UNITED STATES
Washington,
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
March 31, 2021
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
to
THE PECK COMPANY HOLDINGS,
| Delaware | | 47-2150172 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification Number) |
400 Avenue D, Suite 10 Williston, Vermont | | 05495 |
|
| |
| (Address of Principal Executive Offices) | | (Zip Code) |
Yes ☒ No ☐ Yes ☒ No ☐ ☐ YES ☒ The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. Condensed Consolidated Condensed Consolidated (Restated) and Basis of Presentation market on January 20, 2021. At March 31, 2021 and December 31, 2020, the deferred tax liability was $824,129 and $610,558, respectively. values as these amounts are estimated using public market prices, quotes from financial institutions and other available information. reporting period. accounting guidance related to its public and private placement warrants the Company’s predecessor previously issued, the Company’s previously issued financial statements for the Affected Periods should no longer be relied upon. The of December 31, 2020 included in this filing is presented below. shelf registration. 2020: IBEW. Three Months Ended September 30, Nine Months Ended September 30, For the year ended December 31, 2020 the Company recorded deferred income tax benefit of $487,923 and had a net deferred tax liability of $610,558. September 30, 2020 September 30, 2019 September 30, 2020 December 31, 2019 Three Months Ended September 30, Nine Months Ended September 30, September 30, 2020 December 31, 2019 2020. as there is a right to offset. September 30, 2020 December 31, 2019 Three Months Ended September 30, Nine Months Ended September 30, Common Stock. 2020. For the three months ended March 31, 2021 and 2020, project profit was affected by less than 5% as a result of changes in contract estimates included in projects that were in process as of March 31, 2021 and 2020. MARCH 31, 2020 twelve to eighteen months represents projects that have a high probability for conversion. Historically, we have been awarded over 90% of the projects we have reviewed for construction. The upfront assistance and coordination with our clients can be considered our marketing effort, which is a significant advantage for converting a high percentage of its pipeline projects. effective tax rate. LOSS March 31, 2020. These non-GAAP measures are not in accordance with, or an alternative to, GAAP and should be considered in addition to, and not as a substitute or superior to, the other measures of financial performance prepared in accordance with GAAP. Using only the non-GAAP financial measures, particularly Adjusted EBITDA, to analyze our performance would have material limitations because such calculations are based on a subjective determination regarding the nature and classification of events and circumstances that investors may find significant. We compensate for these limitations by presenting both the GAAP and non-GAAP measures of our operating results. Although other companies may report measures entitled “Adjusted EBITDA” or similar in nature, numerous methods may exist for calculating a company’s Adjusted EBITDA or similar measures. As a result, the methods that we use to calculate Adjusted EBITDA may differ from the methods used by other companies to calculate their non-GAAP measures. 2020. earnings of $1.2 million. AmpUp. Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, $0.0001 par value PECKISUN Nasdaq Capital Market YES [X] NO [ ]YES [X] NO [ ]Large accelerated filer [ ]☐ Accelerated filer [ ]Non-accelerated filer[X]Smaller reporting company[X]☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company [X]☒ [ ][ ]☐ NO [X]registrant’s common stockRegistrant’s Common Stock outstanding as of November 10, 2020May 24, 2021 was 5,312,220.THE PECK COMPANY HOLDINGS,2Part I. Financial InformationSeptember 30, 2020 and December 31, 2019 September 30, 2020 December 31, 2019 Assets Current Assets: Cash $ 118,450 $ 95,930 Accounts receivable, net of allowance 9,998,463 7,294,605 Costs and estimated earnings in excess of billings 1,241,667 1,272,372 Other current assets 147,431 201,326 Total current assets 11,506,011 8,864,233 Property and equipment: Building and improvements 672,727 672,727 Vehicles 1,283,364 1,283,364 Tools and equipment 517,602 517,602 Solar arrays 6,386,025 6,386,025 8,859,718 8,859,718 Less accumulated depreciation (2,641,196 ) (2,193,007 ) 6,218,522 6,666,711 Other Assets: Investment in GreenSeed Investors, LLC 4,824,444 - Investment in Solar Project Partners, LLC 96,052 - Captive insurance investment 198,105 140,875 Total assets $ 22,843,134 $ 15,671,819 Liabilities and Stockholders’ Equity Current Liabilities: Accounts payable, includes bank overdrafts of $524,324 and $1,496,695 at September 30, 2020 and December 31, 2019, respectively $ 3,245,792 $ 4,274,517 Accrued expenses 74,674 119,211 Billings in excess of costs and estimated earnings on uncompleted contracts 3,301,903 126,026 Due to stockholders 37,315 342,718 Line of credit 4,907,521 3,185,041 Current portion of deferred compensation 27,880 27,880 Current portion of long-term debt 352,814 426,254 Total current liabilities 11,947,899 8,501,647 Long-term liabilities: Deferred compensation, net of current portion 65,633 88,883 Deferred tax liability 467,146 1,098,481 Long-term debt, net of current portion 3,202,541 1,966,047 Total liabilities 15,683,219 11,655,058 Commitments and Contingencies (Note 9) Stockholders’ equity: Preferred stock – 0.0001 par value 1,000,000 shares authorized, 200,000 and 0 issued and outstanding at September 30, 2020 and December 31, 2019, respectively (Liquidation Value of $5,000,000) 20 - Common stock – 0.0001 par value 49,000,000 shares authorized, 5,298,159 issued and outstanding as of September 30, 2020 and December 31, 2019, respectively 529 529 Additional paid-in capital-common stock 5,508,388 412,356 Retained earnings 1,650,978 3,603,876 Total Stockholders’ equity 7,159,915 4,016,761 Total liabilities and stockholders’ equity $ 22,843,134 $ 15,671,819 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements Assets Current Assets: Cash $ 20,206,778 $ 699,154 Accounts receivable, net of allowance 7,442,640 6,215,957 Inventory 1,534,859 - Costs and estimated earnings in excess of billings 2,601,682 1,354,602 Other current assets 241,205 214,963 Total current assets 32,027,164 8,484,676 Property and Equipment, net of accumulated depreciation 6,114,584 6,119,800 Captive insurance investment 233,487 198,105 Intangible assets 3,007,033 - Investments 7,220,496 4,820,496 16,575,600 11,138,401 Total assets $ 48,602,764 $ 19,623,077 Liabilities and Stockholders’ Equity Current Liabilities: Accounts payable, includes bank overdraft of $1,246,437 at December 31, 2020 $ 3,757,582 $ 4,086,173 Accrued expenses 134,029 172,021 Billings in excess of costs and estimated earnings on uncompleted contracts 1,561,829 1,140,125 Due to stockholders 52,170 24,315 Line of credit 3,682,818 2,482,127 Current portion of deferred compensation 28,656 28,656 Current portion of long-term debt 296,484 308,394 Total current liabilities 9,513,568 8,241,811 Long-term liabilities: Deferred compensation, net of current portion 54,185 62,531 Deferred tax liability 824,129 610,558 Warrant liability 1,386,379 1,124,411 Long-term debt, net of current portion 1,625,801 1,701,495 Total liabilities 13,404,062 11,740,806 Commitments and Contingencies (Note 9) Stockholders’ equity: Preferred stock – 0.0001 par value 200,000 shares authorized, 0 and 200,000 issued and outstanding at March 31, 2021 and December 31, 2020, respectively - 20 Common stock – 0.0001 par value 49,000,000 shares authorized, 8,784,196 and 5,313,268 issued and outstanding as of March 31, 2021 and December 31, 2020, respectively 878 531 Additional paid-in capital 33,076,459 2,577,359 Retained earnings 2,121,365 5,304,361 Total Stockholders’ equity 35,198,702 7,882,271 Total liabilities and stockholders’ equity $ 48,602,764 $ 19,623,077 3The Peck Company Holdings, Inc.Condensed Consolidated Statements of Operations (Unaudited)For the three and nine months ended September 30, 2020 and 2019 Three Months ended Nine Months ended September 30, September 30, 2020 2019 2020 2019 Earned revenue $ 4,966,026 $ 11,749,580 $ 11,720,932 $ 21,878,170 Cost of earned revenue 4,728,328 10,308,936 11,162,439 17,846,681 Gross profit 237,698 1,440,644 558,493 4,031,489 Warehousing and other operating expenses 180,471 294,154 556,927 1,034,965 General and administrative expenses 709,353 967,196 2,190,763 1,980,886 Total operating expenses 889,824 1,261,350 2,747,690 3,015,851 Operating income (652,126 ) 179,294 (2,189,197 ) 1,015,638 Other expenses Interest expense (72,554 ) (54,671 ) (218,730 ) (158,217 ) (Loss) income before income taxes (724,680 ) 124,623 (2,407,927 ) 857,421 (Benefit) provision for income taxes (209,000 ) 48,468 (630,585 ) 1,555,330 Net (loss) income (515,680 ) 76,155 (1,777,342 ) (697,909 ) Net income applicable to preferred shareholders (175,556 ) - (175,556 ) - Net (loss) income available to share of common stockholders $ (691,236 ) $ 76,155 $ (1,952,898 ) $ (697,909 ) Net (loss) income available to common stockholder: Weighted average shares of common stock outstanding Basic and diluted 5,298,159 5,474,695 5,298,159 4,071,497 Basic and diluted $ (0.13 ) $ 0.01 $ (0.37 ) $ (0.17 ) 4The Peck Company Holdings, Inc.StatementStatements of Changes in Stockholders’ EquityOperations (Unaudited)threeThree Months Ended March 31, 2021 and nine months ended September 30, 2020 and 2019 Preferred Stock Common Stock Additional Paid-In Retained Shares Amounts Shares Amounts Capital Earnings Total Balance as of January 1, 2020 - $ - 5,298,159 $ 529 $ 412,356 $ 3,603,876 $ 4,016,761 Net Loss - - - - - (432,632 ) (432,632 ) Balance as of, March 31, 2020 - - 5,298,159 529 412,356 3,171,244 3,584,129 Investment in Green Seed Investors, LLC 200,000 20 - - 4,999,980 - 5,000,000 Investment in Solar Project Partners, LLC - - - - 96,052 - 96,052 Net Loss - - - - - (829,030 ) (829,030 ) Balance as of, June 30, 2020 200,000 20 5,298,159 529 5,508,388 2,342,214 7,851,151 Preferred stock dividend - - - - - (175,556 ) (175,556 ) Net loss - - - - - (515,680 ) (515,680 ) Balance as of, September 30, 2020 200,000 $ 20 5,298,159 $ 529 $ 5,508,388 $ 1,650,978 $ 7,159,915 The Peck Company Holdings, Inc.Condensed Consolidated Statement of Changes in Stockholders’ Equity (Unaudited)For the three and nine months ended September 30, 2020 and 2019 Common Stock Additional Paid-In Retained Shares Amounts Capital Earnings Total Balance as of January 1, 2019 3,234,501 $ 323 $ 552,630 $ 4,518,085 $ 5,071,038 Cash distributions to stockholders in 2019 prior to June 20, 2019 - - - (190,199 ) (190,199 ) Net income - - - 376,652 376,652 Balance as of, March 31, 2019 3,234,501 323 552,630 4,704,538 5,257,491 Cash distributions to stockholders in 2019 prior to June 20, 2019 - - - (296,215 ) (296,215 ) Conversion of Rights to common shares 419,450 42 - - 42 Combination with Peck Electric Co. 1,820,744 182 (129,100 ) - (128,918 ) Net loss - - - (1,150,716 ) (1,150,716 ) Balance as of, June 30, 2019 5,474,695 547 423,530 3,257,607 3,681,684 Recapitalization costs - - (224 ) - (224 ) Net income - - - 76,155 76,155 Balance as of, September 30, 2019 5,474,695 $ 547 $ 423,306 $ 3,333,762 $ 3,757,615 Earned revenue $ 7,260,657 3,984,680 Cost of earned revenue 7,141,760 3,668,167 Gross profit 118,897 316,513 Warehouse and other operating expenses 183,476 192,942 General and administrative expenses 1,465,064 617,748 Stock based compensation – general and administrative 1,070,908 - Total operating expenses 2,719,448 810,690 Operating loss (2,600,551 ) (494,177 ) Other expenses Change in fair value of the warrant liability (261,968 ) (357,605 ) Interest expense, net (36,493 ) (80,766 ) Loss before income taxes (2,899,012 ) (932,548 ) Provision (benefit) for income taxes 214,321 (142,311 ) Net loss (3,113,333 ) (790,237 ) Preferred stock dividend (69,663 ) — Net loss available to shares of common stockholders $ (3,182,996 ) $ (790,237 ) Net loss per common share-Basic and diluted $ (0.41 ) $ (0.15 ) Weighted average shares of common stock- Basic and diluted 7,695,279 5,298,159 unaudited condensed consolidated financial statements.5The Peck Company Holdings, Inc.StatementsStatement of Cash FlowsChanges in Stockholders’ Equity (Unaudited)NineThree Months Ended September 30,March 31, 2021 Preferred Stock Common Stock Additional Shares Amounts Shares Amounts Total Balance as of January 1, 2021-restated 200,000 $ 20 5,313,268 $ 531 $ 2,577,359 $ 5,304,361 $ 7,882,271 Registered Direct Offering — — 840,000 84 9,584,916 - 9,585,000 Acquisition of iSun Energy, LLC — — 300,000 30 2,921,868 - 2,921,898 Exercise of Unit Purchase Option — — 133,684 13 (13 ) - - Redemption of common stock — — (34,190 ) (3 ) (672,856 ) - (672,859 ) Conversion of Preferred Shares (200,000 ) (20 ) 370,370 37 (17 ) - - Dividends payable on preferred shares — — - - - (69,663 ) (69,663 ) Conversion of Solar Project Partners, LLC warrant - - 117,376 12 (12 ) - - Issuance under equity incentive plan - - 126,083 12 1,070,896 - 1,070,908 Exercise of options - - 100,667 10 149,983 - 149,993 Exercise of warrants - - 1,516,938 152 17,444,335 - 17,444,487 Net loss — — — — — (3,113,333 ) (3,113,333 ) Balance as of March 31, 2021 — $ — 8,784,196 $ 878 $ $ 2,121,365 $ 35,198,702 and 2019 2020 2019 Cash flows from operating activities Net loss $ (1,777,342 ) $ (697,909 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 448,189 466,222 Deferred finance charge amortization 3,277 - Bad debt expense 164,292 - Deferred tax (benefit) provision (631,335 ) 1,527,311 Changes in operating assets and liabilities: Accounts receivable (2,868,150 ) (5,103,347 ) Other current assets 53,895 (210,852 ) Costs and estimated earnings in excess of billings 30,705 (2,709,006 ) Accounts payable (1,028,725 ) 2,085,197 Accrued expenses (44,537 ) 43,425 Billings in excess of costs and estimated earnings on uncompleted contracts 3,175,877 645,385 Deferred compensation (23,250 ) (20,165 ) Net cash used in operating activities (2,497,104 ) (3,973,739 ) Cash flows from investing activities: Purchase of solar arrays and equipment - (39,243 ) Investment costs - (129,100 ) Cash surrender value of life insurance - (54,689 ) Investment in captive insurance (57,230 ) (60,063 ) Net cash used in investing activities (57,230 ) (283,095 ) Cash flows from financing activities: Net borrowings on line of credit 2,232,580 4,027,476 Payments of line of credit (510,100 ) - Proceeds from long-term debt 1,487,624 - Payments of long-term debt (327,847 ) (230,629 ) Payments to stockholders (305,403 ) - Due to stockholders - 395,070 Stockholder distributions paid - (219,600 ) Net cash provided by financing activities 2,576,854 3,972,317 Net increase (decrease) in cash 22,520 (284,517 ) Cash, beginning of period 95,930 313,217 Cash, end of period $ 118,450 $ 28,700 Supplemental disclosure of cash flow information Cash paid during the year for: Interest $ 215,453 $ 158,217 Income taxes 366 5,859 Supplemental schedule of non-cash investing and financing activities: Shares of Preferred Stock issued for investment $ 5,000,000 $ - Warrants issued for investment $ 96,052 $ - Preferred dividends satisfied with distribution from investment $ 175,556 Vehicle purchased and financed $ - $ 127,161 Accrued S corporation distributions which have not been paid $ - $ 266,814 Preferred Stock Common Stock Additional Shares Amounts Shares Amounts Total Balance as of January 1, 2020 — $ — 5,298,159 $ 529 $ (2,692,424 ) $ 6,559,973 $ 3,868,078 Net loss — — — — — (790,237 ) (790,237 ) �� Balance as of March 31, 2020 — $ — 5,298,159 $ 529 $ (2,692,424 ) $ 5,769,736 $ 3,077,841 unaudited condensed consolidated financial statements
statements.6The Peck Company Holding, Inc.Notes to Condensed Consolidated Financial Statements of Cash Flows (Unaudited) Cash flows from operating activities Net loss $ (3,113,333 ) $ (790,237 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 135,825 155,012 Deferred finance charge amortization 770 1,535 Provision (benefit) for deferred income taxes 213,571 (143,061 ) Stock based compensation 1,070,908 - Change in fair value of warrant liabilities 261,968 357,605 Changes in operating assets and liabilities: Accounts receivable (1,226,683 ) 166,925 Prepaid expenses 4,095 62,278 Inventory (1,534,859 ) — Costs and estimated earnings in excess of billings (1,247,080 ) (197,704 ) Accounts payable (328,591 ) (1,778,242 ) Accrued expenses (37,992 ) 18,914 Billings in excess of costs and estimated earnings on uncompleted contracts 421,704 161,425 Deferred compensation (8,346 ) (7,750 ) Net cash used in operating activities (5,388,043 ) (1,993,300 ) Cash flows from investing activities: Purchase of equipment (130,609 ) — Acquisition of iSun Energy, LLC (85,135 ) — Investment in captive insurance (35,382 ) (57,230 ) Minority investments (2,500,000 ) — Net cash used in investing activities (2,751,126 ) (57,230 ) Cash flows from financing activities: Proceeds from line of credit 9,440,699 5,603,603 Payments to line of credit (8,240,008 ) (3,165,953 ) Payments of long-term debt (88,374 ) (135,099 ) Redemption of shares of Common Stock (672,859 ) - Due to stockholders 27,855 (291,403 ) Proceeds from registered direct offering 9,585,000 — Proceeds from warrant exercise 17,444,487 — Proceeds from option exercise 149,993 — Net cash provided by financing activities 2,011,148 Net increase (decrease) in cash 19,507,624 (39,382 ) Cash, beginning of period 699,154 95,930 Cash, end of period $ 20,206,778 $ 56,548 Supplemental disclosure of cash flow information Cash paid during the year for: Interest $ 36,493 $ 79,231 Income taxes $ — $ 366 Supplemental schedule of non-cash investing and financing activities: Preferred dividends satisfied with distribution from investment $ 69,663 $ — Shares of Common Stock issued for conversion of Solar Project Partners, LLC $ 12 $ - Shares of Common Stock issued for exercise of Unit Purchase Option on a cashless basis $ 13 $ - Shares of Common Stock issued for conversion of Preferred Stock - $ 37 $ - Shares of Common Stock issued for acquisition of iSun Energy, LLC $ $ - South Burlington,Williston, Vermont.On February 26, 2019, Peck Electric Co., a privately held company, entered into a Share Exchange Agreement (the “Exchange Agreement”) with Jensyn Acquisition Corp. (“Jensyn”), a publicly held company whose primary business objective was to acquire, through a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination (the “Reverse Merger and Recapitalization”), with one or more target businesses (a special purpose acquisition company or “SPAC”). On June 20, 2019, withapproval of the stockholders of each of Peck Electric Co. and Jensyn, the Reverse Merger and Recapitalization was completed. In connection with the Reverse Merger and Recapitalization, Jensyn issued 3,234,501 shares of Jensyn’s Common Stock, par value $0.0001 per share (the “Common Stock”), to the stockholders of the Peck Electric Co. in exchange for all of the equity securities of Peck Electric Co., and Peck Electric Co. became a wholly-owned subsidiary of Jensyn. While Jensyn was the surviving legal entity,Company changed its corporate name from The Peck Company Holdings, Inc. to iSun, Inc. (the “Name Change”). The Name Change was deemedeffected through a parent/subsidiary short-form merger of iSun, Inc., our wholly-owned Delaware subsidiary formed solely for the acquiring entity for accounting purposes. Concurrentpurpose of the name change, with and into us. We were the surviving entity. To effectuate the short-form merger, we filed a Certificate of Merger with the completionSecretary of State of the Reverse MergerState of Delaware on January 19, 2021. The merger became effective on January 19, 2021 with the State of Delaware and, Recapitalization, Jensyn changed its name from “Jensyn Acquisition Corp.” to “The Peck Company Holdings, Inc.” andfor purposes of the symbol for itsquotation of our Common Stock traded on the Nasdaq became “PECK”. UnlessCapital Market (“Nasdaq”), effective at the context otherwise requires, “we,” “us,” “our,” “Peck Company” andopen of the “Company” refer to the combined company.b) Basis of Presentationand nine months ended September 30, 2020March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 20202021 or any other period. The accompanying financial statements should be read in conjunction with the Company’s audited financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.
2020.71) Revenue Recognition StandardIn May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606). The ASU and all subsequently issued clarifying ASUs replaced most existing revenue recognition guidance in U.S. GAAP. The ASU also required expanded disclosures relating to the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The Company adopted the new standard in the fourth quarter 2019, effective January 1, 2019, the first day of the Company’s fiscal year, using the modified retrospective method.As part of the adoption of the ASU, the Company elected to use the following transition practical expedients: (i) completed contracts that begin and end in the same annual reporting period have not been restated; (ii) the Company used the known transaction price for completed contracts; (iii) to exclude disclosures of transaction prices allocated to remaining performance obligations when the Company expects to recognize such revenue for all periods prior to the date of initial application of the ASU; and (iv) the Company has reflected the aggregate of all contract modifications that occurred prior to the date of initial application when identifying the satisfied and unsatisfied performance obligations, determining the transaction price, and allocating the transaction price.The majority of the Company’s revenue is recognized over time based on the percentage of completion method with cost inputs. Revenue recognized over time primarily consists of performance obligations that are satisfied within one year or less. 2)accuratefaithful depiction of the Company’s performance because it directly measures the value of the services transferred to the customer. Cost of revenue includes an allocation of indirect costs including depreciation and amortization. Subcontractor materials, labor and equipment, are included in revenue and cost of revenue when management believes that the Company is acting as a principal rather than as an agent (i.e., the Company integrates the materials, labor and equipment into the deliverables promised to the customer). Changes to total estimated contract cost or losses, if any, are recognized in the period in which they are determined as assessed at the contract level. Pre-contract costs are expensed as incurred unless they are expected to be recovered from the customer. As of September 30,March 31, 2021 and December 31, 2020, the Company had $0 in pre-contract costs classified as a current asset under contract assets on the Condensedits Consolidated Balance Sheet. Project mobilization costs are generally charged to project costs as incurred when they are an integrated part of the performance obligation being transferred to the client. Customer payments on construction contracts are typically due within 30 to 45 days of billing, depending on the contract. Sales and other taxes the Company collects concurrent with revenue-producing activities are excluded from revenue.83)and nine months ended September 30: Three Months Ended
September 30, Nine Months Ended
September 30, 2020 2019 2020 2019 Performance obligations satisfied over time Solar $ 3,840,231 $ 9,852,848 $ 9,162,303 $ 17,060,573 Electric 679,339 1,541,210 1,653,545 3,908,634 Data and Network 446,456 355,522 905,084 908,963 Total $ 4,966,026 $ 11,749,580 $ 11,720,932 $ 21,878,170 During the periods ended September 30, 2020 and 2019, there was no revenue recognized based on the satisfaction of performance obligation at a point in time.4)March 31: 2021 2020 Solar Operations Performance obligations satisfied at a point in time $ — $ — Performance obligations satisfied over time $ 6,092,674 $ 3,229,844 $ 6,092,674 $ 3,229,844 Electric Operations Performance obligations satisfied at a point in time $ — — Performance obligations satisfied over time $ 889,111 $ 491,640 $ 889,111 $ 491,640 Data and Network Operations Performance obligations satisfied at a point in time $ — $ — Performance obligations satisfied over time $ 278,872 $ 263,196 $ 278,872 $ 263,196 Total Performance obligations satisfied at a point in time $ — — Performance obligations satisfied over time $ 7,260,657 $ 3,984,680 Total $ 7,260,657 $ 3,984,680
3) Variable Consideration5)6)e) Accounts Receivable11Accounts receivable are recorded when invoices are issued and presented on the condensed balance sheet netf) Project AssetsProject assets primarily consist of costs related to solar power projects that are in various stages of development that are capitalized prior to the completion of the sale of the project, and are actively marketed and intended to be sold. In contrast to contract assets, the Company holds a controlling interest in the project itself. These project related costs include costs for land, development, and construction of a PV solar power system. Development costs may include legal, consulting, permitting, transmission upgrade, interconnection, and other similar costs. The Company typically classifies project assets as noncurrent due to the nature of solar power projects (long-lived assets) and the time required to complete all activities to develop, construct, and sell projects, which is typically longer than 12 months. Once the Company enters into a definitive sales agreement, such project assets are classified as current until the sale is completed and the Company has met all of the criteria to recognize the sale as revenue. Any income generated by a project while it remains within project assets is accounted for as a reduction to the basis in the project. If a project is completed and begins commercial operation prior to the closing of a sales arrangement, the completed project will remain in project assets until placed in service. All expenditures related to the development and construction of project assets, whether fully or partially owned, are presented as a component of cash flows from operating activities. Project assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. A project is considered commercially viable or recoverable if it is anticipated to be sold for a profit once it is either fully developed or fully constructed. A partially developed or partially constructed project is considered to be commercially viable or recoverable if the anticipated selling price is higher than the carrying value of the related project assets. The Company examines a number of factors to determine if the project is expected to be recoverable, including whether there are any changes in environmental, permitting, market pricing, regulatory, or other conditions that may impact the project. Such changes could cause the costs of the project to increase or the selling price of the project to decrease. If a project is not considered recoverable, we impair the respective project assets and adjust the carrying value to the estimated fair value, with the resulting impairment recorded within “Selling, general and administrative” expense.Project Asset were $0 for the three and nine months ended September 30, 2020 and 2019, respectively.g) Property and EquipmentProperty and equipment greater than $1,000 are recorded at cost, less accumulated depreciation. Cost includes the price paid to acquire or construct the assets, required installation costs, and any expenditures that substantially add to the value or substantially extend the useful life of the assets.The solar arrays represent project assets that the Company may temporarily own and operate after being placed into service. The Company reports solar arrays at cost, less accumulated depreciation. The Company begins depreciation on the solar arrays when they are placed in service.Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The estimated useful lives are as follows:Buildings and improvements39 yearsVehicles3-5 yearsTools and equipment3-7 yearsSolar arrays20 yearsTotal depreciation expense for the three months ended September 30, 2020 and September 30, 2019 was $138,164 and $155,169, respectively. Total depreciation expense for the nine months ended September 30, 2020 and September 30, 2019 was $448,189 and $466,222, respectively.The cost of assets sold, retired, or otherwise disposed of, and the related allowance for depreciation are eliminated from the accounts and any resulting gain or loss is included in operations. The cost of maintenance and repairs are charged to expense as incurred, while significant renewals or betterments are capitalized.h) Long-Lived AssetsThe Company assesses long-lived assets, including property and equipment, for impairment whenever events or changes in circumstances arise, including consideration of technological obsolescence, that may indicate that the carrying amount of such assets may not be recoverable. These events and changes in circumstances may include a significant decrease in the market price of a long-lived asset; a significant adverse change in the extent or manner in which a long-lived asset is being used or in its physical condition; a significant adverse change in the business climate that could affect the value of a long-lived asset; an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset; a current period operating or cash flow loss combined with a history of such losses or a projection of future losses associated with the use of a long-lived asset; or a current expectation that, more likely than not, a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. For purposes of recognition and measurement of an impairment loss, long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.10When impairment indicators are present, the Company compares undiscounted future cash flows, including the eventual disposition of the asset group at market value, to the asset group’s carrying value to determine if the asset group is recoverable. If the carrying value of the asset group exceeds the undiscounted future cash flows, the Company measures any impairment by comparing the fair value of the asset group to its carrying value. Fair value is generally determined by considering (i) internally developed discounted cash flows for the asset group, (ii) third-party valuations, and/or (iii) information available regarding the current market value for such assets.If the fair value of an asset group is determined to be less than its carrying value, an impairment in the amount of the difference is recorded in the period that the impairment indicator occurs. Estimating future cash flows requires significant judgment, and such projections may vary from the cash flows eventually realized.The Company considers a long-lived asset to be abandoned after the Company has ceased use of such asset and they have no intent to use or repurpose the asset in the future. Abandoned long-lived assets are recorded at their salvage value, if any.i) Asset Retirement ObligationsThe Company develops, constructs, and operates certain solar arrays with land lease agreements that include a requirement for the removal of the assets at the end of the term of the agreement. The Company recognizes such asset retirement obligations (“ARO”) in the period in which they are incurred based on the present value of estimated third-party recommissioning costs, and they capitalize the associated asset retirement costs as part of the carrying amount of the related assets. Once an asset is placed into service, the asset retirement cost is subsequently depreciated on a straight-line basis over the estimated useful life of the asset. Changes in AROs resulting from the passage of time are recognized as an increase in the carrying amount of the liability and as accretion expense. The AROs were not deemed significant to the financial statements and were therefore not recorded as a liability at September 30, 2020 and December 31, 2019.j)d) Concentration and Credit RisksSeptember 30, 2020,March 31, 2021, the uninsured balances were immaterial.k)approximately $20 million.closingcompletion of the Exchange Agreement)Reverse Merger and Recapitalization between Peck Electric Co. and Jensyn Acquisition Corp, (the Company’s predecessor)) the former Peck Electric Co. had elected to be taxed as an S-Corporation under the Internal Revenue Code and similar codes in states in which the Company was subject to taxation. While this election was in effect, the income (whether distributed or not) was taxed for federal income tax purposes to former Peck Electric stockholders. Accordingly, no provision for federal income tax was required. However, the Company did calculate a proforma provision. The provision for income taxes for former Peck Electric Co. was primarily for Vermont minimum taxes. As of the date of the completion of the Exchange Agreement,Reverse Merger and Recapitalization, the Company effectively became a C-Corporation, which changed the level of taxation from the stockholders to the Company. The deferred tax assets and liabilities that arise out of the change of tax status have been recorded to account for the temporary differences that existed on the date of the change resulting in a deferred tax liability of $1,506,362.11l)U.S. GAAPgenerally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates their estimates, including those related to inputs used to recognize revenue over time, specifically percentage-of-completion.goodwill, intangibles, investments, impairment on investments and valuation of deferred tax assets. Actual results could differ from those estimates.The Company incurred $21,547 of deferred financing costs for the year ended December 31, 2019 in connection with a refinance of its revolving line of credit. Amortization expense associated with deferred financing costs, which is included in interest expense, totaled $207$770 and $1,535 for the three months ended September 30,March 31, 2021 and March 31 2020, and $0 for the three months ended September 30, 2019. Amortization expense associated with deferred financing costs, which is included in interest expense, totaled $3,277 for the nine months ended September 30, 2020 and $0 for the nine months ended September 30, 2019. Debt financing costs relating to the equity credit line were offset against additional paid in capital as the shares issued were fully earned on the execution of the agreement. The Company incurred $413,032 of deferred financing costs that was recorded to additional paid in capital for the year ended December 31, 2019.
respectively.12o) and cash equivalents, accounts receivable, accounts payable and other current liabilities approximate their fair values. Management believes the carrying values of notes and other receivables, cash collateral deposited with insurance carriers, and outstanding balances on its line of credit facilitiesand long-term debt approximate their fair values.earnout provisionCompany currently has one reportable segment with different product offerings for financial reporting purposes, which represents the Company’s core business.the Share ExchangeFreestanding Equity-Classified Written Call Options. The FASB issued ASU 2021-04 to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. The ASU is considered a Level 3 measurement. Given that the probability of such provisions being achieved is highly unlikely, no value was assigned to the earnout provision.Note 2. EXCHANGE AGREEMENT/REVERSE MERGER AND RECAPITALIZATIONAs discussed in Note 1, on June 20, 2019,effective years beginning after December 15, 2021, including interim periods within those years and the Company consummatedis currently evaluating the Reverse Mergerimpact of this standard on its consolidated financial statements and Recapitalization pursuant torelated disclosures.Exchange Agreement between Jensynfirst-in, first-out method. Inventory primarily consists of solar panels and Peck Electric Co. The materials actions arising from the agreement are outlined below:a) Exchange of SharesUpon the closing of the Exchange Agreement, the stockholders of Peck Electric Co. exchanged their shares of capital stock in Peck Electric Co. for 3,234,501 shares of the Jensyn’s Common Stock (the “Share Exchange”), representing approximately 59% of Jensyn’s outstanding shares after giving effect to the Reverse Merger and Recapitalization. As a result of the Share Exchange, Peck Electric became a wholly owned subsidiary of the Company.13Upon the closing of the Reverse Merger and Recapitalization and after giving effect to the issuances of Common Stock and the conversion of 4,194,500 rights to purchase Common Stock into 419,450 shares of Common Stock. In addition, 1,819,482 shares of the Company’s Common Stock were issued to Jensyn shareholders upon the closing of the Reverse Merger and Recapitalization.other materials. The Company also redeemed a totalreviews the cost of 492,037 sharesinventories against their estimated net realizable value and records write-downs if any inventories have costs in excess of its Common Stock pursuant to the termstheir net realizable values. Inventory is presented net of the Company’s Second Amendedan allowance of $0 at March 31, 2021 and Restated Certificate of Incorporation resulting in a total payment to redeeming stockholders of $5,510,814.i. warrants exercisable for 2,097,250 shares of Common Stock, consisting of 3,900,000 warrants originally sold as part of units in Jensyn’s initial public offering (the “IPO”) and 294,500 warrants sold as part of the units issued in a private placement simultaneously with the consummation of the Jensyn IPO. Each warrant entitles its holder to purchase one-half of one share of Common Stock at an exercise price of $5.75 per half share ($11.50 per whole share)ii. warrants exercisable for 195,000 shares of Common Stock, consisting of 390,000 private warrants originally sold as part of Firm Units in the IPO. Each warrant entitled its holder to purchase one-half of one share of Common Stock at an exercise price of $5.75 per half share ($11.50 per whole share).iii. Purchase option for 390,000 Units was originally sold as part of the IPO. Each Unit has an exercise price of $12.00 per Unit and consists of the following:○One share of Common Stock○One right to receive one-tenth (1/10) of a share of Common Stock issued upon exercise of the UnitOne warrant entitling its holder to purchase one-half of one share of Common Stock at an exercise price of $5.75 per half share ($11.50 per whole share).b) EarnoutThe Exchange Agreement contained a provision that if certain conditions were met by June 30, 2020, the end of the Earnout Period, the Company would issue 898,473 shares of Common Stock to the original Peck Electric Co. stockholders, issue 11,231 shares of Common Stock to Exit Strategy Partners, LLC, and issue shares of Common Stock to certain of the initial stockholders of the Company a number of shares of the Company’s Common Stock equal to the number of shares of the Company’s Common Stock forfeited and canceled by such stockholders to the extent that such shares are used to satisfy Company obligations or to induce investors to make an equity investment in the Company at or prior to the Closing as described below under “Issuance of Additional Shares and Forfeiture of Sponsor Shares.” The Board of Directors of the Company established a Special Committee of the Board of Directors to determine whether the conditions were met. Based on the findings of the Special Committee, the Board of Directors has determined that the conditions were not met. Accordingly, no shares will be issued pursuant to this provision.c) Issuance of Additional Shares and Forfeiture of Sponsor SharesIn connection with the Reverse Merger and Recapitalization arising out of the Exchange Agreement, the Company issued 493,299 shares of Common Stock in exchange for the cancellation of approximately $5,618,675 of obligations and, as contemplated by the Exchange Agreement, certain insiders and their transferees agreed to forfeit and cancel 281,758 shares of Common Stock. As of December 31, 2019, 257,799 shares of Common Stock were forfeited. No new shares will be issued as the earnout provisions of Exchange Agreement were notmet by June 30, 2020, the end of the Earnout Period. The remaining 23,959 shares of Common Stock are pending forfeiture and cancellation as of September 30, 2020.14Note 3. EXCHANGE AND SUBSCRIPTION AGREEMENTThe Company entered into an Exchange and Subscription Agreement (the “Exchange Agreement”) dated April 22, 2020 with GreenSeed Investors, LLC, a Delaware limited liability company (“GSI”), and Solar Project Partners, LLC, a Delaware limited liability company (“SPP”).The primary purpose of GSI isfacilitate the green bond platform and provide capital for the acquisition of solar projects by SPP. The investment in GSI provides accessprior year’s financial statement to early stage financingconform to support the Company’s EPC operations while establishing a large pipeline of projects. The investment in SPP provides the Company with the opportunity to retain a long-term ownership in the completed solar projects. As such, the Company recorded the investments as long-term other assets.Pursuant to the Exchange Agreement, the Company subscribed for 500,000 Units of Class B Preferred Membership units of GSI in exchange for 200,000 shares of the Company’s Series A Preferred Stock (the “Preferred Shares”). In addition to the investment of Preferred Shares by the Company, GSI obtain additional capital contributions which valued the Units at $10.00 per Unit. As the Company acquired 500,000 Units, the market transactions were utilized as a Level 1 fair value instruments in determining the valuation of the investment. As of April 22, 2020, the fair value of the investment in GSI was $5,000,000. Separately, the Company subscribed for and purchased 100,000 Units of SPP in exchange for the issuance by the Company of a Warrant to acquire 275,000 shares of the Company’s Common Stock at an exercise price of $15.00 per share. As of April 22, 2020, the fair value of the warrants was $96,052. The key assumptionsclassifications used in the valuationcurrent year.weremay require the warrants to be classified as follows; a) volatility of 71.36%, b) term of 5 years, c) risk free rate of 0.36% and d) a dividend yield of 0%.The Exchange Agreement provides that as long as the dividend paymentliabilities on the Preferred Shares inSPAC’s financial statements as opposed to equity. Since issuance, the Company’s Warrants were accounted for as equity within the Company’s previously reported financial statements, and after discussion and evaluation, management concluded that the Warrants should be presented as liabilities reported at fair value with subsequent fair value remeasurement at each calendar quarter is equal to the aggregate distribution with respect to the GSI Units, such payments and distributions shall be offset and neither GSI nor the Company need to make any cash payments to the other. For the three months ending September 30, 2020, the Company accrued dividends of $175,556. For the nine months ending September 30, 2020, the Company accrued dividends of $175,556. For the three months ending September 30, 2020, the Company received a distribution from GSI in the amount of $175,556 which offset the dividends payable in accordance with the operating agreement between the Company and GSI. For the nine months ending September 30, 2020, the Company received a distribution from GSI in the amount of $175,556 which offset the dividends payable in accordance with the operating agreement between the Company and GSI.granted to GSI the right to repurchase up to 400,000 (in tranchesconcluded that, because of 50,000)a misapplication of the Units at a valuation of $10.00 per Unit totaling $4,000,000.Company granted to GSI registration rights with respect toAffected Periods are the Preferred Shares, the Warrant,years ended December 31, 2020 and 2019 and the Common Stock underlying the Warrant.The GSI and SPP investments are measured at cost, less impairment, if any, plus or minus changes resulting from observable price changes in ordinary transactions for the identical or similar investment of the same issuer. Changes in the fair value of the investment are recorded as net appreciation in fair value of investment in the Consolidated Statements of Operations. At September 30, 2020, the equity investment for GSI and SPP was $5,000,000 and $96,052, respectively. No net appreciation or depreciation in fair value of the investments was recorded during the three and nine month periodsquarters ended September 30, 2020, June 30, 2020, March 31, 2020, September 30, 2019 and June 30, 2019.As such, the Company is restating its unaudited and audited financial statements for the Affected Periods included in this Form 10-Q.there were no observable price changes. Adjustments As Restated Balance sheet as of December 31, 2020 (audited) Warrant Liability Additional Paid-in Capital Retained Earnings Adjustments As Restated Statement of Operations for the three months ended March 31, 2020 (unaudited) Change in fair value of the warrant liability Net loss Net loss per common share As Previously
Reported Adjustments As Restated Statement of Cash Flows for the three months ended March 31, 2020 (unaudited) Net Loss Change in fair value of the warrant liability Forninethree months ended September 30, 2020,March 31, 2021, the Company experienced a net operating loss and negative cash flow from operations. At September 30, 2020,March 31, 2021, the Company had balancescash on hand of cash of $118,450,approximately $20.2 million and working capital deficit of $441,888 and total stockholders’ equity of $7,335,471. To date,approximately $22.5 million. The Company utilized approximately $5.4 million in cash to support operations during the three months ending March 31, 2021. In prior years, the Company has relied predominantly on operating cash flow to fund its operations and borrowings from its credit facilities and long-term debt to fund its operations.15On April 24, 2020,facilities. For the three months ending March 31, 2021, the Company received a loan underutilized the CARES Act Payroll Protection Program (“PPP”) of $1,487,624. Proceedsproceeds from the loan were usedregistered direct offering and exercise of warrants described below to cover documented expenses relatedgenerate cash flow to payroll, rentsupport its operations.utilities, during the 24-week period, subsequent to the cash being receivedsale by the Company are eligible to be forgiven.of an aggregate 840,000 shares of its Common Stock in a registered direct offering at a purchase price of $12.50 per share for gross proceeds of approximately $10.5 million before deducting fees and offering expenses. The forgiveness amountCompany’s Form S-3 Registration Statement is effective and allows for not more than 40% of the forgiveness to be for non-payroll items and is subject to reduction if employees are terminated or wages are reduced. The remaining unforgiven amount of the loan bears interest at 1% per annum and matures on April 24, 2025. Initial principal payments are deferred for the first ten months; however, interest still accrues during this time. There are no collateral requirements or prepayment penalties associated with the loan. The Company has applied for forgiveness of the full amount of the PPP loan.Due to the impact of the COVID-19 pandemic, during the third quarter the Company recommenced several projects that were previously delayed. The delayed project start dates did negatively impact the anticipated revenueto offer, issue and cash flow for the period. However, all projects are anticipated to be completed consistent with original expectations. The current State of Emergency is scheduled to end on November 15, 2020. However, as the Company does support and maintain critical infrastructure, several projects were deemed essential and allowed to continue.Under the terms of the Company’s equity line of credit, Lincoln Park Capital is required to purchase sharessell up to a total value$50,000,000 in the aggregate of $15,000,000 pursuant to certain terms and conditions. The Company can require the purchase of 50,000our shares of Common Stock under a regular purchase. OnStock. After the next day following a regular purchase,registered direct offering, the Company can require the purchase of an accelerated purchase equal to 200% of the shares sold in the regular purchase as well as an additional accelerated purchase equal to 300% of the shares sold in the regular purchase. The total number of shares authorizedhas approximately $39.5 million available under the Purchase Agreement total 3,024,194 which would allow the Company to maximize the equity line of credit within 10 business days. As of September 30, 2020, The Company has not utilized the line and the full availability remains available.includingproceeds generated from the registered direct offering, the potential availability of proceeds receivedof sale of shares of Common Stock under the PPP loan, the availability under the equity line of credits,shelf registration, the collectability of its accounts receivable and project backlog are sufficient to meet its operating and capital requirements for at least the next twelve months from the date these financial statements are issued.Note 5. September 30, 2020 December 31, 2019 Accounts receivable - contracts in progress $ 9,995,486 $ 7,190,412 Accounts receivable - retainage 86,977 188,193 10,082,463 7,378,605 Allowance for doubtful accounts (84,000 ) (84,000 ) Total $ 9,998,463 $ 7,294,605 Accounts receivable - contracts in progress $ 7,410,103 $ 6,206,760 Accounts receivable - retainage 116,537 93,197 7,526,640 6,299,957 Allowance for doubtful accounts (84,000 ) (84,000 ) Total $ 7,442,640 $ 6,215,957 $0 for September 30, 2020, and 2019, respectively.September 30, 2020March 31, 2021 and December 31, 2019: September 30, 2020 December 31, 2019 Costs in excess of billings $ 1,241,667 $ 1,272,372 Unbilled receivables - 206,213 Retainage 86,977 188,193 $ 1,328,644 $ 1,666,778 Costs in excess of billings $ 958,720 $ 216,261 Unbilled receivables, included in costs in excess of billings 1,642,962 1,138,341 2,601,682 1,354,602 Retainage 116,537 93,197 $ 2,718,219 $ 1,447,799 September 30, 2020March 31, 2021 will be billed and collected within one year. Contract liabilities were as follows at September 30, 2020March 31, 2021 and December 31, 2019: September 30, 2020 December 31, 2019 Billings in excess of costs $ 3,301,903 $ 126,026
2020:16Note 6. Billings in excess of costs $ 1,561,829 $ 1,140,125 isare as follows: September 30, 2020 December 31, 2019 Expenditures to date on uncompleted contracts $ 4,738,293 $ 4,699,855 Estimated earnings thereon 1,042,936 1,409,060 5,781,229 6,108,915 Less billings to date (8,274,600 ) (5,168,782 ) (2,493,371 ) 940,133 Plus under billings remaining on contracts 100% complete 433,135 206,213 Total $ (2,060,236 ) $ 1,146,346 Expenditures to date on uncompleted contracts $ 4,222,606 $ 7,764,622 Estimated earnings thereon 1,242,219 2,178,868 5,464,825 9,943,490 Less billings to date (6,067,934 ) (10,867,354 ) (603,109 ) (923,864 ) Plus under billings remaining on contracts 100% complete 1,642,962 1,138,341 Total $ 1,039,853 $ 214,477 accompanyingaccompany balance sheets under the following captions: September 30, 2020 December 31, 2019 Cost and estimated earnings in excess of billings $ 1,241,667 $ 1,272,372 Billings in excess of costs and estimated earnings on uncompleted contracts (3,301,903 ) (126,026 ) $ (2,060,236 ) $ 1,146,346 Note 7. Cost and estimated earnings in excess of billings $ 2,601,682 $ 1,354,602 Billings in excess of costs and estimated earnings on uncompleted contracts (1,561,829 ) (1,140,125 ) $ 1,039,853 $ 214,477 September 30, 2020 December 31, 2019 NBT Bank, National Association, 4.25% interest rate, secured by all business assets, payable in monthly installments of $5,869 through September 2026, with a balloon payment at maturity. $ 693,461 $ 723,230 NBT Bank, National Association, 4.00% interest rate, secured by all business assets, payable in monthly installments of $12,070 through January 2021. 47,892 153,258 NBT Bank, National Association, 4.20% interest rate, secured by building, payable in monthly installments of $3,293 through September 2026, with a balloon payment at maturity. 253,348 274,476 NBT Bank, National Association, 4.15% interest rate, secured by all business assets, payable in monthly installments of $3,677 through April 2026. 219,235 244,920 NBT Bank, National Association, 4.20% interest rate, secured by all business assets, payable in monthly installments of $5,598 through October 2026, with a balloon payment at maturity. 438,800 474,464 NBT Bank, National Association, 4.85% interest rate, secured by a piece of equipment, payable in monthly installments of $2,932 including interest, through May 2023. 87,751 110,413 NBT Bank, National Association, 1.0% interest rate, payable in monthly installments including interest beginning September 2021, through August 2026, issued through the CARES Act Payroll Protection Program. 1,487,624 - Various vehicle loans, interest ranging from 0% to 6.99%, total current monthly installments of approximately $8,150, secured by vehicles, with varying terms through September 2025. 264,244 333,510 National Bank of Middlebury, 3.95% interest rate for the initial 5 years, after which the loan rate will adjust equal to the Federal Home Loan Bank of Boston 5/20 – year Advance Rate plus 2.75%, loan is subject to a floor rate of 3.95%, secured by solar panels and related equipment, payable in monthly installments of $2,388 including interest, through December 2024. 79,726 98,033 3,572,081 2,412,304 Less current portion (352,814 ) (426,254 ) 3,219,267 1,986,050 Less debt issuance costs (16,726 ) (20,003 ) $ 3,202,541 $ 1,966,047 17 NBT Bank, National Association, 4.25% interest rate, secured by all business assets, payable in monthly installments of $5,869 through September 2026, with a balloon payment at maturity. $ 672,887 $ 683,268 NBT Bank, National Association, repaid in January 2021. - 12,050 NBT Bank, National Association, 4.20% interest rate, secured by building, payable in monthly installments of $3,293 through September 2026, with a balloon payment at maturity. 238,817 246,135 NBT Bank, National Association, 4.15% interest rate, secured by all business assets, payable in monthly installments of $3,677 through April 2026. 201,600 210,475 NBT Bank, National Association, 4.20% interest rate, secured by all business assets, payable in monthly installments of $5,598 through October 2026, with a balloon payment at maturity. 414,270 426,624 NBT Bank, National Association, 4.85% interest rate, secured by a piece of equipment, payable in monthly installments of $2,932 including interest, through May 2023. 72,145 80,001 Various vehicle loans, interest ranging from 0% to 6.99%, total current monthly installments of approximately $8,150, secured by vehicles, with varying terms through September 2025. 271,616 294,799 National Bank of Middlebury, 3.95% interest rate for the initial 5 years, after which the loan rate will adjust equal to the Federal Home Loan Bank of Boston 5/10 – year Advance Rate plus 2.75%, loan is subject to a floor rate of 3.95%, secured by solar panels and related equipment, payable in monthly installments of $2,388 including interest, through December 2024. 67,110 73,467 1,938,445 2,026,819 Less current portion (296,484 ) (308,394 ) 1,641,961 1,718,425 Less debt issuance costs (16,160 ) (16,930 ) Long-term debt $ 1,625,801 $ 1,701,495 Year ending December 31: Amount Remainder of 2020 $ 98,407 2021 404,619 2022 600,960 2023 561,413 2024 515,958 2025 and thereafter 1,390,724 $ 3,572,081 Note 8.Year ending December 31: Amount Remainder of 2021 $ 220,020 2022 305,857 2023 265,765 2024 222,606 2025 209,858 2026 and thereafter 714,339 $ 1,938,445 demand.demand and subject to an annual review in September 2021. The balance outstanding was $4,907,521$3,682,818 and $2,675,041$2,482,127 at September 30, 2020March 31, 2021 and December 31, 2019,2020, respectively Borrowing is based on 80% of eligible accounts receivable. The line is secured by all business assets and is subject to certain financial covenants. These financial covenants consist of a minimum debt service coverage ratio of 1.20 to 1.00 measured on a quarterly basis. As of September 30, 2020,March 31, 2021, the Company iswas not in compliance with the financial covenants.The Company hadcovenants but received a linewaiver of credit withcovenant default from NBT Bank with a limitBank.In 2015, the Company entered into two twenty-five-year non-cancelable lease agreements for land on which they constructed solar arrays. One lease has fixed annual rent of $2,500. The second lease has annual rent of $2,500 with an annual increase of 2%.In 2017, the Company entered into a twenty-year non-cancelable lease agreement for land on which it constructed solar arrays. The lease has annual rent of $3,500 with an annual increase of 2%.In 2018, the Company entered into a twenty-year non-cancelable lease agreement for land on which it constructed solar arrays. The lease has annual rent of $26,000.In 2019, the Company entered into a two-year non-cancelable lease agreement for equipment used in solar installations. The leases have a combined annual rent of $45,832.The Company occasionally pays rent for storage on a month-to-month basis.$2,547$61,215 and $5,219$62,021 for the three months ended September 30,March 31, 2021 and 2020, and 2019, respectively. Total rent expense for all of the non-cancelable leases above were $19,577 and $31,347 for the nine months ended September 30, 2020 and 2019, respectively.$44,385$97,639 and $186,465$87,626 for the three monthsquarters ended September 30,March 31, 2021 and 2020, and 2019, respectively. Total rent expense under short term rental agreements was $160,639 and $266,974 for the nine months ended September 30, 2020 and 2019, respectively.Year ending December 31: Amount Remainder of 2020 $ 48,125 2021 54,201 2022 35,236 2023 35,371 2024 35,508 2025 35,231 Thereafter 448,546 $ 692,218 Years ending December 31: Amount Remainder of 2021 $ 101,148 2022 145,561 2023 147,903 2024 150,291 2025 152,310 Thereafter 1,070,016 $ 1,767,229 Input Risk-free rate Remaining term in years Expected volatility Exercise price Fair value of common stock Total Level 1 Level 2 Level 3 Liabilities: Public Warrants Private Warrants Total Level 1 Level 2 Level 3 Balance, January 1, 2021 $ 1,124,411 Fair value adjustment – Warrant liability 261,968 Balance, March 31, 2021 $ 1,386,379 Outstanding, beginning January 1, 2021 4,163,926 Granted - Exercised 3,033,876 Redeemed - Outstanding, ending March 31, 2021 1,130,050 Union.conditions.conditions that expires May 31, 2022. During the three and nine months ended September 30,March 31, 2021 and 2020, and 2019, the Company incurred the following union assessments. 2020 2019 2020 2019 Pension fund $ 68,353 $ 141,553 $ 209,389 $ 287,810 Welfare fund 218,428 441,441 585,134 895,423 National employees benefit fund 23,553 52,484 59,366 97,071 Joint apprenticeship and training committee 3,336 8,004 8,546 14,456 401(k) matching 11,485 11,424 30,987 28,256 Total $ 325,155 $ 654,906 $ 893,422 $ 1,323,016 18 Pension fund $ 118,434 $ 73,170 Welfare fund 343,371 214,028 National employees benefit fund 33,680 20,519 Joint apprenticeship and training committee 19,630 2,841 401(k) matching 20,998 - Total $ 536,113 $ 310,558 federalFederal and stateState income taxes and must record deferred tax assets and liabilities for the tax effects of any temporary differences that exist on the date of the change. When push down accounting does not apply as part of a business combination, U.S. GAAP requires the effect of the change in tax status to be recognized in the financial statements and the effect is included in income (loss) from continuing operations. The Company recorded deferred income tax expense and a corresponding deferred tax liability of $1,098,481 as of and for the year ended December 31, 2019, of which $1,506,362 was recorded at the time of conversion to a C CorporationC-corporation (see note 1 (k) income taxes).nine months ending September 30,year ended December 31, 2020 and 2019 consists of the following: Current Federal $ - $ 21,660 State 750 6,359 Total current 750 28,019 Deferred Federal (478,370 ) 1,141,389 State (152,965 ) 364,973 Total deferred tax (asset) liability $ (631,335 ) 1,506,362 (Benefit) provision for Income Taxes $ (630,585 ) $ 1,555,330 Current Federal $ — $ — State 750 750 Total Current 750 750 Deferred Federal 161,825 (108,437 ) State 51,746 (34,624 ) Total Deferred $ 213,571 (143,061 ) Provision (benefit) for Income Taxes $ 214,321 $ (142,311 ) September 30, 2020March 31, 2021 and December 31, 20192020 are as follows: Deferred tax assets (liabilities) Accruals and reserves $ 23,758 $ 4,157 Net operating loss 964,948 421,940 Total deferred tax assets 988,706 426,097 Property and equipment (1,455,853 ) (1,524,578 ) Total deferred tax liabilities (1,476,297 ) (1,524,578 ) Net deferred tax asset (liabilities) $ (467,147 ) $ (1,098,481 ) Deferred tax assets (liabilities) Accruals and reserves $ 23,758 $ 23,758 Net operating loss 1,751,269 812,996 Total deferred tax assets 1,775,027 836,754 Property and equipment (2,255,689 ) (1,447,312 ) Stock-based compensation (343,467 ) - Total deferred tax liabilities (2,599,156 ) (1,447,312 ) Net deferred tax asset (liabilities) $ (824,129 ) $ (610,558 )
The Company uses a more-likely-than-not measurement for all tax positions taken or expected to be taken on a tax return in order for those tax positions to be recognized in the financial statements. There were no uncertain tax positions as of March 31, 2021 and December 31, 2020. If the Company were to incur interest and penalties related to income taxes, these would be included in the provision for income taxes, there were none as of March 31, 2021 and December 31, 2020, respectively. Generally, the three tax years previously filed remain subject to examination by federal and state tax authorities. The Company does not expect a material change in uncertain tax positions to occur within the next 12 months. 2020 2019 2020 2019 Income tax (benefit) expense at federal statutory rate $ (152,183 ) $ 26,170 $ (505,665 ) $ 180,058 Federal taxes on period Company was a flow through entity - - - (153,888 ) Permanent differences 12,676 - 36,111 - Deferred tax expense recorded upon conversion to C corp - - - 1,506,362 Other adjustments (15,191 ) - 3,910 - State and local taxes net of federal benefit (54,302 ) 22,298 (164,941 ) 22,798 Total $ (209,000 ) $ 48,468 $ (630,585 ) $ 1,555,330 Note 12. Income tax expense at federal statutory rate $ (608,792 ) $ (193,106 ) Permanent differences 183,790 111,438 Non-deductible goodwill and other intangible 833,399 - State and local taxes net of federal benefit (194,076 ) (60,643 ) Income tax (benefit) expense $ 214,321 $ (142,311 ) $174,891$189,958 and $117,528$189,337 for the years ended December 31, 20192020 and 2018,2019, respectively. The loss funding, derived from the actuarial forecast, is broken-out into two categories by the actuary known as the “A & B” Funds. The “A” Fund pays for the first $100,000 of any loss and the “B” Fund contributes to the remainder of the loss layer up to $300,000 total per occurrence.1920192020 is:Total assets $ 68,741,297 Total liabilities $ 34,086,013 Comprehensive income $ 5,762,011 Total assets $ 96,020,037 Total liabilities $ 46,176,680 Comprehensive income $ 8,820,830 2019. Investment in NCL Capital $ 36,000 $ 36,000 Cash security 158,785 101,555 Investment income in excess of losses (incurred and reserves) 3,320 3,320 Total investment $ 198,105 $ 140,875 Investment in NCL Capital $ 36,000 $ 36,000 Cash security 194,167 158,785 Investment income in excess of losses (incurred and reserves) 3,320 3,320 Total deferred tax assets $ 233,487 $ 198,105 occupies,formerly occupied, lent the proceeds to the majority stockholders of Peck Electric Co. who contributed $400,000 of the net proceeds as paid in capital. At September 30, 2020March 31, 2021 and December 31, 2019,2020, the amount owed of $86,000$57,400 and $117,605,$73,000, respectively, is included in the “due to stockholders” as there is a right to offset.September 30, 2020March 31, 2021 and December 31, 2019,2020, the amounts due of $602,463$29,404 and $337,000,$602,463, respectively, are included in the “due to stockholders” as there is a right to offset.stockholder loaned $286,964 and $295,299stockholders lent proceeds to the Company to help with cash flow needsneeds. At March 31, 2021 and December 31, 2020, the amount isamounts owed of $90,552 and $286,964, respectively, are included in the “due to stockholders” at September 30, 2020 and December 31, 2019, respectively.the owner’seach stockholder’s tax returns and theyeach stockholder are taxed individually. As a result, the Company has accrued a distribution for taxes of $266,814$6,622 at September 30, 2020March 31, 2021 and December 31, 2019,2020, respectively, to the ownersformer stockholders of Peck Electric Co. for the period during which the Company was an S-corporation, which is included in the “due to stockholders” value below.September 30,December 31, 2020 and December 31, 2019: Due to stockholders consists of unsecured notes to stockholders with interest at the mid-term AFR rate (2.08% at September 30, 2020). $ 37,315 $ 342,718 Note 14. Due to stockholders consists of unsecured notes to stockholders with interest at the mid-term AFR rate (2.08% at March 31, 2021). $ 52,170 $ 24,315 $93,513 at September 30, 2020.$82,841. The Company will also pay the former stockholder a solar management fee of 24.5% of the available cash flow from the solar arrays put into service on or before December 31, 2017 over the life of the arrays. The amount is de minimis and therefore not recorded on the balance sheet as of September 30, 2020March 31, 2021 and December 31, 20192020 and recorded in the statement of operations when incurred.20Note 15.common stockCommon Stock outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.As a result of the Reverse Merger and Recapitalization, the Company has retrospectively adjusted the weighted average of shares of common stock outstanding prior to June 20, 2019 by multiplying them by the exchange ratio used to determine the number of shares of common stock into which they converted. 2020 2019 2020 2019 Numerator: Net (loss) income $ (515,680 ) $ 76,155 $ (1,777,342 ) $ (697,909 ) Net income applicable to preferred shareholders (175,556 ) - (175,556 ) - Net (loss) income available to common stock shareholders $ (691,236 ) $ 76,155 $ (1,952,898 ) $ (697,909 ) Denominator: Weighted average shares outstanding: Basic 5,298,159 5,474,695 5,298,159 4,071,497 Diluted 5,298,159 5,474,695 5,298,159 4,071,497 Basic income (loss) per share $ (0.13 ) $ 0.01 $ (0.37 ) $ (0.17 ) Diluted income (loss) per share $ (0.13 ) $ 0.01 $ (0.37 ) $ (0.17 ) arising fromwith the Reverse Merger and Recapitalization and Jensyn’s IPO as discussed in Note 2 and the Exchange and Subscription Agreement discussed in Note 3. The potential issuance of additional shares of Common Stock from these arrangements were excluded from the diluted EPS calculation because the prevailing market and operating conditions at the present time do not indicate that any additional shares of Common Stock will be issued. These instruments could result in dilution in future periods. As 2021 2020 Earnout provision, includes new shares of Common Stock that may be issued to former Peck Electric Co. shareholders — 898,473 Earnout provision, includes new shares of Common Stock that may be issued to Exit Strategy — 11,231 Earnout provision, including new shares of Common Stock that may be issued to holders of forfeited and canceled shares — 257,799 Option to purchase Common Stock, from Jensyn’s IPO 429,000 429,000 Warrants to purchase Common Stock, from Jensyn’s IPO 565,025 2,292,250 Unvested restricted stock awards 161,470 - 1,000,000200,000 shares of convertible preferred stock (the “Preferred Stock”). Pursuant to the Exchange Agreement, the Company subscribed for 500,000 Units of Class B Preferred Membership units of GSI in exchange for 200,000 shares of the Company’s Series A Preferred Stock (the “Preferred Shares”). In addition, the Company subscribed for and purchased 100,000 Units of SPP in exchange for the issuance by the Company of a Warrant to acquire 275,000 shares of the Company’s Common Stock at an exercise price of $15.00 per share.isare not entitled to voting rights.one share1.85185 shares of common stock.Common Stock. The outstanding shares of Preferred Stock automatically convert into common stockCommon Stock upon the occurrence of (i) the trading of the shares of common stockCommon Stock is equal to or greater than $15.00 per share for anycommon stock,Common Stock, are entitled to receive, if and when declared by the Board of Directors, dividends at the rate of $2.00 per share per annum.common stock,Common Stock, a per-share amount equal to the original issue price of $25.00 (as adjusted, as defined), plus all declared but unpaid dividends. Outstanding, beginning January 1, 2021 - $ - Granted 302,000 $ 1.49 Exercised 100,667 $ 1.49 Outstanding, ending March 31, 2021 201,333 $ 1.49 Exercisable at March 31, 2021 - $ -
The above table does not include the 429,000 options issued as part of the Jensyn IPO.Sunworks,$0, respectively, to operations to recognize stock-based compensation expense for stock options and unamortized stock-based compensation expense for stock options is $1.0 million.(“Sunworks”2020 Equity Incentive Plan, (the “2020 Plan”) (Nasdaq: SUNZ), the Company entered into a definitiverestricted stock grant agreement with our Chief Executive Officer Jeffrey Peck, Chief Financial Officer John Sullivan, Chief Operating Officer Fredrick Myrick, and Chief Strategy Officer Michael dAmato in January 2021 (the January 2021 RSGA). All shares issuable under whichthe January 2021 RSGA are valued as of the grant date at $6.15 per share representing the fair market value. The January 2021 RSGA provides for the issuance of up to 241,000 shares of the Company’s common stock. The restricted shares shall vest as follows: 80,333 of the restricted shares shall vest immediately, 80,333 of the restricted shares shall vest on the one (1) year anniversary of the effective date, and the balance, or 80,334 restricted shares, shall vest on the two (2) year anniversary of the effective date.will acquire Sunworks inentered into an all-stock transaction pursuant to which each share of Sunworks stock will be exchanged for 0.185171 shares of Peck common stock (subject to certain adjustments). Assuming no adjustments, Sunworks’ stockholders will receive an aggregate of approximately 3,079,207 shares of Peck common stock, representing approximately 36.54% of Peck common stock outstanding after the merger. Before entering into the definitive agreement, no material relationship existed between Sunworks and Peck. The merger has received the approval of the Board of Directors of both Sunworks and Peck and is anticipated to close during the fourth quarter of 2020 subject to approval by stockholders of both companies and other customary conditions. On October 14, 2020 the Company filed its Definitive Joint Proxy Statement/Prospectus (“the Proxy”) with the Securities and Exchange Commission. The Proxy included the notice of a Special Meeting of Stockholders to be held on November 12, 2020 to vote on the proposal to adopt the Agreement and Plan of Merger. Sunworks provides photovoltaic (PV)Merger and Reorganization with iSun Energy LLC. iSun Energy LLC became a wholly-owned subsidiary of the Company. iSun Energy, LLC is a provider of products and services designed to support the electric vehicle market. In connection with Merger, Sassoon Peress, the sole member, will receive 400,000 shares of the Company’s Common Stock over five years valued at $2,404,000, 200,000 shares of which were issued at the closing, warrants to purchase up 200,000 shares of the Company’s Common Stock, valued at $517,898, cash considerations of $85,135 and up to 240,000 shares of the Company’s Common Stock based power systemson certain performance milestones for an aggregate value of $3,007,033. GreenSeed Investors, LLC $ 4,624,444 $ 4,724,444 Investment in Solar Project Partners, LLC 96,052 96,052 Investment in Gemini Electric Mobility Co. 1,500,000 - Investment in NAD Grid Corp. d/b/a AmpUp 1,000,000 - Total $ 7,220,496 $ 4,820,496 agricultural, commercial, industrial (ACI), public works, and residential marketsacquisition of solar projects by SPP. The investment in California, Nevada, Massachusetts, Oregon, New Jersey and Hawaii.GSI provides access to early stage financing to support the Company’s EPC operations while establishing a large pipeline of projects. The merger will be accountedinvestment in SPP provides the Company with the opportunity to retain a long-term ownership in the completed solar projects. As such, the Company recorded the investments as long-term other assets.business combinationLevel 1 fair value instruments in whichdetermining the valuation of the investment. As of April 22, 2020, the fair value of the investment in GSI was $5,000,000. Separately, the Company subscribed for and purchased 100,000 Units of SPP in exchange for the issuance by the Company of a Warrant to acquire 275,000 shares of the Company’s Common Stock at an exercise price of $15.00 per share. As of March 31, 2021, the warrant was converted to 117,376 shares of Common Stock on a cashless basis.acquirer.
Agreement). The Agreement is also subject to certain customary contingencies to Closing.21Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. and nine months ended September 30,March 31, 2021 and 2020 and September 30, 2019 and related notes included in Part 1, Item 1 of this Quarterly Report on Form 10-Q. The following discussion and analysis should also be read together with our audited consolidated financial statements and related notes for the year ended December 31, 2019.The Peck Company Holdings,iSun, Inc.The Peck Company Holdings,South Burlington,Williston, Vermont, is one of the largest commercial solar engineering, procurement and construction (“EPC”) companies in the country and is expanding across the Northeastern United States (“U.S.”). The Company is a second-generation family business founded under the name Peck Electric Co. (“Peck Electric”) in 1972 as a traditional electrical contractor. The Company’s core values are to align people, purpose, and profitability, and since taking leadership in 1994, Jeffrey Peck, the Company’s Chief Executive Officer, has applied such core values to expand into the solar industry. Today, the Company is guided by the mission to facilitate the reduction of carbon emissions through the expansion of clean, renewable energy and we believe that leveraging such core values to deploy resources toward profitable business is the only sustainable strategy to achieve these objectives.125200 megawatts of solar energy, we believe that we are well-positioned for what we believe to be the coming transformation to an all renewable energy economy. As a result of the completion of our business combination transaction with Jensyn Acquisition Corp. (“Jensyn”) on June 20, 2019, pursuant to which we acquired Peck Electric Co. (the “Reverse Merger and Recapitalization”), we have now opened our family company to the public market as part of our strategic growth plan. We are expanding across the Northeastern U.S. to serve the fast-growing demand for clean renewable energy. We are open to partnering with others to accelerate our growth process, and we are expanding our portfolio of company-owned solar arrays to establish recurring revenue streams for many years to come. We have established a leading presence in the market after five decades of successfully serving our customers, and we are now ready for new opportunities and the next five decades of success.We conductUntil the acquisition of iSun Energy, LLC in January 2021, we conducted all of our business operations exclusively through our wholly-owned subsidiary, Peck Electric. Electric Co. In addition, we formed iSun Utility, LLC in April 2021.subsidiarysubsidiaries after June 20, 2019, and “Peck Electric” refers to the business of Peck Electric before June 20, 2019. Upon closing of the Reverse Merger and Recapitalization, Peck Electric was deemed the accounting acquirer and takes over the historical information for the Company.22 valuation of preferred shares, warrants and the valuation allowance on deferred tax assets. 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.23SEPTEMBER 30, 2020MARCH 31, 2021 COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 30, 2019GOODS SOLDConsolidatedEARNED REVENUESeptember 30, 2020 decreased 58% to $5March 31, 2021, was 94.7% higher at $7.1 million compared to $11.7 million in the corresponding period in 2019. Due to the State of Emergency declared by the State of Vermont, the Company was unable to complete or begin several projects due to the current COVID-19 pandemic. The Company did resume and commence all projects previously impacted by the COVID-19 pandemic and anticipates completion of these projects during 2020. However, the State of Emergency was extended to November 15, 2020 and any impact cannot be predicted.Gross profit decreased 84% to $0.2$3.7 million for the three months ended September 30,March 31, 2020. Our revenue increased in comparison to prior year with projects executed in new geographic regions that started construction in 2020 compared to $1.4 millionwith completion in the corresponding period in 2019. Gross margin as a percentagefirst quarter of sales was 4.8% for the three months ended September 30, 2020, compared to 12.30% in the corresponding period in 2019. Lower gross margin for the three months ended September 30,2021. The first quarter of 2020 was lower than anticipated due to the result of maintaining our labor force during the uncertaintyimpact of the COVID-19 pandemic. The Companyable to secure a loan through the CARES Act Payroll Protection Program to support our workforce.Total operating expenses for the three months ended September 30, 2020 were $0.9 million, or 17.9% of sales, compared to $1.26 million in the corresponding period in 2019, or 10.7% of sales. The decrease in operating expenses for the three months ended September 30, 2020 was the result of tighter internal controls implemented over expense management. In addition, the utilization of remote work capabilities reduced expenditures related to facility usage. .24Income tax benefit for the three months ended September 30, 2020 was $209,000 compared to the income tax provision for the three months ended September 30, 2019 of $48,468. Please see the rate reconciliation table included in Footnote 11 for an explanation of the effective tax rate.Backlog for the three months ended September 30, 2020 was $56 million, compared to $16$0.1 million for the three months ended September 30, 2019 and $26March 31, 2021. This compares to $0.3 million of gross profit for the three months ended June 30,March 31, 2020. The Company expectsgross margin was 1.6% in the three months ended March 31, 2021 compared to realize nearly all7.9% in the three months ended March 31, 2020. The gross margin in the first quarter was impacted by a significant material issue on one of our out of state projects. Material that did not meet the design requirements of the solar array were delivered directly to the job site. Our quality control team identified the issue at inspection and notified our procurement group. Our procurement team was able to find replacement material that did not require a change to the design but did require material modification on previously installed equipment which resulted in additional material handling expenses, material modification expenses and labor expense. Due to the nature of the material issue, we were required to make the necessary changes without additional revenue to offset the unplanned expenses. In addition, we had several job site shutdowns impact varying projects due to the COVID-19 pandemic. As our project deadlines were unchanged, we often were required to deploy overhead to meet previously agreed timelines which impacted the margin performance in the first quarter of 2021.12 months.hashave not historically incurred significant selling and marketing expenses.$0.7$1.4 million for the three months ended September 30, 2020,March 31, 2021, compared to $1$0.6 million for the three months ended September 30, 2019.March 31, 2020. As a percentage of revenue, G&A expenses increaseddecreased to 14.3% of revenue20.2% in the three months ended September 30, 2020,March 31, 2021 compared to 8.2%21.3% in the three months ended September 30, 2019.March 31, 2020. In total dollars, G&A expense decreasedincreased primarily due to tighter internal controls implemented over expense management. In addition, the utilization of remote work capabilities reduced expenditures relatedadded personal costs required to facility usage.,support the Company’s growth initiatives compared to the three months ended September 30, 2019.DEPRECIATIONMarch 31, 2020. In January 2021, we acquired iSun Energy LLC which resulted in an increase in G&A. The iSun Energy LLC acquisition is intended to be accretive, however there was no revenue recognized as part of the acquisition during the first quarter of 2021. In addition, we executed a registered direct offering, exercised a call of our public warrants and began the process of holding our 2020 and 2021 Annual Meetings which added significant professional fees and legal expense for the three months ending March 31, 2021.AMORTIZATIONDepreciationOTHER OPERATING EXPENSESSeptember 30,March 31, 2021 and 2020, were $138,164, compared to $155,169respectively.September 30, 2019. Depreciation expenses were stable whenMarch 31, 2021, was $36,493 compared to $80,766 for the three months ended September 30, 2019same period of the prior year as the Company has not had significant capital expendituresa result of decreased utilization of our line of credit.September 30, 2020.OTHER EXPENSESWarehousingMarch 31, 2021 was 9.6% and other operating expenses were $180,471March 31, 2020 was 24.8%. The proforma effective tax rate for the three months ended September 30,March 31, 2021 was 27.72% and March 31, 2020 compared to $294,154was 27.72%. Please see the rate reconciliation in FN 12 for an explanation of the three months ended September 30, 2019. Warehousing and other operating expenses include Company-owned solar array depreciation and salaries associated with Company-owned solar arrays, general warehousing costs, project-related travel and performance related expenses.(LOSS) INCOMESeptember 30, 2020March 31, 2021 was $0.5 million, compared to a net income of $0.08 million for the three months ended September 30, 2019. The net loss was the result of a lack of revenue generated from operations due to the uncertainty of the COVID-19 pandemic and the State of Emergency declared by the State of Vermont.RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30, 2019REVENUE AND COST OF GOODS SOLDConsolidated revenue for the nine months ended September 30, 2020 decreased 46% to $11.7 million, compared to $21.9 million in the corresponding period in 2019. Due to the State of Emergency declared by the State of Vermont, the Company was unable to complete or begin several projects due to the current COVID-19 pandemic. The Company did resume and commence all projects previously impacted by the COVID-19 pandemic and anticipates completion of these projects during 2020. However, the State of Emergency was extended to November 15, 2020 and any impact cannot be predicted.Gross profit decreased 86% to $0.6 million for the nine months ended September 30, 2020, compared to $4.0 million in the corresponding period in 2019. Gross margin as a percentage of sales was 4.8% for the nine months ended September 30, 2020, compared to 18.4% in the corresponding period in 2019. Lower gross margin for the nine months ended September 30, 2020 was the result of maintaining our labor force during the uncertainty of the COVID-19 pandemic. The Company was able to secure a loan through the CARES Act Payroll Protection Program to support our workforce.Total operating expenses for the nine months ended September 30, 2020 were $2.7 million, or 23.4% of sales, compared to $3.0 million in the corresponding period in 2019, or 13.8% of sales. The decrease in operating expenses for the nine months ended September 30, 2020 was the result of the closure of our facilities due to the COVID-19 pandemic.25Income tax benefit for the nine months ended September 30, 2020 was $630,585 compared to the income tax provision for the nine months ended September 30, 2019 of $1,555,530. Please see the rate reconciliation table included in FN 11 for an explanation of the effective tax rate.SELLING AND MARKETING EXPENSESWe rely on referrals from customers and on its industry reputation, and therefore has not historically incurred significant selling and marketing expenses.GENERAL AND ADMINISTRATIVE EXPENSESTotal general and administrative (“G&A”) expenses were $2.2 million for the nine months ended September 30, 2020, compared to $2.0 million for the nine months ended September 30, 2019. As a percentage of revenue, G&A expenses increased to 18.7% of revenue in the nine months ended September 30, 2020, compared to 9.1% in the nine months ended September 30, 2019. In total dollars, G&A expense was consistent with prior year as the Company was able to stabilize administrative expenses related to operating as a public company during the nine months ended September 30, 2020, compared to the nine months ended September 30, 2019.DEPRECIATION AND AMORTIZATIONDepreciation expenses for the nine months ended September 30, 2020 were $448,189, compared to $466,222 for the nine months ended September 30, 2019. Depreciation expenses were stable when compared to the nine months ended September 30, 2019 as the Company has not had significant capital expenditures for the three months ended September 30, 2020.OTHER EXPENSESWarehousing and other operating expenses were $0.6 million for the nine months ended September 30, 2020, compared to $1.0 million for the nine months ended September 30, 2020. Warehousing and other operating expenses include Company-owned solar array depreciation and salaries associated with Company-owned solar arrays, general warehousing costs, project-related travel and performance related expenses.NET (LOSS) INCOMEThe net loss for the nine months ended September 30, 2020 was $1.8$3.1 million compared to a net loss of $0.7$0.4 million for the ninethree months ended September 30, 2019. The net loss was the result of a lack of revenue generated from operations due to the uncertainty of the COVID-19 pandemic and the State of Emergency declared by the State of Vermont.incomeloss in accordance with GAAP. Adjusted EBITDA excludes certain non-cash and other expenses, certain legal services costs, professional and consulting fees and expenses, and one-time Reverse Merger and Recapitalization expenses and certain adjustments. We believe that these non-GAAP measures illustrate the underlying financial and business trends relating to our results of operations and comparability between current and prior periods. We also use these non-GAAP measures to establish and monitor operational goals.26 Three months ended
September 30, Nine months ended
September 30, 2020 2019 2020 2019 Net income (loss) $ (515,680 ) $ 76,155 $ (1,777,342 ) $ (697,909 ) Depreciation and amortization 138,164 155,169 448,188 466,222 Other expense, net 72,554 54,671 218,730 158,217 Income Tax (209,000 ) 48,468 (630,585 ) 1,555,330 EBITDA (513,962 ) 334,463 (1,741,009 ) 1,481,860 Other costs - 78,388 - 243,819 Adjusted EBITDA (513,962 ) 412,851 (1,741,009 ) 1,725,679 Weighted Average shares outstanding 5,298,159 5,474,695 5,298,159 4,071,497 Adjusted Earnings per share (0.10 ) 0.08 (0.33 ) 0.42 27 2021 2020
(restated) Net loss $ (3,113,333 ) $ (790,237 ) Depreciation and amortization 135,825 155,012 Interest expense 36,493 80,766 Change in fair value of warrant liability 261,968 357,605 Stock based compensation 1,070,908 - Income tax (benefit) 214,321 (142,311 ) EBITDA (1,393,818 ) (339,165 ) Weighted Average shares outstanding 7,695,279 5,298,159 Adjusted EPS (0.18 ) (0.06 ) The Company$118,450$20.2 million in unrestricted cash at September 30, 2020,March 31, 2021, as compared to $95,930$0.7 million at December 31, 2019.September 30, 2020, the Company’sMarch 31, 2021, our working capital deficitsurplus was $441,888,$22.5 million compared to a working capital surplus of $362,586$0.25 million at December 31, 2019. The2020. On January 8, 2021, we entered into a Securities Purchase Agreement with two institutional investors providing for the issuance and sale by the Company believesof an aggregate 840,000 shares of our Common Stock in a registered direct offering at a purchase price of $12.50 per Share for gross proceeds of approximately $10.5 million before deducting fees and offering expenses.itsour existing cash and cash equivalents, andincluding our working capital line of credit, shelf registration and equity line of capital, will be sufficient to meet itsour operating cash requirements foruntil at least June 30, 2022.12 months. On April 24,twelve to eighteen months which would support our transition back to profitability in 2021.Company secured a PPP loanability to access the capital markets up to $50,000,000 in the amount of $1,487,624 through the CARES Act.aggregate to support our statement growth strategy. The Company anticipates utilizing the forgiveness provisionsaccess to capital accelerates our growth process and allows us to continue our expansion plans into new territories, aggressively pursue accretive merger and acquisition transactions and continue investing in our company-owned solar assets which now consist of the PPP loan to support cashflow needs duringproduct offerings of iSun Energy LLC. There is currently approximately $39.5 million available under the continuing COVID-19 pandemic. The Company has applied for forgivenessRegistration Statement as we drew down approximately $10.5 million through our Registered Direct Offering. full amount of the PPP loan.Due to the impact of the COVID-19 pandemic, the Company had several current projects delayed but the commencement of those projects has begun as of the date of this filing. In addition, the Company was awarded several projects that commenced immediately. The current State of Emergency is scheduled to expire on November 15, 2020. However, as the Company does support and maintain critical infrastructure, several projects were deemed essential and allowed to continue.During 2019, the Company entered into an equity line of credit facility with potential to sell at-the-market shares. The Company would receive the cash proceeds of this sale which would help support any cash flow deficiencies that may arise. Under this agreement,entered into on September 26, 2019, Lincoln Park Capital is required to purchase the shares the Company offers inup to a timely manner. The Company believestotal value of $15,000,000 pursuant to certain terms and conditions. As of December 31, 2020, $15,000,000 of the cash proceeds can be raised very quickly in the event there is a liquidity issue. The equity line of credit is available for use. We can require the purchase of 50,000 shares of Common Stock under a regular purchase. On the next day following a regular purchase, we can require the purchase of an accelerated purchase equal to 200% of the shares sold in place for $15,000,000.the regular purchase as well as an additional accelerated purchase equal to 300% of the shares sold in the regular purchase. The total number of shares authorized under the Lincoln Park Capital Purchase Agreement total 3,024,194 which would allow the Companyus to maximize the equity line of credit within 10 business days. As of October 30, 2020, the closing price per share of Common Stock was $6.56 which would allow the CompanyAt that moment, we have no plans to maximize theutilize our equity line of credit, but we do have the capability to generate $15.0 million.Certainraise capital utilizing this at-the-market offering and receive the cash proceeds from the transaction to fund our operating activities.$2,497,104$5.4 million for the ninethree months ended September 30, 2020,March 31, 2021, compared to $3,973,739$0.4 of cash usedprovided by operating activities in the ninethree months ended September 30, 2019.March 31, 2020. The decrease in cash provided by operating activities was primarily the result of the increase in accounts receivable of approximately $2.7$1.2 million, reductioninventory of accounts payable by approximately $1.0$1.5 million, and the net losscosts in excess of $1.8 million for the nine months ended September 30, 2020.$57,230$2.8 million for the ninethree months ended September 30, 2020,March 31, 2021, compared to $283,095$0.1 million used in the ninethree months ended September 30, 2019. DuringMarch 31, 2020. This increase was related to the nine months ended September 30, 2020, the Company took minority investments in Gemini Electric Mobility Co. and NAD Grid Corp. d/b/a conservative approach to investing in property and equipment given the uncertain nature of the current COVID-19 pandemic.$2,576,854$27.7 million for the ninethree months ended September 30, 2020March 31, 2021 compared to $3,972,317 for the nine months ended September 30, 2019. Cash$0.2 million of cash provided by financing activities infor the ninethree months ended September 30, 2020March 31, 2020. The cash flow provided by financing activities consisted of funds received as proceeds$1.2 million of borrowings from the line of credit, increase$17.4 million from warrants exercised and was partially offset by principal payments for equipment notes and amounts to due to shareholders. In addition, the Company secured$9.6 million from a PPP loan through the CARES Act in the amount $1.5 million.
registered direct offering.28The Company believes its current cash on hand including the proceeds received under the PPP loan, the availability under the equity line of credits, the collectability of its accounts receivable and project backlog are sufficient to meet its operating and capital requirements for at least the next twelve months from the date of this Report.Item 3. Quantitative and Qualitative Disclosures about Market RiskItem 3. Item 4. Item 4. Controls and ProceduresSeptember 30, 2020,March 31, 2021, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Management has determined there is a lack of supervisory review of the financial statement closing process due to limited resources and formal documentation of procedures and controls. Thisrelated to the reclassification of the Company’s warrants which resulted in the restatement of our prior financial statements as discussed in note 2 of the condensed consolidated financial statements included in this filing. These control deficiency constitutes adeficiencies constitute material weaknessweaknesses in internal control over financial reporting. As a result, our principal executive officer and principal financial and accounting officer have concluded that during the period covered by this report, our disclosure controls and procedures were not effective. We plan to take steps to remedy this material weakness in with the implementation of an “Internal Control-Integrated Framework”September 30, 2020,March 31, 2021, there were no changes in internal control over financial reporting.Item 1. Item 1A. Item 2. Item 3. Item 4. Item 5. long as the dividend payment on the Preferred Shares in each calendar quarter is equal to the aggregate distribution with respect to the GSI Units, such payments and distributions shall be offset and neither GSI nor the Company need to make any cash payments to the other.The Company granted to GSI the right to repurchase up to 400,000 (in tranches of 50,000) of the Units at a valuation of $4,000,000.The Company granted to GSI registration rights with respect to the Preferred Shares, the Warrant, and the Common Stock underlying the Warrant.Item 3. Default Upon Senior SecuritiesNone.Item 4. Mine Safety DisclosuresNone.On August 26, 2020 The Peck Company Holdings, Inc.), a Delaware corporation (the “Company”), received a letterwritten notice (the “Nasdaq Letter)“Notice”) from the Listing Qualifications Department of The Nasdaq Stock Market (“Nasdaq”) indicating that as resultthe Company was not in compliance with Listing Rule 5620(a) (the “Annual Meeting Rule”), which required the Company to hold an annual meeting of shareholders no later than one year after the end of the resignationCompany’s fiscal year-end for continued listing on August 6,the NASDAQ Capital Market. The Notice was only a notification of deficiency, not of imminent delisting, and had no current effect on the listing or trading of the Company’s securities on the NASDAQ Capital Market.of Mr. Douglas RoseAnnual Meeting on May 11, 2021, as currently anticipated.member ofpress release announcing that the Board of Directors of the Company (the “Board”) has determined to postpone and reschedule the Company no longer complies with Nasdaq’s independent director2020 and audit committee requirements as set forth2021 Annual Meetings of Stockholders from the previously scheduled date of May 11, 2021 to May 25, 2021 due to unexpected delays in Nasdaq Listing Rule 5605. The Nasdaq Listing Rules provide the Company a cure period in order to regain compliance. Counselprinting and mailing of proxy materials to the Stockholders. The Company responded tofiled Definitive Proxy Statements for the Nasdaq Letter by a letter dated September 1, 2020 and 2021 Annual Meetings with the Securities and Exchange Commission (the “Company Letter”“SEC”) indicating thaton April 27, 2021. The Company will file Definitive Additional Materials with the Company anticipated coming into compliance with Nasdaq Listing Rule 5605 uponSEC regarding the closingpostponement.Item 6. 29ExhibitFilingNo. Description Included Form 2.1Agreement and Plan of Merger, dated August 10, 2020, by and among Sunworks, Inc., The Peck Company Holdings, Inc. and Peck Mercury, Inc.By Reference8-KAugust 12, 2020 2.1(a) By Reference 8-K March 1, 2019 2.1(b) By Reference 8-K June 3, 2019 2.2 By Reference 8-K 2.3 By Reference 10-Q August 20, 2018 2.4 By Reference 8-K April 28, 200220202.5 By Reference 8-K January 25, 2021 3.1 By Reference 8-K March 10, 2016 3.1(a) By Reference 8-K March 6, 2018 3.1(b) By Reference 8-K June 8, 2018 3.1(c) By Reference 8-K September 4, 2018 3.1(d) By Reference 8-K January 3, 2019 Description Included Form 3.1(e) 3.1 (e)By Reference 8-K April 28, 2020 3.23.1(f) By Reference S-18-K November 23, 2015304.1Specimen Unit Certificate.By ReferenceS-1November 23, 2015January 25, 2021 4.23.1(g) By Reference S-18-K November 23, 2015February 26, 2021 4.33.2 By Reference S-1 November 23, 2015 4.44.1By Reference S-1 November 23, 2015 4.2 By Reference S-1 November 23, 2015 4.3 By Reference S-1 November 23, 2015 4.4 By Reference S-1 November 23, 2015 4.5 By Reference 10-Q November 18, 2019 4.6 By Reference 8-K March 10, 2016 4.7 By Reference 8-K March 10, 2016 4.8 By Reference 8-K March 10, 2016 4.9 By Reference 8-K April 28, 2020 4.10 By Reference 8-K April 28, 2020 4.11 By Reference 8-K April 28, 2020 4.12 By Reference 8-K April 28, 2020March 9, 20214.13 By Reference 8-K March 9, 2021 4.14 By Reference 8-K January 12, 2021 10.1 By Reference 10-Q November 18, 2019 10.2 By Reference 10-Q November 18, 2019 10.3 By Reference 10-Q November 18, 2019 10.4(a) By Reference 8-K March 10, 2016 31Description Included Form 10.4(b) By Reference 8-K March 10, 2016 10.4(c) By Reference 8-K March 10, 2016 10.4(d) By Reference 8-K March 10, 2016 10.4(e) By Reference 8-K March 10, 2016 10.4(f) By Reference 8-K March 10, 2016 10.4(g) By Reference 8-K March 10, 2016 10.4(h) By Reference 8-K March 10, 2016 10.5 By Reference 8-K March 10, 2016 10.5(a) By Reference 8-K March 10, 2016 10.5(b) By Reference 8-K June 8, 2018 10.5(c) By Reference 8-K August 29, 2018 10.5(d) By Reference 8-K January 3, 2019 10.6 By Reference 8-K March 10, 2016 Description Included Form 10.7 By Reference 8-K March 10, 2016 32 10.8 By Reference S-1 November 23, 2015 10.9 By Reference S-1 November 23, 2015 10.10 By Reference 8-K March 10, 2016 10.11 By Reference 8-K March 10, 2016 10.12 By Reference S-1 November 23, 2015 10.13 By Reference S-1 November 23, 2015 10.14 By Reference 10-K March 27, 2017 10.15 By Reference 10-K March 27, 2017 10.16 By Reference 10-K March 29, 2018 10.17 By Reference 10-Q May 21, 2018 10.18 By Reference 10-Q August 20, 2018 10.19 By Reference 8-K March 14, 2019 10.20 By Reference 8-K March 14, 2019 Description Included Form 10.21 By Reference 10-QAugust 13,April 14, 2020 10.22 By Reference 8-K April 28, 2020 10.23 By Reference 8-K April 28, 2020 10.24 By Reference 8-KS-8 August 12,October 28, 2020 10.25 By Reference 8-K August 12,December 10, 2020 10.26 By Reference 8-K AugustJanuary 12, 20202021 10.27 By Reference 8-K August 12, 2020January 25, 202131.1 10.28 By Reference 8-K January 25, 2021 10.29 By Reference 8-K January 25, 2021 10.30 By Reference 8-K January 25, 2021 Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Herewith 10-Q Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Herewith 10-Q Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Herewith 10-Q 32.2 32.2 Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are being furnished and not filed. 33Herewith10-Q 10th24th day of November, 2020.May, 2021. THE PECK COMPANY HOLDINGS,iSUN, INC. By: /s/ Jeffrey Peck Jeffrey Peck Chief Executive Officer (Principal Executive Officer) By: /s/ John Sullivan John Sullivan Chief Financial Officer (Principal Financial and Accounting Officer) 34��Dated: May 24, 2021