ACQUISITIONS, GOODWILL AND INTANGIBLE ASSETS

6 Months Ended

Jun. 30, 2022

ACQUISITIONS, GOODWILL AND INTANGIBLE ASSETS

ACQUISITIONS, GOODWILL AND INTANGIBLE ASSETS

NOTE 4 – ACQUISITIONS, GOODWILL, AND INTANGIBLE ASSETS

Boston Solar Acquisition

On April 21, 2022, the Company completed the acquisition of 80.1% of the membership interests in Boston Solar, a leading residential, small commercial solar energy, procurement, and construction (“EPC”) company focused on customers in the greater Boston area. This acquisition solidifies the Company’s EPC acquisition strategy. The total consideration paid for the purchased interests was $6,064,858 consisting of: $2,287,168 of cash paid at closing; issuance of a note payable in 14,781,938 shares of Company common stock with a fair value of $1,252,273; issuance of a promissory note with a fair value of $897,306; issuance of a convertible promissory note with a fair value of $1,378,111 payable in cash or shares of Company common stock at the holder’s option; and a $250,000 holdback of additional cash. The Company incurred acquisition related expenses of approximately $615,000 during the six months ended June 30, 2022, which were recognized in SG&A within the Company’s consolidated statement of income.

The Company accounted for the acquisition as a purchase of a business and recorded the excess of the purchase price over the estimated fair value of the assets acquired and liabilities assumed as goodwill. The total purchase price was provisionally allocated as follows:

Goodwill	$	6,785,416
Tangible assets		4,787,928
Intangible asset – tradename/trademarks (10-year life)		3,008,100
Intangible asset – IP/technology (7-year life)		438,000
Intangible asset – non-competes (3-year life)		123,200
Total liabilities		(7,571,036	)
Non-controlling interest		(1,506,750	)
Total consideration paid for 80.1% interest	$	6,064,858

Revenue of $3,839,773 and a net loss of $721,964 related to Boston Solar for the period from the April 21, 2022 acquisition date through the end June 30, 2022 are included in the Company’s accompanying consolidated statement of operations. These results are prior to consideration for non-controlling interest. 

The following supplemental unaudited pro forma information presents the consolidated results of the Company’s operations as if the acquisition of Boston Solar on April 21, 2022 had been consummated on April 1, 2021. This supplemental unaudited pro forma information is based solely on the historical unaudited financial results for the Boston Solar acquisition and does not include operational or other changes which might have been affected by the Company. The supplemental unaudited pro forma information presented below is for illustrative purposes only and is not necessarily indicative of the results which would have been achieved or results which may be achieved in the future:

	Three Months Ended June 30,
	2022			2021
Revenue, net	$	5,333,803		$	4,501,773
Net loss	$	(3,348,902	)	$	(667,789	)

Goodwill

The following table presents details of the Company’s goodwill as of June 30, 2022, and December 31, 2021:

	Boston Solar		Direct Solar America		Box Pure Air		EnergyWyze		Total
Balances at December 31, 2021:	$	-	$	1,212,968	$	414,151	$	75,000	$	1,702,119
Aggregate goodwill acquired		6,785,416		-		-		-		6,785,416
Impairment losses		-		-		-		-		-
Balances at June 30, 2022:	$	6,785,416	$	1,212,968	$	414,151	$	75,000	$	8,487,536

The Company periodically reviews the carrying value of intangible assets not subject to amortization, including goodwill, to determine whether impairment may exist. Goodwill and certain intangible assets are assessed annually, or when certain triggering events occur, for impairment using fair value measurement techniques. These events could include a significant change in the business climate, legal factors, a decline in operating performance, competition, sale or disposition of a significant portion of the business, or other factors. Specifically, a goodwill impairment test is used to identify potential impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill. The Company uses level 3 inputs and a discounted cash flow methodology to assess impairment. A discounted cash flow analysis requires various judgmental assumptions to be made including future cash flows, growth rates, and discount rates. The assumptions about future cash flows and growth rates are based on the Company’s budget and long-term plans. Discount rate assumptions are based on an assessment of the risk inherent in the respective reporting units. 

Intangible Assets

The following table presents details of the Company’s intangible assets (excluding goodwill) as of June 30, 2022:

	IP / Technology		Tradename Trademarks		Non - Competes		Other		Total
Balances at December 31, 2021:	$	-	$	-	$	-	$	34,485	$	34,485
Intangibles acquired		438,000		3,008,100		123,200		-		3,569,300
Less: Amortization		11,732		56,402		7,700		7,260		83,094
Balances at June 30, 2022:	$	426,268	$	2,951,698	$	115,500	$	27,225	$	3,520,691

 Estimated amortization expense:

Year Ending December 31,
2022 (remainder)	$	209,484
2023		418,968
2024		409,893
2025		376,215
2026		363,381
Thereafter		1,742,750
Total	$	3,520,691