UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission
File No.
(Exact name of registrant as specified in its charter)
| (State
or other jurisdiction of incorporation or organization) |
(I.R.S.
Employer Identification Number) |
| (Address of Principal Executive Offices) | (Zip Code) |
(Registrant’s telephone number)
N/A
(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common Stock, Par Value $0.0001
(Title of class)
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐
The number of shares of the Registrant’s Common Stock outstanding at November 10, 2022 was .
ISUN, INC.
Form 10-Q
Table of Contents
| 2 |
iSun, Inc.
Consolidated Balance Sheets
September 30, 2022 (Unaudited) and December 31, 2021
(In thousands, except number of shares)
| - | September 30, 2022 | December 31, 2021 | ||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net of allowance | ||||||||
| Costs and estimated earnings in excess of billings | ||||||||
| Inventory | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Other Assets: | ||||||||
| Property and equipment, net of accumulated depreciation | ||||||||
| Captive insurance investment | ||||||||
| Goodwill | ||||||||
| Intangible assets, net | ||||||||
| Investments | ||||||||
| Other assets | ||||||||
| Total other assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Billings in excess of costs and estimated earnings on uncompleted contracts | ||||||||
| Line of credit | ||||||||
| Current portion of deferred compensation | ||||||||
| Current portion of long-term debt | ||||||||
| Total current liabilities | ||||||||
| Long-term liabilities: | ||||||||
| Deferred compensation, net of current portion | ||||||||
| Deferred tax liability | ||||||||
| Warrant liability | ||||||||
| Other liabilities | ||||||||
| Long-term debt, net of current portion | ||||||||
| Total liabilities | ||||||||
| Commitments and Contingencies (Note 8) | ||||||||
| Stockholders’ equity: | ||||||||
| Common stock – par value shares authorized, and issued and outstanding as of September 30, 2022 and December 31, 2021, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 3 |
iSun, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
For the Three and Nine Months Ended September 30, 2022 and 2021
(In thousands, except number of shares)
| Three Months ended | Nine Months ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Earned revenue | $ | $ | $ | $ | ||||||||||||
| Cost of earned revenue | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Warehousing and other operating expenses | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Stock based compensation – general and administrative | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expenses) | ||||||||||||||||
| Gain on forgiveness of PPP Loan | ||||||||||||||||
| Gain on sale of fixed assets | ||||||||||||||||
| Change in fair value of the warrant liability | ||||||||||||||||
| Interest expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| (Benefit) provision for income taxes | ( | ) | ( | ) | ( | ) | ||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Preferred shareholders’ dividend | ( | ) | ||||||||||||||
| Net loss available to shares of common stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per share of Common Stock - Basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average shares of Common Stock - Basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 4 |
iSun, Inc.
Condensed Consolidated Statement of Changes in Stockholders’ Equity (Unaudited)
For the Three and Nine Months Ended September 30, 2022
(In thousands, except number of shares)
| Preferred Stock | Common Stock | Additional Paid-In | Retained Earnings/ (Accumulated | |||||||||||||||||||||||||
| Shares | Amounts | Shares | Amounts | Capital | Deficit) | Total | ||||||||||||||||||||||
| Balance as of January 1, 2022 | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||
| Issuance under equity incentive plan | ||||||||||||||||||||||||||||
| Sale of common stock pursuant to S-3 registration statement | - | |||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance as of March 31, 2022 | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||
| Issuance under equity incentive plan | ||||||||||||||||||||||||||||
| Sale of common stock pursuant to S-3 registration statement | - | |||||||||||||||||||||||||||
| Net Loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance as of June 30, 2022 | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||
| Issuance under equity incentive plan | ||||||||||||||||||||||||||||
| Sale of common stock pursuant to S-3 registration statement | - | |||||||||||||||||||||||||||
| Net Loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance as of September 30, 2022 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| 5 |
iSun, Inc.
Condensed Consolidated Statement of Changes in Stockholders’ Equity (Unaudited)
For the Three and Nine Months Ended September 30, 2021
(In thousands, except number of shares)
| Preferred Stock | Common Stock | Additional Paid-In | Retained Earnings/ (Accumulated | |||||||||||||||||||||||||
| Shares | Amounts | Shares | Amounts | Capital | Deficit) | Total | ||||||||||||||||||||||
| Balance as of January 1, 2021 | $ | $ | $ | $ | $ | |||||||||||||||||||||||
| Registered Direct Offering | ||||||||||||||||||||||||||||
| Acquisition of iSun Energy, LLC | - | |||||||||||||||||||||||||||
| Exercise of Unit Purchase Option | - | |||||||||||||||||||||||||||
| Redemption of common stock | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Conversion of preferred shares | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Dividends payable on preferred shares | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Conversion of Solar Project Partners, LLC warrant | - | |||||||||||||||||||||||||||
| Issuance under equity incentive plan | - | |||||||||||||||||||||||||||
| Exercise of options | - | |||||||||||||||||||||||||||
| Exercise of warrants | - | |||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance as of March 31, 2021 | $ | $ | $ | $ | ||||||||||||||||||||||||
| Exercise of Warrants | - | |||||||||||||||||||||||||||
| Stock based compensation | - | - | ||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance as of June 30, 2021 | $ | $ | $ | |||||||||||||||||||||||||
| Issuance under equity incentive plan | ||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance as of September 30, 2021 | $ | $ | $ | $ | $ | |||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 6 |
iSun, Inc.
Consolidated Statements of Cash Flows (Unaudited)
For the Nine Months ended September 30, 2022 and 2021
(In thousands)
| - | 2022 | 2021 | ||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash (used in) operating activities: | ||||||||
| Depreciation | ||||||||
| Amortization expense | ||||||||
| Bad debt expense | ||||||||
| Gain on forgiveness of PPP loan | ( | ) | ||||||
| Change in fair value of warrant liability | ( | ) | ( | ) | ||||
| Stock based compensation | ||||||||
| Deferred finance charge amortization | ||||||||
| Deferred taxes | ( | ) | ( | ) | ||||
| (Gain) on sale of fixed assets | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ||||||||
| Other current assets | ( | ) | ||||||
| Costs and estimated earnings in excess of billings | ( | ) | ||||||
| Inventory | ( | ) | ( | ) | ||||
| Accounts payable | ( | ) | ( | ) | ||||
| Accrued expenses | ( | ) | ||||||
| Billings in excess of costs and estimated earnings on uncompleted contracts | ||||||||
| Other liabilities | ( | ) | ||||||
| Deferred compensation | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of solar arrays and equipment | ( | ) | ( | ) | ||||
| Proceeds from sale of fixed assets | ||||||||
| Acquisition of Oakwood Construction Services, LLC | ( | ) | ||||||
| Acquisition of iSun Energy, LLC | ( | ) | ||||||
| Dividend receivable | ||||||||
| Minority investments | ( | ) | ||||||
| Investment in captive insurance | ( | ) | ||||||
| Net cash provided by (used in) investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from line of credit | ||||||||
| Payments to line of credit | ( | ) | ( | ) | ||||
| Equity incentive program | ||||||||
| Proceeds from long-term debt | ||||||||
| Payments of long-term debt | ( | ) | ( | ) | ||||
| Due to stockholders | ( | ) | ||||||
| Proceeds from warrant exercise | ||||||||
| Redemption of shares | ( | ) | ||||||
| Proceeds from sales of common stock, net | ||||||||
| Registered direct offering | ||||||||
| Net cash provided by financing activities | ||||||||
| Net increase in cash | ||||||||
| Cash, beginning of period | ||||||||
| Cash, end of period | $ | $ | ||||||
| Supplemental disclosure of cash flow information | ||||||||
| Cash paid during the year for: | ||||||||
| Interest | $ | $ | ||||||
| Income taxes | ||||||||
| Supplemental schedule of non-cash investing and financing activities | ||||||||
| Accrued Employee Incentive Compensation settled in stock | ||||||||
| Preferred dividends satisfied with distribution from investment | ||||||||
| Shares of Common Stock issued for conversion of Solar Project Partners, LLC | ||||||||
| Shares of Common Stock issued for exercise of Unit Purchase Option on a cashless basis | ||||||||
| Shares of Common Stock issued for conversion of preferred stock | ||||||||
| Shares of Common Stock issued for acquisition of iSun Energy LLC | ||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 7 |
iSun, Inc
Notes to Consolidated Financial Statements
September 30, 2022 and 2021
1. SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
a) Organization
iSun, Inc. is a solar engineering, construction and procurement contractor for commercial, industrial, residential and utility customers. The Company also provides electrical contracting services and data and communication services. The work is performed under fixed-price and modified fixed-price contracts and time and materials contracts. The Company is incorporated in the State of Delaware and has its corporate headquarters in Williston, Vermont.
The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022 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, 2021.
b) Principles of Consolidation
The accompanying consolidated financial statements include the accounts of iSun, Inc. and its direct and indirect wholly-owned operating subsidiaries, iSun Residential, Inc., SolarCommunities, Inc., iSun Industrial, LLC, Peck Electric Co., Liberty Electric, Inc., iSun Utility, LLC, iSun Corporate, LLC and iSun Energy, LLC. All material intercompany transactions have been eliminated upon consolidation of these entities.
c) Revenue Recognition
The majority of the Company’s revenue arrangements generally consist of a single performance obligation to transfer promised goods or services.
1) Revenue Recognition Policy
Solar Power Systems Sales and Engineering, Procurement, and Construction Services
The Company recognizes revenue from the sale of solar power systems, Engineering, Procurement and Construction (“EPC”) services, and other construction-type contracts over time, as performance obligations are satisfied, due to the continuous transfer of control to the customer. Construction contracts, such as the sale of a solar power system combined with EPC services, are generally accounted for as a single unit of account (a single performance obligation) and are not segmented between types of services. Our contracts often require significant services to integrate complex activities and equipment into a single deliverable, and are therefore generally accounted for as a single performance obligation, even when delivering multiple distinct services. For such services, the Company recognizes revenue using the cost to cost method, based primarily on contract cost incurred to date compared to total estimated contract cost. The cost to cost method (an input method) is the most faithful 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, 2022 and December 31, 2021, the Company had $0 in pre-contract costs classified as a current asset under contract assets on its 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.
For sales of solar power systems in which the Company sells a controlling interest in the project to a customer, revenue is recognized for the consideration received when control of the underlying project is transferred to the customer. Revenue may also be recognized for the sale of a solar power system after it has been completed due to the timing of when a sales contract has been entered into with the customer.
Energy Generation
Revenue from net metering credits is recorded as electricity is generated from the solar arrays and billed to customers (PPA off-taker) at the price rate stated in the applicable power purchase agreement (PPA).
| 8 |
Operation and Maintenance and Other Miscellaneous Services
Revenue for time and materials contracts is recognized as the service is provided.
2) Disaggregation of Revenue from Contracts with Customers
The following table disaggregates the Company’s revenue based on the timing of satisfaction of performance obligations for the three and nine months ended September 30, 2022 and September 30, 2021:
(In thousands)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Performance obligations satisfied over time | ||||||||||||||||
| Solar | $ | $ | $ | $ | ||||||||||||
| Electric | ||||||||||||||||
| Data and Network | ||||||||||||||||
| Totals | $ | $ | $ | $ | ||||||||||||
The following table disaggregates the Company’s revenue based operational division for the three and nine months ended September 30, 2022 and September 30, 2021:
(In thousands)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Operations | ||||||||||||||||
| Residential | $ | $ | $ | $ | ||||||||||||
| Commercial and Industrial | ||||||||||||||||
| Utility | ||||||||||||||||
| Totals | $ | $ | $ | $ | ||||||||||||
3) Variable Consideration
The nature of the Company’s contracts gives rise to several types of variable consideration, including claims and unpriced change orders; award and incentive fees; and liquidated damages and penalties. The Company recognizes revenue for variable consideration when it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. The Company estimates the amount of revenue to be recognized on variable consideration using the expected value (i.e., the sum of a probability-weighted amount) or the most likely amount method, whichever is expected to better predict the amount. Factors considered in determining whether revenue associated with claims (including change orders in dispute and unapproved change orders in regard to both scope and price) should be recognized include the following: (a) the contract or other evidence provides a legal basis for the claim, (b) additional costs were caused by circumstances that were unforeseen at the contract date and not the result of deficiencies in the Company’s performance, (c) claim-related costs are identifiable and considered reasonable in view of the work performed, and (d) evidence supporting the claim is objective and verifiable. If the requirements for recognizing revenue for claims or unapproved change orders are met, revenue is recorded only when the costs associated with the claims or unapproved change orders have been incurred. Back charges to suppliers or subcontractors are recognized as a reduction of cost when it is determined that recovery of such cost is probable and the amounts can be reliably estimated. Disputed back charges are recognized when the same requirements described above for claims accounting have been satisfied.
| 9 |
4) Remaining Performance Obligation
Remaining performance obligations, or backlog, represents the aggregate amount of the transaction price allocated to the remaining obligations that the Company has not performed under its customer contracts. The Company has elected to use the optional exemption in ASC 606-10-50-14, which exempts an entity from such disclosures if a performance obligation is part of a contract with an original expected duration of one year or less.
5) Warranties
The
Company generally provides limited workmanship warranties up to
d) Accounts Receivable
Accounts
receivable are recorded when invoices are issued and presented on the balance sheet net of the allowance for doubtful accounts. The allowance,
which was $
e) Concentration and Credit Risks
The
Company occasionally has cash balances in a single financial institution during the year in excess of the Federal Deposit Insurance Corporation
(FDIC) limits. The differences between book and bank balances are outstanding checks and deposits
in transit. At September 30, 2022, the uninsured balances were approximately $
f) Use of Estimates
The preparation of consolidated financial statements in conformity with generally 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, estimates in recording the business combinations, goodwill, intangibles, investments, impairment on investments, warrant liability and valuation of deferred tax assets. Actual results could differ from those estimates.
g) Recently Issued Accounting Pronouncements
In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires entities to apply ASC 606 to recognize and measure contract assets and contract liabilities in a business combination. The guidance improves comparability after the business combination by providing consistent recognition and measurement guidance for revenue contracts with customers acquired in a business combination and revenue contracts with customers not acquired in a business combination. ASU 2021-08 is effective for our fiscal year beginning after December 15, 2022, January 1, 2023 with early adoption permitted. We do not expect that the adoption of this guidance will have a material impact on our consolidated financial statements and related disclosures.
| 10 |
On May 03, 2021, the FASB issued Accounting Standards Update (ASU) 2021-04, Earnings Per Share (Topic 260), Debt— Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. The FASB issued ASU 2021-04 provides guidance that an entity should treat a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange as an exchange of the original instrument for a new instrument. The standard also provides guidance on how an entity should measure and recognize the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified. The amendments in this ASU are effective for the Company for fiscal years beginning after December 15, 2021. The Company anticipates adopting the provisions of ASU 2021-04 for the annual reporting period and subsequent interim periods after December 31, 2022 and does not anticipate their being a material impact to its financial statements.
Standard to be Adopted in Future Reporting Periods
In February 2016, the FASB issued ASU 2016-02, Leases. The new guidance will require lessees to recognize a right-to-use asset and lease liability for most of its leases with a term of more than twelve months, including those classified as operating leases. The new guidance also requires additional quantitative and qualitative disclosures. This guidance will be effective for annual periods beginning after December 15, 2018, with early adoption permitted. In July 2018, the FASB issued ASU 2018-11 to provide an optional transition method allowing entities to apply the new lease standard at the adoption date with a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption (modified retrospective approach) as opposed to restating prior period financial statements. The Company anticipates adopting the ASU and related amendments for the annual reporting period and subsequent interim periods after December 31, 2022 and elected certain practical expedients permitted under the transition guidance. The Company plans to elect the optional transition method that allows for a cumulative-effect adjustment in the period of adoption and will not restate prior periods, retained historical lease classification, nor apply hindsight in determining the lease term. The Company will elect the short-term lease exception for all classes of assets, and therefore will not apply the recognition requirements for leases of 12 months or less.
The
Company is in the process of reviewing its lease contracts, updating its accounting policies, and implementing a new system as well as
processes and internal controls to support the Company’s financial reporting and disclosure under the new standard. The Company
estimates that the impact to its balance sheet would be an increase to a right-to-use asset of $
h) Fair Value of Financial Instruments
The Company’s financial instruments include cash and cash equivalents, accounts receivable, cash collateral deposited with insurance carriers, deferred compensation plan liabilities, accounts payable and other current liabilities, and debt obligations.
Fair value is the price that would be received to sell an asset or the amount paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value guidance establishes a valuation hierarchy, which requires maximizing the use of observable inputs when measuring fair value. The three levels of inputs that may be used are: (i) Level 1 - quoted market prices in active markets for identical assets or liabilities; (ii) Level 2 - observable market-based inputs or other observable inputs; and (iii) Level 3 - significant unobservable inputs that cannot be corroborated by observable market data, which are generally determined using valuation models incorporating management estimates of market participant assumptions. In instances in which the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Management’s assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability.
| 11 |
Fair values of financial instruments are estimated using public market prices, quotes from financial institutions and other available information. Due to their short-term maturity, the carrying amounts of cash, 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 and long-term debt approximate their fair values as these amounts are estimated using public market prices, quotes from financial institutions and other available information.
i) Debt Extinguishment
Under
ASC 470, debt should be derecognized when the debt is extinguished, in accordance with the guidance in ASC 405-20, Liabilities: Extinguishments
of Liabilities. Under this guidance, debt is extinguished when the debt is paid, or the debtor is legally released from being the
primary obligor by the creditor. On January 21, 2022, SunCommon received notification from Citizens Bank N.A. that the Small Business
Administration has approved the forgiveness of the PPP loan in its entirety and as such, the full $
j) Inventory
Inventory
is valued at lower of cost or net realizable value determined by the first-in, first-out method. Inventory primarily consists of solar
panels and other materials. The Company reviews the cost of inventories against their estimated net realizable value and records write-downs
if any inventories have costs in excess of their net realizable values. Inventory is presented at net realizable value with reserves
for obsolete inventory of $
k) Warrant liability
The Company accounts for warrants to acquire shares of Common Stock as liabilities held at fair value on the consolidated balance sheets. The warrants are subject to remeasurement at each balance sheet date and any change in fair value is recognized as a change in fair value of warrant liabilities in the Company’s consolidated statements of operations. The Company will continue to adjust the liability for changes in fair value until the earlier of the exercise or expiration of the warrants. At that time, the warrant liability will be reclassified to additional paid-in capital.
l) Segment Information
Operating
segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by
the chief operating decision maker, or decision-making group, in deciding the method to allocate resources and assess performance. The
Company currently has
m) Legal contingencies
The Company accounts for liabilities resulting from legal proceedings when it is possible to evaluate the likelihood of an unfavorable outcome in order to provide an estimate for the contingent liability. At September 30, 2022 and 2021, there are no material contingent liabilities arising from pending litigation.
| 12 |
n) Reclassification
Certain reclassifications have been made to prior year’s financial statement to conform to classifications used in the current year.
2. BUSINESS ACQUISITIONS
Pro Forma Information (Unaudited)
The
results of operations of SolarCommunities, Inc. and Liberty Electric, Inc. which the Company acquired on the October 1, 2021 and November
1, 2021 closing dates, respectively, have been included in our December 31, 2021 consolidated financial statements and include approximately
$
(in thousands)
Three Months Ended
| Nine Months Ended
| |||||||
| Revenue, net | $ | $ | ||||||
| Net Income (Loss) | ||||||||
| Weighted average shares of common stock outstanding, basic and diluted | ||||||||
| Net Loss per share, basic and diluted | $ | $ | ||||||
3. LIQUIDITY AND FINANCIAL CONDITION
In
the nine months ended September 30, 2022, the Company experienced a net operating loss of $
| 13 |
The
demand for solar and electric vehicle infrastructure continues to increase across all customer groups. Our residential division has customer
orders of approximately $
As
of September 30, 2022, the Company had approximately $
The Company believes its current cash on hand, potential additional sales of Common Stock, 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.
4. ACCOUNTS RECEIVABLE
Accounts receivable consist of:
(In thousands)
| September 30, 2022 | December 31, 2021 | |||||||
| Accounts receivable - contracts in progress | $ | $ | ||||||
| Accounts receivable - retainage | ||||||||
| Allowance for doubtful accounts | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
Bad
debt expense was $
Contract assets represent revenue recognized in excess of amounts billed, unbilled receivables, and retainage. Unbilled receivables represent an unconditional right to payment subject only to the passage of time, which are reclassified to accounts receivable when they are billed under the terms of the contract. Contract assets were as follows at September 30, 2022 and 2021:
| (In thousands) | September 30, 2022 | December 31, 2021 | ||||||
| Costs in excess of billings | $ | $ | ||||||
| Unbilled receivables, included in costs in excess of billings | ||||||||
| Retainage | ||||||||
| Total | $ | $ | ||||||
Contract liabilities represent amounts billed to clients in excess of revenue recognized to date, billings in excess of costs, and retainage. The Company anticipates that substantially all incurred cost associated with contract assets as of September 30, 2022 will be billed and collected within one year. Contract liabilities were as follows at September 30, 2022 and December 31, 2021:
| (In thousands) | September 30, 2022 | December 31, 2021 | ||||||
| Billings in excess of costs | $ | $ | ||||||
| 14 |
5. CONTRACTS IN PROGRESS
Information with respect to contracts in progress are as follows:
| (In thousands) | September 30, 2022 | December 31, 2021 | ||||||
| Expenditures to date on uncompleted contracts | $ | $ | ||||||
| Estimated earnings thereon | ||||||||
| Less billings to date | ( | ) | ( | ) | ||||
| ( | ) | |||||||
| Plus under billings remaining on contracts 100% complete | ||||||||
| Total | $ | ( | ) | $ | ||||
Included in accompany balance sheets under the following captions:
| (In thousands) | September 30, 2022 | December 31, 2021 | ||||||
| Cost and estimated earnings in excess of billings | $ | $ | ||||||
| Billings in excess of costs and estimated earnings on uncompleted contracts | ( | ) | ( | ) | ||||
| Total | $ | ( | ) | $ | ||||
6. LONG-TERM DEBT
A summary of long-term debt is as follows:
| (In thousands) | September 30, 2022 | December 31, 2021 | ||||||
| NBT Bank, National Association, | $ | $ | ||||||
| NBT Bank, National Association, | ||||||||
| NBT Bank, National Association, | ||||||||
| NBT Bank, National Association, | ||||||||
| NBT Bank, National Association, | ||||||||
| Various vehicle loans, interest ranging from | ||||||||
| National Bank of Middlebury, | ||||||||
| B. Riley Commercial Capital, LLC, | ||||||||
| Unsecured note payable in connection with the PPP, established by the federal government Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which bears interest at | ||||||||
| 15 |
September 30, 2022 | December 31, 2021 | |||||||
| CSA 5: Payable in | ||||||||
| CSA 17: Payable in monthly installments of $ | ||||||||
| CSA 36: Payable in monthly installments of $ | ||||||||
| CSA 5: Payable in monthly interest only installments of $ | ||||||||
| CSA 17: Payable in monthly interest only installments of $ | ||||||||
| CSA 36: Payable in monthly interest only installments of $ | ||||||||
| Equipment loans | ||||||||
| Easement liabilities | ||||||||
| Less current portion | ( | ) | ( | ) | ||||
| Less debt issuance costs | ( | ) | ( | ) | ||||
| Long-term debt | $ | $ | ||||||
Maturities of long-term debt are as follows:
(In thousands)
| Year ending December 31: | Amount | |||
| Remainder of 2022 | $ | |||
| 2023 | ||||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 and thereafter | ||||
| Total | $ | |||
7. LINE OF CREDIT
The
Company’s wholly owned subsidiary, Peck Electric Co., has a working capital line of credit with NBT Bank with a limit of $
| 16 |
8. COMMITMENTS AND CONTINGENCIES
Leases:
(All dollar amounts in thousands)
In
2020, the Company entered into a lease agreement for a new headquarters in Williston, Vermont consisting of
approximately
The
Company leases an office and warehouse facilities in Waterbury, Vermont under agreements expiring in May 2028 and August 2026, respectively.
Monthly base rent for the office and warehouse facilities currently approximates $
The
Company leases an office and warehouse facility in Rhinebeck, New York from a stockholder. Monthly base rent currently approximates $
The Company leases a vehicle under a non-cancelable operating lease. In addition, the Company occasionally pays rent for storage on a month-to-month basis.
Total
rent expense for all of the non-cancelable leases above were $
The
Company leases vehicles and office equipment under various agreements expiring through September 2026. As of September 30, 2022, aggregate
monthly payments required under these leases approximates $
The
Company also rents equipment to be used on jobs under varying terms not exceeding one year. Total rent expense under short term rental
agreements was $
Future minimum lease payments required under all of the non-cancelable operating leases are as follows:
| Years ending December 31: | Amount | |||
| Remainder of 2022 | $ | |||
| 2023 | ||||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| Thereafter | ||||
| $ | ||||
| 17 |
Litigation:
On January 27, 2022, the Company became aware of pending litigation in the U.S. District Court for the District of Vermont, entitled Sassoon Peress and Renewz Sustainable Solutions, Inc. v. iSun, Inc., alleging various claims including breach of contract, defamation, and unjust enrichment arising out of the acquisition of iSun Energy, LLC, the sole owner of which was Mr. Peress. The litigation seeks legal and equitable remedies. The Company was granted an extension of time to plead to Plaintiffs’ Amended Complaint until April 29, 2022. On April 29, 2022, the Company filed its Answer and Counterclaims. Plaintiffs filed their Answer to the Company’s Counterclaims on May 31, 2022. The Court granted the parties’ Stipulated Discovery Schedule on September 8, 2022, setting forth discovery and other deadlines, and a Trial Readiness date of March 1, 2023. In accordance with the Stipulated Discovery Schedule, the parties served their respective Initial Disclosures on September 7, 2022, Plaintiffs served their 1st Set of Discovery on September 16, 2022, and the Company served its 1st Set of Discovery on July 18, 2022. The Company served its responses and objections to Plaintiffs’ 1st Set of Discovery on August 4, 2022, and Plaintiffs’ responses and objections to the Company’s 1st Set of Discovery are due September 6, 2022. Additionally, the case has been referred by the Court to Early Neutral Evaluation, which was conducted on September 30, 2022 before Mediator/ENE Evaluator Michael Marks, Esq. The Company anticipates reaching settlement in the pending litigation. It is not possible to evaluate the likelihood of an unfavorable outcome or provide an estimate or range of potential loss.
9. FAIR VALUE MEASUREMENTS
During
the nine months ended September 30, 2022 no warrants to acquire shares of Common Stock were granted, exercised or redeemed. At
September 30, 2022,
The private warrants were valued using a Black-Scholes model, pursuant to the inputs provided in the table below:
| Input | Mark-to-Market Measurement at September 30, 2022 | Mark-to-Market Measurement at December 31, 2021 | ||||||
| Risk-free rate | % | % | ||||||
| Remaining term in years | ||||||||
| Expected volatility | % | % | ||||||
| Exercise price | $ | $ | ||||||
| Fair value of common stock | $ | $ | ||||||
The following table sets forth the Company’s assets and liabilities which are measured at fair value on a recurring basis by level within the fair value hierarchy:
Fair Value Measurement as of September 30, 2022 | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Liabilities: | ||||||||||||||||
| Private Warrants | ||||||||||||||||
Fair Value Measurement as of December 31, 2021 | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Liabilities: | ||||||||||||||||
| Private Warrants | ||||||||||||||||
The following is a roll forward of the Company’s Level 3 instruments:
September 30, 2022 | December 31, 2021 | |||||||
| Beginning balance | $ | $ | ||||||
| Fair value adjustment – Warrant liability | ( | ) | ( | ) | ||||
| Ending balance | $ | $ | ||||||
| 18 |
The Company employs members of the International Brotherhood of Electrical Workers Local 300 (IBEW). The union fee assessments payable are both withholdings from employees and employer assessments. Union fees are for monthly dues, defined contribution pension, health and welfare funds as part of multi-employer plans. All union assessments are based on the number of hours worked or a percentage of gross wages as stipulated in the agreement with the Union.
The Company has an agreement with the IBEW in respect to rates of pay, hours, benefits, and other employment conditions that expires May 31, 2025. During the three and nine months ended September 30, 2022 and 2021, the Company incurred the following union assessments.
(All dollar amounts in thousands)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Pension fund | $ | $ | $ | $ | ||||||||||||
| Welfare fund | ||||||||||||||||
| National employees benefit fund | ||||||||||||||||
| Joint apprenticeship and training committee | ||||||||||||||||
| 401(k) matching | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
11. PROVISION FOR INCOME TAXES -
The provision for income taxes for September 30, 2022 and 2021 consists of the following:
(All dollar amounts in thousands)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Current | ||||||||||||||||
| Federal | $ | $ | $ | $ | ||||||||||||
| State | ||||||||||||||||
| Total Current | ||||||||||||||||
| Deferred | ||||||||||||||||
| Federal | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| State | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Change in valuation allowance | ||||||||||||||||
| Total Deferred | ( | ) | ( | ) | ( | ) | ||||||||||
| Benefit from Income Taxes | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
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The Company’s total deferred tax assets and liabilities at September 30, 2022 and December 31, 2021 are as follows:
| (In thousands) | September 30, 2022 | December 31, 2021 | ||||||
| Deferred tax assets (liabilities) | ||||||||
| Accruals and reserves | $ | $ | ||||||
| Tax credits | ||||||||
| Stock-based compensation | ||||||||
| Net operating loss | ||||||||
| Less valuation allowance | ( | ) | _ | |||||
| Total deferred tax assets | ||||||||
| Property and equipment | ( | ) | ( | ) | ||||
| Intangibles | ( | ) | ( | ) | ||||
| Stock-based compensation | ( | ) | ||||||
| Total deferred tax liabilities | ( | ) | ( | ) | ||||
| Net deferred tax asset (liabilities) | $ | $ | ( | ) | ||||
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
Reconciliation between the effective tax on income from operations and the statutory tax rate is as follows:
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Income tax (benefit) expense at federal rate | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Paycheck Protection Program tax exempt loan forgiveness | ( | ) | ||||||||||||||
| Permanent tax differences | ||||||||||||||||
| Stock compensation subject to S162(m) limitation | ||||||||||||||||
| Non-deductible goodwill and other intangible | ||||||||||||||||
| Other adjustments | ||||||||||||||||
| State and local taxes net of federal benefit | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Permanent tax differences for change in fair value of warrants | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Non-deductible goodwill and other intangible | ||||||||||||||||
| Valuation allowance | ||||||||||||||||
| Total | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| 20 |
The
Company received a loan under the CARES Act Payroll Protection Program (“PPP”) of $
The
Company has federal net operating losses of approximately $
12. RELATED PARTY TRANSACTIONS
(All dollar amounts in thousands)
In
2014, the minority stockholders of Peck Electric Co., who sold the building that the Company formerly occupied, lent the proceeds to
the majority stockholders of Peck Electric Co. who contributed $ of the net proceeds as paid in capital. At September 30, 2022 and
December 31, 2021, the amount owed of $
In
May 2018, stockholders of the Company bought out a minority stockholder of Peck Electric Co. The Company advanced $ for the stock
purchase which is included in the “due from stockholders”. At September 30, 2022 and December 31, 2021, the amounts due of
$
In 2019, the Company’s majority stockholders lent proceeds to the Company to help with cash flow needs. At September 30, 2022 and December 31, 2021, the amounts owed of $ and $, respectively, are included in the “due to stockholders” as there is a right to offset.
13. DEFERRED COMPENSATION PLAN
(All dollar amounts in thousands)
In
2018, the Company entered into a deferred compensation agreement with a former minority stockholder. The agreement provides for deferred
income benefits and is payable over the post-retirement period. The Company accrues the present value of the estimated future benefit
payments over the period from the date of the agreement to the retirement date. The minimum commitment for future compensation under
the agreement is $
| 21 |
Basic earnings (loss) per share (“EPS”) is computed by dividing net income (loss) available to common stockholders by the weighted average number of shares of Common 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.
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Option to purchase Common Stock, from Jensyn’s IPO | ||||||||||||||||
| Private warrants to purchase Common Stock, from Jensyn’s IPO | ||||||||||||||||
| Outstanding restricted stock awards | ||||||||||||||||
| Outstanding options to purchase Common Stock | ||||||||||||||||
| Totals | ||||||||||||||||
The Company has contingent share arrangements and warrants with 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. Including these instruments in the EPS calculation would be anti-dilutive, and therefore appropriate to exclude. These instruments could result in dilution in future periods.
Options
During the nine months ended September 30, 2022, the Company had non-qualified stock options outstanding to purchase shares of Common Stock, granted in January 2022. The stock options vest at various times and are exercisable for a period of from the date of grant at an exercise price of $ per share, the fair market value of the Company’s Common Stock on the date of each grant. The Company determined the fair market value of these options to be $ million by using the Black Scholes option valuation model. The key assumptions used in the valuation of the options were as follows; a) volatility of %, b) term of years, c) risk free rate of % and d) a dividend yield of %.
Nine Months Ended September 30, 2022 | ||||||||
Number of Options | Weighted average exercise price | |||||||
| Outstanding, beginning January 1, 2022 | $ | |||||||
| Granted | $ | |||||||
| Exercised | $ | |||||||
| Outstanding, ending September 30, 2022 | $ | |||||||
| Exercisable at September 30, 2022 | $ | |||||||
The
above table does not include the
| 22 |
Aggregate intrinsic value of options outstanding at September 30, 2022 was $ million. Aggregate intrinsic value represents the difference between the Company’s closing stock price on the last trading day of the fiscal period which was $ as of September 30, 2022 and the exercise price multiplied by the number of options outstanding.
During
the three months ended September 30, 2022 and
2021, the Company charged a total of $
As of September 30, 2022, the Company had $ million in unrecognized stock based compensation related to stock option awards, which is expected to be recognized over a weighted average period of less than three years. All option units are expected to vest.
Restricted Stock Grant to Executives
With an effective date of January 4, 2021, subject to the iSun, Inc. 2020 Equity Incentive Plan, (the “2020 Plan”), the Company entered into a restricted stock grant agreement with our Chief Executive Officer Jeffrey Peck, Chief Financial Officer John Sullivan, Executive Vice President Fredrick Myrick, and Chief Strategy Officer Michael dAmato in January 2021 (the January 2021 RSGAs). All shares of Common Stock issuable under the January 2021 RSGA are valued as of the grant date at $ per share representing the fair market value. The January 2021 RSGA provides for the issuance of up to shares of the Company’s Common Stock. The restricted shares of Common Stock shall vest as follows: of the restricted shares shall vest immediately, of the restricted shares shall vest on the one (1) year anniversary of the effective date, and the balance, or restricted shares, shall vest on the two (2) year anniversary of the effective date.
With an effective date of January 24, 2022, subject to the iSun, Inc. 2020 Equity Incentive Plan, (the “2020 Plan”), the Company entered into a restricted stock grant agreement with our Chief Executive Officer Jeffrey Peck, Chief Financial Officer John Sullivan, Executive Vice President Fredrick Myrick, and Chief Strategy Officer Michael dAmato in January 2022 (the January 2022 RSGAs). All shares of Common Stock issuable under the January 2022 RSGA are valued as of the grant date at $ per share representing the fair market value. The January 2022 RSGA provides for the issuance of up to shares of the Company’s Common Stock. The restricted shares of Common Stock shall vest as follows: of the restricted shares shall vest immediately, of the restricted shares shall vest on the one (1) year anniversary of the effective date, and the balance, or restricted shares, shall vest on the two (2) year anniversary of the effective date.
In
the three months ended September 30, 2022 and 2021, stock-based compensation expense of $
Stock-based compensation, excluding the January 2022 and 2021 RSGA, related to employee and director options totaled $ and $ for the three months ended September 30, 2022 and 2021, respectively. Stock-based compensation, excluding the January 2022 and 2021 RSGA, related to employee and director options totaled $ and $ for the nine months ended September 30, 2022 and 2021, respectively.
On December 17, 2021, the stockholders of the Company approved an amendment to the 2020 Equity Incentive Plan increasing the number of shares of Common Stock allocated to the 202 Equity Incentive Plan to shares of Common Stock.
| 23 |
16. INVESTMENTS
Investments consist of: (In thousands)
September 30, 2022 | December 31, 2021 | |||||||
| GreenSeed Investors, LLC | $ | $ | ||||||
| Investment in Solar Project Partners, LLC | ||||||||
| Investment in Gemini Electric Mobility Co. | ||||||||
| Investment in NAD Grid Corp. d/b/a AmpUp | ||||||||
| Investment in Encore Renewables | ||||||||
| Total | $ | $ | ||||||
GreenSeed Investors, LLC and Solar Project Partners, LLC
For
the three and nine months ended September 30, 2022, the Company received a return of capital from GSI in the amount of $
17. SUBSEQUENT EVENTS
On
November 4, 2022, the Company entered into a Securities Purchase Agreement with certain investors. At the Closing, the Company
issued and sold to the Purchasers Senior Secured Convertible Notes in the aggregate original principal amount of $
| 24 |
| Item 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements as of and for the three and nine months ended September 30, 2022 and 2021 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, 2021.
Forward-Looking Statements
This discussion and analysis contains forward-looking statements about our plans and expectations of what may happen in the future. Forward-looking statements are based on a number of assumptions and estimates that are inherently subject to significant risks and uncertainties, and our actual results could differ materially from the results anticipated by our forward-looking statements. Our future results and financial condition may also differ materially from those that we currently anticipate as a result of the factors described in the sections entitled “Risk Factors” in the filings that we make with the U.S. Securities and Exchange Commission (the “SEC”). Throughout this section, unless otherwise noted, “we,” “us,” “our” and the “Company” refer to iSun, Inc.
Business Introduction / Overview
iSun, Inc., the principal office of which is located in 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 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.
On January 19, 2021, we completed a business combination (the “Merger Agreement”) pursuant to which we acquired iSun Energy LLC (“iSun Energy”). The Business Combination was an acquisition treated as a merger and reorganization and iSun Energy became a wholly owned subsidiary of The Peck Company Holdings, Inc. Following the business combination, we changed our name to iSun, Inc. (the “Company”).
On April 6, 2021, iSun Utility, LLC (“iSun Utility”), a Delaware limited liability company and wholly-owned subsidiary of the Company, Adani Solar USA, Inc., a Delaware corporation (Adani”), and Oakwood Construction Services, Inc., a Delaware corporation (“Oakwood”) entered into an Assignment Agreement (the “Assignment”), pursuant to which iSun Utility acquired all rights to the intellectual property of Oakwood and its affiliates (the “Project IP”). Oakwood is a utility-scale solar EPC company and a wholly-owned subsidiary of Adani. The Project IP includes all of the intellectual property, project references, templates, client lists, agreements, forms and processes of Adani’s U.S. solar business.
On September 8, 2021, iSun, Inc. entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, iSun Residential Merger Sub, Inc., a Vermont corporation (the “Merger Sub”) and wholly-owned subsidiary of iSun Residential, Inc., a Delaware corporation (“iSun Residential”) and wholly-owned subsidiary of the Company, SolarCommunities, Inc., d/b/a SunCommon, a Vermont benefit corporation (“SunCommon”), and Jeffrey Irish, James Moore, and Duane Peterson as a “Shareholder Representative Group” of the holders of SunCommon’s capital stock (the “SunCommon Shareholders”), pursuant to which the Merger Sub merged with and into SunCommon (the “Merger”) with SunCommon as the surviving company in the Merger and SunCommon became a wholly-owned subsidiary of iSun Residential. The Merger was effective on October 1, 2021.
We now conduct all of our business operations exclusively through our direct and indirect wholly-owned subsidiaries, iSun Residential, Inc., SolarCommunities, Inc. iSun Industrial, LLC, Peck Electric Co., Liberty Electric, Inc., iSun Utility, LLC, iSun Energy, LLC and iSun Corporate, LLC.
We are one of the largest solar energy services and infrastructure deployment companies in the country and are expanding across the United States. Our services include solar, storage and electric vehicle infrastructure, development and professional services, engineering, procurement, and installation. We uniquely target all solar markets including residential, commercial, industrial and utility scale customers.
| 25 |
Prior to becoming a public company, we were a second-generation family business founded under the name Peck Electric Co. in 1972 as a traditional electrical contractor. Our core values were and still are to align people, purpose, and profitability, and since taking leadership in 1994, Jeffrey Peck, our Chief Executive Officer, has applied such core values to expand into the solar industry. Today, we are 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.
The world recognizes the need to transition to a reliable, renewable energy grid in the next 50 years. States from Vermont to Hawaii are leading the way in the U.S. with renewable energy goals of 75% by 2032 and 100% by 2045, respectively. California committed to 100% carbon-free energy by 2045. The majority of the other states in the U.S. also have renewable energy goals, regardless of current Federal solar policy. We are a member of Renewable Energy Vermont, an organization that advocates for clean, practical and renewable solar energy. We intend to use near-term incentives to take advantage of long-term, sustainable energy transformation with a commitment to the environment and to our shareholders. Our triple bottom line, which is geared towards people, environment, and profit, has always been our guide since we began installing renewable energy and we intend that it remain our guide over the next 50 years as we construct our energy future.
We primarily provide services to solar energy customers for projects ranging in size from several kilowatts for residential loads to multi-megawatt systems for commercial, industrial and utility projects. To date, we have installed over 400 megawatts of solar systems since inception and are focused on profitable growth opportunities. We believe that we are well-positioned for what we believe to be the coming transformation to an all renewable energy economy. We are expanding across the United States 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 manage our business through our construction operations and offer our EPC services and products consisting of solar, electrical and data installations. Approximately 89% of our revenue is derived from our solar EPC business, approximately 10% of revenue is derived from our electrical and data business and approximately 1% of revenue is currently derived from recurring revenue of Company-owned solar arrays. Recently our growth has been derived by increasing our solar customer base starting in 2013 and by continuing to serve the needs of existing electrical and data customers. We have installed some of the largest commercial and utility-scale solar arrays in the State of Vermont. Our union crews are expert constructors, and union access to an additional workforce makes us ready for rapid expansion to other states while maintaining control of operating costs. The skillset provided by our workforce is transferrable among our service offerings depending on current demand.
We also make investments in solar development projects and currently own approximately three megawatts of operating solar arrays operating under long-term power purchase agreements. These long-term recurring revenue streams, combined with our in-house development and construction capabilities, make this asset class a strategic long-term investment opportunity for us.
We have a three-pronged growth strategy that includes (1) organic expansion across the Northeastern United States, (2) conducting accretive merger and acquisition transactions to expand geographically, and (3) investing into Company-owned solar assets.
Equity and Ownership Structure
On January 19, 2021, we completed a business combination (the “Merger Agreement”) pursuant to which we acquired iSun Energy LLC (“iSun Energy”). The Business Combination was an acquisition treated as a merger and reorganization and iSun Energy became a wholly owned subsidiary of The Peck Company Holdings, Inc. Following the business combination, we changed our name to iSun, Inc. (the “Company”).
| 26 |
On April 6, 2021, iSun Utility, LLC (“iSun Utility”), a Delaware limited liability company and wholly-owned subsidiary of the Company, Adani Solar USA, Inc., a Delaware corporation (Adani”), and Oakwood Construction Services, Inc., a Delaware corporation (“Oakwood”) entered into an Assignment Agreement (the “Assignment”), pursuant to which iSun Utility acquired all rights to the intellectual property of Oakwood and its affiliates (the “Project IP”). Oakwood is a utility-scale solar EPC company and a wholly-owned subsidiary of Adani. The Project IP includes all of the intellectual property, project references, templates, client lists, agreements, forms and processes of Adani’s U.S. solar business.
On September 8, 2021, iSun, Inc. entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, iSun Residential Merger Sub, Inc., a Vermont corporation (the “Merger Sub”) and wholly-owned subsidiary of iSun Residential, Inc., a Delaware corporation (“iSun Residential”) and wholly-owned subsidiary of the Company, SolarCommunities, Inc., d/b/a SunCommon, a Vermont benefit corporation (“SunCommon”), and Jeffrey Irish, James Moore, and Duane Peterson as a “Shareholder Representative Group” of the holders of SunCommon’s capital stock (the “SunCommon Shareholders”), pursuant to which the Merger Sub merged with and into SunCommon (the “Merger”) with SunCommon as the surviving company in the Merger and SunCommon became a wholly-owned subsidiary of iSun Residential. The Merger was effective on October 1, 2021.
We now conduct all of our business operations exclusively through our direct and indirect wholly-owned subsidiaries, iSun Residential, Inc., SolarCommunities, Inc. iSun Industrial, LLC, Peck Electric Co., Liberty Electric, Inc., iSun Utility, LLC, iSun Energy, LLC and iSun Corporate, LLC.
Critical Accounting Policies
The following discussion and analysis of the Company’s financial condition and results of operations are based upon the Company’s financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates include estimates used to review the Company’s impairments and estimations of long-lived assets, impairment on investment, estimates in recording business combinations, goodwill, intangibles, revenue recognition utilizing a cost to cost method, allowances for uncollectible accounts, impairment on investments, warrant liability 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.
Revenue Recognition
We recognize revenue from contracts with customers under Accounting Standards Codification (“ASC”) Topic 606 (“Topic 606”). Under Topic 606, revenue is recognized when, or as, control of promised goods and services is transferred to customers, and the amount of revenue recognized reflects the consideration to which an entity expects to be entitled in exchange for the goods and services transferred. We primarily recognize revenue over time utilizing the cost-to-cost measure of progress on contracts for specific projects and for certain master service and other service agreements.
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Contracts. We derive revenue primarily from construction projects performed under: (i) master and other service agreements, which are typically priced using either a time and materials or a fixed price per unit basis; and (ii) contracts for specific projects requiring the construction and installation of an entire infrastructure system or specified units within an infrastructure system, which are subject to multiple pricing options, including fixed price, unit price, time and materials, or cost plus a markup.
The total contract transaction price and cost estimation processes used for recognizing revenue over time under the cost-to-cost method is based on the professional knowledge and experience of our project managers, engineers and financial professionals. Management reviews estimates of total contract transaction price and total project costs on an ongoing basis. Changes in job performance, job conditions and management’s assessment of expected variable consideration are factors that influence estimates of the total contract transaction price, total costs to complete those contracts and our profit recognition. Changes in these factors could result in revisions to revenue in the period in which the revisions are determined, which could materially affect our consolidated results of operations for that period. Provisions for losses on uncompleted contracts are recorded in the period in which such losses are determined. For the three months ended September 30, 2022 and 2021, 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 September 30, 2022 and 2021.
Performance Obligations. A performance obligation is a contractual promise to transfer a distinct good or service to a customer and is the unit of account under Topic 606. The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the performance obligation is satisfied. Our contracts often require significant services to integrate complex activities and equipment into a single deliverable and are therefore generally accounted for as a single performance obligation, even when delivering multiple distinct services. Contract amendments and change orders, which are generally not distinct from the existing contract, are typically accounted for as a modification of the existing contract and performance obligation. The vast majority of our performance obligations are completed within one year.
When more than one contract is entered into with a customer on or close to the same date, management evaluates whether those contracts should be combined and accounted for as a single contract as well as whether those contracts should be accounted for as one, or more than one, performance obligation. This evaluation requires significant judgment and is based on the facts and circumstances of the various contracts.
Union Labor
Peck Electric Co uses union labor in order to construct and maintain the solar, electric and data work that comprise the core activities of its business. As such, contributions were made by the Company to the National Joint Apprenticeship and Training Committee, the National Electrical Benefit Funds, Union Pension Plans and a union Health and Welfare Fund. Each employee contributes monthly to the International Brotherhood of Electrical Workers (“IBEW”). Peck Electric Co’s contract with the IBEW expires May 31, 2025.
The Company’s management believes that access to unionized labor provides a unique advantage for growth, because workforce resources can be scaled efficiently utilizing labor unions in other states to meet specific project needs in other states without substantially increasing fixed costs for the Company.
Business Insurance / Captive Insurance Group
In 2018, Peck Electric Co. joined a captive insurance group. The Company’s management believes that belonging to a captive insurance group will stabilize business insurance expenses and will lock in lower rates that are not subject to change from year-to-year and instead are based on the Company’s favorable experience modification rate.
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Warrant Liability
On April 12, 2021, the staff of the SEC issued a public statement regarding the treatment of accounting for public and private warrants issued by SPAC companies, stating that these warrants should be accounted for as liabilities as opposed to equity. Since our reverse merger with Jensyn Acquisition Corp in 2019, we were accounting for our warrants as equity and therefore had to restate our financials for prior periods. The restatement has no effect on our cash balances or adjusted EBITDA. As of the September 30, 2022, we have no public warrants outstanding as all public warrants have been exercised or redeemed.
Stock-Based Compensation
We periodically issue stock grants and stock options to employees and directors. We account for stock option grants issued and vesting to employees based on the authoritative guidance provided by the Financial Accounting Standards Board (FASB) whereas the value of the award is measured on the date of grant and recognized over the vesting period.
We account for stock grants issued to non-employees in accordance with the authoritative guidance of the FASB whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date.
Revenue Drivers
The Company’s business includes the design and construction of solar arrays for its customers. Revenue is recognized for each construction project on a percentage of completion basis. From time to time, the Company constructs solar arrays for its own account or purchases a solar array that must still be constructed. In these instances, no revenue is recognized for the construction of the solar array. In instances where the Company owns the solar array, revenue is recognized for the sale of the electricity generated to third parties. As a result, depending on whether it is building for others or for its own account, the Company’s revenue is subject to significant variation.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2022 COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 30, 2021
REVENUE AND COST OF EARNED REVENUE
For the three months ended September 30, 2022, our revenue increased 184% to $19.0 million compared to $6.7 million for the three months ended September 30, 2021. Cost of earned revenue for the three months ended September 30, 2022, was 185% higher at $15.4 million compared to $5.4 million for the three months ended September 30, 2021. As revenue increased at approximately the same rate than cost of earned revenue, margins remained relatively flat. Our revenue increased as a result of multiple acquisitions throughout 2021 that allowed the Company to serve the residential, commercial, industrial and utility solar markets while providing our traditional electric, data and telecommunication services. Our revenue mix consisted of $11.3 million from our Residential and Small Commercial division, $5.9 million from our Large Commercial and Industrial division and $1.8 million from our Utility division.
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Gross profit was $3.6 million for the three months ended September 30, 2022. This compares to $1.3 million of gross profit for the three months ended September 30, 2021. The gross margin was 19.0% in the three months ended September 30, 2022 compared to 19.40% in the three months ended September 30, 2021. As previously reported, our margins returned to more normal levels following the negative impact of the COVID-19 pandemic in the second half of 2021. We have seen our margins grow to an approximate range of 19% to 22% over the last three quarters. With the diversification of our revenue stream, our margins have improvement based on the performance of our residential division.
For the remainder of 2022, we anticipate an increase in revenue over 2021 due to several factors. The demand for solar and electric vehicle infrastructure continues to increase across all customer groups. Our residential division has customer orders of approximately $25.8 million expected to be completed within three to five months, our commercial division has a contracted backlog of approximately $12.6 million expected to be completed within eight to nine months, our industrial division has a contracted backlog of approximately $140.7 million expected to be completed within twelve to eighteen months and our utility division has 1,300 MW of projects currently under development with an estimated commencement date in the second quarter of 2023. We are not typically bidding competitively for projects, but instead engage with our customers over a long-term basis to develop project designs and to help customers reduce project costs. 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 our pipeline projects.
In addition, we are engaging existing customers and new partners outside of Vermont as part of our planned 2022 expansion across the Northeast and additional strategic geographical areas. Our current project backlog includes projects in Vermont, Maine, New Hampshire and Maryland while our pipeline includes projects across the United States.
SELLING AND MARKETING EXPENSES
We rely on referrals from customers and on our industry reputation, and therefore have not historically incurred significant selling and marketing expenses. For the three months ended September 30, 2022, we recognized sales and marketing expenses of approximately $0.4 million that had been incurred by SunCommon. SunCommon is a wholly-owned subsidiary and our residential division brand and will incur marketing expenses as a means to generate sales demand.
GENERAL AND ADMINISTRATIVE EXPENSES
Total general and administrative (“G&A”) expenses were $6.0 million for the three months ended September 30, 2022, compared to $2.4 million for the three months ended September 30, 2021. As a percentage of revenue, G&A expenses decreased to 31.57% in the three months ended September 30, 2022 compared to 35.8% in the three months ended September 30, 2021. In total dollars, G&A increased as we developed our internal platform to support the growth of our new customer revenue channels. With the acquisitions throughout 2021, we increased G&A significantly in order to maintain operational consistency across the newly acquired entities. As we assess efficiencies, we would anticipate the realization of operation synergies which would allow an overall reduction in G&A in future periods. The growth in G&A is also attributed to several non-cash related expenses, such as depreciation and amortization, resulting from the acquisition of intangibles and fixed assets throughout 2021. For the three months ended September 30, 2022 and 2021, the non-cash expenses related to depreciation and amortization totaled $1.8 million and $0.3 million, respectively.
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WAREHOUSE AND OTHER OPERATING EXPENSES
Warehousing and other operating expenses were $.2 million for the three months ended September 30, 2022 compared to $0.1 million for the three months ended September 30, 2021. The increase is related to the expansion of our warehousing capabilities to meet the growing demand for our electric vehicle infrastructure products. The Company executed a $29.3 million contract in January 2022 to support electric vehicle infrastructure deployment.
STOCK-BASED COMPENSATION EXPENSES
During the three months ended September 30, 2022, we incurred $0.6 million in total non-cash stock-based compensation expense compared to $0.3 million for the same period in the prior year related to the issuance of new restricted stock awards and stock options as well as the continued amortization of restricted stock awards and stock options issued in prior years.
OTHER INCOME (EXPENSES)
Interest expense for the three months ended September 30, 2022, was $0.09 million compared to $0.05 million for the same period of the prior year.
INCOME (BENEFIT) TAX EXPENSE
The US GAAP effective tax rate for the three months ended September 30, 2022, was 0% and September 30, 2021 was 55.6%. The proforma effective tax rate for the three months September 30, 2022 was 21.0% and September 30, 2021 was 21.0%. Please see the rate reconciliation in FN 12 for an explanation of the effective tax rate.
NET LOSS
The net loss for the three months ended September 30, 2022 was $4.93 million compared to a net loss of $0.65 million for the three months September 30, 2021.
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30, 2021
REVENUE AND COST OF EARNED REVENUE
For the nine months ended September 30, 2022, our revenue increased 177% to $50.6 million compared to $18.3 million for the nine months ended September 30, 2021. Cost of earned revenue for the nine months ended September 30, 2022, was 129% higher at $40.1 million compared to $17.5 million for the nine months ended September 30, 2021. As revenue increased at a higher rate than cost of earned revenue, we realized an overall improvement to margins. Our revenue increased as a result of multiple acquisitions throughout 2021 that allowed the Company to serve the residential, commercial, industrial and utility solar markets while providing our traditional electric, data and telecommunication services. Our revenue mix consisted of $27.7 million from our Residential and Small Commercial division, $19.1 from our Large Commercial and Industrial division and $3.8 million from our Utility division.
Gross profit was $10.5 million for the nine months ended September 30, 2022. This compares to $0.8 million of gross profit for the nine months ended September 30, 2021. The gross margin was 20.8% in the nine months ended September 30, 2022 compared to 4.4% in the nine months ended September 30, 2021. As previously reported, our margins returned to more normal levels following the negative impact of the COVID-19 pandemic in the second half of 2021. We have seen our margins grow to an approximate range of 19% to 22% over the last three quarters.
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For the remainder of 2022, we anticipate an increase in revenue over 2021 due to several factors. The demand for solar and electric vehicle infrastructure continues to increase across all customer groups. Our residential division has customer orders of approximately $25.8 million expected to be completed within three to five months, our commercial division has a contracted backlog of approximately $12.6 million expected to be completed within eight to nine months, our industrial division has a contracted backlog of approximately $140.7 million expected to be completed within twelve to eighteen months and our utility division has 1,300 MW of projects currently under development with an estimated commencement date in the second quarter of 2023. We are not typically bidding competitively for projects, but instead engage with our customers over a long-term basis to develop project designs and to help customers reduce project costs. 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 our pipeline projects.
In addition, we are engaging existing customers and new partners outside of Vermont as part of our planned 2022 expansion across the Northeast and additional strategic geographical areas. Our current project backlog includes projects in Vermont, Maine, New Hampshire and Maryland while our pipeline includes projects across the United States.
SELLING AND MARKETING EXPENSES
We rely on referrals from customers and on our industry reputation, and therefore have not historically incurred significant selling and marketing expenses. For the nine months ended September 30, 2022, we recognized sales and marketing expenses of approximately $1.0 million that had been incurred by SunCommon. SunCommon is a wholly-owned subsidiary and our residential division brand and will incur marketing expenses as a means to generate sales demand.
GENERAL AND ADMINISTRATIVE EXPENSES
Total general and administrative (“G&A”) expenses were $17.5 million for the nine months ended September 30, 2022, compared to $5.5 million for the nine months ended September 30, 2021. As a percentage of revenue, G&A expenses increased to 34.5% in the nine months ended September 30, 2022 compared to 29.9% in the nine months ended September 30, 2021. In total dollars, G&A increased as we developed our internal platform to support the growth of our new customer revenue channels. With the acquisitions throughout 2021, we increased G&A significantly in order to maintain operational consistency across the newly acquired entities. As we assess efficiencies, we would anticipate the realization of operation synergies which would allow an overall reduction in G&A in future periods. The growth in G&A is also attributed to several non-cash related expenses, such as depreciation and amortization, resulting from the acquisition of intangibles and fixed assets throughout 2021. For the nine months ended September 30, 2022 and 2021, the non-cash expenses related to depreciation and amortization totaled $5.3 million and $0.6 million, respectively.
WAREHOUSE AND OTHER OPERATING EXPENSES
Warehousing and other operating expenses were $1.5 million for the nine months ended September 30, 2022 compared to $0.2 million for the nine months ended September 30, 2021. The increase is related to the expansion of our warehousing capabilities to meet the growing demand for our electric vehicle infrastructure products. The Company executed a $29.3 million contract in January 2022 to support electric vehicle infrastructure deployment.
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STOCK-BASED COMPENSATION EXPENSES
During the nine months ended September 30, 2022, we incurred $2.4 million in total non-cash stock-based compensation expense compared to $1.5 million for the same period in the prior year related to the issuance of new restricted stock awards and stock options as well as the continued amortization of restricted stock awards and stock options issued in prior years.
OTHER INCOME (EXPENSES)
Interest expense for the nine months ended September 30, 2022, was $0.8 million compared to $0.1 million for the same period of the prior year. The increase in interest expense is primarily a result of the short term loan from B Riley that was paid in full in March 2022.
INCOME (BENEFIT) TAX EXPENSE
The US GAAP effective tax rate for the nine months ended September 30, 2022, was 5.4% and September 30, 2021 was 17.2%. The proforma effective tax rate for the nine months September 30, 2022 was 21% and September 30, 2021 was 21.0%. Please see the rate reconciliation in FN 12 for an explanation of the effective tax rate.
NET LOSS
The net loss for the nine months ended September 30, 2022 was $13.5 million compared to a net loss of $5.1 million for the nine months September 30, 2021.
Certain Non-GAAP Measures
We periodically review the following key non-GAAP measures to evaluate our business and trends, measure our performance, prepare financial projections and make strategic decisions.
EBITDA and Adjusted EBITDA
Included in this presentation are discussions and reconciliations of earnings before interest, income tax and depreciation and amortization (“EBITDA”) and EBITDA adjusted for certain non-cash, non-recurring or non-core expenses (“Adjusted EBITDA”) to net loss 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.
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.
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The reconciliations of EBITDA and Adjusted EBITDA to net loss, the most directly comparable financial measure calculated and presented in accordance with GAAP, are shown in the table below:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Net income (loss) | $ | (4,934 | ) | $ | (656 | ) | $ | (13,520 | ) | $ | (5,094 | ) | ||||
| Depreciation and amortization | 1.770 | 271 | 5,300 | 576 | ||||||||||||
| Interest expense | 84 | 42 | 800 | 130 | ||||||||||||
| Stock based compensation | 567 | 218 | 2,402 | 1,555 | ||||||||||||
| Change in fair value of warrant liability | (7 | ) | (126 | ) | (98 | ) | (944 | ) | ||||||||
| Income tax (benefit) | - | (820 | ) | (765 | ) | (1,057 | ) | |||||||||
| EBITDA | (2,520 | ) | (1,071 | ) | (5,881 | ) | (4,835 | ) | ||||||||
| Other costs(1) | 10 | - | 10 | - | ||||||||||||
| Adjusted EBITDA | $ | (2,510 | ) | $ | (1,071 | ) | $ | (3,371 | ) | $ | (4,834 | ) | ||||
| Weighted Average shares outstanding | 13,546,624 | 8,398,596 | 13,769,564 | 8,658,405 | ||||||||||||
| Adjusted EBITDA per share | (0.18 | ) | (0.12 | ) | (0.24 | ) | (0.56 | ) | ||||||||
| (1) | Other costs consist of one-time expenses related to the valuation of acquisitions of SolarCommunities, Inc. |
| (2) | As the forgiveness of the PPP loan is considered a one-time expense, the Company considered including the forgiveness of $2.6 million and $0 million for the three and nine months ended September 30, 2022 and 2021, respectively, as a reconciling item. The Company excluded the forgiveness on the basis that had it not been awarded a PPP loan, the Company would have terminated, furlough or reduced its workforce during the COVID-19 pandemic shutdown. |
LIQUIDITY AND CAPITAL RESOURCES
We had $3.8 million in unrestricted cash at September 30, 2022, as compared to $2.2 million at December 31, 2021.
As of September 30, 2022, our working capital deficit was $5.3 million compared to a working capital deficit of $10.3 million at December 31, 2021. To date, the Company has relied predominantly on cash flow from financing activities to fund its operations, borrowings from its credit facilities, sales of Common Stock and exercise of public warrants. The availability of financing and the cash flow from operations mitigates the potential for substantial doubt.
As of November 11, 2022, the Company had approximately $18.0 million in gross proceeds potentially available from sales of Common Stock pursuant to the S-3 Registration Statement which could be utilized to support any short-term deficiencies in operating cash flow.
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We believe that the aggregate of our existing cash and cash equivalents and sales of Common Stock pursuant to our shelf registration, will be sufficient to meet our operating cash requirements for at least 12 months from the date these financial statements are made available. The demand for solar and electric vehicle infrastructure continues to increase across all customer groups. Our residential division has customer orders of approximately $25.8 million expected to be completed within three to five months, our commercial division has a contracted backlog of approximately $12.6 million expected to be completed within six to eight months, our industrial division has a contracted backlog of approximately $140.7 million expected to be completed within twelve to eighteen months and our utility division has 1,300 of projects currently under development with an estimated commencement date in the second quarter of 2023. The customer demand across our segments will provide short-term operational cash flow.
Cash flow used in operating activities was $7.6 million for the nine months ended September 30, 2022, compared to $8.2 million of cash used by operating activities in the nine months ended September 30, 2021. The decrease in cash provided by operating activities was primarily the result of the decrease in accounts payable of $4.2 million and gain on forgiveness of PPP loan of $2.6 million.
Net cash provided by investing activities was $0.9 million for the nine months ended September 30, 2022, compared to $4.5 million used in the nine months ended September 30, 2021. The increase in cash provided by investing activities was primarily the result of proceeds from the sale of fixed assets of $1.2 million.
Net cash provided by financing activities was $8.2 million for the nine months ended September 30, 2022 compared to $39.5 million of cash provided by financing activities for the nine months ended September 30, 2021. The cash flow provided by financing activities consisted of $20.4 million of borrowings from the line of credit, $13.9 million from the sale of Common Stock, $0.2 million from proceeds of long-term debt, and a $6.8 million payment of long term debt.
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements that are reasonably likely to have a current or future effect on its financial condition, revenues, results of operations, liquidity, or capital expenditures.
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk |
As a smaller reporting company, as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we are not required to provide the information required by this Item.
| Item 4. | Controls and Procedures |
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of September 30, 2022, 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. This control deficiency constitutes a material weakness 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” As of September 30, 2022, we have implemented a new Enterprise Resource Planning (“ERP”) system which provides the necessary control environment to mitigate the potential for misstatements in our financial reporting.
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Disclosure controls and procedures are designed to ensure that the information that is required to be disclosed by us in our Exchange Act report is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial and accounting officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
During the three months ended September 30, 2022, we began documentation of the control environment implemented through the new ERP system. The control environment is focused on establishing the appropriate controls and approval process around financial reporting to mitigate the risk of potential misstatements in our financial statements which was previously identified as a material weakness. We began implementing stronger processes and controls related to estimating, procurement and project management. .
PART II – Other Information
| Item 1. | Legal Proceedings |
On January 27, 2022, the Company became aware of pending litigation in the U.S. District Court for the District of Vermont entitled Sassoon Peress and Renewz Sustainable Solutions, Inc. v. iSun, Inc. alleging various claims including breach of contract, defamation, and unjust enrichment arising out of the acquisition of iSun Energy, LLC, the sole owner of which was Mr. Peress. The litigation seeks legal and equitable remedies. The Company was granted an extension of time to plead to Plaintiffs’ Amended Complaint until April 29, 2022. On April 29, 2022, the Company filed its Answer and Counter-claims. Plaintiffs filed their Answer to the Company’s Counterclaims on May 31, 2022. The Court granted the parties’ Stipulated Discovery Schedule on September 8, 2022, setting forth discovery and other deadlines, and a Trial Readiness date of March 1, 2023. In accordance with the Stipulated Discovery Schedule, the parties served their respective Initial Disclosures on September 7, 2022, Plaintiffs served their 1st Set of Discovery on September 16, 2022, and the Company served its 1st Set of Discovery on July 18, 2022. The Company served its responses and objections to Plaintiffs’ 1st Set of Discovery on August 4, 2022, and Plaintiffs’ responses and objections to the Company’s 1st Set of Discovery are due September 6, 2022. Additionally, the case has been referred by the Court to Early Neutral Evaluation, which occurred on September 30, 2022 before Mediator/ENE Evaluator Michael Marks, Esq. The Company anticipates settling the litigation. It is not possible to evaluate the likelihood of an unfavorable outcome or provide an estimate or range of potential loss.
| Item 1A. | Risk Factors |
As a smaller reporting company, as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information required by this Item.
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
None.
| Item 3. | Defaults Upon Senior Securities |
None.
| Item 4. | Mine Safety Disclosures |
None.
| Item 5. | Other Information |
None.
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| Item 6. | Exhibits |
Exhibits Index
| Exhibit No. | Description | Included | Form | Filing Date | ||||
| 31.1 | Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | Herewith | 10-Q | |||||
| 31.2 | Certification of Principal Financial and Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | Herewith | 10-Q | |||||
| 32.1 | 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 | 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. | Herewith | 10-Q | |||||
| 101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document). | |||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on the 14th day of November 2022.
| 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) | ||
| Dated: November 14, 2022 | ||
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Exhibit 31.1
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
I, Jeffrey Peck, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of iSun, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: November 14, 2022 | By: | /s/ Jeffrey Peck |
| Jeffrey Peck | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) |
Exhibit 31.2
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
I, John Sullivan, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of iSun, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: November 14, 2022 | By: | /s/ John Sullivan |
| John Sullivan | ||
| Chief Financial Officer | ||
| (Principal Financial Officer) |
Exhibit 32.1
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
In connection with the Quarterly Report of iSun, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jeffrey Peck, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
| (1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: November 14, 2022 | By: | /s/ Jeffrey Peck |
| Jeffrey Peck | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) |
Exhibit 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 connection with the Quarterly Report of iSun, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John Sullivan, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
| (1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: November 14, 2022 | By: | /s/ John Sullivan |
| John Sullivan | ||
| Chief Financial Officer | ||
| (Principal Financial Officer) |
Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares |
Sep. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Common stock, par value | $ 0.0001 | $ 0.0001 |
| Common stock, shares authorized | 49,000,000 | 49,000,000 |
| Common stock, shares issued | 15,227,582 | 11,825,878 |
| Common stock, shares outstanding | 15,227,582 | 11,825,878 |
SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES |
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| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES | 1. SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
a) Organization
iSun, Inc. is a solar engineering, construction and procurement contractor for commercial, industrial, residential and utility customers. The Company also provides electrical contracting services and data and communication services. The work is performed under fixed-price and modified fixed-price contracts and time and materials contracts. The Company is incorporated in the State of Delaware and has its corporate headquarters in Williston, Vermont.
The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022 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, 2021.
b) Principles of Consolidation
The accompanying consolidated financial statements include the accounts of iSun, Inc. and its direct and indirect wholly-owned operating subsidiaries, iSun Residential, Inc., SolarCommunities, Inc., iSun Industrial, LLC, Peck Electric Co., Liberty Electric, Inc., iSun Utility, LLC, iSun Corporate, LLC and iSun Energy, LLC. All material intercompany transactions have been eliminated upon consolidation of these entities.
c) Revenue Recognition
The majority of the Company’s revenue arrangements generally consist of a single performance obligation to transfer promised goods or services.
1) Revenue Recognition Policy
Solar Power Systems Sales and Engineering, Procurement, and Construction Services
The Company recognizes revenue from the sale of solar power systems, Engineering, Procurement and Construction (“EPC”) services, and other construction-type contracts over time, as performance obligations are satisfied, due to the continuous transfer of control to the customer. Construction contracts, such as the sale of a solar power system combined with EPC services, are generally accounted for as a single unit of account (a single performance obligation) and are not segmented between types of services. Our contracts often require significant services to integrate complex activities and equipment into a single deliverable, and are therefore generally accounted for as a single performance obligation, even when delivering multiple distinct services. For such services, the Company recognizes revenue using the cost to cost method, based primarily on contract cost incurred to date compared to total estimated contract cost. The cost to cost method (an input method) is the most faithful 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, 2022 and December 31, 2021, the Company had $0 in pre-contract costs classified as a current asset under contract assets on its 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.
For sales of solar power systems in which the Company sells a controlling interest in the project to a customer, revenue is recognized for the consideration received when control of the underlying project is transferred to the customer. Revenue may also be recognized for the sale of a solar power system after it has been completed due to the timing of when a sales contract has been entered into with the customer.
Energy Generation
Revenue from net metering credits is recorded as electricity is generated from the solar arrays and billed to customers (PPA off-taker) at the price rate stated in the applicable power purchase agreement (PPA).
Operation and Maintenance and Other Miscellaneous Services
Revenue for time and materials contracts is recognized as the service is provided.
2) Disaggregation of Revenue from Contracts with Customers
The following table disaggregates the Company’s revenue based on the timing of satisfaction of performance obligations for the three and nine months ended September 30, 2022 and September 30, 2021:
(In thousands)
The following table disaggregates the Company’s revenue based operational division for the three and nine months ended September 30, 2022 and September 30, 2021:
(In thousands)
3) Variable Consideration
The nature of the Company’s contracts gives rise to several types of variable consideration, including claims and unpriced change orders; award and incentive fees; and liquidated damages and penalties. The Company recognizes revenue for variable consideration when it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. The Company estimates the amount of revenue to be recognized on variable consideration using the expected value (i.e., the sum of a probability-weighted amount) or the most likely amount method, whichever is expected to better predict the amount. Factors considered in determining whether revenue associated with claims (including change orders in dispute and unapproved change orders in regard to both scope and price) should be recognized include the following: (a) the contract or other evidence provides a legal basis for the claim, (b) additional costs were caused by circumstances that were unforeseen at the contract date and not the result of deficiencies in the Company’s performance, (c) claim-related costs are identifiable and considered reasonable in view of the work performed, and (d) evidence supporting the claim is objective and verifiable. If the requirements for recognizing revenue for claims or unapproved change orders are met, revenue is recorded only when the costs associated with the claims or unapproved change orders have been incurred. Back charges to suppliers or subcontractors are recognized as a reduction of cost when it is determined that recovery of such cost is probable and the amounts can be reliably estimated. Disputed back charges are recognized when the same requirements described above for claims accounting have been satisfied.
4) Remaining Performance Obligation
Remaining performance obligations, or backlog, represents the aggregate amount of the transaction price allocated to the remaining obligations that the Company has not performed under its customer contracts. The Company has elected to use the optional exemption in ASC 606-10-50-14, which exempts an entity from such disclosures if a performance obligation is part of a contract with an original expected duration of one year or less.
5) Warranties
The Company generally provides limited workmanship warranties up to five years for work performed under its construction contracts. The warranty periods typically extend for a limited duration following substantial completion of the Company’s work on a project. Historically, warranty claims have not resulted in material costs incurred, and any estimated costs for warranties are included in the individual contract cost estimates for purposes of accounting for long-term contracts.
d) Accounts Receivable
Accounts receivable are recorded when invoices are issued and presented on the balance sheet net of the allowance for doubtful accounts. The allowance, which was $171,000 at September 30, 2022 and $84,000 at December 31, 2021, is estimated based on historical losses, the existing economic condition, and the financial stability of the Company’s customers. Accounts are written off against the reserve when they are determined to be uncollectible.
e) Concentration and Credit Risks
The Company occasionally has cash balances in a single financial institution during the year in excess of the Federal Deposit Insurance Corporation (FDIC) limits. The differences between book and bank balances are outstanding checks and deposits in transit. At September 30, 2022, the uninsured balances were approximately $2,261,000.
f) Use of Estimates
The preparation of consolidated financial statements in conformity with generally 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, estimates in recording the business combinations, goodwill, intangibles, investments, impairment on investments, warrant liability and valuation of deferred tax assets. Actual results could differ from those estimates.
g) Recently Issued Accounting Pronouncements
In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires entities to apply ASC 606 to recognize and measure contract assets and contract liabilities in a business combination. The guidance improves comparability after the business combination by providing consistent recognition and measurement guidance for revenue contracts with customers acquired in a business combination and revenue contracts with customers not acquired in a business combination. ASU 2021-08 is effective for our fiscal year beginning after December 15, 2022, January 1, 2023 with early adoption permitted. We do not expect that the adoption of this guidance will have a material impact on our consolidated financial statements and related disclosures.
On May 03, 2021, the FASB issued Accounting Standards Update (ASU) 2021-04, Earnings Per Share (Topic 260), Debt— Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. The FASB issued ASU 2021-04 provides guidance that an entity should treat a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange as an exchange of the original instrument for a new instrument. The standard also provides guidance on how an entity should measure and recognize the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified. The amendments in this ASU are effective for the Company for fiscal years beginning after December 15, 2021. The Company anticipates adopting the provisions of ASU 2021-04 for the annual reporting period and subsequent interim periods after December 31, 2022 and does not anticipate their being a material impact to its financial statements.
Standard to be Adopted in Future Reporting Periods
In February 2016, the FASB issued ASU 2016-02, Leases. The new guidance will require lessees to recognize a right-to-use asset and lease liability for most of its leases with a term of more than twelve months, including those classified as operating leases. The new guidance also requires additional quantitative and qualitative disclosures. This guidance will be effective for annual periods beginning after December 15, 2018, with early adoption permitted. In July 2018, the FASB issued ASU 2018-11 to provide an optional transition method allowing entities to apply the new lease standard at the adoption date with a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption (modified retrospective approach) as opposed to restating prior period financial statements. The Company anticipates adopting the ASU and related amendments for the annual reporting period and subsequent interim periods after December 31, 2022 and elected certain practical expedients permitted under the transition guidance. The Company plans to elect the optional transition method that allows for a cumulative-effect adjustment in the period of adoption and will not restate prior periods, retained historical lease classification, nor apply hindsight in determining the lease term. The Company will elect the short-term lease exception for all classes of assets, and therefore will not apply the recognition requirements for leases of 12 months or less.
The Company is in the process of reviewing its lease contracts, updating its accounting policies, and implementing a new system as well as processes and internal controls to support the Company’s financial reporting and disclosure under the new standard. The Company estimates that the impact to its balance sheet would be an increase to a right-to-use asset of $7,429,000 and lease liability of $7,732,000 as of January 1, 2022 and a right-to-use asset of $6,945,000 and lease liability as of $7,289,000 as of September 30, 2022. The Company does not expect a material impact to its statement of operations.
h) Fair Value of Financial Instruments
The Company’s financial instruments include cash and cash equivalents, accounts receivable, cash collateral deposited with insurance carriers, deferred compensation plan liabilities, accounts payable and other current liabilities, and debt obligations.
Fair value is the price that would be received to sell an asset or the amount paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value guidance establishes a valuation hierarchy, which requires maximizing the use of observable inputs when measuring fair value. The three levels of inputs that may be used are: (i) Level 1 - quoted market prices in active markets for identical assets or liabilities; (ii) Level 2 - observable market-based inputs or other observable inputs; and (iii) Level 3 - significant unobservable inputs that cannot be corroborated by observable market data, which are generally determined using valuation models incorporating management estimates of market participant assumptions. In instances in which the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Management’s assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability.
Fair values of financial instruments are estimated using public market prices, quotes from financial institutions and other available information. Due to their short-term maturity, the carrying amounts of cash, 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 and long-term debt approximate their fair values as these amounts are estimated using public market prices, quotes from financial institutions and other available information.
i) Debt Extinguishment
Under ASC 470, debt should be derecognized when the debt is extinguished, in accordance with the guidance in ASC 405-20, Liabilities: Extinguishments of Liabilities. Under this guidance, debt is extinguished when the debt is paid, or the debtor is legally released from being the primary obligor by the creditor. On January 21, 2022, SunCommon received notification from Citizens Bank N.A. that the Small Business Administration has approved the forgiveness of the PPP loan in its entirety and as such, the full $2,591,500 has been recognized in the income statement as a gain upon debt extinguishment for the nine months ended September 30, 2022.
j) Inventory
Inventory is valued at lower of cost or net realizable value determined by the first-in, first-out method. Inventory primarily consists of solar panels and other materials. The Company reviews the cost of inventories against their estimated net realizable value and records write-downs if any inventories have costs in excess of their net realizable values. Inventory is presented at net realizable value with reserves for obsolete inventory of $0 at September 30, 2022 and December 31, 2021.
k) Warrant liability
The Company accounts for warrants to acquire shares of Common Stock as liabilities held at fair value on the consolidated balance sheets. The warrants are subject to remeasurement at each balance sheet date and any change in fair value is recognized as a change in fair value of warrant liabilities in the Company’s consolidated statements of operations. The Company will continue to adjust the liability for changes in fair value until the earlier of the exercise or expiration of the warrants. At that time, the warrant liability will be reclassified to additional paid-in capital.
l) Segment Information
Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker, or decision-making group, in deciding the method to allocate resources and assess performance. The Company currently has one reportable segment with different product offerings for financial reporting purposes, which represents the Company’s core business. The Company will begin reporting in segments for the interim and annual reporting periods subsequent to December 31, 2022.
m) Legal contingencies
The Company accounts for liabilities resulting from legal proceedings when it is possible to evaluate the likelihood of an unfavorable outcome in order to provide an estimate for the contingent liability. At September 30, 2022 and 2021, there are no material contingent liabilities arising from pending litigation.
n) Reclassification
Certain reclassifications have been made to prior year’s financial statement to conform to classifications used in the current year.
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BUSINESS ACQUISITIONS |
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| Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BUSINESS ACQUISITIONS | 2. BUSINESS ACQUISITIONS
Pro Forma Information (Unaudited)
The results of operations of SolarCommunities, Inc. and Liberty Electric, Inc. which the Company acquired on the October 1, 2021 and November 1, 2021 closing dates, respectively, have been included in our December 31, 2021 consolidated financial statements and include approximately $12.5 million and $0.7 million of total revenue. The following unaudited pro forma financial information represents a summary of the consolidated results of operations for the three and nine months ended September 30, 2021, assuming the acquisitions had been completed as of January 1, 2021. The pro forma financial information includes certain non-recurring pro forma adjustments that were directly attributable to the business combination. The proforma adjustments include the elimination of acquisition transaction expenses totaling $1.235 million incurred in 2021. The pro forma financial information is not necessarily indicative of the results of operations that would have been achieved if the acquisitions had been effective as of these dates, or of future results.
(in thousands)
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LIQUIDITY AND FINANCIAL CONDITION |
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| Liquidity And Financial Condition | |
| LIQUIDITY AND FINANCIAL CONDITION | 3. LIQUIDITY AND FINANCIAL CONDITION
In the nine months ended September 30, 2022, the Company experienced a net operating loss of $16.2 million and negative cash flow from operations of $7.6 million. At September 30, 2022, the Company had cash on hand of approximately $3.8 million and a working capital deficit of approximately $5.3 million. The Company utilized approximately $7.6 million in cash to support operations during the nine months ending September 30, 2022. To date, the Company has relied predominantly on operating cash flow, borrowings from its credit facilities, and sales of Common Stock. The above raises substantial doubt about the ability for the Company to continue as a going concern. However, the Company believes the matters outlined below alleviate that substantial doubt.
The demand for solar and electric vehicle infrastructure continues to increase across all customer groups. Our residential division has customer orders of approximately $25.8 million expected to be completed within to five months, our commercial division has a contracted backlog of approximately $12.6 million expected to be completed within to eight months, our industrial division has a contracted backlog of approximately $140.7 million expected to be completed within to eighteen months and our utility division has 1,300 MW of projects currently under development. The Company estimates approximately 100 MW of utility scale projects to achieve notice to proceed in the second half 2023. The customer demand across our segments will provide short-term operational cash flow.
As of September 30, 2022, the Company had approximately $18.0 million in gross proceeds potentially available from sales of Common Stock pursuant to the S-3 Registration Statement which could be utilized to support any short-term deficiencies in operating cash flow.
The Company believes its current cash on hand, potential additional sales of Common Stock, 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.
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ACCOUNTS RECEIVABLE |
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| ACCOUNTS RECEIVABLE | 4. ACCOUNTS RECEIVABLE
Accounts receivable consist of:
(In thousands)
Bad debt expense was $69,000 and $87,000 for the three and nine months ended September 30, 2022, respectively. Bad debt expense was immaterial for the three and nine months ended September 30, 2021, respectively.
Contract assets represent revenue recognized in excess of amounts billed, unbilled receivables, and retainage. Unbilled receivables represent an unconditional right to payment subject only to the passage of time, which are reclassified to accounts receivable when they are billed under the terms of the contract. Contract assets were as follows at September 30, 2022 and 2021:
Contract liabilities represent amounts billed to clients in excess of revenue recognized to date, billings in excess of costs, and retainage. The Company anticipates that substantially all incurred cost associated with contract assets as of September 30, 2022 will be billed and collected within one year. Contract liabilities were as follows at September 30, 2022 and December 31, 2021:
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CONTRACTS IN PROGRESS |
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| Contracts In Progress | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CONTRACTS IN PROGRESS | 5. CONTRACTS IN PROGRESS
Information with respect to contracts in progress are as follows:
Included in accompany balance sheets under the following captions:
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LONG-TERM DEBT |
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| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LONG-TERM DEBT | 6. LONG-TERM DEBT
A summary of long-term debt is as follows:
Maturities of long-term debt are as follows:
(In thousands)
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LINE OF CREDIT |
9 Months Ended |
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Sep. 30, 2022 | |
| Debt Disclosure [Abstract] | |
| LINE OF CREDIT | 7. LINE OF CREDIT
The Company’s wholly owned subsidiary, Peck Electric Co., has a working capital line of credit with NBT Bank with a limit of $6 million and a variable interest rate based on the Wall Street Journal Prime rate, currently 6.25%. The line of credit is payable upon demand and is subject to an annual review in December 2022. The balance outstanding was $5.6 million and $4.5 million, at September 30, 2022 and December 31, 2021, 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, 2022, the Company was not in compliance with the financial covenants but received a waiver of covenant default from NBT Bank.
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COMMITMENTS AND CONTINGENCIES |
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Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| COMMITMENTS AND CONTINGENCIES | 8. COMMITMENTS AND CONTINGENCIES
Leases:
(All dollar amounts in thousands)
In 2020, the Company entered into a lease agreement for a new headquarters in Williston, Vermont consisting of approximately 6,250 square feet of office space and 6,500 square feet of warehouse. The lease has annual rent of $108 with an annual increase of 2%.
The Company leases an office and warehouse facilities in Waterbury, Vermont under agreements expiring in May 2028 and August 2026, respectively. Monthly base rent for the office and warehouse facilities currently approximates $28, subject to annual 3% increases.
The Company leases an office and warehouse facility in Rhinebeck, New York from a stockholder. Monthly base rent currently approximates $7 and is on a month-to-month basis.
The Company leases a vehicle under a non-cancelable operating lease. In addition, the Company occasionally pays rent for storage on a month-to-month basis.
Total rent expense for all of the non-cancelable leases above were $191 and $49 for the three months ended September 30, 2022 and 2021, respectively. Total rent expense for all of the non-cancelable leases above were $567 and $111 for the nine months ended September 30, 2022 and 2021, respectively.
The Company leases vehicles and office equipment under various agreements expiring through September 2026. As of September 30, 2022, aggregate monthly payments required under these leases approximates $12.
The Company also rents equipment to be used on jobs under varying terms not exceeding one year. Total rent expense under short term rental agreements was $387 and $99 for the three months ended September 30, 2022 and 2021, respectively. Total rent expense under short term rental agreements was $706 and $196 for the nine months ended September 30, 2022 and 2021, respectively.
Future minimum lease payments required under all of the non-cancelable operating leases are as follows:
Litigation:
On January 27, 2022, the Company became aware of pending litigation in the U.S. District Court for the District of Vermont, entitled Sassoon Peress and Renewz Sustainable Solutions, Inc. v. iSun, Inc., alleging various claims including breach of contract, defamation, and unjust enrichment arising out of the acquisition of iSun Energy, LLC, the sole owner of which was Mr. Peress. The litigation seeks legal and equitable remedies. The Company was granted an extension of time to plead to Plaintiffs’ Amended Complaint until April 29, 2022. On April 29, 2022, the Company filed its Answer and Counterclaims. Plaintiffs filed their Answer to the Company’s Counterclaims on May 31, 2022. The Court granted the parties’ Stipulated Discovery Schedule on September 8, 2022, setting forth discovery and other deadlines, and a Trial Readiness date of March 1, 2023. In accordance with the Stipulated Discovery Schedule, the parties served their respective Initial Disclosures on September 7, 2022, Plaintiffs served their 1st Set of Discovery on September 16, 2022, and the Company served its 1st Set of Discovery on July 18, 2022. The Company served its responses and objections to Plaintiffs’ 1st Set of Discovery on August 4, 2022, and Plaintiffs’ responses and objections to the Company’s 1st Set of Discovery are due September 6, 2022. Additionally, the case has been referred by the Court to Early Neutral Evaluation, which was conducted on September 30, 2022 before Mediator/ENE Evaluator Michael Marks, Esq. The Company anticipates reaching settlement in the pending litigation. It is not possible to evaluate the likelihood of an unfavorable outcome or provide an estimate or range of potential loss.
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FAIR VALUE MEASUREMENTS |
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| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FAIR VALUE MEASUREMENTS | 9. FAIR VALUE MEASUREMENTS
During the nine months ended September 30, 2022 no warrants to acquire shares of Common Stock were granted, exercised or redeemed. At September 30, 2022, 69,144 of private warrants to acquire shares of Common Stock that were outstanding at the time of the Company became a public company remain outstanding.
The private warrants were valued using a Black-Scholes model, pursuant to the inputs provided in the table below:
The following table sets forth the Company’s assets and liabilities which are measured at fair value on a recurring basis by level within the fair value hierarchy:
The following is a roll forward of the Company’s Level 3 instruments:
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UNION ASSESSMENTS |
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| Retirement Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| UNION ASSESSMENTS |
The Company employs members of the International Brotherhood of Electrical Workers Local 300 (IBEW). The union fee assessments payable are both withholdings from employees and employer assessments. Union fees are for monthly dues, defined contribution pension, health and welfare funds as part of multi-employer plans. All union assessments are based on the number of hours worked or a percentage of gross wages as stipulated in the agreement with the Union.
The Company has an agreement with the IBEW in respect to rates of pay, hours, benefits, and other employment conditions that expires May 31, 2025. During the three and nine months ended September 30, 2022 and 2021, the Company incurred the following union assessments.
(All dollar amounts in thousands)
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PROVISION FOR INCOME TAXES |
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| Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PROVISION FOR INCOME TAXES | 11. PROVISION FOR INCOME TAXES -
The provision for income taxes for September 30, 2022 and 2021 consists of the following:
(All dollar amounts in thousands)
The Company’s total deferred tax assets and liabilities at September 30, 2022 and December 31, 2021 are as follows:
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 September 30, 2022 and December 31, 2021. 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 September 30, 2022 and December 31, 2021, respectively. Generally, the 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.
Reconciliation between the effective tax on income from operations and the statutory tax rate is as follows:
The Company received a loan under the CARES Act Payroll Protection Program (“PPP”) of $1,487,624. The Company’s acquisition of SolarCommunities, Inc. & Subsidiaries included the acquisition of outstanding “PPP” loans of $2,591,500 and $2,000,000. Proceeds from the loans were used to cover documented expenses related to payroll, rent and utilities, during the 24-week period, subsequent to the cash being received by the Company, are eligible to be forgiven. The “PPP” loan was forgiven in its entirety in 2020 and the income is deemed to be non-taxable which results in the Company’s effective tax rate differing from the statutory rate. The SolarCommunities, Inc & Subsidiaries PPP loans of $2,000,000 were forgiven in its entirety in the fourth quarter of 2021 and $2,591,500 in its entirety in the first quarter of 2022.
The Company has federal net operating losses of approximately $31,000,000 of which $2,200,000 will expire beginning in 2035, $28,800,000 of the net operating losses do not expire. Net operating losses incurred beginning in 2018 are not subject to expiration under the Tax Cuts and Jobs Act, but the annual usage is limited to 80% of pre net operating loss taxable income for years beginning after December 31, 2020. The Company has tax credit carryforwards of approximately $592,000 which will expire beginning in 2034. We believe that it is more likely than not that the tax benefit of these net operating losses will be fully realized, as such no valuation allowance has been recorded. The deferred tax assets for the net operating losses are presented net with deferred tax liabilities, which primarily consist of book and tax depreciation differences.
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RELATED PARTY TRANSACTIONS |
9 Months Ended |
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Sep. 30, 2022 | |
| Related Party Transactions [Abstract] | |
| RELATED PARTY TRANSACTIONS | 12. RELATED PARTY TRANSACTIONS
(All dollar amounts in thousands)
In 2014, the minority stockholders of Peck Electric Co., who sold the building that the Company formerly occupied, lent the proceeds to the majority stockholders of Peck Electric Co. who contributed $ of the net proceeds as paid in capital. At September 30, 2022 and December 31, 2021, the amount owed of $0 and $21, respectively, is included in the “due to stockholders” as there is a right to offset.
In May 2018, stockholders of the Company bought out a minority stockholder of Peck Electric Co. The Company advanced $ for the stock purchase which is included in the “due from stockholders”. At September 30, 2022 and December 31, 2021, the amounts due of $0 and $39, respectively, are included in the “due to stockholders” as there is a right to offset.
In 2019, the Company’s majority stockholders lent proceeds to the Company to help with cash flow needs. At September 30, 2022 and December 31, 2021, the amounts owed of $ and $, respectively, are included in the “due to stockholders” as there is a right to offset.
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DEFERRED COMPENSATION PLAN |
9 Months Ended |
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Sep. 30, 2022 | |
| Compensation Related Costs [Abstract] | |
| DEFERRED COMPENSATION PLAN | 13. DEFERRED COMPENSATION PLAN
(All dollar amounts in thousands)
In 2018, the Company entered into a deferred compensation agreement with a former minority stockholder. The agreement provides for deferred income benefits and is payable over the post-retirement period. The Company accrues the present value of the estimated future benefit payments over the period from the date of the agreement to the retirement date. The minimum commitment for future compensation under the agreement is $155, the net present value of which is $45. 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, 2022 and December 31, 2021 and recorded in the statement of operations when incurred.
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EARNINGS (LOSS) PER SHARE |
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| EARNINGS (LOSS) PER SHARE |
Basic earnings (loss) per share (“EPS”) is computed by dividing net income (loss) available to common stockholders by the weighted average number of shares of Common 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.
The Company has contingent share arrangements and warrants with 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. Including these instruments in the EPS calculation would be anti-dilutive, and therefore appropriate to exclude. These instruments could result in dilution in future periods.
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RESTRICTED STOCK AND STOCK OPTIONS |
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| Share-Based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RESTRICTED STOCK AND STOCK OPTIONS |
Options
During the nine months ended September 30, 2022, the Company had non-qualified stock options outstanding to purchase shares of Common Stock, granted in January 2022. The stock options vest at various times and are exercisable for a period of from the date of grant at an exercise price of $ per share, the fair market value of the Company’s Common Stock on the date of each grant. The Company determined the fair market value of these options to be $ million by using the Black Scholes option valuation model. The key assumptions used in the valuation of the options were as follows; a) volatility of %, b) term of years, c) risk free rate of % and d) a dividend yield of %.
The above table does not include the 429,000 options issued as part of the Jensyn IPO.
Aggregate intrinsic value of options outstanding at September 30, 2022 was $ million. Aggregate intrinsic value represents the difference between the Company’s closing stock price on the last trading day of the fiscal period which was $ as of September 30, 2022 and the exercise price multiplied by the number of options outstanding.
During the three months ended September 30, 2022 and 2021, the Company charged a total of $0.3 million and $0.1, respectively to operations to recognize stock-based compensation expense. During the nine months ended September 30, 2022 and 2021, the Company charged a total of $ million and $, respectively to operations to recognize stock-based compensation expense.
As of September 30, 2022, the Company had $ million in unrecognized stock based compensation related to stock option awards, which is expected to be recognized over a weighted average period of less than three years. All option units are expected to vest.
Restricted Stock Grant to Executives
With an effective date of January 4, 2021, subject to the iSun, Inc. 2020 Equity Incentive Plan, (the “2020 Plan”), the Company entered into a restricted stock grant agreement with our Chief Executive Officer Jeffrey Peck, Chief Financial Officer John Sullivan, Executive Vice President Fredrick Myrick, and Chief Strategy Officer Michael dAmato in January 2021 (the January 2021 RSGAs). All shares of Common Stock issuable under the January 2021 RSGA are valued as of the grant date at $ per share representing the fair market value. The January 2021 RSGA provides for the issuance of up to shares of the Company’s Common Stock. The restricted shares of Common Stock shall vest as follows: of the restricted shares shall vest immediately, of the restricted shares shall vest on the one (1) year anniversary of the effective date, and the balance, or restricted shares, shall vest on the two (2) year anniversary of the effective date.
With an effective date of January 24, 2022, subject to the iSun, Inc. 2020 Equity Incentive Plan, (the “2020 Plan”), the Company entered into a restricted stock grant agreement with our Chief Executive Officer Jeffrey Peck, Chief Financial Officer John Sullivan, Executive Vice President Fredrick Myrick, and Chief Strategy Officer Michael dAmato in January 2022 (the January 2022 RSGAs). All shares of Common Stock issuable under the January 2022 RSGA are valued as of the grant date at $ per share representing the fair market value. The January 2022 RSGA provides for the issuance of up to shares of the Company’s Common Stock. The restricted shares of Common Stock shall vest as follows: of the restricted shares shall vest immediately, of the restricted shares shall vest on the one (1) year anniversary of the effective date, and the balance, or restricted shares, shall vest on the two (2) year anniversary of the effective date.
In the three months ended September 30, 2022 and 2021, stock-based compensation expense of $0.3 million and $0.1, respectively was recognized for the January 2021 and January 2022 RSGA. In the nine months ended September 30, 2022 and 2021, stock-based compensation expense of $1.2 million and $0.7, respectively was recognized for the January 2021 and January 2022 RSGA.
Stock-based compensation, excluding the January 2022 and 2021 RSGA, related to employee and director options totaled $ and $ for the three months ended September 30, 2022 and 2021, respectively. Stock-based compensation, excluding the January 2022 and 2021 RSGA, related to employee and director options totaled $ and $ for the nine months ended September 30, 2022 and 2021, respectively.
On December 17, 2021, the stockholders of the Company approved an amendment to the 2020 Equity Incentive Plan increasing the number of shares of Common Stock allocated to the 202 Equity Incentive Plan to shares of Common Stock.
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INVESTMENTS |
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| Investments, All Other Investments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INVESTMENTS | 16. INVESTMENTS
Investments consist of: (In thousands)
GreenSeed Investors, LLC and Solar Project Partners, LLC
For the three and nine months ended September 30, 2022, the Company received a return of capital from GSI in the amount of $100,000 and $300,000, respectively. The dividend receivable of $300,000 is included in other current assets as of September 30, 2022.
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SUBSEQUENT EVENTS |
9 Months Ended |
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Sep. 30, 2022 | |
| Equity [Abstract] | |
| SUBSEQUENT EVENTS | 17. SUBSEQUENT EVENTS
On November 4, 2022, the Company entered into a Securities Purchase Agreement with certain investors. At the Closing, the Company issued and sold to the Purchasers Senior Secured Convertible Notes in the aggregate original principal amount of $12,500,00. The Purchase Agreement provided for six percent (6%) original interest discount resulting in gross proceeds to the Company of $11,750,000. Upon (i) the effectiveness of a Registration Statement covering the Registrable Securities, (ii) Stockholder approval, (iii) the Company’s achievement of certain revenue and EBITDA targets, (iv) the Company having sufficient authorized shares of Common Stock (v) Company’s maintenance of certain balance sheet requirements and (vi) certain other conditions, the Company and the Purchasers will consummate a second closing in which the Company will issue and sell to each Purchaser a second Note for an aggregate principal amount of $12,500,000 having identical terms and conditions as the first Note, including a six percent (6%) original interest discount, for an aggregate principal amount of $25,000,000 in Notes that may be issued and sold pursuant to the Purchase Agreement. Additional information on this transaction is set forth in the Company’s Current Report on 8-K filed on November 8, 2022. |
SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Organization | a) Organization
iSun, Inc. is a solar engineering, construction and procurement contractor for commercial, industrial, residential and utility customers. The Company also provides electrical contracting services and data and communication services. The work is performed under fixed-price and modified fixed-price contracts and time and materials contracts. The Company is incorporated in the State of Delaware and has its corporate headquarters in Williston, Vermont.
The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022 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, 2021.
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| Principles of Consolidation | b) Principles of Consolidation
The accompanying consolidated financial statements include the accounts of iSun, Inc. and its direct and indirect wholly-owned operating subsidiaries, iSun Residential, Inc., SolarCommunities, Inc., iSun Industrial, LLC, Peck Electric Co., Liberty Electric, Inc., iSun Utility, LLC, iSun Corporate, LLC and iSun Energy, LLC. All material intercompany transactions have been eliminated upon consolidation of these entities.
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| Revenue Recognition | c) Revenue Recognition
The majority of the Company’s revenue arrangements generally consist of a single performance obligation to transfer promised goods or services.
1) Revenue Recognition Policy
Solar Power Systems Sales and Engineering, Procurement, and Construction Services
The Company recognizes revenue from the sale of solar power systems, Engineering, Procurement and Construction (“EPC”) services, and other construction-type contracts over time, as performance obligations are satisfied, due to the continuous transfer of control to the customer. Construction contracts, such as the sale of a solar power system combined with EPC services, are generally accounted for as a single unit of account (a single performance obligation) and are not segmented between types of services. Our contracts often require significant services to integrate complex activities and equipment into a single deliverable, and are therefore generally accounted for as a single performance obligation, even when delivering multiple distinct services. For such services, the Company recognizes revenue using the cost to cost method, based primarily on contract cost incurred to date compared to total estimated contract cost. The cost to cost method (an input method) is the most faithful 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, 2022 and December 31, 2021, the Company had $0 in pre-contract costs classified as a current asset under contract assets on its 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.
For sales of solar power systems in which the Company sells a controlling interest in the project to a customer, revenue is recognized for the consideration received when control of the underlying project is transferred to the customer. Revenue may also be recognized for the sale of a solar power system after it has been completed due to the timing of when a sales contract has been entered into with the customer.
Energy Generation
Revenue from net metering credits is recorded as electricity is generated from the solar arrays and billed to customers (PPA off-taker) at the price rate stated in the applicable power purchase agreement (PPA).
Operation and Maintenance and Other Miscellaneous Services
Revenue for time and materials contracts is recognized as the service is provided.
2) Disaggregation of Revenue from Contracts with Customers
The following table disaggregates the Company’s revenue based on the timing of satisfaction of performance obligations for the three and nine months ended September 30, 2022 and September 30, 2021:
(In thousands)
The following table disaggregates the Company’s revenue based operational division for the three and nine months ended September 30, 2022 and September 30, 2021:
(In thousands)
3) Variable Consideration
The nature of the Company’s contracts gives rise to several types of variable consideration, including claims and unpriced change orders; award and incentive fees; and liquidated damages and penalties. The Company recognizes revenue for variable consideration when it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. The Company estimates the amount of revenue to be recognized on variable consideration using the expected value (i.e., the sum of a probability-weighted amount) or the most likely amount method, whichever is expected to better predict the amount. Factors considered in determining whether revenue associated with claims (including change orders in dispute and unapproved change orders in regard to both scope and price) should be recognized include the following: (a) the contract or other evidence provides a legal basis for the claim, (b) additional costs were caused by circumstances that were unforeseen at the contract date and not the result of deficiencies in the Company’s performance, (c) claim-related costs are identifiable and considered reasonable in view of the work performed, and (d) evidence supporting the claim is objective and verifiable. If the requirements for recognizing revenue for claims or unapproved change orders are met, revenue is recorded only when the costs associated with the claims or unapproved change orders have been incurred. Back charges to suppliers or subcontractors are recognized as a reduction of cost when it is determined that recovery of such cost is probable and the amounts can be reliably estimated. Disputed back charges are recognized when the same requirements described above for claims accounting have been satisfied.
4) Remaining Performance Obligation
Remaining performance obligations, or backlog, represents the aggregate amount of the transaction price allocated to the remaining obligations that the Company has not performed under its customer contracts. The Company has elected to use the optional exemption in ASC 606-10-50-14, which exempts an entity from such disclosures if a performance obligation is part of a contract with an original expected duration of one year or less.
5) Warranties
The Company generally provides limited workmanship warranties up to five years for work performed under its construction contracts. The warranty periods typically extend for a limited duration following substantial completion of the Company’s work on a project. Historically, warranty claims have not resulted in material costs incurred, and any estimated costs for warranties are included in the individual contract cost estimates for purposes of accounting for long-term contracts.
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| Accounts Receivable | d) Accounts Receivable
Accounts receivable are recorded when invoices are issued and presented on the balance sheet net of the allowance for doubtful accounts. The allowance, which was $171,000 at September 30, 2022 and $84,000 at December 31, 2021, is estimated based on historical losses, the existing economic condition, and the financial stability of the Company’s customers. Accounts are written off against the reserve when they are determined to be uncollectible.
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| Concentration and Credit Risks | e) Concentration and Credit Risks
The Company occasionally has cash balances in a single financial institution during the year in excess of the Federal Deposit Insurance Corporation (FDIC) limits. The differences between book and bank balances are outstanding checks and deposits in transit. At September 30, 2022, the uninsured balances were approximately $2,261,000.
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| Use of Estimates | f) Use of Estimates
The preparation of consolidated financial statements in conformity with generally 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, estimates in recording the business combinations, goodwill, intangibles, investments, impairment on investments, warrant liability and valuation of deferred tax assets. Actual results could differ from those estimates.
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| Recently Issued Accounting Pronouncements | g) Recently Issued Accounting Pronouncements
In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires entities to apply ASC 606 to recognize and measure contract assets and contract liabilities in a business combination. The guidance improves comparability after the business combination by providing consistent recognition and measurement guidance for revenue contracts with customers acquired in a business combination and revenue contracts with customers not acquired in a business combination. ASU 2021-08 is effective for our fiscal year beginning after December 15, 2022, January 1, 2023 with early adoption permitted. We do not expect that the adoption of this guidance will have a material impact on our consolidated financial statements and related disclosures.
On May 03, 2021, the FASB issued Accounting Standards Update (ASU) 2021-04, Earnings Per Share (Topic 260), Debt— Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. The FASB issued ASU 2021-04 provides guidance that an entity should treat a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange as an exchange of the original instrument for a new instrument. The standard also provides guidance on how an entity should measure and recognize the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified. The amendments in this ASU are effective for the Company for fiscal years beginning after December 15, 2021. The Company anticipates adopting the provisions of ASU 2021-04 for the annual reporting period and subsequent interim periods after December 31, 2022 and does not anticipate their being a material impact to its financial statements.
Standard to be Adopted in Future Reporting Periods
In February 2016, the FASB issued ASU 2016-02, Leases. The new guidance will require lessees to recognize a right-to-use asset and lease liability for most of its leases with a term of more than twelve months, including those classified as operating leases. The new guidance also requires additional quantitative and qualitative disclosures. This guidance will be effective for annual periods beginning after December 15, 2018, with early adoption permitted. In July 2018, the FASB issued ASU 2018-11 to provide an optional transition method allowing entities to apply the new lease standard at the adoption date with a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption (modified retrospective approach) as opposed to restating prior period financial statements. The Company anticipates adopting the ASU and related amendments for the annual reporting period and subsequent interim periods after December 31, 2022 and elected certain practical expedients permitted under the transition guidance. The Company plans to elect the optional transition method that allows for a cumulative-effect adjustment in the period of adoption and will not restate prior periods, retained historical lease classification, nor apply hindsight in determining the lease term. The Company will elect the short-term lease exception for all classes of assets, and therefore will not apply the recognition requirements for leases of 12 months or less.
The Company is in the process of reviewing its lease contracts, updating its accounting policies, and implementing a new system as well as processes and internal controls to support the Company’s financial reporting and disclosure under the new standard. The Company estimates that the impact to its balance sheet would be an increase to a right-to-use asset of $7,429,000 and lease liability of $7,732,000 as of January 1, 2022 and a right-to-use asset of $6,945,000 and lease liability as of $7,289,000 as of September 30, 2022. The Company does not expect a material impact to its statement of operations.
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| Fair Value of Financial Instruments | h) Fair Value of Financial Instruments
The Company’s financial instruments include cash and cash equivalents, accounts receivable, cash collateral deposited with insurance carriers, deferred compensation plan liabilities, accounts payable and other current liabilities, and debt obligations.
Fair value is the price that would be received to sell an asset or the amount paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value guidance establishes a valuation hierarchy, which requires maximizing the use of observable inputs when measuring fair value. The three levels of inputs that may be used are: (i) Level 1 - quoted market prices in active markets for identical assets or liabilities; (ii) Level 2 - observable market-based inputs or other observable inputs; and (iii) Level 3 - significant unobservable inputs that cannot be corroborated by observable market data, which are generally determined using valuation models incorporating management estimates of market participant assumptions. In instances in which the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Management’s assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability.
Fair values of financial instruments are estimated using public market prices, quotes from financial institutions and other available information. Due to their short-term maturity, the carrying amounts of cash, 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 and long-term debt approximate their fair values as these amounts are estimated using public market prices, quotes from financial institutions and other available information.
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| Debt Extinguishment | i) Debt Extinguishment
Under ASC 470, debt should be derecognized when the debt is extinguished, in accordance with the guidance in ASC 405-20, Liabilities: Extinguishments of Liabilities. Under this guidance, debt is extinguished when the debt is paid, or the debtor is legally released from being the primary obligor by the creditor. On January 21, 2022, SunCommon received notification from Citizens Bank N.A. that the Small Business Administration has approved the forgiveness of the PPP loan in its entirety and as such, the full $2,591,500 has been recognized in the income statement as a gain upon debt extinguishment for the nine months ended September 30, 2022.
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| Inventory | j) Inventory
Inventory is valued at lower of cost or net realizable value determined by the first-in, first-out method. Inventory primarily consists of solar panels and other materials. The Company reviews the cost of inventories against their estimated net realizable value and records write-downs if any inventories have costs in excess of their net realizable values. Inventory is presented at net realizable value with reserves for obsolete inventory of $0 at September 30, 2022 and December 31, 2021.
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| Warrant liability | k) Warrant liability
The Company accounts for warrants to acquire shares of Common Stock as liabilities held at fair value on the consolidated balance sheets. The warrants are subject to remeasurement at each balance sheet date and any change in fair value is recognized as a change in fair value of warrant liabilities in the Company’s consolidated statements of operations. The Company will continue to adjust the liability for changes in fair value until the earlier of the exercise or expiration of the warrants. At that time, the warrant liability will be reclassified to additional paid-in capital.
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| Segment Information | l) Segment Information
Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker, or decision-making group, in deciding the method to allocate resources and assess performance. The Company currently has one reportable segment with different product offerings for financial reporting purposes, which represents the Company’s core business. The Company will begin reporting in segments for the interim and annual reporting periods subsequent to December 31, 2022.
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| Legal contingencies | m) Legal contingencies
The Company accounts for liabilities resulting from legal proceedings when it is possible to evaluate the likelihood of an unfavorable outcome in order to provide an estimate for the contingent liability. At September 30, 2022 and 2021, there are no material contingent liabilities arising from pending litigation.
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| Reclassification | n) Reclassification
Certain reclassifications have been made to prior year’s financial statement to conform to classifications used in the current year.
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SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF DISAGGREGATION OF REVENUE | The following table disaggregates the Company’s revenue based on the timing of satisfaction of performance obligations for the three and nine months ended September 30, 2022 and September 30, 2021:
(In thousands)
|
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| SCHEDULE OF REVENUE BASED OPERATIONAL SEGMENT | The following table disaggregates the Company’s revenue based operational division for the three and nine months ended September 30, 2022 and September 30, 2021:
(In thousands)
|
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BUSINESS ACQUISITIONS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF BUSINESS PRO FORMA INFORMATION |
(in thousands)
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCOUNTS RECEIVABLE (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF ACCOUNTS RECEIVABLE | Accounts receivable consist of:
(In thousands)
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF CONTRACT ASSETS AND LIABILITIES | Contract assets represent revenue recognized in excess of amounts billed, unbilled receivables, and retainage. Unbilled receivables represent an unconditional right to payment subject only to the passage of time, which are reclassified to accounts receivable when they are billed under the terms of the contract. Contract assets were as follows at September 30, 2022 and 2021:
Contract liabilities represent amounts billed to clients in excess of revenue recognized to date, billings in excess of costs, and retainage. The Company anticipates that substantially all incurred cost associated with contract assets as of September 30, 2022 will be billed and collected within one year. Contract liabilities were as follows at September 30, 2022 and December 31, 2021:
|
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CONTRACTS IN PROGRESS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Contracts In Progress | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF CONTRACTS IN PROGRESS | Information with respect to contracts in progress are as follows:
Included in accompany balance sheets under the following captions:
|
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LONG-TERM DEBT (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SUMMARY OF LONG-TERM DEBT | A summary of long-term debt is as follows:
|
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| SCHEDULE OF MATURITIES OF LONG-TERM DEBT |
|
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COMMITMENTS AND CONTINGENCIES (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS | Future minimum lease payments required under all of the non-cancelable operating leases are as follows:
|
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FAIR VALUE MEASUREMENTS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF FAIR VALUE MEASUREMENT INPUTS | The private warrants were valued using a Black-Scholes model, pursuant to the inputs provided in the table below:
|
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| SCHEDULE OF ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON RECURRING BASIS | The following table sets forth the Company’s assets and liabilities which are measured at fair value on a recurring basis by level within the fair value hierarchy:
|
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| SCHEDULE OF ROLL FORWARD OF LEVEL 3 INSTRUMENTS | The following is a roll forward of the Company’s Level 3 instruments:
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UNION ASSESSMENTS (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Retirement Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF UNION ASSESSMENTS | The Company has an agreement with the IBEW in respect to rates of pay, hours, benefits, and other employment conditions that expires May 31, 2025. During the three and nine months ended September 30, 2022 and 2021, the Company incurred the following union assessments.
(All dollar amounts in thousands)
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PROVISION FOR INCOME TAXES (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF COMPONENTS OF INCOME TAX EXPENSE (BENEFIT) | The provision for income taxes for September 30, 2022 and 2021 consists of the following:
(All dollar amounts in thousands)
|
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| SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES | The Company’s total deferred tax assets and liabilities at September 30, 2022 and December 31, 2021 are as follows:
|
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| SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION | Reconciliation between the effective tax on income from operations and the statutory tax rate is as follows:
|
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EARNINGS (LOSS) PER SHARE (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF POTENTIAL SHARE ISSUANCES EXCLUDED FROM COMPUTATION OF EARNINGS (LOSS) PER SHARE |
|
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RESTRICTED STOCK AND STOCK OPTIONS (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-Based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF SHARE BASED PAYMENT ARRANGEMENT, OPTION, ACTIVITY |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENTS (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investments, All Other Investments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF INVESTMENT | Investments consist of: (In thousands)
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SCHEDULE OF DISAGGREGATION OF REVENUE (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
| Totals | $ 19,034 | $ 6,679 | $ 50,597 | $ 18,293 |
| Solar Operations [Member] | ||||
| Totals | 16,836 | 5,378 | 45,311 | 14,987 |
| Electric Operations [Member] | ||||
| Totals | 1,994 | 931 | 4,510 | 2,426 |
| Data and Network Operations [Member] | ||||
| Totals | $ 204 | $ 370 | $ 776 | $ 880 |
SCHEDULE OF REVENUE BASED OPERATIONAL SEGMENT (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
| Totals | $ 19,034 | $ 6,679 | $ 50,597 | $ 18,293 |
| Residential [Member] | ||||
| Totals | 11,338 | 27,684 | ||
| Commercial and Industrial [Member] | ||||
| Totals | 5,933 | 6,059 | 19,085 | 17,423 |
| Utility [Member] | ||||
| Totals | $ 1,763 | $ 620 | $ 3,828 | $ 870 |
SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) |
3 Months Ended | 9 Months Ended | ||||
|---|---|---|---|---|---|---|
|
Sep. 30, 2022
USD ($)
|
Sep. 30, 2021
USD ($)
|
Sep. 30, 2022
USD ($)
Segment
|
Sep. 30, 2021
USD ($)
|
Jan. 02, 2022
USD ($)
|
Dec. 31, 2021
USD ($)
|
|
| Allowance for doubtful accounts | $ 171,000 | $ 171,000 | $ 84,000 | |||
| Uninsured cash balances | 2,261,000 | 2,261,000 | ||||
| Right-to-use asset | 6,945,000 | 6,945,000 | $ 7,429,000 | |||
| Lease liability | 7,289,000 | 7,289,000 | $ 7,732,000 | |||
| Gain on forgiveness of PPP loan | 2,592,000 | |||||
| Inventory allowance | $ 0 | $ 0 | $ 0 | |||
| Number of reportable segments | Segment | 1 | |||||
| PPP [Member] | ||||||
| Gain on forgiveness of PPP loan | $ 2,591,500 | |||||
| Maximum [Member] | ||||||
| Workmanship warranties period | 5 years | |||||
SCHEDULE OF BUSINESS PRO FORMA INFORMATION (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended |
|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2021 |
|
| Business Combination and Asset Acquisition [Abstract] | ||
| Revenue, net | $ 16,672 | $ 44,837 |
| Net Income (Loss) | $ 1,045 | $ 433 |
| Weighted average shares of common stock outstanding, basic and diluted | 10,944,097 | 10,499,069 |
| Net Loss per share, basic and diluted | $ 0.10 | $ 0.04 |
BUSINESS ACQUISITIONS (Details Narrative) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | |
|---|---|---|---|---|
Dec. 31, 2021 |
Sep. 30, 2021 |
Sep. 30, 2021 |
Dec. 31, 2021 |
|
| Business Acquisition [Line Items] | ||||
| Revenue since acquisition date | $ 16,672 | $ 44,837 | ||
| Acquisition costs | $ 1,235 | |||
| Solar Communities Inc [Member] | ||||
| Business Acquisition [Line Items] | ||||
| Revenue since acquisition date | $ 12,500 | |||
| Liberty Electric Inc [Member] | ||||
| Business Acquisition [Line Items] | ||||
| Revenue since acquisition date | $ 700 | |||
SCHEDULE OF ACCOUNTS RECEIVABLE (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
| Accounts receivable | $ 11,926 | $ 14,421 |
| Allowance for doubtful accounts | (171) | (84) |
| Total | 11,755 | 14,337 |
| Contracts In Progress [Member] | ||
| Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
| Accounts receivable | 11,822 | 13,886 |
| Retainage [Member] | ||
| Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
| Accounts receivable | $ 104 | $ 535 |
SCHEDULE OF CONTRACT ASSETS AND LIABILITIES (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Receivables [Abstract] | ||
| Costs in excess of billings | $ 3,314 | $ 3,452 |
| Unbilled receivables, included in costs in excess of billings | 339 | 552 |
| Costs and estimated earnings in excess of billings | 3,653 | 4,004 |
| Retainage | 104 | 535 |
| Total | 3,757 | 4,539 |
| Billings in excess of costs | $ 6,143 | $ 2,389 |
ACCOUNTS RECEIVABLE (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | |
|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
| Receivables [Abstract] | |||
| Bad debt expense | $ 69,000 | $ 87,000 | |
SCHEDULE OF CONTRACTS IN PROGRESS (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Capitalized Contract Cost [Line Items] | ||
| Contract costs | $ 27,808 | $ 16,499 |
| Less billings to date | (30,637) | (15,436) |
| Contract costs, net of billings | (2,829) | 1,063 |
| Plus under billings remaining on contracts 100% complete | 339 | 552 |
| Total | (2,490) | 1,615 |
| Cost and estimated earnings in excess of billings | 3,653 | 4,004 |
| Billings in excess of costs and estimated earnings on uncompleted contracts | (6,143) | (2,389) |
| Total | (2,490) | 1,615 |
| Expenditures On Uncompleted Contracts [Member] | ||
| Capitalized Contract Cost [Line Items] | ||
| Contract costs | 24,022 | 13,716 |
| Earnings On Uncompleted Contracts [Member] | ||
| Capitalized Contract Cost [Line Items] | ||
| Contract costs | $ 3,786 | $ 2,783 |
SCHEDULE OF MATURITIES OF LONG-TERM DEBT (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Debt Disclosure [Abstract] | ||
| Remainder of 2022 | $ 149 | |
| 2023 | 550 | |
| 2024 | 494 | |
| 2025 | 408 | |
| 2026 | 808 | |
| 2027 and thereafter | 268 | |
| Total | $ 2,677 | $ 12,157 |
LINE OF CREDIT (Details Narrative) $ in Thousands |
9 Months Ended | |
|---|---|---|
|
Sep. 30, 2022
USD ($)
|
Dec. 31, 2021
USD ($)
|
|
| Debt Instrument [Line Items] | ||
| Line of credit | $ 5,646 | $ 4,468 |
| NBT Bank, Working Capital Line of Credit [Member] | ||
| Debt Instrument [Line Items] | ||
| Maximum borrowing capacity | 6,000 | |
| Line of credit | $ 5,600 | $ 4,500 |
| Eligible accounts receivable on which borrowings are based | 80.00% | |
| NBT Bank, Working Capital Line of Credit [Member] | Minimum [Member] | ||
| Debt Instrument [Line Items] | ||
| Debt service coverage ratio | 1.20 | |
| NBT Bank, Working Capital Line of Credit [Member] | Maximum [Member] | ||
| Debt Instrument [Line Items] | ||
| Debt service coverage ratio | 1.00 | |
| NBT Bank, Working Capital Line of Credit [Member] | Prime Rate [Member] | ||
| Debt Instrument [Line Items] | ||
| Interest rate | 6.25% |
SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS (Details) $ in Thousands |
Sep. 30, 2022
USD ($)
|
|---|---|
| Commitments and Contingencies Disclosure [Abstract] | |
| Remainder of 2022 | $ 379 |
| 2023 | 804 |
| 2024 | 812 |
| 2025 | 800 |
| 2026 | 718 |
| 2027 | 452 |
| Thereafter | 1,015 |
| Total future minimum lease payments | $ 4,980 |
SCHEDULE OF FAIR VALUE MEASUREMENT INPUTS (Details) - Private Warrants [Member] - $ / shares |
9 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2022 |
Dec. 31, 2021 |
|
| Class of Warrant or Right [Line Items] | ||
| Risk-free rate | 3.83% | 0.06% |
| Remaining term in years | 1 year 8 months 19 days | 2 years 5 months 19 days |
| Expected volatility | 147.02% | 152.90% |
| Exercise price | $ 11.50 | $ 11.50 |
| Fair value of common stock | $ 3.25 | $ 5.96 |
SCHEDULE OF ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON RECURRING BASIS (Details) - Private Warrants [Member] - Fair Value, Recurring [Member] - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
| Warrant Liabilities | $ 50 | $ 148 |
| Fair Value, Inputs, Level 1 [Member] | ||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
| Warrant Liabilities | ||
| Fair Value, Inputs, Level 2 [Member] | ||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
| Warrant Liabilities | ||
| Fair Value, Inputs, Level 3 [Member] | ||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
| Warrant Liabilities | $ 50 | $ 148 |
SCHEDULE OF ROLL FORWARD OF LEVEL 3 INSTRUMENTS (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
Dec. 31, 2021 |
|
| Fair Value Disclosures [Abstract] | |||||
| Beginning balance | $ 148 | $ 350 | $ 350 | ||
| Fair value adjustment – Warrant liability | $ (7) | $ (126) | (98) | $ (944) | (202) |
| Ending balance | $ 50 | $ 50 | $ 148 | ||
FAIR VALUE MEASUREMENTS (Details Narrative) |
Sep. 30, 2022
shares
|
|---|---|
| Private Warrants [Member] | |
| Class of Warrant or Right [Line Items] | |
| Warrants outstanding | 69,144 |
SCHEDULE OF UNION ASSESSMENTS (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
| Defined Benefit Plan Disclosure [Line Items] | ||||
| Total | $ 300 | $ 360 | $ 1,369 | $ 1,253 |
| Pension Plan [Member] | ||||
| Defined Benefit Plan Disclosure [Line Items] | ||||
| Total | 82 | 77 | 326 | 264 |
| Welfare Fund [Member] | ||||
| Defined Benefit Plan Disclosure [Line Items] | ||||
| Total | 160 | 231 | 814 | 805 |
| National Employees Benefit Fund [Member] | ||||
| Defined Benefit Plan Disclosure [Line Items] | ||||
| Total | 21 | 22 | 74 | 75 |
| Joint Apprenticeship and Training Committee [Member] | ||||
| Defined Benefit Plan Disclosure [Line Items] | ||||
| Total | 6 | 5 | 32 | 28 |
| Matching 401K Plan [Member] | ||||
| Defined Benefit Plan Disclosure [Line Items] | ||||
| Total | $ 31 | $ 25 | $ 123 | $ 81 |
SCHEDULE OF COMPONENTS OF INCOME TAX EXPENSE (BENEFIT) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
| Current | ||||
| Federal | ||||
| State | 1 | 7 | 2 | |
| Total Current | 1 | 7 | 2 | |
| Deferred | ||||
| Federal | (1,128) | (622) | (3,648) | (803) |
| State | (361) | (199) | (1,168) | (256) |
| Change in valuation allowance | 1,489 | 4,044 | ||
| Total Deferred | (821) | (772) | (1,059) | |
| Benefit from Income Taxes | $ (820) | $ (765) | $ (1,057) | |
SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Deferred tax assets (liabilities) | ||
| Accruals and reserves | $ 144 | $ 170 |
| Tax credits | 592 | 514 |
| Stock-based compensation | 424 | |
| Net operating loss | 8,343 | 6,182 |
| Less valuation allowance | (4,045) | |
| Total deferred tax assets | 5,458 | 6,866 |
| Property and equipment | (1,713) | (3,466) |
| Intangibles | (3,745) | (3,857) |
| Stock-based compensation | (315) | |
| Total deferred tax liabilities | (5,458) | (7,638) |
| Net deferred tax asset (liabilities) | $ (772) |
SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
| Income Tax Disclosure [Abstract] | ||||
| Income tax (benefit) expense at federal rate | $ (1,037) | $ (311) | $ (2,999) | $ (1,292) |
| Paycheck Protection Program tax exempt loan forgiveness | (544) | |||
| Permanent tax differences | 6 | |||
| Stock compensation subject to S162(m) limitation | 67 | 67 | ||
| Non-deductible goodwill and other intangible | $ 833 | |||
| Other adjustments | ||||
| State and local taxes net of federal benefit | $ (451) | $ (154) | $ (1,246) | $ (473) |
| Permanent tax differences for change in fair value of warrants | (1) | (422) | (21) | (198) |
| Non-deductible goodwill and other intangible | ||||
| Valuation allowance | 1,489 | 4,045 | ||
| Benefit from Income Taxes | $ (820) | $ (765) | $ (1,057) | |
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) $ in Thousands |
1 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|
May 31, 2018 |
Dec. 31, 2014 |
Sep. 30, 2022 |
Dec. 31, 2021 |
|
| Majority Shareholder [Member] | ||||
| Related Party Transaction [Line Items] | ||||
| Proceeds from related party | $ 400 | |||
| Majority Shareholder [Member] | Advance for Stock Purchase [Member] | ||||
| Related Party Transaction [Line Items] | ||||
| Related party transaction amount | $ 250,000 | |||
| Majority Shareholder [Member] | Loan to Help with Cash Flow Needs [Member] | ||||
| Related Party Transaction [Line Items] | ||||
| Due to stockholders | $ 0 | $ 60 | ||
| Investor [Member] | Sale of Building [Member] | ||||
| Related Party Transaction [Line Items] | ||||
| Due to stockholders | 0 | 21 | ||
| Stockholders [Member] | Buyout of Minority Stockholder [Member] | ||||
| Related Party Transaction [Line Items] | ||||
| Due to stockholders | $ 0 | $ 39 |
DEFERRED COMPENSATION PLAN (Details Narrative) - Investor [Member] $ in Thousands |
12 Months Ended |
|---|---|
|
Dec. 31, 2018
USD ($)
| |
| Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items] | |
| Minimum commitment for future compensation | $ 155 |
| Net present value of future compensation | $ 45 |
| Solar management fee | 24.50% |
SCHEDULE OF SHARE BASED PAYMENT ARRANGEMENT, OPTION, ACTIVITY (Details) - Share-Based Payment Arrangement, Option [Member] |
9 Months Ended |
|---|---|
|
Sep. 30, 2022
$ / shares
shares
| |
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
| Outstanding beginning balance | shares | 201,334 |
| Outstanding per share | $ / shares | $ 1.49 |
| Granted | shares | 375,000 |
| Granted per share | $ / shares | $ 5.04 |
| Exercised | shares | |
| Exercised per share | $ / shares | $ 1.49 |
| Outstanding ending balance | shares | 576,334 |
| Outstanding per share | $ / shares | $ 3.80 |
| Exercisable | shares | 225,666 |
| Exercisable per share | $ / shares | $ 3.46 |
SCHEDULE OF INVESTMENT (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Net Investment Income [Line Items] | ||
| Total | $ 12,120 | $ 12,420 |
| GreenSeed Investors LLC [Member] | ||
| Net Investment Income [Line Items] | ||
| Total | 4,024 | 4,324 |
| Solar Project Partners LLC [Member] | ||
| Net Investment Income [Line Items] | ||
| Total | 96 | 96 |
| Gemini Electric Mobility Co [Member] | ||
| Net Investment Income [Line Items] | ||
| Total | 2,000 | 2,000 |
| Nad Grid Corp [Member] | ||
| Net Investment Income [Line Items] | ||
| Total | 1,000 | 1,000 |
| Encore Redevelopment LLC [Member] | ||
| Net Investment Income [Line Items] | ||
| Total | $ 5,000 | $ 5,000 |
INVESTMENTS (Details Narrative) - GreenSeed Investors LLC [Member] |
3 Months Ended | 9 Months Ended |
|---|---|---|
|
Sep. 30, 2022
USD ($)
|
Sep. 30, 2022
USD ($)
|
|
| Net Investment Income [Line Items] | ||
| Return of capital | $ 100,000 | $ 300,000 |
| Dividends receivable | $ 300,000 | $ 300,000 |
SUBSEQUENT EVENTS (Details Narrative) - Subsequent Event [Member] |
Nov. 04, 2022
USD ($)
|
|---|---|
| Senior Secured Convertible First Note [Member] | |
| Subsequent Event [Line Items] | |
| Aggregate principal amount | $ 12,500.00 |
| Discount percentage | 6.00% |
| Gross proceeds from debt | $ 11,750,000 |
| Senior Secured Convertible Second Note [Member] | |
| Subsequent Event [Line Items] | |
| Aggregate principal amount | $ 12,500,000 |
| Discount percentage | 6.00% |
| Senior Secured Convertible Note [Member] | |
| Subsequent Event [Line Items] | |
| Aggregate principal amount | $ 25,000,000 |