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RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS (Tables)
 3 Months Ended
Mar. 31, 2021
Commitments and Contingencies Disclosure [Abstract]  
The effect of the Restatement described above on the accompanying consolidated balance sheet as of December 31, 2020 is as follows:

The effect of the Restatement described above on the accompanying consolidated balance sheet as of December 31, 2020 is as follows:

 

                                     
   Consolidated Balance Sheet as at December 31, 2020 
   As Previously Reported   Inventory Costing Errors   Loss Contract Reserve   Additional Inventory Reserve   As Restated 
ASSETS                    
Current Assets:                         
     Cash  $6,033,537   $—   $—   $—   $6,033,537 
     Accounts receivable, net   4,962,906                   4,962,906 
     Contract assets   19,729,638                   19,729,638 
     Inventory   9,567,921    (1,875,950)        (1,305,683)   6,386,288 
     Refundable income taxes   40,000                   40,000 
     Prepaid expenses and other current assets   534,857                   534,857 
                          
Total Current Assets   40,868,859    (1,875,950)   —    (1,305,683)   37,687,226 
                          
Operating lease right-of-use assets   4,075,048                   4,075,048 
Property and equipment, net   2,521,742                   2,521,742 
Intangibles, net   250,000                   250,000 
Goodwill   1,784,254                   1,784,254 
Other assets   191,179                   191,179 
                          
Total Assets  $49,691,082   $(1,875,950)  $—   $(1,305,683)  $46,509,449 
                          
Liabilities and Shareholders’ Deficit                         
Current Liabilities:                         
Accounts payable  $12,092,684    $—     $—    $—    $12,092,684 
Accrued expenses   5,693,518    244,403              5,937,921 
Contract liabilities   1,650,549                   1,650,549 
Loss reserve   800,971         1,208,276         2,009,247 
Current portion of long-term debt   6,501,666                   6,501,666 
Operating lease liabilities   1,819,237                   1,819,237 
Income taxes payable   862    86              948 
                          
Total Current Liabilities   28,559,487    244,489    1,208,276    —    30,012,252 
                          
Line of credit   20,738,685                   20,738,685 
Long-term operating lease liabilities   2,537,149                   2,537,149 
Long-term debt, net of current portion   6,205,095                   6,205,095 
                          
Total Liabilities   58,040,416    244,489    1,208,276    —    59,493,181 
                          
Shareholders’ Deficit:                         
Common stock   11,951                   11,951 
Additional paid-in capital   72,005,841                   72,005,841 
Accumulated deficit   (80,367,126)   (2,120,439)  (1,208,276)   (1,305,683)   (85,001,524)
Total Shareholders’ Deficit   (8,349,334)   (2,120,439)   (1,208,276)   (1,305,683)   (12,983,732)
Total Liabilities and Shareholders’ Deficit  $49,691,082   $(1,875,950)  $—   $(1,305,683)  $46,509,449 

 

 

The effect of the Restatement described above on the accompanying consolidated statement of operations for the three months ended March 31, 2020 is as follows:

 

                                     
   Consolidated Statement of Operation For the three months ended March 31, 2020 (Unaudited) 
     
   As Previously Reported   Inventory Costing Errors   Loss Contract Reserve   Inventory Reserve   As Restated 
Revenue  $16,858,386   $—   $—   $—   $16,858,386 
Cost of sales   16,160,567    315,999    9,371    219,466    16,705,403 
Gross profit   697,819    (315,999)   (9,371)   (219,466)   152,983 
Selling, general and administrative expenses   3,093,090                   3,093,090 
Loss from operations   (2,395,271)   (315,999)   (9,371)   (219,466)   (2,940,107)
                          
Other expense:                         
Interest expense   (416,670)                  (416,670)
Loss before provision for income taxes   (2,811,941)   (315,999)   (9,371)   (219,466)   (3,356,777)
                          
Provision for income taxes   578    —    —    —    578 
Net loss  $(2,812,519)  $(315,999)  $(9,371)  $(219,466)  $(3,357,355)
                          
Loss per common share - basic  $(0.24)  $(0.03)  $(0.00)  $(0.02)  $(0.29)
Loss per common share - diluted  $(0.24)  $(0.03)  $(0.00)  $(0.02)  $ (0.29)
Basic   11,837,014    —    —    —    11,837,014 
Diluted   11,837,014    —    —    —    11,837,014 

 

 

Cumulative Effect of Prior Period Adjustments 

The following table presents the impact of the Restatement on the Company’s shareholders’ deficit as of December 31, 2019 (as restated), March 31, 2020 (as restated), June 30, 2020 (as restated), September 30, 2020 (as restated) and December 31, 2020 (as restated):

 

   Common Stock
Shares		   Common
Stock		   Additional Paid-in
Capital		   Accumulated Deficit   Total
Shareholders’
Deficit		 

Balance, December 31, 2019

(As Restated)

   11,818,830   $11,819   $71,294,629   $(81,346,771)  $(10,040,323)
Net Loss (as previously reported)
   —     —     —    $(2,812,519)  $(2,812,519)
Inventory Costing Errors   —    —    —    (315,999)   (315,999)
Loss Contract Reserve   —    —    —    (9,371)   (9,371)
Inventory Reserve   —    —    —    (219,466)   (219,466)
Cumulative restatement adjustments   —    —    —    (544,836)   (544,836)
Net Loss (as restated)                  (3,357,355)   (3,357,355)
Stock-based compensation   18,388    18    347,167    —    347,185 

Balance, March 31, 2020

(As Restated)

   11,837,218   $11,837   $71,641,796   $(84,704,126)  $(13,050,493)
Net Loss (as previously reported)
                 $(596,831)  $(596,831)
Inventory Costing Errors   —    —    —    (510,244)   (510,244)
Loss Contract Reserve   —    —    —    (190,035)   (190,035)
Inventory Reserve   —    —    —    (63,451)   (63,451)
Cumulative restatement adjustments   —    —    —    (763,730)   (763,730)
Net Loss (as restated)                  (1,360,561)   (1,360,561)
Stock-based compensation   18,388    19    189,184    —    189,203 

Balance, June 30, 2020

(As Restated)

   11,855,606   $11,856   $71,830,980   $(86,064,687)  $(14,221,851)
Net Income (as previously reported)
                 $815,209   $815,209 
Inventory Costing Errors   —    —    —    (112,446)   (112,446)
Loss Contract Reserve   —    —    —    206,159    206,159 
Inventory Reserve   —    —    —    (69,157)   (69,157)
Cumulative restatement adjustments   —    —    —    24,556    24,556 
Net Income (as restated)                  839,765    839,765 
Stock-based compensation   70,571    70    141,031    —    141,101 

Balance, September 30, 2020

(As Restated)

   11,926,177   $11,926   $71,972,011   $(85,224,922)  $(13,240,985)
Net Income
                 $1,273,703   $1,273,703 
Inventory Costing Errors   —    —    —    (1,071,395)   (1,071,395)
Loss Contract Reserve   —    —    —    99,921    99,921 
Inventory Reserve   —    —    —    (78,831)   (78,831)
Cumulative restatement adjustments   —    —    —    (1,050,305)   (1,050,305)
Net Income (as restated)                   223,398    223,398 
Stock-based compensation   25,094    25    33,830    —    33,855 

Balance, December 31, 2020

(As Restated)

   11,951,271   $11,951   $72,005,841   $(85,001,524)  $(12,983,732)

 

 

Impact on Consolidated Statement of Cash Flows

 

 The effect of the Restatement described above on the accompanying consolidated statement of cash flows for the three months ended March 31, 2020 is as follows:

 

                                     
   Consolidated Statements of Cash Flows for the three months ended March 31, 2020 (Unaudited) 
   As Previously Reported   Inventory Costing Errors   Loss Contract Reserve   Inventory Reserve   As Restated 
Cash flows from operating activities:                    
Net Loss  $(2,812,519)  $(315,999)  $(9,371)  $(219,466)  $(3,357,355)
Adjustments to reconcile net loss to net cash used in operating activities:                         
Depreciation and amortization   256,284                   256,284 
Amortization of debt issuance cost   35,437                   35,437 
Cash expended in excess of rent expense   (38,644)                  (38,644)
Stock-based compensation expense   347,185                   347,185 
Bad debt expense   (51,369)                  (51,369)
Changes in operating assets and liabilities:                         
Decrease in accounts receivable   973,002                   973,002 
Increase in contract assets   (533,743)                  (533,743)
Increase in inventory   (1,048,752)   242,857    —    219,466    (586,429)
Decrease in prepaid expenses and other current assets   26,549                   26,549 
Decrease in refundable income taxes   1,506                   1,506 
Increase in accounts payable and accrued expenses   735,282    73,142              808,424 
Increase in contract liabilities   1,187,667                   1,187,667 
Decrease in loss reserve   (505,407)   —    9,371    —    (496,036)
Net cash used in operating activities   (1,427,522)   —    —    —    (1,427,522)
Cash flows from investing activities:                         
Purchase of property and equipment   (3,200)   —    —    —    (3,200)
Net cash used in investing activities   (3,200)   —    —    —    (3,200)
Cash flows from financing activities:                         
                          
Payments on long-term debt   (622,690)   —    —    —    (622,690)
                         
Net cash used in financing activities   (622,690)   —    —    —    (622,690)
Net decrease in cash and restricted cash   (2,053,412)   —    —    —    (2,053,412)
Cash and restricted cash at beginning of year   5,432,793    —    —    —    5,432,793 
Cash and restricted cash at end of period  $3,379,381   $—   $—   $—   $3,379,381 
Supplemental disclosures of cash flow information:                         
Cash paid during the year for interest  $450,191   $—   $—   $—   $450,191 
Cash (received) from income taxes  $(928)  $—   $—   $—   $(928)