of the end of the period covered by this Quarterly Report on Form 10-Q. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Based on management’s evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, ~~2019,~~2020, as a result of the material weaknesses described below, our disclosure controls and procedures are not designed at a reasonable assurance level and are ineffective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. The material weaknesses, which relate to internal control over financial reporting, that were identified are:

a) Due to our small size, we did not have sufficient personnel in our accounting and financial reporting functions. As a result, we were not able to achieve adequate segregation of duties and were not able to provide for adequate review of the financial statements. This control deficiency, which is pervasive in nature, results in a reasonable possibility that material misstatements of the consolidated financial statements will not be prevented or detected on a timely basis; and

b) We lacked sufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of U.S. GAAP and SEC disclosure requirements.

We intend to create written policies and procedures for accounting and financial reporting with respect to the requirements and application of U.S. GAAP and SEC disclosure requirements in the future when funds permit.

We will continue to monitor and evaluate the effectiveness of our disclosure controls and procedures and our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.

Changes in internal control over financial reporting.

There were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, ~~2019~~2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

31 25

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We are currently not a party to any material legal proceedings or claims.

Item 1A. Risk Factors

Not required under Regulation S-K for “smaller reporting companies.”

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the three months ended September 30, 2019, we sold an aggregate of 78,000 shares of common stock to GHS Investments LLC pursuant to our equity financing agreement, in exchange for proceeds of $26,746.~~This transaction was exempt from registration under the Securities Act pursuant to Section 4(a)(2) of the Securities Act.~~None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.

Item 6. Exhibits

~~31.01~~3.01 Articles of Incorporation of the Company, filed with the Nevada Secretary of State on August 17, 2015, filed as an exhibit to the Registration Statement on Form S-1, filed with the Securities and Exchange Commission (the “Commission”) on June 29, 2016 and incorporated herein by reference.
3.02 Certificate of Correction to the Articles of Incorporation of the Company, filed with the Nevada Secretary of State on August 18, 2015, filed with the Nevada Secretary of State on August 18, 2015, filed as an exhibit to the Registration Statement on Form S-1, filed with the Commission on June 29, 2016 and incorporated herein by reference.
3.03 Bylaws of the Company, filed as an exhibit to the Registration Statement on Form S-1, filed with the Commission on June 29, 2016 and incorporated herein by reference.
3.04 Form of Articles of Amendment to Articles of Incorporation, filed with the Nevada Secretary of State on September 29, 2020, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 5, 2020 and incorporated herein by reference.
10.01 Seed capital subscription agreement, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on August 14, 2020 and incorporated herein by reference.
31.01* Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

~~31.02~~31.02** Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

~~32.01~~32.01** Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~101~~101** The following materials from ~~H/Cell Energy~~Vision Hydrogen Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, ~~2019,~~2020, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Stockholders’ Equity, (iv) the Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Unaudited Condensed Consolidated Financial Statements.

32* Filed herewith.
** Furnished herewith.
26

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

~~H/CELL ENERGY~~VISION HYDROGEN CORPORATION

Date: November ~~12, 2019~~2, 2020 By: /s/ ANDREW HIDALGO
Andrew Hidalgo

Chief Executive Officer (Principal ~~Executive~~
~~Officer)~~ExecutiveOfficer)

Date: November ~~12, 2019~~2, 2020 By: /s/ MATTHEW HIDALGO
Matthew Hidalgo

Chief Financial Officer (Principal Financial Officer
and Principal Accounting Officer)
27

	September 30, 2019			December 31, 2018
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	242,389		$	359,134
Accounts receivable		1,019,524			1,087,381
Prepaid expenses		19,763			16,282
Current right of use asset		85,807			-
Costs and earnings in excess of billings		3,709			45,478
Total current assets		1,371,192			1,508,275

Property and equipment, net		464,075			476,436
Security deposits and other non-current assets		31,109			32,530
Deferred tax asset		50,000			50,000
Customer lists, net		68,282			83,645
Deferred offering cost		133,797			-
Right of use asset		139,607			-
Goodwill		1,373,621			1,373,621

Total assets	$	3,631,683		$	3,524,507

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities
Accounts payable and accrued expenses	$	746,081		$	891,354
Current line of credit		303,526			-
Billings in excess of costs and earnings		44,301			195,331
Sales and withholding tax payable		50,072			59,857
Current equipment notes payable		41,358			38,991
Current operating lease liability		85,807			-
Current finance lease payable		73,842			65,265
Current convertible notes payable – related party, net of discounts		257,659			-
Income tax payable		33,134			48,643
Total current liabilities		1,635,780			1,299,441

Noncurrent liabilities
Line of credit		-			28,359
Lease operating liability		141,171			-
Earn out payable		204,383			190,736
Finance leases		268,269			232,876
Equipment notes payable		76,159			121,038
Convertible notes payable – related party, net of discounts		155,442			29,122
Total noncurrent liabilities		845,424			602,131

Total liabilities		2,481,204			1,901,572

Commitments and contingencies

Stockholders’ equity
Preferred stock - $0.0001 par value; 5,000,000 shares authorized; 0 shares issued and outstanding		-			-
Common stock - $0.0001 par value; 25,000,000 shares authorized; 7,694,024 and 7,586,024 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively		769			758
Additional paid-in capital		2,950,136			2,983,476
Accumulated deficit		(1,724,028	)		(1,285,764	)
Accumulated other comprehensive loss		(76,398	)		(75,535	)
Total stockholders’ equity		1,150,479			1,622,935

TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY	$	3,631,683		$	3,524,507

	Common Stock						Preferred Stock				Additional			Accumulated			Accumulated Other			Total
	Number of Shares			Amount			Number of shares		Amount		Paid-In Capital			Income (Deficit)			Comprehensive Income (Loss)			Stockholders’ Equity
Beginning, January 1, 2019		7,586,024		$	758			-	$	-	$	2,983,476		$	(1,285,764	)	$	(75,535	)	$	1,622,935

Stock-based compensation		-			-			-		-		8,562			-			-			8,562

Share donation		35,000			4			-		-		23,446			-			-			23,450

Beneficial conversion feature		-			-			-		-		97,500			-			-			97,500

Foreign currency translation adjustment		-			-			-		-		-			-			18,612			18,612

Debt extinguishment		-			-			-		-		(216,460	)		-			-			(216,460	)

Net loss		-			-			-		-		-			(143,638	)		-			(143,638	)

Ending, March 31, 2019		7,621,024		$	762			-	$	-	$	2,896,524		$	(1,429,402	)	$	(56,923	)	$	1,410,961

Stock-based compensation		-			-			-		-		2,074			-			-			2,074

Foreign currency translation adjustment		-			-			-		-		-			-			(4,239	)		(4,239	)

Net loss		-			-			-		-		-			(105,223	)		-			(105,223	)

Ending, June 30, 2019		7,621,024		$	762			-	$	-	$	2,898,598		$	(1,534,625	)	$	(61,162	)	$	1,303,573

Stock-based compensation		-			-			-		-		4,456			-			-			4,456

Cancelled shares		(35,000	)		(4	)		-		-		(23,450	)		-			-			(23,454	)

Commitment shares		30,000			3			-		-		45,000			-			-			45,003

Equity financing (net proceeds)		78,000			8			-		-		25,532			-			-			25,540

Foreign currency translation adjustment		-			-			-		-		-			-			(15,236	)		(15,236	)

Net loss		-			-			-		-		-			(189,403	)		-			(189,403	)

Ending September 30, 2019		7,694,024		$	769			-	$	-	$	2,950,136		$	(1,724,028	)	$	(76,398	)	$	1,150,479

	For the Nine Months Ended September 30,
	2019			2018

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss	$	(438,264	)	$	(364,342	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		256,864			99,498
Stock-based compensation		15,092			51,821
(Gain) loss on sale of assets		(25,458	)		4,149
Change in fair value contingent consideration		13,647			11,028
Change in operating assets and liabilities:
Change in operating right of use asset		(233,558	)		-
Change in operating lease liability		235,179			-
Accounts and retainage receivable		41,908			(456,672	)
Prepaid expenses and other costs		(2,852	)		(9,121	)
Costs in excess of billings		41,277			(26,786	)
Accounts payable and accrued expenses		(132,237	)		311,906
Billings in excess of costs		(149,072	)		(30,246	)

Net cash used in operating activities		(377,474	)		(408,765	)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of fixed assets		(123,241	)		(13,909	)
Cash acquired in business acquisition		-			30,408
Security deposits		(373	)		(13,898	)
Proceeds from disposition of property and equipment		124,779			5,534

Net cash provided by investing activities		1,165			8,135

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issuance of convertible debt		147,500			395,000
Net proceeds from line of credit		263,093			251,065
Repayments on capital leases		(44,113	)		(42,123	)
Repayments on notes payable		(35,671	)		(36,229	)
Repayments on long-term debt		-			(225,903	)
Legal fees associated with financing		(90,000	)		-
Gross proceeds from equity financing		26,746			-
Proceeds related to stock option exercises		-			1,000

Net cash provided by financing activities		267,555			342,810

Net decrease in cash and cash equivalents		(108,754	)		(57,820	)

Effect of foreign currency translation on cash		(7,991	)		(66,644	)

Cash and cash equivalents - beginning of period		359,134			455,700

Cash and cash equivalents - end of period	$	242,389		$	331,236

Supplemental disclosure of non-cash investing and financing activities

Common stock issued for acquisition of business	$	-		$	1,177,779
Fair value of net assets acquired in business combination	$	-		$	2,056,344
Beneficial conversion feature	$	190,000		$	378,232
Vehicle leases	$	120,413		$	-
Stock issued for deferred financing fee	$	45,000		$	-
Reclassification of deferred financing fee to additional paid in capital	$	1,206		$	-

	1.	The customer’s written approval of the scope of the change order;
	2.	Current contract language that indicates clear and enforceable entitlement relating to the change order;
	3.	Separate documentation for the change order costs that are identifiable and reasonable; orand
	4.	The Company’s favorable experience in negotiating change orders, especially as it relates to the specific type of contract and change order being evaluated

	Three Months Ended
	September 30, 2019		September 30, 2018
United States – Service	$	730,419	$	672,989
Australia – Service		379,696		447,047
United States – Contract		-		-
Australia – Contract		591,250		719,455
Total	$	1,701,365	$	1,839,491

	Nine Months Ended
	September 30, 2019		September 30, 2018
United States – Service	$	1,992,444	$	1,746,486
Australia – Service		1,529,652		1,505,660
United States – Contract		160,000		-
Australia – Contract		1,651,463		2,323,494
Total	$	5,333,559	$	5,575,640

	●[ ]	Level 1—quoted prices in active markets for identical assets and liabilities;

	●[ ]	Level 2—observable ~~market based~~market-based inputs or unobservable inputs that are corroborated by market data; and

	●[ ]	Level 3—significant unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

Balance at December 31, 2018	$	190,736
Payments		-
Adjustments to fair value		13,647
Balance at September 30, 2019	$	204,383

	September 30, 2019		December 31, 2018

Options to purchase common stock		543,375		131,250
Convertible debt		1,100,000		800,000
Totals		1,643,375		931,250

2019	$	15,225
2020		62,491
2021		63,615
2022		64,425
2023		38,542
Thereafter		36,937
Total lease payments		281,235
Less: present value discount		(54,257	)
Total operating lease liabilities	$	226,978

2019	$	21,346
2020		85,387
2021		75,741
2022		66,445
2023		68,455
Thereafter		55,686

Finance lease obligation		373,060
Less: amounts representing interest		30,949
Current maturities of capital lease obligations		73,842

Finance lease obligations, non-current	$	268,269

	September 30, 2019			December 31, 2018
Note payable with monthly payments of $716, including interest at 6.50% per annum through November 2020.	$	-		$	18,707
Note payable with monthly payments of $615, including interest at 6.80% per annum through August 2021.		13,220			18,383
Note payable with monthly payments of $1,294, including interest at 14.72% per annum through March 2023.		41,306			50,072
Note payable with monthly payments of $1,063, including interest at 5.76% per annum through April 2021.		11,834			18,539

Note payable with monthly payments of $983, including interest at 4.90% per annum through August 2024.		51,157			-
Note payable with monthly payments of $947 including interest at 6.14% per annum through December 2024.	$	-		$	54,328
Total:	$	117,517		$	160,029
Total current portion:		(41,358	)		(38,991	)
Total non-current portion:	$	76,159		$	121,038

Year ending December 31:	Amount
2019 (remainder)	$	8,308
2020		33,561
2021		26,065
2022		19,479
2023		24,283
Thereafter		5,821
Notes payable obligation		117,517

Balance at December 31, 2018	$	1,373,621
Adjustments		-
Balance at September 30, 2019	$	1,373,621

Balance at December 31, 2018	$	83,645
Amortization		15,363
Balance at September 30, 2019	$	68,282

	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value		Shares			Weighted- Average Exercise Price			Weighted-Average Remaining Contractual Term			Aggregate Intrinsic Value
Outstanding at December 31, 2018		955,000			0.29		2.40		488,000
Outstanding at December 31, 2019											34,925		$	6.20			2.40		$	216,535
Grants		65,000			0.95		2.63		-		-			-			-			-
Exercised		-			-		-		-		-			-			-			-
Canceled		(21,500	)		0.05		-		-		(34,925	)		(6.20	)		(2.40	)		-
Outstanding at September 30, 2019		998,500		$	0.31		4.15		-
Exercisable at September 30, 2019		425,000		$	0.01		1.44	$	176,375
Outstanding at September 30, 2020											-		$	0.00			-			-
Exercisable at September 30, 2020											-		$	0.00			-			-

	September 30, 2019		December 31, 2018
Assets by Segment
Renewable systems integration	$	1,646,461	$	1,540,423
Non-renewable systems integration		1,985,222		1,984,084
	$	3,631,683	$	3,524,507

	For the Three Months Ended						For the Nine Months Ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
Revenue by segment
Renewable systems integration	$	45,921		$	8,499		$	172,156		$	40,288
Non-renewable system integration		1,655,444			1,830,992			5,161,403			5,535,352
		1,701,365		$	1,839,491		$	5,333,559		$	5,575,640

Cost of sales by segment
Renewable systems integration	$	29,466		$	9,019		$	147,437		$	40,636
Non-renewable system integration		1,212,164			1,438,669			3,599,953			3,901,125
	$	1,241,630		$	1,447,688		$	3,747,390		$	3,941,761

Operating expenses
Renewable systems integration		104,666		$	123,459		$	420,358		$	424,640
Non-renewable system integration		472,516			503,166			1,434,333			1,484,000
	$	577,182		$	626,625		$	1,854,691		$	1,908,640
Operating (loss) income by segment
Renewable systems integration		(88,211	)	$	(126,461	)	$	(395,639	)	$	(424,988	)
Non-renewable system integration		(29,236	)		(108,361	)		127,117			150,227
		(117,447	)	$	(234,822	)	$	(268,522	)	$	(274,761	)

	i.	~~If between zero (0) to fifteen thousand (15,000) Shares are traded on average per day during the Pricing Period, the relevant Put shall be capped to fifteen thousand (15,000) Shares;~~
	~~ii.~~	~~If between fifteen thousand and one (15,001) Shares to thirty thousand (30,000) Shares are traded on average per day, the relevant Put shall be capped to thirty thousand (30,000) Shares;~~
	~~iii.~~	~~If between thirty thousand and one (30,001) Shares to sixty thousand (60,000) Shares are traded on average per day, the relevant Put shall be capped to sixty thousand (60,000) Shares;~~
	~~iv.~~	If between sixty thousand and one (60,001) Shares to one hundred and fifty thousand (150,000) Shares are traded on average per day, the relevant Put shall be capped to one hundred and fifty thousand (150,000) Shares; and
	v.	If the average daily traded volume for the Pricing Period is equal to or greater than one hundred fifty thousand and one (150,001) Shares, then the relevant Put shall be limited to an amount which equals two times (2x) the average daily volume for the Shares during the Pricing Period.

	September 30, 2020
PVBJ
Proceeds on sale (earn-out payable exchange)	$	214,074
Less: net asset value		(1,383,440	)
Loss on sale of assets	$	(1,169,366	)

Pride
Proceeds on sale (debt forgiveness)	$	500,321
Less net asset value		(120,380	)
Gain on sale of assets	$	379,941

	Three months ended September 30, 2020		Three months ended September 30, 2019			Nine months ended September 30, 2020			Nine months ended September 30, 2019
PVBJ
Revenue
Sales	$	-	$	730,419		$	722,786		$	2,152,444
Total revenue		-		730,419			722,786			2,152,444

Cost of goods sold
Direct costs		-		559,290			560,328			1,619,173
Total cost of goods sold	$	-	$	559,290		$	560,328		$	1,619,173

Selling, general and administrative		-		176,984			230,807			482,853

Net income (loss) for period	$	-	$	(5,855	)	$	(68,349	)	$	50,418

	Three months ended September 30, 2020		Three months ended September 30, 2019			Nine months ended September 30, 2020			Nine months ended September 30, 2019
Pride
Revenue
Sales	$	-	$	970,946		$	1,474,460		$	3,181,115
Total revenue		-		970,946			1,474,460			3,181,115

Cost of goods sold
Direct costs		-		682,340			1,121,121			2,128,218
Total cost of goods sold	$	-	$	682,340		$	1,121,121		$	2,128,218

Selling, general and administrative		-		313,955			440,396			950,216

Net income (loss) for period	$	-	$	(25,349	)	$	(87,057	)	$	102,681

Results from discontinued operations	$	-	$	31,204	$	(155,406	)	$	153,098
Loss on disposal of assets		-		-		(789,425	)		-
Loss from discontinued operations	$	-	$	31,204	$	(944,831	)	$	153,098

	December 31, 2019
Pride current assets	$	674,388
PVBJ current assets		419,056
Current assets of discontinued operations	$	1,093,444

Pride non-current assets	$	391,004
PVBJ non-current assets		1,824,173
Non-current assets of discontinued operations	$	2,215,177

	December 31, 2019
Pride current liabilities	$	681,947
PVBJ current liabilities		449,246
Current liabilities of discontinued operations	$	1,131,193

Pride non-current liabilities	$	644,068
PVBJ non-current liabilities		555,916
Non-current liabilities of discontinued operations	$	1,199,984

	●	March 2020 - Commenced discussions with investor regarding financing options for our company and strategic acquisitions.
	●	April 21, 2020 - Concluded the disposition of the PVBJ subsidiary
	●	May 2020 - Commenced discussions and diligence for an investment in a hydrogen production project in the Netherlands, known as Volt H2
	●	May 18, 2020 - Concluded the disposition of The Pride Group subsidiary
	●	July 2020 - Concluded 2nd and 3rd tranches of debt financing with proceeds earmarked for an investment in Volt H2.
	●	August 12, 2020 - Concluded acquisition of an equity interest in Volt H2
	●	October 6, 2020 – Changed the company name to Vision Hydrogen Corporation and effected a twenty-for-one reverse stock split of our outstanding common stock

	a)	Due to our small size, we did not have sufficient personnel in our accounting and financial reporting functions. As a result, we were not able to achieve adequate segregation of duties and were not able to provide for adequate review of the financial statements. This control deficiency, which is pervasive in nature, results in a reasonable possibility that material misstatements of the consolidated financial statements will not be prevented or detected on a timely basis; and

b)	We lacked sufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of U.S. GAAP and SEC disclosure requirements.

~~31.01~~3.01		Articles of Incorporation of the Company, filed with the Nevada Secretary of State on August 17, 2015, filed as an exhibit to the Registration Statement on Form S-1, filed with the Securities and Exchange Commission (the “Commission”) on June 29, 2016 and incorporated herein by reference.

3.02		Certificate of Correction to the Articles of Incorporation of the Company, filed with the Nevada Secretary of State on August 18, 2015, filed with the Nevada Secretary of State on August 18, 2015, filed as an exhibit to the Registration Statement on Form S-1, filed with the Commission on June 29, 2016 and incorporated herein by reference.

3.03		Bylaws of the Company, filed as an exhibit to the Registration Statement on Form S-1, filed with the Commission on June 29, 2016 and incorporated herein by reference.

3.04		Form of Articles of Amendment to Articles of Incorporation, filed with the Nevada Secretary of State on September 29, 2020, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 5, 2020 and incorporated herein by reference.

10.01		Seed capital subscription agreement, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on August 14, 2020 and incorporated herein by reference.

31.01*		Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

~~31.02~~31.02**		Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

~~32.01~~32.01**		Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~101~~101**		The following materials from ~~H/Cell Energy~~Vision Hydrogen Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, ~~2019,~~2020, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Stockholders’ Equity, (iv) the Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Unaudited Condensed Consolidated Financial Statements.

	~~H/CELL ENERGY~~VISION HYDROGEN CORPORATION

Date: November ~~12, 2019~~2, 2020	By:	/s/ ANDREW HIDALGO
		Andrew Hidalgo
		Chief Executive Officer (Principal ~~Executive~~ ~~Officer)~~ExecutiveOfficer)

Date: November ~~12, 2019~~2, 2020	By:	/s/ MATTHEW HIDALGO
		Matthew Hidalgo
		Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)